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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, 2004



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 Euro 0.50 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.



87,268,562 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for 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     |  | J.T.M. van Bergen, Océ N.V.
|Reed Smith LLP       |  | Secretariat of the Company 
|435 Sixth Avenue     |  | P.O. Box 101               
|Pittsburgh, PA 15219 |  | 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                        |  | 3   
|2    |  | Offer Statistics and Expected Timetable                                      |  | 3   
|3    |  | Key Information                                                              |  | 3   
|4    |  | Information on the Company                                                   |  | 11  
|5    |  | Operating and Financial Review and Prospects                                 |  | 28  
|6    |  | Directors, Senior Management and Employees                                   |  | 39  
|7    |  | Major Shareholders and Related Party Transactions                            |  | 46  
|8    |  | Financial Information                                                        |  | 48  
|9    |  | The Offer and Listing                                                        |  | 48  
|10   |  | Additional Information                                                       |  | 49  
|11   |  | Quantitative and Qualitative Disclosures about Market Risk                   |  | 55  
|12   |  | Description of Securities Other than Equity Securities                       |  | 56  
|     |  |                                                                             
|     |  | Part II                                                                      |  |     
|13   |  | Defaults, Dividend Arrearages and Delinquencies                              |  | 56  
|14   |  | Material Modifications to the Rights of Security Holders and Use of Proceeds |  | 56  
|15   |  | Controls and Procedures                                                      |  | 57  
|16A  |  | Audit Committee Financial Expert                                             |  | 57  
|16B  |  | Code of Ethics                                                               |  | 57  
|16C  |  | Principal Accountant Fees and Services                                       |  | 58  
|16D  |  | Exemptions from the listing Standards for Audit Committees                   |  | 59  
|16E  |  | Purchases of Equity Securities by the Issuer and Affiliated Purchasers       |  | 59  
|     |  |                                                                             
|     |  | Part III                                                                     |  |     
|17   |  | Financial Statements                                                         |  | 59  
|18   |  | Financial Statements                                                         |  | 59  
|19   |  | Exhibits                                                                     |  | 59  
|     |  |                                                                             
|     |  | 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., 2004) are to the Companys fiscal year ending November 30 (e.g., November 30, 2004);
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 2004 were converted into dollars from Euros at an exchange rate of $1.3259 to 1 Euro, which was the Noon Buying Rate on November 30,
2004. 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.



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
|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      
|2004                     |  | 1.18 |  | 1.33 |  | 1.24    |  | 1.33      



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|              |  |           |  |      |  |         |  |            |  |     
|------------- |  | --------- |  | ---- |  | ------- |  | ---------- |  | ----
|Months ended: |  | Low       |  | High |  | Average |  | Period-End
|2004          |  | September |  | 1.21 |  | 1.24    |  | 1.22       |  | 1.24
|              |  | October   |  | 1.23 |  | 1.28    |  | 1.25       |  | 1.27
|              |  | November  |  | 1.27 |  | 1.33    |  | 1.30       |  | 1.33
|              |  | December  |  | 1.32 |  | 1.36    |  | 1.34       |  | 1.35
|2005          |  | January   |  | 1.30 |  | 1.36    |  | 1.31       |  | 1.30



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, 2000 through November 30, 2004. The average rates are calculated on the average of the daily rates per month weighted with the monthly revenues.



|                     |  |                                     |  |                         |  |        |  |        |  |        |  |       |  |        |  |        |  |        |  |       
|-------------------- |  | ----------------------------------- |  | ----------------------- |  | ------ |  | ------ |  | ------ |  | ----- |  | ------ |  | ------ |  | ------ |  | ------
|                     |  | Average Rate During the Fiscal Year |  | Rate as of November 30,
|Applicable Currency  |  | 2000                                |  | 2001                    |  | 2002   |  | 2003   |  | 2004   |  | 2000  |  | 2001   |  | 2002   |  | 2003   |  | 2004  
|Pound sterling       |  | 0.61                                |  | 0.62                    |  | 0.63   |  | 0.68   |  | 0.68   |  | 0.61  |  | 0.62   |  | 0.64   |  | 0.70   |  | 0.70  
|United States dollar |  | 0.93                                |  | 0.89                    |  | 0.93   |  | 1.11   |  | 1.23   |  | 0.86  |  | 0.89   |  | 0.99   |  | 1.20   |  | 1.32  
|Australian dollar    |  | 1.58                                |  | 1.72                    |  | 1.72   |  | 1.75   |  | 1.68   |  | 1.65  |  | 1.71   |  | 1.77   |  | 1.65   |  | 1.72  
|Japanese Yen         |  | 99.18                               |  | 107.53                  |  | 117.12 |  | 130.14 |  | 133.73 |  | 95.92 |  | 109.82 |  | 121.76 |  | 131.25 |  | 136.64
|Swiss franc          |  | 1.56                                |  | 1.50                    |  | 1.47   |  | 1.51   |  | 1.55   |  | 1.51  |  | 1.47   |  | 1.48   |  | 1.55   |  | 1.52  



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 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.



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|                                                                                                        |  |                             |  |        |     |  |        |  |        |  |        |  |       
|------------------------------------------------------------------------------------------------------- |  | --------------------------- |  | ------ | --- |  | ------ |  | ------ |  | ------ |  | ------
|                                                                                                        |  | Years ended November 30(b),
|(In millions except per share amounts)                                                                  |  | 2000                        |  | 2001   |     |  | 2002   |  | 2003   |  | 2004   |  | 2004  
|                                                                                                        |  | Euro                        |  | Euro   |     |  | Euro   |  | Euro   |  | Euro   |  | $     
|CONSOLIDATED STATEMENT OF OPERATIONS DATA:                                                              |  |                             |  |        |     |  |        |  |        |  |        |  |       
|Amounts in accordance with Dutch GAAP                                                                   |  |                             |  |        |     |  |        |  |        |  |        |  |       
|                                                                                                        |  |                             |  |        |     | 
|Revenues                                                                                                |  | 3,224                       |  | 3,234  |     |  | 3,176  |  | 2,769  |  | 2,652  |  | 3,517 
|Operating income                                                                                        |  | 282                         |  | 225    |     |  | 226    |  | 125    |  | 110    |  | 146   
|Income before income taxes, equity in income of investments in minority interests and minority interest |  | 222                         |  | 156    |     |  | 172    |  | 94     |  | 92     |  | 122   
|Exceptional item (net of tax)                                                                           |  |                            |  | -95    |     |  |       |  |       |  |       |  |      
|Net income                                                                                              |  | 152                         |  | 10     |     |  | 113    |  | 61     |  | 78     |  | 104   
|                                                                                                        |  |                             |  |        |     | 
|Basic earnings per ordinary share(a)                                                                    |  | 1.76                        |  | 1.19   | (e) |  | 1.30   |  | 0.69   |  | 0.89   |  | 1.18  
|Diluted earnings per ordinary share(a)                                                                  |  | 1.74                        |  | 1.18   | (e) |  | 1.29   |  | 0.69   |  | 0.88   |  | 1.17  
|Dividends per ordinary share(a)(d)                                                                      |  | 0.58                        |  | 0.58   |     |  | 0.58   |  | 0.58   |  | 0.58   |  | 0.77  
|                                                                                                        |  |                             |  |        |     | 
|Amounts in accordance with U.S. GAAP(c)                                                                 |  |                             |  |        |     |  |        |  |        |  |        |  |       
|Net income                                                                                              |  | 98                          |  | 52     |     |  | 65     |  | 51     |  | 59     |  | 79    
|Earnings per ordinary share(a)                                                                          |  |                             |  |        |     |  |        |  |        |  |        |  |       
|Basic                                                                                                   |  | 1.11                        |  | 0.56   |     |  | 0.73   |  | 0.57   |  | 0.67   |  | 0.89  
|Diluted                                                                                                 |  | 1.10                        |  | 0.56   |     |  | 0.73   |  | 0.56   |  | 0.66   |  | 0.88  
|                                                                                                        |  |                             |  |        |     | 
|CONSOLIDATED BALANCE SHEET DATA:                                                                        |  |                             |  |        |     |  |        |  |        |  |        |  |       
|                                                                                                        |  |                             |  |        |     | 
|Amounts in accordance with Dutch GAAP                                                                   |  |                             |  |        |     |  |        |  |        |  |        |  |       
|Total assets                                                                                            |  | 3,216                       |  | 3,128  |     |  | 2,862  |  | 2,421  |  | 2,233  |  | 2,961 
|Long term debt                                                                                          |  | 854                         |  | 754    |     |  | 757    |  | 381    |  | 438    |  | 581   
|Capital Stock                                                                                           |  | 559                         |  | 565    |     |  | 565    |  | 565    |  | 565    |  | 749   
|Shareholders equity                                                                                    |  | 989                         |  | 909    |     |  | 771    |  | 713    |  | 714    |  | 947   
|Number of shares outstanding (x1000)(a)                                                                 |  | 84,400                      |  | 85,241 |     |  | 84,086 |  | 83,409 |  | 83,488 |  | 83,488
|                                                                                                        |  |                             |  |        |     | 
|Amounts in accordance with U.S. GAAP(c)                                                                 |  |                             |  |        |     |  |        |  |        |  |        |  |       
|Total assets                                                                                            |  | 3,431                       |  | 3,334  |     |  | 3,053  |  | 2,622  |  | 2,429  |  | 3,221 
|Long term debt                                                                                          |  | 854                         |  | 754    |     |  | 757    |  | 381    |  | 438    |  | 581   
|Capital stock                                                                                           |  | 559                         |  | 565    |     |  | 565    |  | 565    |  | 565    |  | 749   
|Shareholders equity                                                                                    |  | 1,305                       |  | 1,282  |     |  | 1,110  |  | 1,079  |  | 1,027  |  | 1,362 
|Number of shares outstanding (x1000)(a)                                                                 |  | 84,400                      |  | 85,241 |     |  | 84,086 |  | 83,409 |  | 83,488 |  | 83,488

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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 acquisition of 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.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(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 and diluted earnings per Ordinary Share were Euro 0.08 and Euro 0.07 respectively 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.



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|                         |         |                         |       |      |                            |       |      |   |         |      |       |      |   |       |      |  
|------------------------ | ------- | ----------------------- | ----- | ---- | -------------------------- | ----- | ---- | - | ------- | ---- | ----- | ---- | - | ----- | ---- | -
|Years ended November
30, |         | Euro per Ordinary Share |       |      | Dollars per Ordinary Share |      
|                         | Interim |                         | Final |      |                            | Total |      |   | Interim |      | Final |      |   | Total |     
|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 |  
|2004                     |         | 0.15                    |       | 0.43 | *                          |       | 0.58 | * |         | 0.20 |       | 0.57 | * |       | 0.77 | *

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|* | Payment of final portion subject to approval by the shareholders of the Company at the Annual General Meeting of Shareholders on April 15, 2005.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------



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.



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. These factors, risks and uncertainties include, but are not limited to, changes in economic and
business conditions, customer demand in competitive markets, the successful introduction of new products and services into the markets, developments in technology, adequate pricing of products and services, competitive pricing pressures within
Océs markets, the financing of Océs business activities, efficient and cost-effective operations, changes in foreign currency exchange rates, fluctuations in interest rates, political uncertainties, changes in governmental
regulations and laws, tax rates, successful acquisitions, joint ventures and disposals and the effects of recent or further terrorist attacks and the war on terrorism.



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, 2003 and 2004 was adversely
affected by the global economic conditions and Océs profitability in 2005 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 (revenues from services,
materials, business services contracts, rentals and interest).



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 to a large extent 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.



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The decline in the sales of machines in 2002 and 2003 and only a slight increase in 2004 resulted in a decrease in
Océs recurring revenue in 2004. Because global economic developments are uncertain in 2005, 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 (58%), the United
States (35%) and the rest of the world (7%). 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.



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 2004, Océ achieved approximately 40% of its revenues from the Eurozone, 35% from the United States and 7% from the United Kingdom. Revenues from other countries amounted to approximately 18% in 2004. 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 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 effect 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 also be affected by any fluctuations in the value of the Euro compared to the value of the U.S. dollar.



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. The market for black-and-white printers has reached maturity in terms of technology and, as a result, product development focuses on aspects such as cost-price, total cost of ownership, operational reliability,
environmental friendliness, ease of use and productivity, while the most important future trends are the shift toward color applications, high volume production printing and document management software. 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 its ability to develop 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 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 product 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 invests approximately 7% of its revenues (7.8% in 2004) 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 five and ten years. Accurate anticipation of customers changing needs and emerging technological trends is critical. Océ must
make long-



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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s 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.



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 cannot 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 the 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 5,873 patents and patent applications pending throughout the world. In addition, prior to disclosing any proprietary
technology to third parties, the Company requires these third parties to enter into protective arrangements 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.



The Company relies on third parties
in connection with the production of its machines



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; Czech Republic; Poing, Germany; San José, California United States; and Vancouver, Canada. During 2004, Océ began implementation of its previously-announced plans to relocate parts of its manufacturing and assembly
activities (related to non-strategic manufacturing) in The Netherlands to Central Europe and the Far East (via outsourcing) in order to reduce its manufacturing expenses. Relocation of these manufacturing and



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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 has increased its cooperation with external logistic specialists. Although the Company intends for this transition to be seamless to its customers and is
monitoring it closely, 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 for Océs machines 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 leakages 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 functionalities increase, the possibility of an inadvertent infringement and related intellectual property claim against
the Company increases. There may be patents and 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 and provide proper indemnification warranties, 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 and 2004. Outside the United States, Océ is outsourcing its lease activities under private label arrangements to its
vendor lease partners (third party lease companies). Under these arrangements the outsourcing of Océs lease activities consists of two key elements. New end-user finance lease arrangements are entered into directly by Océs
vendor lease partners, prior to which Océ has sold the equipment and any software licenses to that partner and Océs existing lease portfolio is transferred to its vendor lease partners (under a sale or assignment agreement) on a
non-recourse basis.



In the United States, Océs captive lease
company Océ-Financial Services, Inc. is the party entering into the finance lease arrangement with the end-user and then selling those End-User contracts to its lease partners, again on a non recourse basis. 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 to continue to provide high quality services to Océs customers. The outsourcing of the
lease activities will have financial consequences.



The outsourcing of the
lease portfolio presently 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 U.S.
GAAP may adversely affect the off-balance sheet accounting treatment.



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 543 million at November 30, 2003 and Euro 519 million at November 30, 2004. 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



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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 long-lived assets at any time. Recognition of impairments of long-lived assets has had 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 2004.



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



The Company currently maintains pension plans in many countries and many of such pension
plans 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 and pension 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. Volatility in the financial markets and fluctuations in interest rates may require the Company to contribute additional funds in the future. If the Company is required to make contributions to fund the
pension plans, this will have an impact on the Companys financial statements and 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



For financial years commencing on or after January 1, 2005,
all European publicly listed companies have to report on the basis of IFRS. Starting in fiscal year 2006, Océ will therefore draw up its annual financial statements and quarterly reports on the basis of IFRS and therefore the IFRS opening
balance sheet will be drawn up as at December 1, 2004.



Because of
Océs listing on NASDAQ and its filing with the SEC in the United States, as much convergence as possible will be sought with the American accounting principles (U.S. GAAP) in those cases where IFRS allows a choice to be made.



Océ is well on schedule with the introduction of IFRS: the relevant
standards that do not conflict with the current Dutch accounting principles (Dutch GAAP) were implemented as much as possible in fiscal 2004 relating in particular to balance sheet classifications.



As a result of this strategy it will be possible to minimize the number of reconciliation
items needed to move from Dutch GAAP to the IFRS opening balance sheet. Nonetheless, the IFRS opening balance sheet will include a number of items which conflict with Dutch GAAP and whose effect may be material. This relates in particular to the
valuation of pension liabilities (which must be reset) and the valuation of option and share plans and financial instruments. Currently, it is not possible to give an indication of what the impact of this will be.



The implementation of the Sarbanes-Oxley Section 404 requirements



Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations
require us to include in our future annual reports an assessment by management of the effectiveness of our internal control over financial reporting. In addition, PricewaterhouseCoopers, our independent registered public accounting firm, must attest
to and report on managements assessment. This requirement is currently expected first to apply to our annual report on Form 20-F for our fiscal year ending November 30, 2005. We are evaluating our internal control systems to allow our
management to report on, and PwC to attest to, our internal control over financial reporting. As a result, we have incurred additional expenses in 2004 and a diversion of our managements time, and we expect this to continue at least into
fiscal year 2005.



While we have dedicated a significant amount of time and
resources to ensuring compliance, there can be no assurance that we or PwC will complete the necessary work to comply with all aspects of Section 404 and related regulations in a timely manner. If we have a material weakness in our internal control
over financial reporting, we may be unable to prevent or detect material misstatements in a timely manner. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating
results or cause us to fail to meet our reporting obligations. If the assessment of our internal control identifies material weaknesses that must be disclosed, we may receive an attestation with an adverse opinion from PwC as to the adequacy of our
internal control over financial reporting. Furthermore, potential acquisitions of businesses that are currently not in compliance with Section 404 requirements could lead to disclosures on currently unforeseen deficiencies in our internal control
over financial reporting.



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 that 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. Océ N.V. is an international holding company within the meaning of Article 153, para. 3b, Book 2 of the Dutch
Civil Code. 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 2004, 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 and innovative products and services for use by professionals in print and document management processes. The Company focuses primarily on
professional environments in which large volumes of documents are processed. Océs customers are mainly active in the industrial and printing sectors, as well as office environments. Océ develops and manufacturers its own machines
and systems for use in the production, distribution and management of documents. Océ also offers its customers innovative services in the areas of consulting, outsourcing and, in cooperation with partners, financing.



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 is 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 Canada. 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 2004, Océ achieved revenues of Euro 2.7 billion and net income of Euro 78 million.



Annual Report 2004



Océs Annual Report 2004, 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
involve 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 and 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.



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 or DDS strategic business unit. The Digital Document Systems business unit focuses on mid- and high to very high volume output print
management systems. Océ continued its other strategic business unit, Wide Format Printing Systems or WFPS strategic business unit. 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 DDS and WFPS 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.



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In 2004 the Company began implementation of its previously-announced plans to relocate part of its manufacturing and
assembly activities from The Netherlands to Central Europe and the Far East.



On December 10, 2004, Océ in the United States announced that the business activities of Océ Display Graphics Systems Inc., which is headquartered in San Jose, California but has significant manufacturing and R&D
activities in Canada, will be transferred to the Océ business in Canada. The related restructuring costs will be approximately Euro 2.5 million.



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 Océ machines through financial lease arrangements).



More than 50% of the Companys machine sales are financed through financial leases, and Océ branded leasing forms are 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. (Océ-Financial Services), which is responsible for all leasing activities in the United States. Under this structure,
Océ-Financial Services negotiates and enters into the initial leasing agreement with the customer. In due course Océ-Financial Services sells the lease receivables (together with the title to the underlying machines) to third party
fundors. During 2004, Euro 139 million worth of lease contracts (together with the title to the underlying machines) were sold to four third party fundors in the United States. Océ-Financial Services carries out activities such as invoicing
and the collection of accounts receivable on behalf of third party fundors.



In
Europe and the rest of the world, the Company has entered into (or intends to enter into) private label agreements with third party fundors. In December 2001, Océ entered into a private label agreement with Telia Finans AB to outsource
its financing lease portfolio and financing activities in Scandinavia. In 2002, the Company entered into a private label agreement with De Lage Landen International B.V. (DLL), a subsidiary of Rabobank, to outsource its lease
activities and the existing financing lease portfolio in The Netherlands, Belgium, Spain, France, Germany and the United Kingdom/Ireland. In 2004, DLL acquired Telia Finans AB, allowing the Company to further standardize this process in the covered
countries. In 2004, the Company entered into a private label agreement with CIT Group Finance (Ireland) (CIT) for the outsourcing of lease activities in Italy, Switzerland, Australia, Central Europe and South East Asia. The CIT
arrangement is expected to be implemented during 2005.



Originally, Océ
intended to complete the outsourcing of most of its financial leasing activities in Europe by the end of 2003 through the then existing arrangements. As Océ began to transfer existing lease contracts and to originate new lease contracts to
its private label fundors during 2003, Océ determined that substantial changes to its own information systems and those of its vendor lease partner were required before the transfer could become effective.



During 2004, a total of Euro 312 million worth of financial lease receivables and underlying
equipment were sold to external lease partners, of which Euro 139 million was in the United States and Euro 173 million was in Europe. The sale of the existing lease portfolio resulted in a book profit of Euro 30.9 million. As of the end of 2004,
Océ had Euro 403 million of lease receivables remaining on its balance sheet. Océ expects to decrease this position by approximately Euro 175 million which will leave approximately Euro 225 million of lease receivables on its balance
sheet.



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 anticipated transfer of the (major part of the) remaining portion of the lease portfolio, the Company will no longer have the applicable leases (nor 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 nominal 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. As a result, Océs risks related to bad credit or debtor defaults may relatively increase with respect to that portion of the leasing portfolio retained by Océ.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Interest received from leasing activities has historically yielded a stable stream of revenues, which will, together with the related costs of funding, largely be eliminated once
the lease portfolio is transferred to Océs vendor-lease partners and/or fundors. The elimination of this stream of revenues may cause Océs results to become more volatile.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The transfer of the lease activities may have the effect of decreasing Océs net results. Although the Company anticipates that this effect could be offset by making
effective use of the funds, there is no guarantee that the Companys future investments of these funds will be successful.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Principal Capital Expenditures and Divestitures



The following table sets forth 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 2002, 2003 and 2004:



|                                       |  |      |  |      |  |     
|-------------------------------------- |  | ---- |  | ---- |  | ----
|(In millions)                          |  | 2002 |  | 2003 |  | 2004
|                                       |  | Euro |  | Euro |  | Euro
|                                       |  |      | 
|Capital Expenditures                   |  |      |  |      |  |     
|Intangible assets (net)                |  | 19   |  | 11   |  | 9   
|Property, plant and equipment          |  | 116  |  | 97   |  | 87  
|Rental equipment (net)                 |  | 30   |  | 15   |  | 40  
|Other investments                      |  | 5    |  | 2    |  | -3  
|Capital Divestments                    |  |      |  |      |  |     
|Property, plant and equipment          |  | -15  |  | -17  |  | -13 
|Disposal of unconsolidated companies   |  | -1   |  |     |  | -1  
|Sale of financial lease portfolio      |  | -71  |  | -80  |  | -312
|Acquisitions (Disposals) (net of cash) |  | 55   |  | -2   |  |    
|                                       |  |      |  |      |  |     
|Total                                  |  | 138  |  | 26   |  | -193
|                                       |  |      |  |      |  |     



The Company expects that its 2005
capital expenditures will be approximately Euro 108 million for 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 activities will significantly reduce its working capital requirements.



Océ did not make any significant acquisitions in 2004 or 2003. In 2003
Océ South Africa was sold.



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s 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 2005. Océ faces strong competition in the market for color products.



See also the discussions regarding recent developments under Item 4, Restructuring, Outsourcing of Financial Leases, Digital Document
Systems Business Unit and Wide Format Printing Systems Business Unit.





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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)     |  | 2002                     |  | 2003  |  | 2004  |  | 2004 
|                  |  | Euro                     |  | Euro  |  | Euro  |  | $    
|                  |  |                          |  |      
|United States     |  | 1,298                    |  | 1,046 |  | 925   |  | 1,226
|Germany           |  | 371                      |  | 335   |  | 333   |  | 442  
|The Netherlands   |  | 278                      |  | 284   |  | 291   |  | 386  
|France            |  | 209                      |  | 199   |  | 191   |  | 253  
|United Kingdom    |  | 238                      |  | 183   |  | 180   |  | 239  
|Rest of Europe    |  | 554                      |  | 519   |  | 534   |  | 708  
|Rest of the World |  | 228                      |  | 203   |  | 198   |  | 263  
|                  |  |                          |  |       |  |       |  |      
|Total             |  | 3,176                    |  | 2,769 |  | 2,652 |  | 3,517
|                  |  |                          |  |       |  |       |  |      



Strategic Business Units



As a result of the restructuring described above, Océ has two
strategic business units: Digital Document Systems (DDS) and Wide Format Printing Systems (WFPS). 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)                |  | 2002                     |  | 2003  |  | 2004  |  | 2004 
|                             |  | Euro                     |  | Euro  |  | Euro  |  | $    
|                             |  |                          |  |      
|Digital Document Systems     |  | 2,155                    |  | 1,907 |  | 1,834 |  | 2,432
|Wide Format Printing Systems |  | 1,021                    |  | 862   |  | 818   |  | 1,085
|                             |  |                          |  |       |  |       |  |      
|Total revenues               |  | 3,176                    |  | 2,769 |  | 2,652 |  | 3,517
|                             |  |                          |  |       |  |       |  |      



Digital Document Systems Business
Unit



The DDS strategic business unit concentrates on document output
solutions for specific market segments and printing activities that require high productivity. DDS consists of four business groups:



| |  |  | The Corporate Printingbusiness group serves financial institutions, telecommunications companies, utility companies, government institutions, educational institutions and
companies engaged in industry and trade. The focus of this business group is on integral solutions for document output management in high-production environments (print-for-use).
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Commercial Printing business group serves marketing services companies, digital print providers, the printing industry and reprographic businesses. This business group
focuses on commercial applications (print-for-pay).
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Software & Professional Services business group focuses on customers in all target groups of both Corporate and Commercial Printing and Technical Document Systems.
This business group concentrates on customer support and software products and project services for the implementation and use of digital solutions.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Océ Business Services business group focuses on customers that use the products and services of DDS and WFPS for the outsourcing of document management processes.
This business group specializes in document handling, printing and copying activities and complete document management and printing processess.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



14



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##### Table of Contents

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                |  | Segments in which Océ operates: Data
centers Central repro departments Extensive office
environments  Specifically in the sectors: Financial institutions Telecom and utility companies Government and education Trade, transport, industry and
consultancy |  | 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. |  | CanonIBMKodakKonica/MinoltaRicohXerox                                 
|                                  |  |                                                                                                                                                                                                                                                             | 
|Commercial Printing               |  | Marketing Services Digital Newspaper Network
Printing industry Digital print providers Reprographic businesses (quick printers and copy shops)                                                                                                              |  | (Very) high volume printers/copiers, black-and-white and color. Production printers, black-and-white and color, cutsheet and continuous
feed. Financial services.                                                                        |  | CanonIBMKodakKonica/MinoltaRicohXerox                                 
|                                  |  |                                                                                                                                                                                                                                                             | 
|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 wide and small format applications.                                                                                                          |  | IKONPitney BowesXeroxLocal
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, consultancy, implementation, support.                            |  | CanonHewlett-PackardIBMPLP
DigitalSystemsSeal SystemsXeroxZeh Software

---

|* | The results of the business group Software & Professional Services are integrated in those of the business groups Corporate Printing, Commercial Printing, Technical Document
Systems and Display Graphics Systems.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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##### Table of Contents

New DDS products introduced in 2004



The following table lists each new product introduced by the DDS unit in 2004, 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 VarioStream 9210 and 9220                                         |  | Corporate and Commercial Printing |  | Very high volume continuous feed printer family, based on a completely new, innovative technology: Color-on-Demand. Océ offers users a development route to move from
black-and-white printing via Océ CustomTone to full color. These machines set a new standard for very high volume printing.
|                                                                      |  |                                  
|Océ VarioStream 7000 MICR and CustomTone                              |  | Corporate and Commercial Printing |  | New applications for the Océ VarioStream 7000 family that were launched in 2003. New applications include a large increase in the number of application speeds for use in MICR (Magnetic
Ink Character Recognition)  i.e., for the automated processing of checks and bank statements.            
|                                                                      |  |                                  
|Océ VarioPrint 5115 and 5160 document printing and convergence models |  | Corporate and Commercial Printing |  | New models of the Océ VarioPrint 5000 series that were introduced in 2003 for document environments. New models feature scanning and copying functionality and advanced finishing
options such as stapling of brochures and high-capacity storage of finished documents.                           
|                                                                      |  |                                  
|Océ VarioPrint 2110                                                   |  | Corporate and Commercial Printing |  | Highly advanced multifunctional printer/copier/scanner for high-production mid-volume applications.                                                                                                                                                                                                
|                                                                      |  |                                  
|Océ VarioPrint 3070                                                   |  | Corporate and Commercial Printing |  | Production printer for transaction and document printing, especially in office environments.                                                                                                                                                                                                       
|                                                                      |  |                                  
|Océ CPS900                                                            |  | Corporate and Commercial Printing |  | Full color production printer for reprographic departments and commercial environments.                                                                                                                                                                                                            
|                                                                      |  |                                  
|Océ CPS800                                                            |  | Corporate and Commercial Printing |  | High production full color copier/printer for reprographic departments and commercial environments.                                                                                                                                                                                                
|                                                                      |  |                                  
|Océ CS230                                                             |  | Corporate and Commercial Printing |  | Mid-volume color printer/copier.                                                                                                                                                                                                                                                                   
|                                                                      |  |                                  
|Océ CS180                                                             |  | Corporate and Commercial Printing |  | Mid-volume color printer/copier.                                                                                                                                                                                                                                                                   
|                                                                      |  |                                  
|Océ PRISMAweb                                                         |  | Software & Professional Services  |  | Advanced e-business solution, allowing orders to be placed and fully processed automatically via the Internet.                                                                                                                                                                                     
|                                                                      |  |                                  
|Océ Document Designer                                                 |  | Software & Professional Services  |  | Variable document processing software for data centers and direct mail applications.                                                                                                                                                                                                               
|                                                                      |  |                                  
|Océ PRISMA-satellite                                                  |  | Software & Professional Services  |  | Print output management software. Includes new functions that offer more possibilities for cost-effective print management in office environments.                                                                                                                                                 
|                                                                      |  |                                  
|Océ PRISMA-production new releases                                    |  | Software & Professional Services  |  | Output management system with maximum productivity and flexibility benefits.                                                                                                                                                                                                                       
|                                                                      |  |                                  
|Océ PRISMA software bundles                                           |  | Software & Professional Services  |  | Comprise all functions that are needed for the following customer environments: PRISMA for Office; PRISMA for Printrooms; PRISMA for Printshops; PRISMA for Printing-on-Demand; PRISMA for
Mailers; PRISMA for Enterprise Resource Planning (ERP); PRISMA for Transaction.                         



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##### Table of Contents

Corporate Printing Business Group



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 electronic data processing, environments in big companies, where large numbers of
transaction documents are printed electronically, and to central reprographic environments with very high volumes of document production. In addition, Océ offers a series of office applications for use at both the central and departmental
levels of 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.



Corporate Printing concentrates on three vertical market segments:



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



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



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



For customers in these segments the primary focus is on improving the effectiveness of
documents and the information they contain and on achieving maximum efficiency and cost control.



An option that is increasingly in demand is the use of color. Océ has a number of products available for such applications. For the mid-volume segment, the Company offers the Océ CPS800 printer/copier
and the Océ CPS900 full color printer, both of which were introduced during 2004. The machines in the Océ VarioStream family for the high and very high volume segments can print not only in black but also in any desired spot color or
house style color.



The new Océ VarioStream 9000 family, which was
expanded by the launch of the Océ 9210 and the Océ 9220 in early 2004, has again positioned Océ as the leading innovator in high volume printing. The current machines can print in duplex mode in black-and-white and with spot
color. The underlying technology forms the basis for a range of full color printers that are expected to be introduced in the future.



In office and printroom environments customers are increasingly realizing the importance of company-wide management of their machine establishment and their document
production. Océs offerings in this area relate to services for analysis, implementation and management. These services enable the use of installed equipment to be optimized and can also bring about a reduction in the related costs.



In printroom environments, convergence  or the possibility of processing
various document flows via one printer  is essential. Océ has set the standard for intelligent software which can efficiently handle the entire document management process, primarily controlled from one single location.



Developments in 2004. During 2004, Océ boosted the competitive
strength of its product portfolio in all environments: in the data-processing center, the printroom and the advanced office. Océ supplies complete solutions, consisting of hardware, software and services under the names Professional
Office, Professional Printroom and Professional Transaction programs, respectively.



The focus on specific market segments has led to the introduction of products that offer an optimum combination of innovative printing systems, output management software
and professional services. During the Océ Open House held in February 2004 in Poing, Germany, a series of groundbreaking products were on display. Special attention was also devoted to the added value of color offered by the Océ CPS900
and the Océ VarioStream 9000 family.



In the corporate environment, the
digitization of documents continued to advance. There was a further decrease in analog copying during 2004. Document processes in the office and in document production and transaction printing are being integrated more and more. Printing is
replacing copying. Though paper continues to be important, it is increasingly becoming an intermediate working medium. The layout and the use of color are growing in importance because they make the information that is presented easier to retain.
The distribution and archiving of documents will, however, take place more and more in digital form. The introduction of the Océ PRISMA-satellite 1.2 allows Océs corporate clients to manage office documents, while at the same
time increasing the printing efficiency and reducing the costs for the customer.



To meet the growing demand for color, Océ has launched a complete series of color printers for the office and the printroom. For the mid-volume and for the high volume and very high volume segments, Océ has expanded its
product range considerably by adding a series of new and upgraded printers, both for cut sheet and for continuous feed. The series of cut sheet printers was completed with the introduction of the production printer, the Océ VarioPrint 2110.
In the high and very high volumes, Océ confirmed its position as a supplier of leading-edge technology with the launch of the Océ VarioStream 9210, a new continuous feed printer. The Océ VarioStream 7000 family was also
completed during 2004. In this way, Océ continues to offer its customers a complete range of products.



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##### Table of Contents

Trends. Growth in the corporate environment is taking place specifically in high-production color
and high volume black-and-white print solutions. Printing speeds are continually being increased and printers that can also print in color are replacing mid-volume black-and-white printers and thus providing the means for greater use of color in
office applications. Many customers are focused on controlling the costs involved in the processing of documents. This gives rise to the need to replace a large number of decentralized printers with a much smaller number of high-production systems
that operate at departmental or central level, because these systems facilitate substantially lower printing costs. Outsourcing is also a solution that is being chosen more often.



Strategy. Océs strategy for corporate printing is aimed at achieving and strengthening a top position in
all high-production printing segments. With this goal in mind, Océ offers a complete range of state-of-the-art printing systems, for both black-and-white and color. In addition, Océ can supply excellent output management software in
the form of PRISMA production and PRISMAsatellite which are able to efficiently control both Océ equipment and third-party machines. To complete its portfolio, Océ has opted for strategic cooperation with partners. In all important
markets, Océ is working to continually strengthen its distribution systems, notably in the United States and the United Kingdom.



In the market for continuous feed printing systems, Océ is consolidating its leading position by further strengthening its distribution systems and innovation
efforts. The introduction of the Océ VarioStream 9000 family has again demonstrated that Océ is the leading innovator in this segment. In response to the increasing customer demand for complete solutions, and the resultant increase in
complexity, Océ is investing in its operational organization and in sales and consultancy services. Océ also offers an extensive range of services via the Océ Business Services and Software & Professional Services business
groups.



Commercial Printing Business Group



Market position. The Commercial Printing business
group serves customers that use the equipment commercially as a production asset to generate income.



Within businesses that concentrate on the production of direct mail (marketing services), Océ holds a leading position world-wide with its high and very high volume printers. In this market, Océ also
holds a strong position among digital print providers. The Company has recently extended its activities into segments of the printing industry market, especially for time-critical production runs, limited print-runs and personalized mailings or
frequently updated instruction manuals. This segment is expected to show strong growth in the future.



Océ has a strong position in the production of books and newspapers with a limited print-run. Although digital printing is provisionally being used on a limited scale in the printing world, significant growth
potential exists together with offset printing, which continues to be the appropriate technique for large print-runs.



Developments in 2004. As in 2003, customers unwillingness to invest made itself felt in 2004 in the commercial printing market, particularly
in this markets most important segment: marketing services. The decline in advertising expenditure also impacted on direct-mail activities. Market conditions were marginally better than in 2003.



In the printing market, the role of digital printing is steadily expanding, despite being
slowed by economic developments. The number of machine placements remained at almost the same level as in 2003. Nonetheless, Océ is gaining additional ground in this market, primarily as a result of improved and expanded product offerings.
This was demonstrated by the introduction of the Océ VarioStream 9000 family. Opening up this market also entails the development of new competencies in Océs sales organizations.



The printing of daily newspapers in limited print-runs (Digital Newspaper Network) attracted
much attention during 2004, notably because of the activities during the Summer Olympic Games in Athens, where major dailies from numerous countries were able to supply their national delegations with newspapers printed on Océ machines for
that day. This activity demonstrates the special applications that this equipment has to offer for a specific part of the printing market.



Both by expanding its range and by means of its vertical market approach, Océ has been able to gain ground in the commercial printing segments. In these highly
demanding market segments, reliability and productivity are of the utmost importance and Océs machines have performed well in these criteria. In addition, Océ has translated its lengthy experience in complex printing processes
into the development of software that can steer the entire process flexibly and problem-free, even where the system also incorporates non-Océ equipment.



Trends. The strong growth in the commercial digital printing segment is being driven on the one hand by the outsourcing of printed matter in the
corporate environment to commercial printers and, on the other hand, by the migration to digital printing of printed matter that was traditionally produced on offset presses. This migration has become possible because of decreasing costs,



18



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##### Table of Contents

increasing quality and productivity of digital printers and the availability of workflow solutions tailored to the needs of the commercial segment. The shift
towards digital printing is being boosted by the increasing demand for small print-runs and personalized documents for which digital printing is more suitable than offset printing. The biggest potential growth in color printing is to be found in the
very high production segments (contract printers, book printing and direct mailers). In absolute terms, the market share of color is still small due to what is still a relatively high total cost of ownership.



Strategy. Océs objective is to achieve a further
strengthening of the top position that the Company now holds for continuous feed solutions in the very high production segment of digital printing. The Océ VarioStream 9210 and the Océ VarioStream 9220, which were introduced in 2004,
represent the benchmark for this part of the market in terms of technology and innovation, partly due to the fact that they can be further developed in phases to become highly productive full color systems.



In the printing industry market, one of the growth markets for digital printing,
Océs goal is to achieve a prominent position by launching new technologies. Here, too, a key role will be played by the Océ VarioStream 9000 family plus the advanced cut sheet color printer, the Océ CPS900.
Océs printing industry sales and sales support organization is also being strengthened to ensure that it has the know-how and expertise needed to meet the specific requirements, business processes and projected developments within this
sector.



Océs goal is to become a major supplier of products to
print shop and copy shop chains. The new mid-volume and high volume printing systems, such as the Océ VarioPrint 2110 and the full color Océ CPS800 and Océ CPS900, are ideally suited for such applications. A crucial aspect of
Océs strategy in this market is Océs ability to offer hardware and software bundled together in one package.



Software & Professional Services Business Group



Market position. The Software & Professional Services business group brings together all of Océs
expertise in the area of output and document management. The group is a center of expertise and comprises Océ specialists who, working closely together with the customers specialists, analyze the customers print output and
document processes and formulate proposals for improvements. The systems, consisting of hardware and software, are designed and implemented by Océs specialists and consultants. Océ structures these activities by applying its own
working method, the Océ Solution Delivery Process. Over the years, Océ has also built up in-depth experience of processes, systems and software solutions specifically geared to the needs of each customer sector.



In all markets in which Océ operates, paper flows and digital document flows have
become increasingly more integrated and more complex. These document processes and workflows need to be managed and controlled. Since the introduction of its first digital printers, Océ has been developing software for the management of
printing processes and printing systems.



Océs customers are
seeking ways to add greater value to their documents and, at the same time, to reduce the costs of document production in their businesses. As part of its Professional Office Program, Océ supplies software and services that enable printing
and document flows in businesses to be analyzed. On the basis of the information from these analyses, new printing configurations are proposed in combination with intelligent software which channels each print job to the equipment that is most
suitable and most cost-effective for processing that job. In environments where high and very high volumes are printed, Océ is able to ensure not only the highest degree of efficiency but also to add extra functionality to transaction
documents. In this way, for example, bank statements or gas or electricity invoices can be given added value as marketing tools. These programs and others like them have been developed in recent years in close cooperation with Océs
customers.



The entire range of DDS output management programs and applications
is available under the Océ PRISMA brand name.



Océ harnesses its
know-how and expertise to offer businesses and customers solutions in the form of configurations consisting of Océ equipment and software, third-party machines and complete implementation services. The Software & Professional Services
business group advises its customers on the restructuring and improvement of their document management processes. The Software & Professional Services business group also provides support in cases where customers outsource their entire document
and printing processes to the Océ Business Services business group.



Developments in 2004. The Software & Professional Services business group has introduced software bundles that are focused on the specific needs of major customer groups. For corporate customers, four
bundles have been developed: PRISMA for Office, PRISMA for Printrooms, PRISMA for ERP (Enterprise Resource Planning) and PRISMA for Transaction. For the commercial market, three bundles have been developed: PRISMA for Printshops, PRISMA for
Printing-on-Demand and PRISMA for Mailers.



Each PRISMA bundle amalgamates the
most important applications and output management system functions for a specific customer segment within a single, compact and complete combination of programs. The bundles improve the customers working processes and efficiency and this
specifically tailored bundling of software simplifies its implementation process. Various research institutes have already ranked PRISMA software as being among the best software that is available within the industry.



19



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##### Table of Contents

Trends. Our customers need to effectively manage the growing volume of information and documents.
Due to the rapid advance of digitization, the enormous quantity of paper documents is being supplemented by significant amounts of digital information. Not only the management but also the processing of this information is becoming more complex, as
it is supplied simultaneously on paper, by fax, by e-mail or in the form of a PDF file.



Customers are increasingly asking for complete solutions or one single package from one single supplier. The Software & Professional Services business group meets these needs in two ways. On the one hand, the PRISMA products package is
being further developed through the seamless integration of partner products and, on the other, Océ can draw on an extensive team of its own system consultants, engineers and project managers. These professionals are primarily active in the
countries where Océ has its own sales establishments and they are supported in this work by specialized teams. Their task is to design, integrate and implement complex systems which contain both Océ products and third-party equipment.



Strategy. Océ intends to achieve a
substantial strengthening of its position in the market for output management systems by broadening and extending the range, and by offering combinations, of hardware, software and services that are targeted at specific user environments. With its
Océ PRISMA output management software, the Company is one of the most important players in the market. Océ continues to concentrate on the integration of partner systems to supplement the range of its product offerings with an emphasis
on job preparation and transmission to the production locations.



During 2004,
Océ further extended the PRISMA family by adding partner products such as Océ PRISMAweb. This product enables corporate and commercial customers to implement web-based ordering and print job management.



In addition Océ, together with its business partners, intends to steadily 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 central roles.



Océ Business Services Business Group



Market position. The Océ Business Services business group
operates in a distinct growth market for the outsourcing of document management processes and print management activities. Its customers are medium-sized and large companies that want to concentrate on their core activities and wish to have other
activities handled by the best provider of such services on the market. The activities comprise all print room processes, the operation and maintenance of complete copier/printer systems, fleet management, electronic and physical archives
management, scanning and mailroom activities. Over the past ten years, Océ has grown to become one of the leading companies in this field both in the United States and in Europe.



Because of its position at the center of its customers document processes, Océ is a business partner that can offer world-class
expertise, not only for the operational side of the processes but also for integrated document management. During the entire contract period with a customer, possible improvements are continuously investigated, proposed and introduced. Océ
acts on the one hand as a consultant which implements best practices and on the other as a supplier of hardware and media. Working methods and results are based on service level agreements that are in line with the customers wishes and the
specific situation. In this way, the quality, effectiveness and productivity of the document management process are improved, while keeping the costs for the customer at the same level or even reducing them further.



Developments in 2004. The activities of the Business Services business
group were expanded during 2004, despite what was generally a slower growth-rate for the outsourcing market. Economic conditions are one of the causes of that slowdown. In addition, a decrease in revenues from existing contracts slowed revenue
growth during 2004. Océ continues to focus on the profitability of current contracts by virtue of cost controls and by introducing new types of services that generate higher added value. As in the past, Océ Business Services regards
its current activities in print rooms and mail rooms as cornerstones but also as launch-pads that will lead to more complex assignments.



Trends. The outsourcing market is still growing, despite negative economic influences, particularly because of an increasingly wider range in the
activities that are being outsourced. There is a noticeable difference between the United States and the United Kingdom compared to the rest of Europe. In the United States, the character of the market is changing now that more and more new
suppliers are providing services that cross the traditional borders between specialized working areas. Because the existing suppliers are also expanding their package of services, a substantial overlap is being created, leading to fiercer
competition. In Europe, where outsourcing is still a relatively recent development, expansion towards more complex activities linked to the management of complete information flows can be accomplished more quickly.



Strategy. Océ is concentrating on boosting the profitability of
its Business Services business group. In the future, this will be continued and intensified by improving the contract management processes and by realizing synergies with other parts of Océs business. In close cooperation with the
Software & Professional Services business group, Océ Business Services is developing a series



20



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##### Table of Contents

of advanced solutions for the management of complex information flows. The focus will continue to be on the processes in which printing plays an important
role. Océ concentrates primarily on the development of those activities which, on the basis of its know-how and expertise and the availability of excellent equipment, will generate maximum added value. This implies a shift of emphasis away
from mailroom and print room services and towards the more complex management of the physical and electronic document flows within businesses.



Wide Format Printing Systems Business Unit



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



| |  |  | The Technical Document Systems business group serves customers such as construction and industrial companies, architectural and engineering offices, utility and telecom
companies and the government as well as reprographic businesses and digital print providers. This business group focuses on technical applications (print-for-use) and commercial applications (print-for-pay).
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Display Graphics Systemsbusiness group serves customers in the area of the graphic art industry and advertising agencies and focuses on indoor and outdoor advertising
and other forms of graphic communication.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Imaging Supplies business group primarily specializes in the supply of print media for all customer categories.
| | - |  | -------------------------------------------------------------------------------------------------------------------



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 Copy shops                           |  | Wide format production printers, black-and-white and
color. Wide format scanners. Print Management
Software. Financial services.             |  | Fuji-XeroxHewlett-PackardKIPRicohXerox            
|                           |  |                                                                                                                                                                                                                       | 
|Display Graphics Systems   |  | Print-for-use Corporate and retail
in-house printing Printing works Advertising and design agencies  Print-for-pay Digital print providers Reprographic businesses Photo processing laboratories Silk screen printers |  | Wide format production printers (roll-to-roll and flatbed) for indoor and outdoor applications. Print workflow software. Financial services. |  | EpsonHewlett-PackardKodakMimakiMutohNurScitexVutek
|                           |  |                                                                                                                                                                                                                       | 
|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
and inks. Print media.                                                                 |  | 3MHewlett-PackardIntelicoatNeusiedlerPaperlinxSihl





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##### Table of Contents

New WFPS Products in 2004



The following table lists each new product introduced by the WFPS unit in 2004, 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 TDS300                 |  | Technical Document Systems                        |  | Highly productive wide format printer/copier for decentralized departments in industrial environments.                                                                                                                                                   
|                           |  |                                                  
|Océ CS40xx scanners        |  | Technical Document Systems                        |  | A new line of stand-alone scanners which enable optimum digitization of originals (black-and-white and/or color). The accompanying software offers the possibility for immediate
printing.                                                               
|                           |  |                                                  
|Océ Account Center         |  | Technical Document Systems                        |  | New software version for automatically generating account information that can be printed, copied and scanned on Océ TDS and TCS systems.                                                                                                                
|                           |  |                                                  
|Océ Power Logic Controller |  | Technical Document Systems                        |  | New software version for improved control over and variation in document production processes, also via the Internet.                                                                                                                                    
|                           |  |                                                  
|Océ Print Exec Workgroup   |  | Technical Document Systems                        |  | New software version that controls and manages the printing process from the selection of the offerings from Internet sites through to the production of physical documents in architectural,
development and production environments.                   
|                           |  |                                                  
|Océ Repro Desk Server 1.6  |  | Technical Document Systemsand Commercial Printing |  | Software, accessible via the Internet, which enables location-independent digital print jobs to be transmitted via central servers to various print shops.                                                                                               
|                           |  |                                                  
|Océ Plan Center 1.6        |  | Technical Document Systemsand Commercial Printing |  | Software package which is accessible for customers via the Internet and which allows digital print assignments to be supplied to various print shops via central servers.                                                                                
|                           |  |                                                  
|Océ Arizona 600            |  | Display Graphics Systems                          |  | Wide format, high volume color printer for durable, weather-resistant advertisements.                                                                                                                                                                    
|                           |  |                                                  
|Océ CS6060                 |  | Display Graphics Systems                          |  | Wide format, mid-volume color printer for durable, weather-resistant advertisements.                                                                                                                                                                     
|                           |  |                                                  
|Océ Arizona T220UV         |  | Display Graphics Systems                          |  | Wide format, mid-volume color printer for durable, weather-resistant advertisements using environmentally friendly UV inks. Processes flexible and board materials up to 5 centimetres thick for
advertising signs, exhibition materials and signposting.



Technical
Document Systems Business Group



Market
position.Océs Technical Document Systems (TDS) business group supplies wide format printers and software for use in the scanning, copying, printing, distributing and archiving of technical documents. Users are to be found in
construction companies, in industry, in architectural and engineering offices, in utility and telecommunications businesses, in the transport sector and in government, as well as in the professional print-for-pay environments of reprographic
businesses. Océ has a strong, leading position that it has also succeeded in maintaining in the face of todays difficult economic conditions and growing competitive pressure, mainly thanks to the quality, productivity and user
friendliness of its systems.



Océ has always played a pioneering role in
the process of digitization. Throughout its history, Océ has introduced innovations that now form part of everyday processes, such as the scanning of drawings for archiving purposes, electronic distribution and decentralized printing at a
location close to the user. At an early stage, Océ also introduced such innovations as advanced software for the allocation and management of printing costs and for the supply of print assignments to specialized reprographic businesses via
the Internet.



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Océ has a unique reputation world-wide as a supplier of innovative solutions, quality and ease of use and a high
level of service. Océs systems stand out because of their high productivity, both during printing and copying and in pre-processing and finishing. Traditionally, the main thrust of the commercial activities of the Technical Documents
Systems business group has been in Europe and the United States, but in recent years Océ has also shown strong growth in the Asian region. In Japan, Océ has been successfully active in the wide format sector for some years. This
relates to an extensive market in which there is strong competition. Océ concentrates on market segments in which the Company can excel and it has adapted its most important hardware and software to the language and specific requirements of
Japanese users. Major contracts with car manufacturers highlight the sound market position that Océ has acquired in the home market of its biggest competitors.



In China, Océ has its own sales organization and the Company also operates there in conjunction with a number of distributors. In
this buoyant market with its unprecedented level of construction activity and growing industrial production, there is a great need for technical documents. Though the transition to digitization is now under way, the emphasis in China is still on
smaller volumes.



Developments in 2004. In the
black-and-white segment, an aggressive marketing approach led to an increase in autonomous revenues from printing systems. Despite an increase in the print volume, revenues from services remained unchanged, particularly because of exchange rate
effects.



Océ generally succeeded in maintaining the number of
black-and-white printers sold in all volume segments at the same level as in 2003. This is the result of various innovations aimed at a further increase in productivity and in convenience of use. For example, the introduction at the end of 2003 of
the Océ Power Logic Controller in the TDS series was well received in the market. The same also applied to the new versions of Océs print management software which were developed in the Companys R&D centers in the
United States and France.



In the low volume segment, Océ introduced the
Océ TDS300 at the beginning of 2004. The Océ TDS300 makes it easier for smaller companies in particular to take the step from analog to digital. With this machine and with the Océ TDS400 and the analog Océ 7050,
Océ now has optimum coverage of the low volume segment.



The number of
systems sold in the Océ TDS800 series, the most productive machine in the high volume segment, in 2004 remained practically the same as in 2003. Specialized reprographic businesses in particular used this machine to replace its successful
precursor, the Océ 9800, and to profit from the latest technology and increased functionality and productivity of this new machine. Within the industry, by contrast, more and more print volume is being distributed to smaller printers such as
the Océ TDS600 and the Océ TDS400.



In the color segment, the
Océ TCS400, both the printer and the printer/copier variant, has already built a clear market position, especially in Europe. Océ has succeeded in becoming the first supplier to incorporate the proven black-and-white productivity
concept into a color system as well. As its usage expands further, this machine is expected to make an important contribution to recurring revenues in the near future. Although many users of wide format printers are currently still utilizing
black-and-white printing because of the combination of lower costs and high productivity, it is anticipated that color will serve as a catalyst for future growth.



In 2004, Océ was again recognized as the supplier with the most complete and best wide format offerings, as regards both hardware and
software and both in black-and-white and in color. The authoritative American Test Institute BERTL praised the quality and reliability of the TDS series and the Océ TCS400 and pointed to the high standard of Océs service and the
high level of customer satisfaction.



Trends. In
general, the TDS market will only show very modest further growth in the years ahead. Moreover, the growing exchange and archiving of electronic information will in many cases lead to more decentralized printing, which means that the emphasis will
shift from big to smaller machines. The black-and-white printing volume in specialized reprographic businesses is expected to increase further, so that replacement investments will be needed in that sector. The ongoing advance of digitization is
leading to a decline in the volume of analog printing. In smaller organizations, however, the need for analog systems will for the time being continue to exist. The shift from black-and-white to color is continuing unabated, both for printing,
scanning and copying. Many organizations use combinations of color and black-and-white systems.



Strategy. Despite limited market growth potential, Océ aims to grow its Technical Document Systems business group further by means of
product innovation and greater distribution strength. This will allow Océ to further expand its already strong position in this market segment in Europe and the United States and to continue its expansion in Japan and China and in various
emerging markets.



Marketing programs for TDS focusing on customer satisfaction
and on expanding the range of products in combination with further intensive training of the sales and service organizations are expected to result in an increase in market share.



Océ is continuing, as before, to invest in printers and scanners and in the software required to ensure their best possible
operation. A series of new systems and system and software options are scheduled for release in 2005. They include new print management software versions for specialized reprographic businesses and for organizations that produce wide format prints
in-house.





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Display Graphics Systems Business Group



Market position. Driven by the increasing dynamism in the advertising
market, the Display Graphics Systems (DGS) business group focuses on the flexible and fast digital printing of posters, banners, billboards and numerous other wide format graphics products. In this market, digital technologies were introduced only a
comparatively short time ago as a replacement for highly developed techniques such as silkscreen printing, photographic printing, offset and traditional lettering. Since the value of digital products is becoming increasingly apparent, this market is
expected to grow quickly. In Europe and the United States, Océ is offering a range of advanced printers. In Japan, Océ successfully started its display graphics business during 2004. In addition, through Onyx Graphics, Océ holds
a leading position worldwide for the software-based control of display graphics printing systems.



Developments in 2004. On an organic basis revenues of the DGS business group increased slightly during the year. The main cause is the slow
recovery of the advertising market, which was badly hit by stagnation. The introduction of new products has strengthened the range offered by DGS, but these additions only contributed to the result in the second half of the year. Meanwhile,
Océ is concentrating on a further optimization of the portfolio with the emphasis on offering complete applications in the form of a combination of hardware, media, inks and expertise. In 2004, Onyx Graphics continued its excellent results.



Trends. The growth of the display graphics market as a
whole is dependent on the development of advertising expenditures. Within the market, the growth of the digital segment is comparatively stronger, as digitization is increasingly giving rise to more productive, flexible and cost-effective production
methods. Even though the market is beginning to grow slightly again, the willingness of customers to invest in completely new digital production equipment is still low. The market is also highly fragmented both on the customer side and on the
hardware manufacturers side. Therefore, further consolidation seems likely.



Strategy. Océ has established a strong position in display graphics in recent years. DGS is focusing on expanding this position further. The worldwide sales and service organizations are expected to make
a strong contribution to these efforts. Offerings to customers include a well-balanced package of hardware and software products featuring the right ink-media combinations for specific applications.



The DGS business group targets those segments in which the highest rate of growth is
expected, notably in the mid-volume segment and in the area of flatbed printers. Product offerings will also be supplemented by adding strong partner products.



Synergy with the TDS groups activities will be optimally utilized, especially in the areas of sales and service organization and in technology.



Imaging Supplies Business Group



Market position. Media for printers and copying machines form an
essential part of Océs overall product offerings. This close linkage dates back to the period when images were formed using chemicals. Since that time, however, Océs R&D has continuously concentrated on achieving the
best possible interaction between hardware and media. That same expertise also forms the basis for a wide range of specialized media, for example for CAD and display graphics applications on Océs products and on machines from
third-party suppliers. The Imaging Supplies business group is active in the entire field of wide format and smaller formats (A3 and A4), both in plain paper and in specialized papers and films. From their initial launch, Océs offerings
of small format color printers (the Océ CPS700, 800 and 900) were complemented by a full range of specialized materials. As a supplier of white bulk paper, Océ also holds a relatively strong position in Europe. In the United States,
the business group is the market leader in the black-and-white wide format sector, which includes CAD materials, while it is also strongly positioned in the wide format color market and in the market for display graphics. Both in Europe and in the
United States, the Image Supplies business group is a leading performer in the areas of logistics and sales support.



Developments in 2004. During 2004, the sluggish recovery of the economy and another fall in paper prices on the world market were factors that
affected the revenues of this business group. Against this background, the Imaging Supplies business group performed well, principally because of the investments that were made in recent years and the continued strengthening of logistics systems.
Despite lower revenues, the profitability of Océs activities in this market segment was not impaired.



Though the volume of wide format plain paper and CAD materials showed a worldwide decline, Océ grew its paper sales in terms of square metres. This growth in
market share is largely attributable to higher sales of materials for use on Océs own population of machines. Pro-active promotion of machine sales and pro-active sales support efforts helped to contribute to this. The quality of the
materials and the logistic performances also caused a number of major trade partners in Europe and the United States to include Océ materials in their range under their own name.



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In the display graphics segment, the expansion of the range resulted in a direct growth in revenues, with double-digit
growth in Europe. Supply coverage for both Océ machines and third-party equipment increased substantially. The range of media and inks (also oil-based and solvent-based) is now one of the most complete in the industry.



In the A4 segment, the volumes in white bulk grew marginally in 2004 as compared to the
previous year. The range of media for the Océ CPS700 also proved to be a particular success. For the new Océ CPS900, a line of Machine Coated (MC) paper is being developed in close cooperation with R&D and paper mills. The
Océ CPS900 is specifically targeted at the printing industry, where this machine is expected to find widespread use in the printing of brochures in smaller print-runs.



In the United States, there has been a further expansion of the activities in the area of small format specialities (including inkjet photo
paper and overhead sheets) that are produced by the companys own Arkwright plant.



Trends. The market for imaging supplies is competitive and fragmented. In view of the current difficult economic conditions, this will inevitably lead to consolidation, while the parties that are left will be
forced to optimize their logistics process even further. The growth of the market will be stimulated by the ongoing process of digitization, which is steadily gaining more ground on the traditional printing techniques. Technological know-how and
expertise in the area of sourcing are vital elements to ensure a good performance in this environment. Océ possesses both of these.



Strategy. The strategy of the Imaging Supplies business group is primarily focused on maintaining its prominent position as a supplier of
high-quality, specialized media for wide format printers in the TDS and the DGS segments. In addition, the business group seeks to provide maximum support to the DGS activities by offering a complete and competitive range of small format media.
Thanks to its extensive range of imaging supplies, Océ is able to enhance the value of its integrated solutions for its customers.



Sales and Services



Océ has a strong direct sales and service organization, which provides critical input in the Companys research and development activities and in its overall success. The Company markets and sells its
products primarily through its direct sales force of approximately 4,200 employees, sells its maintenance services through approximately 4,000 of its employees and provides business services through approximately 6,700 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 SBU-DDS 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, in particular where the Company does not have its own sales force. Approximately 5%, 5% and 6% of its revenues in 2004, 2003 and 2002,
respectively, were generated using independent distributors and OEMs.



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 pages 15 and 21. 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 put distinctive systems on the market and 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, Canada and the United States. Accordingly, Océ has historically devoted a significant portion of its revenues to research and development. Almost 9% of the Companys employees work in R&D. 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, 2004, Océ held 5,873 patents and patent applications pending throughout the world. The Company considers its patent position to be important to protect its
technology and



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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 that 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 2004, the Companys principal manufacturing facilities were in Venlo, The Netherlands and Poing, Germany. In 2004, however, the Company began implementation of its previously-announced plans to relocate
part of its manufacturing and assembly activities from The Netherlands to Central Europe and the Far East. The manufacturing activities which are being relocated to Central Europe or the Far East relate only to non-strategic parts and components to
be produced by third parties, 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 some of its 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 more complicated machines internally.



Management believes that its external suppliers are capable 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 has historically experienced that sales during the third quarter decrease due to the holiday season in Europe and increase in the fourth quarter.



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 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 95% of the equity (and holds 95% of the voting power) since February 2005.



|                                                       |  |                |  |                
|------------------------------------------------------ |  | -------------- |  | ---------------
|Europe                                                 |  |                |  |                
|Océ-Belgium N.V./S.A.                                  |  | Brussels       |  | Belgium        
|Océ Software Laboratories Namur S.A.                   |  | Namur          |  | Belgium        
|Océ Nordic Holdings ApS                                |  | Copenhagen     |  | Denmark        
|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          
|Océ-Technologies B.V.                                  |  | Venlo          |  | The Netherlands



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|                                            |  |                          |  |                
|------------------------------------------- |  | ------------------------ |  | ---------------
|Océ-Nederland B.V.                          |  | s-Hertogenbosch         |  | The Netherlands
|Arkwright Europe B.V.                       |  | Venlo                    |  | The Netherlands
|Océ General Partnership                     |  | Venlo                    |  | The Netherlands
|Océ-America, Inc.                           |  | 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-Iberia Holding Valores, S.L.            |  | Barcelona                |  | Spain          
|Océ-España S.A.                             |  | Barcelona                |  | Spain          
|Océ-Czech republika 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         
|                                            |  |                         
|Direct Export/Emerging Market               |  |                          |  |                
|Océ Direct Export/Emerging Markets          |  | Venlo                    |  | The Netherlands
|                                            |  |                         
|Financing companies                         |  |                          |  |                
|Océ-Australia Finance Pty. Ltd.             |  | Scoresby                 |  | Australia      
|Océ-Interservices N.V./S.A.                 |  | Brussels                 |  | Belgium        
|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 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 Square Feet/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 Consumables                                  |  | 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 (including temporary facilities)                      |  | Owned/Operational lease            |  | 16,910 sq. mtr.                      
|                          |  |                                                               | 
|Germany:                  |  |                                                               |  |                                    |  |                                      
|Mülheim/Ruhr              |  | Offices and Warehouse                                         |  | Owned                              |  | 10,073 sq. mtr.                      
|Poing                     |  | Offices Research and Development, Manufacturing and Warehouse |  | 53% Owned53% Owned                 |  | 18,286 sq. mtr.97,775 sq. mtr.       
|                          |  |                                                               | 
|France:                   |  |                                                               |  |                                    |  |                                      
|Noisy-le-Grand            |  | Offices                                                       |  | Owned                              |  | 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 leaseOperational 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 Supplies                                     |  | Owned                              |  | 110,000 sq. ft.                      
|Fiskeville, RI            |  | Manufacturing of Supplies                                     |  | Owned                              |  | 250,000 sq. ft.                      
|Charleston, IL            |  | Manufacturing of 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 two years remaining for a
fixed amount of Euro 6.7 million a year.



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 0 million, Euro 7 million and
Euro 9 million and as of November 30, 2004, 2003 and 2002, respectively, and certain facilities were subject to operational leases, amounting to Euro 49 million, Euro 51 million and Euro 58 million as of November 30, 2004, 2003 and 2002,
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 recently expanded its toner production facility in Venlo, The Netherlands. This expansion began in 2003 and was completed in 2004, with full service being
provided in 2005. The Company spent Euro 14 million related to this expansion. The Company has paid and will pay for this expansion with cash from operating activities. Completion of this expansion has increased the capacity of the toner facility by
approximately 50%.



Item 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS



Océs Annual Report 2004 is set forth in Exhibit 10 and contains a review of the Companys operating and financial results and prospects. The Annual Report 2004 is incorporated in Item 5 by reference. The following
discussion supplements and should be read in conjunction with Océs Annual Report 2004 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 and innovative
products and services for use by professionals in print and document management processes. The Company focuses primarily on professional environments in which large volumes of documents are processed. Océs customers are mainly active in
the industrial and printing sectors, as well as office environments.



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Océ develops and manufactures its own machines and systems for use with the production, distribution and
management of documents. Océ also offers its customers innovative services in the areas of consulting, outsourcing and, in cooperation with partners, financing. The Company operates globally with activities in 80 countries with over 21,000
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.
| | - |  | -------------------------------



Océs results for 2004 were mixed, reflecting significant progress on a number of strategic fronts in the face of continuing challenges resulting from a weak
U.S. dollar and the lingering effects of a stagnating economy, as well as the financial impact of certain strategic initiatives. Overall, total revenues were 4.2% lower than in 2003, including a profit of Euro 30.9 million from the sale of a portion
of the Companys leasing portfolio. However, on an organic basis (i.e., after adjusting for exchange rate effects), total revenues were unchanged, halting a three year decline and highlighting the significant impact of adverse exchange rates on
2004s results. Recurring revenues, which represent 72% of total revenues, declined throughout 2004 and had a negative impact on sales. In connection with the Companys strategic move toward outsourcing its leasing activities,
approximately half of the Companys existing lease portfolio at the end of 2003 was outsourced during 2004, resulting in substantially lower interest revenue and a reduction of almost Euro 400 million in lease receivables.



Costs of sales of products, rentals and service reflect primarily the costs of components and
sub-assemblies and labor.



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, Océ Financial Services, 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 fundors. During 2004, Euro 139 million of lease contracts (together with the underlying machines) were sold to four third party fundors in the United States. Océ-Financial Services remains responsible for
activities such as invoicing and the collection of accounts receivable on behalf of the third party fundors.



In Europe and the rest of the world, Océ has entered into (or intends to enter into) private label agreements with third party vendor lease companies. Under these agreements, Océ will transfer existing
financial leases to its vendor lease partners and these vendor lease partners will directly enter into new financial leases, after having purchased the leased products from Océ. 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 own information systems and those of its vendor lease partners were required prior to this transfer. The
required changes to the information systems were implemented during 2004 and Océ intends to complete the outsourcing of the main part of its lease portfolio in Europe by the end of 2005. During 2004, a total of Euro 312 million worth of the
existing financial lease receivables and underlying equipment value were sold to external lease partners, of which Euro 139 million was in the U.S. and Euro 173 million was in Europe. The transfer of the existing lease portfolio resulted in a book
profit of Euro 30.9 million. As of the end of 2004, Océ had Euro 403 million of lease receivables on its balance sheet. Océ expects its balance sheet to decrease with Euro 175 million of lease receivables, which will leave
approximately Euro 225 million of lease receivables on its balance sheet.



Research and the development of technology are critical to Océs success. Accordingly, Océ has historically devoted a significant portion of its revenue to research and development (approximately 7%). Océ exceeded
this in 2004 by investing approximately 8% of its revenues in research and development.



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 approximately 4,200 employees, sells its maintenance services through approximately 4,000 of its employees and provides business services through approximately 6,700 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 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.



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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;
| | - |  | ------------------------------------------------------



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



| |  |  | valuing deferred taxes.
| | - |  | -----------------------



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, 2003 and 2004, the intangible
long-lived assets amounted to Euro 49 million and Euro 37 million, respectively, and the tangible long-lived assets amounted to Euro 494 million and Euro 481 million, respectively. In accounting for long-lived assets, the Company assesses the
impairment of the carrying value of its long-lived assets under Dutch GAAP when factors indicate that the carrying value may not be recoverable, and at least annually under U.S. GAAP. Factors that indicate potential impairment include, but are not
limited to:



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



| |  |  | significant changes in the operating results or in cash flows associated with the use of the long-lived assets;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | 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 recognizes revenue from the rental of the machines over the lease term. If a lease is accounted for as a financing or capital lease, the Company recognizes 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;
| | - |  | -------------------------------------------------



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| |  |  | 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 the end of the lease term are estimated. The estimates are based upon our historical experience with the 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 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.



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 -3 million (Euro 11 million addition and Euro 14 million release) and Euro 11 million under Dutch GAAP in 2004 and 2003,
respectively, relating in 2004 primarily to the release of certain provisions and in 2003 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 9.0 million in 2004 and Euro 16.3 million in 2003. 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. On December 10, 2004, Océ in the United States announced that the business activities of Océ Display Graphics Systems Inc.,
which is headquartered in San Jose, California, will be taken over by the Océ business in Canada. The related restructuring costs will be approximately Euro 2.5 million.



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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 discloses 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.



Valuing deferred taxes



As part of the process of preparing the Companys consolidated financial statements,
Océ is required to estimate its income taxes in each of the jurisdictions in which it operates. This process involves estimating our actual current tax exposure in the relevant jurisdictions and assessing temporary differences resulting from
differing treatment of balance sheet items, such as leases. These differences result in deferred tax assets and liabilities, which are included within Océs consolidated balance sheet. Océ must then assess the likelihood that the
deferred tax assets will be recovered from future taxable income. If recovery, in whole or in part, is not likely, Océ does not recognize these assets or Océ only recognizes a portion of these assets, as appropriate. To the extent the
likely recovery of deferred tax assets changes, the Company includes an expense or a gain within the tax charge on our statement of income for the relevant period.



Significant management judgement is required in determining the provision for income taxes, our deferred tax assets and liabilities and the
valuation of deferred tax assets. In the event that actual results differ from these estimates due to future changes in income tax laws or results from final review of our tax returns by taxing authorities, Océ may need to establish an
additional valuation allowance which could impact our financial position and results of operations.



International Financial Reporting Standards



For financial years commencing on or after January 1, 2005, all European publicly listed companies have to report on the basis of IFRS. Starting in fiscal year 2006, Océ will therefore draw up its annual
financial statements and quarterly reports on the basis of IFRS and therefore the IFRS opening balance sheet will be drawn up as at December 1, 2004.



Because of Océs listing on NASDAQ and its filing with the SEC in the United States, as much convergence as possible will be sought with the American
accounting principles (U.S. GAAP) in those cases where IFRS allows a choice to be made.



Océ is well on schedule with the introduction of IFRS: the relevant standards that do not conflict with the current Dutch accounting principles (Dutch GAAP) were implemented as much as possible in fiscal 2004 relating in particular
to balance sheet classifications. In addition, existing accounting principles have been tightened up but the impact of this was limited.



As a result of this strategy it will be possible to minimize the number of reconciliation items needed to move from Dutch GAAP to the IFRS opening balance sheet.
Nonetheless, the IFRS opening balance sheet will include a number of items which conflict with Dutch GAAP and whose effect may be material. This relates in particular to the valuation of pension liabilities (which must be reset) and the valuation of
option and share plans and financial instruments. Currently, it is not possible to give an indication of what the impact of this will be.



New accounting pronouncements



Dutch GAAP



In September 2004 a new proposal was issued in respect of changes to The Netherlands Civil Code regarding the application of IFRS. According to the new proposal all Dutch
legal entities have an option to prepare their consolidated and entity accounts in accordance with IFRS. Listed companies have to prepare the consolidated annual accounts as from 2005 in accordance with IFRS (EU Regulation) and, based on the
proposal, have an option for their entity accounts (application of either IFRS or Dutch GAAP). Also included in the new proposal are changes relating to the valuation of certain financial instruments at fair value.



The proposal includes an effective date for these changes of January 1, 2005; however, at
this moment it is unknown if and, if so, when this new proposal will be accepted by Parliament.



IFRS



Endorsement process.



All standards issued up to September 19, 2002, except for IFRS 1 and two standards regarding financial instruments (IAS 32 and 39) and related interpretations have now been approved by the European Commission. The two
standards regarding financial instruments, together with other standards and interpretations issued after September 2002, are now being reviewed (for endorsement) by the European Commission (except for IFRS 1).



Interim financial reporting 2005.



Currently, the IFRS standards do not require interim financial reporting. However, the EU
has drafted a transparency guideline, which was issued in March 2003. This standard requires that listed companies present semi-annual accounts 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 annual accounts. Furthermore, the EU clarified that quarterly accounts are not required other than certain general information about the financial position.



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IFRS1 requires that the first IFRS financial statements are presented based on the standards and interpretations adopted
by the IASB. For financial years commencing on or after January 1, 2005, all European publicly listed companies have to report on the basis of IFRS. Starting in the 2006 financial year, Océ will therefore draw up its financial statements and
quarterly reports on the basis of IFRS and therefore, the IFRS opening balance sheet will be drawn up as at December 1, 2004.



U.S. GAAP



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 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 has reviewed its Accounting for Revenue Arrangements with multiple Deliverables and came to the conclusion that no
indications for material differences have been revealed.



In January 2003, the
FASB issued FASB Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. In December 2003, the FASB issued FIN 46R (FIN 46R) Consolidation of Variable Interest Entities,
which amended FIN 46. FIN 46R requires certain variable interest entities to be consolidated by the primary beneficiary. The primary beneficiary of a variable interest entity is the party that absorbs a majority of the entitys expected losses
or receives the majority of its expected residual returns, or both, as a result of holding variable interests, which are the ownership interests, contractual interests or other pecuniary interests in an entity that change with changes in the fair
value of the entitys net assets, excluding variable interests.



FIN 46R
was effective immediately for all variable interest entities created or acquired after January 31, 2003, and became effective September 1, 2003 for all arrangements entered into before February 1, 2003.



The Company reviewed its contractual arrangements and has identified no Variable
Interest Entities, as defined by FIN 46R, for which the Company can be considered the primary beneficiary.



In December 2003, the FASB issued SFAS 132R regarding Employers Disclosures about Pensions and other Postretirement Benefits, which is an amendment of FASB
statements no. 87, 88 and 106.



This statement revises employers
disclosures about pension plans and other postretirement benefit plans. It does not change the measurement or recognition of those plans required by FASB Statements No. 87, Employers Accounting for Pensions, No. 88, Employers Accounting
for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, and No. 106, Employers Accounting for Postretirement Benefits Other Than Pensions. This Statement retains the disclosure requirements contained in
FASB Statement No. 132, Employers Disclosures about Pensions and Other Postretirement Benefits, which it replaces. It requires additional disclosures to those in the original Statement 132 about the assets, obligations, cash flows, and net
periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. The required information should be provided separately for pension plans and for other postretirement benefit plans. SFAS 132R is not applicable
for the Company because its Form 20-F is filed under item 17.



In November
2004, FASB issued SFAS No. 151, Inventory Costs - an amendment of ARB No. 43, Chapter 4 (SFAS No. 151). This Statement amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for
abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of abnormal. In
addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of this Statement shall be effective for inventory costs incurred
during fiscal years beginning after June 15, 2005. The Company is currently in the process of evaluating the impact of SFAS No. 151.



In December 2004, the SFAS issued SFAS 123 (R) regarding Share-Based Payment, a revision of FASB Statement No. 123 Accounting for Stock-Based compensation, with an
effective date of September 1, 2005.



This Statement establishes standards for
the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the
entitys equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.



The Company is required to adopt SFAS 123 (R) effective September 1, 2005 and
is currently in process of evaluating the impact of SFAS 123 (R).



In December
2004 the FASB issued SFAS 153 regarding exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29. The guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions, is based on the principle that exchanges of nonmonetary assets
should be measured based on the fair value of the assets exchanged. The guidance in that Opinion, however, included certain exceptions to that principle. This Statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of
similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS 153 has no impact on the Companys financial statements.



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.



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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, growth through acquisitions and the effect of foreign currency exchange rates.



Total revenues in 2004, 2003 and 2002 were Euro 2,652 million, Euro 2,769 million, Euro 3,176
million, respectively. Total revenues in 2004 were 4.2% lower than in 2003, which was primarily attributable to adverse exchange rate effects. Total revenues in 2003 were 12.8% lower than in 2002. 5.1% of this decrease was 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.



Revenues from product sales amounted to Euro 1,564 million, Euro 1,553 million and Euro 1,792
million in 2004, 2003 and 2002, respectively, and revenues from product sales increased by 0.7% from 2003 to 2004, compared to a 13.4% decrease from 2002 compared to 2003. Earnings from rentals and service were Euro 1,020 million, Euro 1,119 million
and Euro 1,267 million in 2004, 2003 and 2002, respectively, and revenues from rentals and services decreased by 8.8% from 2003 to 2004 and decreased by 11.7% from 2002 to 2003. Interest income from financial leases was Euro 68 million, Euro 97
million and Euro 117 million in 2004, 2003 and 2002, respectively. Interest income from financial leases decreased by 30.1% from 2003 to 2004, compared to a 16.3% decrease from 2002 to 2003.



Revenues of the DDS business unit were Euro 1,834 million, Euro 1,907 million and Euro 2,155
million in 2004, 2003 and 2002, respectively, and revenues of the DDS business unit increased organically by 0.3% from 2003 to 2004 comparable to 4.0% decrease from 2002 to 2003. Sales of machines in the DDS business unit increased organically by
13% from 2003 to 2004 which was primarily attributed to the success of the Companys renewed product offerings, compared to an 11% decrease from 2002 to 2003.



Revenues of the WFPS business unit were Euro 818 million, Euro 862 million and Euro 1,021 in 2004, 2003 and 2002, respectively. The revenue
of the WFPS business unit decreased organically by 1.0% from 2003 to 2004, compared to a 7.5% decrease from 2002 to 2003. The decrease in 2004 is primarily attributable in full to the decrease in revenues from media, price pressure and lower lease
revenues and the decrease in 2003 is primarily attributable to the downturn in the economic cycle and the postponement of investment decisions by customers.



Gross Margin



Gross margin was Euro 1,103, Euro 1,165 million and Euro 1,328 million in 2004, 2003 and 2002 respectively, and represents an equivalent of 41.6%, 42.1% and 41.8% of the
Companys total revenues in 2004, 2003 and 2002. Gross margin in 2004 was 0.5% lower than in 2003, compared to an increase by 0.3% from 2002 to 2003. The decrease in gross margin percentage from 2004 compared to 2003 was attributable to the
effect of the Companys foreign currency hedging. The increase in gross margin percentage from 2002 to 2003 was attributable to the positive effect of the Companys foreign currency hedging and a negative product mix effect.



Selling Expenses



Selling expenses were Euro 615 million, Euro 624 million and Euro 705 million in 2004, 2003
and 2002, respectively, which represents 23.2%, 22.5% and 22.2% of the Companys total revenues in those years. The reduction in selling expenses from 2003 to 2004 was the result of exchange rate effects and from 2002 to 2003 was primarily
related to the reduction in labor costs in connection with the restructuring partially offset by the negative effect of foreign currency translation. The increase in selling expenses as a percentage of total revenues in 2004 compared to 2003 is the
result of investments in the sales force.



Research &
Development



Expenditures in research and development were Euro 208
million, Euro 208 million and Euro 212 million in 2004, 2003 and 2002, respectively, which represents 7.8%, 7.5% and 6.7% of the Companys total revenues in 2004, 2003 and 2002, respectively. The Company incurred a repayment liability of Euro 2
million in 2004, Euro 1 million in 2003 and Euro 3 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 Notes 0 and 14 to the Consolidated Financial Statements.



General and administrative expenses



The Companys general and administrative expenses were Euro 162 million, Euro 183 million and Euro 185 million in 2004, 2003 and 2002, respectively, which represents
6.1%, 6.6% and 5.8% of the Companys total revenues in these years. These expenses decreased by 11.6% from 2003 to 2004 and by 0.8% from 2002 to 2003.



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Impairment



An impairment of intangible and tangible fixed assets occurred in 2004 and 2003 of Euro 7.9 million and Euro 25.2 million, respectively.
These impairments relate to the goodwill of Océ Display Graphics Systems Inc. for an amount of Euro 7.0 million, the goodwill of Océ Mexico S.A. de C.V. for an amount of Euro 0.2 million, the customer base of Océ Finland OY for
an amount of Euro 0.1 million, the customer base of Océ Denmark A.S. for an amount of Euro 0.2 million and a part of the fixed assets of Océ Display Graphics Systems Inc. for an amount of Euro 0.4 million for 2004 and, for 2003, 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 2004, 2003 and 2002 was Euro 110 million, Euro 125 million and Euro 226
million, respectively, and represents 4.2%, 4.5% and 7.1% of the Companys total revenues in 2004, 2003 and 2002, respectively. Operating income (in Euros) decreased 11.6% from 2003 to 2004 and by 44.8% from 2002 to 2003. From 2003 to 2004,
this decrease was primarily attributable to exchange rates partially offset by lower impairment costs and from 2002 to 2003, this decrease was primarily attributable to lower revenues from machine sales and impairment charges incurred.



Financial expense (net)



The Companys financial expense (net) was Euro 18 million in 2004, Euro 31 million in
2003 and Euro 54 million in 2002. The decrease in financial expense (net) from 2002 to 2003 was caused by a reduction in the outstanding amount of the Companys loans and lower interest rates and the further decrease in 2004 was caused by a
continuing reduction in the Companys net debt partially offset by slightly higher interest rates. The average weighted interest bearing net debt was Euro 388 million in 2004 (with an average interest rate of 4.7%), Euro 696 million in 2003
(with an average interest rate of 4.10%) and Euro 992 million in 2002 (with an average interest rate of 5.25%).



Income taxes



The Companys effective income tax rate was 13.2% in 2004, 32.4% in 2003 and 33.4% in 2002. The decrease in the Companys effective income tax rate in 2004 is
due primarily to the release of a provision of Euro 7 million as a result of the definitive settlement of the tax risks to which these provisions related and the fact that relatively more profit was achieved in countries with a relatively low tax
rate.



Net Income



Net income was Euro 78 million, Euro 61 million and Euro 113 million in 2004, 2003 and 2002,
respectively. Net income increased by 27.0% from 2003 to 2004, compared to a decrease of 45.4% from 2002 to 2003. On a basic earnings per ordinary share basis, net income in 2004 increased by 28.6% from 2003 to Euro 0.89 per share, compared to a
46.9% decrease in 2003 from 2002 to Euro 0.69 per share compared to Euro 1.30 per share in 2002.



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 and the related bad debt risk. 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.



As described elsewhere, the Company is in the
process of outsourcing its financial activities. Accordingly, revenues from financial leasing activities will decrease further in future years, as will the related assets. In 2004, operating income from commercial activities was positively
influenced by the profit realized on the sale of part of the Companys lease portfolio (Euro 30.9 million as compared to Euro 6.0 million in 2003). At the same time, as a result, interest revenues from leases decreased by Euro 29.4 million to
Euro 68.2 million (2003: Euro 97.6 million). In light of the outsourcing of its leasing activities, in future years, the Company will emphasize its results from its commercial activities (Euro 31.0 million in 2004 compared to Euro 49.7 million in
2003, excluding the one-time profit on the sale of the lease portfolio in both years).



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##### Table of Contents

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



|                                      |  |            |  |       |  |       |  |      
|------------------------------------- |  | ---------- |  | ----- |  | ----- |  | -----
|(In millions)                         |  |            |  | 2002  |  | 2003  |  | 2004 
|                                      |  |            |  | Euro  |  | Euro  |  | Euro 
|                                      |  |            |  |      
|Revenue                               |  | Commercial |  | 3,059 |  | 2,672 |  | 2,584
|                                      |  | Financial  |  | 117   |  | 97    |  | 68   
|                                      |  |            |  |       |  |       |  |      
|                                      |  | Total      |  | 3,176 |  | 2,769 |  | 2,652
|                                      |  |            |  |       |  |       |  |      
|Operating income                      |  | Commercial |  | 142   |  | 56    |  | 62   
|                                      |  | Financial  |  | 84    |  | 69    |  | 48   
|                                      |  |            |  |       |  |       |  |      
|                                      |  | Total      |  | 226   |  | 125   |  | 110  
|                                      |  |            |  |       |  |       |  |      
|Net income                            |  | Commercial |  | 86    |  | 36    |  | 53   
|                                      |  | Financial  |  | 27    |  | 25    |  | 25   
|                                      |  |            |  |       |  |       |  |      
|                                      |  | Total      |  | 113   |  | 61    |  | 78   
|                                      |  |            |  |       |  |       |  |      
|Cash flow before financing activities |  | Commercial |  | 247   |  | 195   |  | -9   
|                                      |  | Financial  |  | 91    |  | 133   |  | 379  
|                                      |  |            |  |       |  |       |  |      
|                                      |  | Total      |  | 338   |  | 328   |  | 370  
|                                      |  |            |  |       |  |       |  |      



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 2004 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 net transaction exposure (principally, in U.S. dollar, Japanese Yen and Pound Sterling). In 2004, as a result of its hedging
activities, the negative impact of the strong Euro was partially offset by a positive hedge result of Euro 6.3 million on operating income. In 2003, the Company realized a positive hedge result of Euro 22.4 million. 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 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.



36



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Cash flows provided by operating activities were Euro 137 million for 2004 compared to Euro 340 million for 2003 and Euro
446 million for 2002. The decrease in cash flows from operating activities in 2004 resulted from lower earnings after adjusting for non-cash items such as depreciation and amortization, payments for restructuring expenses, contribution to pension
funds and extra taxes as a result of the sale of the lease portfolio. At November 30, 2004, the Company had cash available amounting to Euro 313 million compared to Euro 56 million at November 30, 2003 and Euro 37 million at November 30, 2002. This
increase is attributable to the sale of the lease portfolio.



At November 30,
2004, Océ and its Dutch subsidiaries had available Euro 373 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 287 million of
credit. At November 30, 2004, the used portion of these credit facilities amounted to Euro 33 million of long term debt and Euro 93 million of short term debt. These lines of credit expire over the next 2 to 4 years. None of these credit facility
contracts contain restrictive covenants. As a result, repayment of any borrowings under these lines of credit cannot 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 activities to third party lease companies, which involves transferring its current lease portfolio to these third party lease companies 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 vendor lease partners. In connection with this process, the Company intends to transfer a major part of its lease portfolio to third parties under various private label
program agreements. 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 to a large extent be completed by the end of 2005. 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 be reduced further.



Capital Expenditures



Cash flows from investing
activities were Euro +234 million for 2004, Euro -12 million for 2003 and Euro -109 million for 2002. Net capital expenditures were Euro 83 million for 2004 compared to Euro 92 million for 2003 and Euro 121 million for 2002. Capital expenditures
decreased in 2004 over 2003 due primarily to fewer investments in property, plant and equipment.



The Company did not make any new significant acquisitions in 2004 or 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.



Aggregate cash flows used in financing activities were Euro 114 million, Euro 295 million and Euro 356 million for 2004, 2003 and 2002, respectively. The Companys 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 2004 through the repayment of approximately Euro 60 million of outstanding debt and 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 2004 (including cash and cash equivalents) of 4.7% increased from 4.4% in financial year 2003.



The Company paid dividends of Euro 52 million during 2004, compared to Euro 52 million during
2003 and Euro 52 million during 2002.



The Company purchases its Ordinary
Shares from time to time to cover obligations under stock option plans. In 2004, Océ purchased none of its Ordinary Shares. In 2003 Océ purchased 100,000 of its Ordinary Shares for an aggregate price of Euro 0.9 million. As of November
30, 2004, the Company held 3,750,442 Ordinary Shares in treasury, and it has no current intention of selling those shares.



As of November 30, 2004, the Companys principal sources of liquidity consists of Euro 313 million of cash and cash equivalents and Euro 661 million available
borrowings under credit lines. The Company also expects to raise cash from the further sale of part of its financial lease portfolio in Europe, Asia and Australia in 2005. 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. At the end of 2004, the current repayable portion of the Companys long term debt will be Euro 28 million. The Company expects capital expenditures in 2005 to be approximately Euro 108
million. In addition, the Company has for the next twelve months operating lease commitments for an amount of approximately Euro 76 million.



37



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C. Research and Development



Research and development are critical to the success of the Company. The Company employed 1,868 people in six countries at the end of 2004
to engage in research and development activities (compared to 1,928 and 1,945 employees at the end of 2003 and 2002, respectively).



Océs strategy is to develop machines that 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: The
Netherlands, Germany, France, Belgium, Canada and the United States.



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-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 upgrades and new releases 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 6.2% in 2000 to 7.8% in 2004 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 Euros) |  | Percent of Revenues
|2000                     |  | 199                                |  | 6.2                
|2001                     |  | 203                                |  | 6.3                
|2002                     |  | 215                                |  | 6.8                
|2003                     |  | 212                                |  | 7.7                
|2004                     |  | 207                                |  | 7.8                



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 government of The Netherlands 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 -1.6 million in 2004, Euro +4.0 million in 2003, Euro +1.8 million in 2002, Euro +3.7 million in 2001
and Euro +8.8 million in 2000.



D. Trends



Océs results for 2004 were mixed, reflecting significant progress on a number
of strategic fronts in the face of continuing challenges resulting from a weak U.S. dollar and the lingering effects of a stagnating economy, as well as the financial impact of certain strategic initiatives. Overall, total revenues were 4.2% lower
than in 2003. However, on an organic basis (i.e., after adjusting for exchange rate effects), total revenues were unchanged, halting a three year decline and highlighting the significant impact of adverse exchange rates on 2004s results.
Strengthened by the success of the new products introduced in 2004, the Company believes that sales of printing systems will show continued growth in 2005.



On the other hand, the Companys expectation that the growing sales of its machines would be followed in 2004 by a recovery in revenues from services, rental and
materials did not materialize. These recurring revenues, which represent 72% of total revenues, continued to decline throughout 2004 and had a negative impact on sales. The Company expects that the anticipated continued growth in sales of its
machines in 2005 will lead to improvements in its recurring revenues. In connection with the Companys strategic move toward outsourcing its leasing activities, more than half of the Companys existing lease portfolio at the end of 2003
was sold during 2004, resulting in substantially lower interest revenue and a reduction of almost Euro 400 million in lease receivables.



Operating income from commercial activities, excluding book profits from the sale of the lease portfolio, is expected to be higher in 2005, provided however that the U.S.
dollar does not fall further in value against the Euro. As a result of lower revenues from leases, the Company anticipates that its net income will fall below that of 2004.



In addition, as discussed in Item 4, during 2004, a total of Euro 312 million of financial lease receivables and the machines they relate to
were sold to external lease partners. Océ expects to sell approximately Euro 175 million of lease receivables to its partners in 2005, which will leave approximately Euro 225 million of lease receivables on its balance sheet. As a result, the
revenue from these



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financial leasing activities will be reduced in 2005 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 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.



The Companys results were negatively effected in 2004 by the strong Euro
and weak U.S. dollar. The Company believes that this trend may continue in 2005, especially in connection with the prices of products and in connection with currency translation.



In 2004, the Company began implementation of its previously-announced plans 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 reduced 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 this transfer to result in a reduction in manufacturing costs in 2005 and thereafter. The Company expects that this
transfer will be seamless to its operations and customers.



For a discussion of
the trends for each of the Companys business groups, see Item 4, Digital Document Systems Business Unit and Wide Format Printing Systems Business Unit.



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 are material to investors.



F. Tabular
disclosure of contractual obligations



|                                                                                                                        |  |                       |  |                  |  |           |  |           |  |                 
|----------------------------------------------------------------------------------------------------------------------- |  | --------------------- |  | ---------------- |  | --------- |  | --------- |  | ----------------
|                                                                                                                        |  | Payment due by period
|                                                                                                                        |  | Total                 |  | Less than 1 year |  | 1-3 years |  | 3-5 years |  | More than5 years
|Contractual Obligations                                                                                                 |  |                       |  |                  |  |           |  |           |  |                 
|Long-Term Debt Obligations                                                                                              |  | 461                   |  | 26               |  | 419       |  | 9         |  | 7               
|Capital (Finance) Lease Obligations                                                                                     |  | 5                     |  | 2                |  | 2         |  | 1         |  |                
|Operating Lease Obligations                                                                                             |  | 313                   |  | 76               |  | 100       |  | 63        |  | 74              
|Other Long-Term Liabilities Reflected on the Companys Balance Sheet under the GAAP of the primary financial statements |  | 516                   |  | 31               |  | 6         |  | 4         |  | 475             
|                                                                                                                        |  |                       |  |                  |  |           |  |           |  |                 
|Total                                                                                                                   |  | 1,295                 |  | 135              |  | 527       |  | 77        |  | 556             

---

|* | The contractual obligations and commercial commitments table above does not reflect obligations under purchase orders that arise in the ordinary course of business and that are
typically fulfilled within ninety days. In addition to ordinary course purchase orders, the Company enters into supply agreements and distribution agreements in the ordinary course of business, some of which make the purchase of minimum quantities
of products a condition to exclusivity or to obtaining or retaining more favorable pricing. Since failure to purchase the minimum amounts under these agreements generally does not result in a breach of contract, but only in an option on the part of
the vendor to terminate the Companys exclusivity or increase the product prices the Company pays to the vendor, they are not included in the contractual obligations and commercial commitments table above. An estimate of the purchase
obligations at its two largest manufacturing facilities which are due within one year is approximately Euro 145 million.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|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 January 28, 2005 concerning the Supervisory Directors, Executive Directors and senior managers of the Company.



Board of Supervisory Directors as at January 28, 2005



|                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 2013. Supervisory directorships: Chairman of the Supervisory Board of Heijmans 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.



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|                                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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. Supervisory Directorships: Member of the Supervisory Board of PontMeyer N.V. Other posts: member of the
Advisory Board of Keyser & Mackay (International) C.V. and board member of several foundations.                                                                                                                                                                                                                                                                                                           
|                                       | 
|M. Arentsen (Born: 1939)               |  | Post(s) held: former CFO 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. Supervisory directorships: Chairman of the Board of Supervisory Directors of CSM Nederland B.V., Klaverblad Onderlinge
Verzekeringsmaatschappij U.A. and Koninklijke Frans Maas Groep N.V. and member of the Supervisory Board of Directors of Zuivelcooperatie Campina U.A., Incotec B.V. and Van der Moolen N.V. Other posts: board member of several foundations.                                                                                                                                              
|                                       | 
|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 2015. 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: director
Port of Singapore Authority Europe and member of the Supervisory Board of the Netherlands Authority for Financial Markets (AFM).
|                                       | 
|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. 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. 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 2006. Maximum period of office until 2010. Supervisory Directorships: Chairman of the Supervisory Board of AZL 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 Berenschot Groep B.V. 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. At each
general meeting of shareholders the term of at least one Supervisory Director expires. A Supervisory Director who has not served as a Supervisory Director for twelve years may be immediately reappointed. Vacancies that 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 replaced Mr. Berndsen as the Chairman of the
Companys Audit Committee.



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##### Table of Contents

Board of Executive Directors as at January 28, 2005



|                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|R.L. van Iperen (Born: 1953) |  | Post: 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, Manufacturing & Logistics, 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 Technical University Eindhoven and Rabobank Nederland and member of the Board of Foundation
Marketing and Technique. Prior 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: Member Board of Executive Directors. Nationality: Dutch. Appointed: March 2001. Functional Responsibilities: Finance and Administration, Treasury, Tax, Internal Audit, Information Technology, Investor Relations and financing companies.
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.                                                                                                                                                                                                           
|                             | 
|J.F. Dix (Born: 1946)        |  | Post: Member Board of Executive Directors. Nationality: Dutch. Appointed: May 1998. FunctionalResponsibilities: United States (CEO), Direct Export, Emerging Markets and Marketing Communications. Geographical Responsibilities: United States, Canada, Mexico, United Kingdom, Nordic, Switzerland, Italy, 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. Since 1998 member of the Executive Board of Océ N.V. CEO of Océ-USA Holding, Inc. since September 15,
2004.                                                         



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
three 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. R.E. Daly was a member of the Board of Executive Directors for a portion of 2004.



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.



41



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##### Table of Contents

Senior Managers as at January 28, 2005



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  DDS                                                 |  | 2004                         
|                  |  |                                                                               
|T. Egelund        |  | Executive Vice President  WFPS                                                |  | 2004                         
|                  |  |                                                                               
|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                         
|                  |  |                                                                               
|P.H.G.M. Creemers |  | Senior Vice President  Corporate Personnel and Organization                   |  | 1998                         
|                  |  |                                                                               
|E.E.C. Vandoninck |  | Senior Vice President  Group Control                                          |  | 2004                         
|                  |  |                                                                               
|P. Hagedoorn      |  | Senior Vice President and Chief Information Officer                            |  | 2003                         
|                  |  |                                                                               
|P.M. Vincent      |  | Senior Vice President  Corporate Finance                                      |  | 2004                         



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.



B. Compensation



Supervisory Directors



In 2004, the Company paid Euro 222,281, 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. 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 2004 will amount to Euro 46,355 for the Chairman of the Board of Supervisory Directors and Euro 30,903 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 2004. The amounts set forth are denominated in Euros.



|                |  |            |  |                |     |  |         |  |                      
|--------------- |  | ---------- |  | -------------- | --- |  | ------- |  | ---------------------
|                |  | BaseSalary |  | VariableSalary |     |  | Total   |  | PensionContributions*
|R.L. van Iperen |  | 612,676    |  | 60,000         | *** |  | 672,676 |  | 338,711              
|J. van den Belt |  | 411,590    |  | 45,000         | *** |  | 456,590 |  | 122,871              
|R.E. Daly**     |  | 319,264    |  |               |     |  | 319,264 |  | 9,852                
|J.F. Dix        |  | 461,321    |  | 45,000         | *** |  | 506,321 |  | 161,395              

---

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

|** | The Company paid Mr. Daly $1,050,000 upon his leaving employment with the Company.
|-- | ----------------------------------------------------------------------------------

|*** | The amount of variable salary paid is based on a combination of the performance of the Company and the individual Executive Director during the 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 are amounts which will be paid in 2005 for performance during
2004, which is in accordance with Dutch GAAP.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The following table sets forth in Euro at November 30, 2004 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 2004. 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 with a maximum pension salary 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 2004 |  | AccruedPension Rights |  | Capital Build-Up inDefined ContributionsScheme
|R.L. van Iperen |  | 51  |  | 60              |  | 20,001                                  |  | 222,336               |  | 182,229                                       
|J. van den Belt |  | 58  |  | 62              |  | 4,260                                   |  | 36,126                |  | 142,666                                       
|J.F. Dix        |  | 58  |  | 62              |  | 7,448                                   |  | 190,986               |  | 143,648                                       



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. 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. The Company paid Mr. Daly $1,050,000 upon his leaving employment with the Company.



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).



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



The Remuneration Committee consists of F.J. de Wit (Chairman), J.L. Brentjens and J.V.H. Pennings. 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 adopted a charter. 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 engaging 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 2004, the Audit Committee consisted of three members: L.J.M. Berndsen (Chairman and financial expert, member through March 2, 2004) and
M. Arentsen (Chairman and financial expert, member from March 2, 2004), as well as 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 also replaced Mr. Berndsen as Chairman of the Audit Committee.



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.



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D. Employees



The Company employed 21,315, 22,204 and 22,489 employees (in full time equivalents) world-wide, at November 30, 2004, 2003 and 2002, 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 Oces Employees and Sustainable Development on pages 50-54 of the Companys 2004 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.



Employees by category



|                                                   |  |        |  |        |  |       
|-------------------------------------------------- |  | ------ |  | ------ |  | ------
|                                                   |  | 2002   |  | 2003   |  | 2004  
|Research and Development                           |  | 1,945  |  | 1,928  |  | 1,868 
|Manufacturing and Logistics                        |  | 2,809  |  | 2,514  |  | 2,512 
|Business Services                                  |  | 6,611  |  | 7,149  |  | 6,693 
|Sales                                              |  | 4,376  |  | 4,140  |  | 4,192 
|Service                                            |  | 4,617  |  | 4,327  |  | 4,013 
|Accounting and other staff                         |  | 2,131  |  | 2,146  |  | 2,037 
|                                                   |  |        |  |        |  |       
|Total number of employees at November 30,          |  | 22,489 |  | 22,204 |  | 21,315
|                                                   |  |        |  |        |  |       
|Average number of employees during the fiscal year |  | 22,480 |  | 22,346 |  | 21,760



Distribution of
employees by geographical areas



|                                          |  |        |  |     |  |        |  |     |  |        |  |    
|----------------------------------------- |  | ------ |  | --- |  | ------ |  | --- |  | ------ |  | ---
|                                          |  | 2002   |  | %   |  | 2003   |  | %   |  | 2004   |  | %  
|United States                             |  | 8,730  |  | 39  |  | 8,969  |  | 40  |  | 8,340  |  | 39 
|The Netherlands                           |  | 4,052  |  | 18  |  | 4,061  |  | 18  |  | 3,922  |  | 18 
|Germany                                   |  | 3,199  |  | 14  |  | 3,063  |  | 14  |  | 3,028  |  | 14 
|France                                    |  | 1,237  |  | 5   |  | 1,203  |  | 6   |  | 1,160  |  | 5  
|United Kingdom                            |  | 1,122  |  | 5   |  | 1,041  |  | 5   |  | 1,016  |  | 5  
|Rest of Europe                            |  | 3,069  |  | 14  |  | 2,903  |  | 13  |  | 2,879  |  | 14 
|Rest of the world                         |  | 1,080  |  | 5   |  | 964    |  | 4   |  | 970    |  | 5  
|                                          |  |        |  |     |  |        |  |     |  |        |  |    
|Total number of employees at November 30, |  | 22,489 |  | 100 |  | 22,204 |  | 100 |  | 21,315 |  | 100
|                                          |  |        |  |     |  |        |  |     |  |        |  |    



E. Share ownership



At November 30, 2004, 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, 2004, 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 a 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 SAR. Upon exercise of a SAR, the holder may receive the payment either in cash or the
Companys Ordinary Shares.



During 2004, the Company granted an aggregate
of 500,000 unconditional options and 17,000 SARS to a total of 167 participants under its stock option plan. The terms and conditions of options granted under the stock option plan depend on where an individual



44



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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 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 2004, the Company granted 246,000 conditional options to 65 participants. If these
criteria are achieved, these 246,000 option rights will become unconditional. The maximum possible number of option rights that may become unconditional is 492,000.



The exercise price of conditional and unconditional options or SARS granted in 2004 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 11.25 per share. Participants residing in The Netherlands to whom options were granted were offered a choice between an
exercise price of Euro 11.25, Euro 12.38, Euro 13.50 or Euro 15.19 per share for tax planning purposes. Holders who elect higher exercise prices are required to pay a lower amount of tax 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
21 stock exchange trading days before publication of the Companys quarterly results.



As at November 30, 2004, a total of 3,675,500 unconditional option rights or SARS in respect of Ordinary Shares were outstanding at an average exercise price of Euro 13.17. In addition, as at November 30, 2004, a
total of 1,280,000 conditional options with an average exercise price of Euro 11.39 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 2004, the Company did not repurchase any its Ordinary Shares to be issued in connection with
exercises of options and SARS.



45



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##### Table of Contents

The following table sets forth as at November 30, 2004, the options granted to the members of the Board of Executive
Directors after their appointment to the Board.



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



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, 2004.



|                       |  |                           |  |                       |  |                  |  |                           |  |             |  |                  |  |                       
|---------------------- |  | ------------------------- |  | --------------------- |  | ---------------- |  | ------------------------- |  | ----------- |  | ---------------- |  | ----------------------
|Stock Option Plan Year |  | Number of Options Granted |  | ExercisePrice in Euro |  | OptionsForfeited |  | ExercisedNumber ofOptions |  | Outstanding |  | Expiration Date*
|2000                   |  |                           |  | 791,000               |  | 16.85-22.98      |  | 424,000                   |  |            |  | 367,000          |  | November 26, 2004     
|2001                   |  |                           |  | 847,500               |  | 18.10-24.44      |  | 99,000                    |  |            |  | 748,500          |  | November 29, 2005/2006
|2002                   |  | Unconditional             |  | 716,000               |  | 9.77-13.19       |  | 24,000                    |  | 95,500      |  | 596,500          |  | November 28, 2009/2010
|2002                   |  | Conditional               |  | 392,000               |  | 9.77             |  | 392,000                   |  |            |  |                 |  | November 28, 2009/2010
|2003                   |  | Unconditional             |  | 793,000               |  | 10.75-14.51      |  | 5,000                     |  | 29,000      |  | 759,000          |  | November 27, 2010/2011
|2003                   |  | Conditional               |  | 470,000               |  | 10.75            |  | 78,000                    |  |            |  | 392,000          |  | November 27, 2010/2011
|2004                   |  | Unconditional             |  | 692,500               |  | 12.21-16.48      |  | 2,000                     |  | 3,000       |  | 687,500          |  | November 26, 2011/2012
|2004                   |  | Conditional               |  | 446,000               |  | 12.21            |  | 50,000                    |  |            |  | 396,000          |  | November 26, 2011/2012
|2005                   |  | Unconditional             |  | 517,000               |  | 11.25-15.19      |  |                          |  |            |  | 517,000          |  | November 30, 2012/2013
|2005                   |  | Conditional               |  | 492,000               |  | 11.25            |  |                          |  |            |  | 492,000          |  | November 30, 2012/2013
|                       |  |                           |  |                       |  |                  | 
|TOTAL                  |  |                           |  | 6,157,000             |  |                  |  | 1,074,000                 |  | 127,500     |  | 4,955,500        |  |                       

---

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



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;
| | - |  | ---------------------------------------------------------------



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##### Table of Contents

| |  |  | 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.
| | - |  | ----------------------------------------------------------------------------------



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.



The Company believes that the following entities own the following shares of its capital stock as of December 31, 2004:



|                                                                        |  |                                                        |  |              |  |                  |   
|----------------------------------------------------------------------- |  | ------------------------------------------------------ |  | ------------ |  | ---------------- | --
|Title of Class                                                          |  | Identity of Person or
Group                            |  | Amount Owned |  | Percent of Class |   
|Ordinary Shares                                                         |  | ING Groep N.V.                                         |  | 7,642,987    |  | 8.8              | %*
|                                                                        |  |                                                        | 
|                                                                        |  | Supervisory Directors                                  |  | 2,969        |  |                 |   
|                                                                        |  |                                                        | 
|Priority Shares                                                         |  | Foundation Fort Ginkel                                 |  | 30           |  | 100              | % 
|                                                                        |  |                                                        | 
|Cumulative Financing Preference Shares                                  |  | Stichting Administratiekantoor Preferente Aandelen Océ |  | 20,000,000   |  | 100              | % 
|                                                                        |  |                                                        | 
|Depositary Receipts representing Cumulative Financing Preference Shares |  | Rabobank Nederland Participatie maatschappij
B.V.      |  | 6,000,000    |  | 30.0             | % 
|                                                                        |  |                                                        | 
|                                                                        |  | Fortis N.V.                                            |  | 6,000,000    |  | 30.0             | % 
|                                                                        |  |                                                        | 
|                                                                        |  | ABP-PGGM Capital Holdings N.V.                         |  | 6,000,000    |  | 30.0             | % 
|                                                                        |  |                                                        | 
|                                                                        |  | ING Groep N.V.                                         |  | 2,000,000    |  | 10.0             | % 

---

|* | As of December 31, 2004 according to Schedule 13G as filed by ING Group N.V. with the SEC on February 10, 2005.
|- | ---------------------------------------------------------------------------------------------------------------



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 19% 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 activities 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 6.A, Directors and Senior Management and Item 10.B, Memorandum and Articles of Association, 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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##### Table of Contents

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-34.



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 Offered 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 was amended on December 1, 2004 and may be amended every eight years thereafter. With respect to 2004, 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 2004, 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 2004 deviated from
this policy because of the importance that the Company places on a stable distribution of dividends. In 2004, the Company paid a total cash dividend per ordinary share equal to Euro 0.58 per share, which constitutes 65.0% of the Companys net
income for 2004.



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 condition since November 30, 2004.



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 stock 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.



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|                         |  |                |  |                                           |  |                        |  |            |  |        
|------------------------ |  | -------------- |  | ----------------------------------------- |  | ---------------------- |  | ---------- |  | -------
|                         |  |                |  | Euronext AmsterdamEuro per Ordinary Share |  | Nasdaq Dollars per ADS
|                         |  |                |  | High                                      |  | Low                    |  | High Asked |  | Low Bid
|Annual highs and lows    |  |                |  |                                           |  |                        |  |           
|2000                     |  |                |  | 18.90                                     |  | 11.55                  |  | 17.75      |  | 12.00  
|2001                     |  |                |  | 18.90                                     |  | 6.15                   |  | 17.50      |  | 6.37   
|2002                     |  |                |  | 14.05                                     |  | 6.80                   |  | 13.05      |  | 6.69   
|2003                     |  |                |  | 13.70                                     |  | 6.50                   |  | 15.59      |  | 7.49   
|2004                     |  |                |  | 16.10                                     |  | 10.60                  |  | 20.45      |  | 13.15  
|                         |  |                |  |                                          
|Quarterly highs and lows |  |                |  |                                           |  |                        |  |           
|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  
|                         |  |                |  |                                           | 
|2004                     |  | First quarter  |  | 16.10                                     |  | 11.60                  |  | 20.45      |  | 14.13  
|                         |  | Second quarter |  | 15.95                                     |  | 12.18                  |  | 19.20      |  | 15.00  
|                         |  | Third quarter  |  | 13.83                                     |  | 11.60                  |  | 16.90      |  | 14.30  
|                         |  | Fourth quarter |  | 13.17                                     |  | 10.60                  |  | 16.25      |  | 13.15  
|                         |  |                |  |                                          
|Monthly highs and lows   |  |                |  |                                           |  |                        |  |           
|2004                     |  | October        |  | 13.17                                     |  | 10.60                  |  | 16.25      |  | 13.15  
|                         |  | November       |  | 11.82                                     |  | 10.75                  |  | 15.34      |  | 13.86  
|                         |  | December       |  | 11.38                                     |  | 10.80                  |  | 15.35      |  | 14.20  
|2005                     |  | January        |  | 12.41                                     |  | 11.00                  |  | 15.89      |  | 14.35  



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.



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
amended. As further discussed on page 62 of the 2004 Annual Report, Dutch corporate governance law is determined by legislation and codes of best practices. The Dutch corporate governance code was adopted in December 2003. As a result of this
legislation, the Company amended its Articles of Association in 2004, which amendments were approved by its shareholders at an extraordinary meeting on September 8, 2004 and confirmed by notarial deed dated December 23, 2004. Any references in this
report to the Articles of Association should be read in conjunction with the Articles, as amended, as filed herewith.



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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, as amended, 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.
| | - |  | --------------------------------------------------------------------------------------------------------------------



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 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 as the other members of the Board of Executive Directors. 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 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 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 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. Decisions of the Board of Executive Directors relating to a
substantial change in the identity or character of the Company or its business must be approved by the general meeting of shareholders, which events specifically include transfer of the business or substantially all of the business to a third party,
entering into or terminating long-term cooperation of the Company or a subsidiary with a third party or as a partner with unlimited liability in limited or general partnership if such cooperation or termination is of far-reaching importance, and
acquiring or disposing of capital of a company that has a value of at least one-third of the total assets of the Company on a consolidated basis. 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;
| | - |  | ---------------------------------------------------------------



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| |  |  | 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;
| | - |  | ------------------------------------------------------------------



| |  |  | 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 and M.W.
den Boogert. The by-laws provide that none of the directors of the Foundation may be a member of the Supervisory or Executive Boards of the Company or its subsidiaries or be a member of the family of a member of such Boards; an employee of the
Company or its subsidiaries; an advisor (including auditor, notary and attorney) with whom the Company or its subsidiaries has a regular ongoing relationship; a person who was formerly a member of the Companys Supervisory or Executive Boards
or an employee of the Company or its subsidiaries; a person who was, within the past three years, an advisor with whom the Company or its subsidiaries had a regular ongoing relationship; or a director or employee of a bank or other financial
institution with which the Company has a permanent and significant relationship.



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, 2004, 87,268,562 Ordinary Shares were outstanding. Océ 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.
| | - |  | ---------------------------------------------------



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



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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 Item 8 Financial Information.



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 Priority or Finance Preference Shares will be admitted after the Company receives
written notification and holders of bearer shares will be admitted by showing a voucher of deposit of their shares. Shareholders of the Company who solely or jointly represent 1% of the Companys issued and outstanding capital stock or capital
stock with a value or Euro 50 million may present proposals for consideration up to 30 days prior to the date of the meeting, provided that this provision will not be applicable if in the opinion of the Supervisory Board or the Executive Board, a
major interest is opposed thereto.



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.E.



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 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. 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, who solely or jointly represent 1% of the Companys issued and outstanding capital stock or capital stock with a
value of Euro 50 million, may also present proposals for consideration up to 30 days prior to the date of the meeting, provided that this provision will not be applicable if in the opinion of the Supervisory Board or Executive Board, a major
interest is opposed thereto. 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 2004 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 2004 annual general meeting of shareholders.



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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.



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



All shares of the Companys capital stock are
registered shares. The Ordinary Shares are included in the giro depository, as referred to in the Act of Giral Securities Transactions (Wet Giraal Effectenverkeer). Transfers and deliveries of Ordinary Shares are made by institutions affiliated with
the giro depository on behalf of the shareholders. Ownership of Priority Shares and preference shares are registered in a register maintained by the Board of Executive Directors.



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.



Indemnification



The Company will reimburse members of the Board of Executive Directors and the Supervisory Board, as well as their former members, for costs related to the fulfillment of
their duties, which costs include the cost of defense against claims for compensation on the grounds of acts or omissions in fulfillment of their duties and other legal or administrative proceedings in which they are involved as members of such
Boards. The Company will also indemnify members of such Boards, as well as their former members, against any financial loss that is a direct result of these claims. These provisions do not apply if and to the extent it is definitively established
that the act or omission that gave rise to the claim was manifestly improper or seriously culpable. The Company is authorized to take out professional liability insurance on the members of such Boards.



C. Material contracts



The following is a summary of certain terms of the material contracts included as exhibits to this report. This summary is qualified by
reference to the actual terms of the agreements.



In November 2002, the Company
entered into a private label agreement with De Lage Landen International B.V. (DLL). Under the terms of this agreement, the Company agreed to outsource its lease activities and transfer existing financial leases in The Netherlands,
Belgium, Spain, France, Germany and the United Kingdom/Ireland to DLL upon terms and conditions to be agreed upon. The initial term of this agreement is five years, and after the fourth year of the agreement, either party must give 12 months
notice to terminate the agreement. See also the discussion regarding this agreement under Item 4 Outsourcing of Financial Leases.



The Company has also entered into service contracts with each of the three members of the Board of Executive Directors of the Company. Specifically, the Company entered
into a service contract dated February 1, 1995 with R. L. van Iperen, a service contract dated March 10, 1998 with J.F. Dix, and a service contract dated November 22, 2000 with J. van den Belt (the Service Contracts).



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Each of the Service Contracts set forth, among other things, the responsibilities, conditions to employment and
remuneration of the respective member of the Board of Executive Directors. See also the discussion in Item 6 Compensation, which outlines in more detail the remuneration of each of the Members of the Board of Executive Directors.



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%.



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 for tax purposes, 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 Dutch tax purposes and are not subject to Dutch 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 by a non-resident individual or corporation.



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 transfer, 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 2004 (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 facility 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.



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s 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 net foreign currency flows (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, 2004 and 2003, respectively, were:



| |  |  | For cash flows in 2004 Euro 225.0 million and Euro 7.9 million and in 2003 Euro 187.1 million and Euro 8.2 million; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------



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| |  |  | For (intercompany) loans in 2004 Euro 79.8 million and Euro 1.3 million and in 2003, Euro 148.0 million and Euro 1.7 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 35% of its total revenues) changes compared with the Euro by 12% would be Euro 13 million for 2005 assuming that no other measures had been taken as protective measures against this decrease. The
transfer of manufacturing activities to the Far East will decrease the net level of the Companys exposure to the U.S. dollar because payment for those goods will be made in U.S. dollars.



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 that 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 431.5 million with a market value of interest rate instruments of Euro 21.0 million at November 30, 2004 and the
contract value/notional principal value of Euro 835.7 million with a market value of interest rate instruments of Euro 21.0 million at November 30, 2003.



The aggregate hypothetical loss in earnings on an annual basis on all financial instruments and derivative instruments, held by the Company at November 30, 2004, that
would have resulted from a hypothetical increase in interest rates of 10 percent, sustained for one year, is considered not to be significant 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 that have a high credit rating, with fixed limits being
applicable to each institution.



See also Item 3.D, Risk factors.



Item 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES



Not applicable.



PART II



Item 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES



None.



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



As a result of the adoption of the Dutch corporate governance code in December 2003, during 2004 the Company amended its Articles of Association. A copy of the Articles
of Association, as amended, are included as an exhibit to this report on Form 20-F. The amendments affect the Companys Ordinary Shares, Preference Shares and Priority Shares. The amendments are reflected in the description of the Articles of
Association in Item 10.B, Memorandum and Articles of Association above. The general effect of the modifications were to reflect changes in the legislation governing the Company as a result of the adoption of the Dutch corporate
governance code and to reflect other developments in the area of corporate governance and for reasons of a practical nature.



56



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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, 2004 (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, 2004, 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. Arentsen qualifies as the Audit Committee financial expert. For the portion of 2004 before Mr. Arentsen joined the Supervisory Board, Mr. Berndsen was determined to qualify as the Audit Committee financial expert.



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 Group Internal Auditor;
| | - |  | ---------------------------



| |  |  | 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 2004.



57



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##### Table of Contents

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, 2004. The following table presents the aggregate fees in Euros for audit
services and other services rendered by PricewaterhouseCoopers in 2004 and 2003.



|                                               |  |       |  |      
|---------------------------------------------- |  | ----- |  | -----
|Year ended November 30, (Amounts in
thousands) |  | 2003  |  | 2004 
|Audit Fees                                     |  | 2,191 |  | 2,597
|Audit-Related Fees                             |  | 555   |  | 1,130
|Tax Fees                                       |  | 674   |  | 666  
|All Other Fees                                 |  | 0     |  | 0    
|                                               |  |       |  |      
|Total                                          |  | 3,420 |  | 4,393
|                                               |  |       |  |      



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 this 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 Companys consolidated financial statements.



The audit-related fees mainly include the following services provided by PricewaterhouseCoopers to the Company in 2004:



| |  |  | advisory services related to Sarbanes-Oxley Section 404;
| | - |  | --------------------------------------------------------



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



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



The audit-related fees mainly include the following services provided by PricewaterhouseCoopers to the Company in 2003:



| |  |  | advisory services related to Sarbanes-Oxley Section 302;
| | - |  | --------------------------------------------------------



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



| |  |  | accounting consultation relating to Dutch GAAP, U.S. 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 2004, none of the audit-related, tax-related or other services were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2.01 of
Regulation S-X.



58



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##### Table of Contents

Item 16D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES



Not applicable.



Item 16E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS



There were no purchases by or on behalf of Océ or any affiliated purchaser of its equity securities during 2004.



PART III



Item 17 FINANCIAL STATEMENTS



See Item 19.



Item 18 FINANCIAL STATEMENTS



See Item 19.



|Item | 19 EXHIBITS
|---- | -----------



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



|                                                                               |  |     
|------------------------------------------------------------------------------ |  | ----
|                                                                               |  | Page
|Report of the Independent Registered Public Accounting Firm                    |  | F-2 
|                                                                               | 
|Consolidated statements of operations                                          |  | F-3 
|                                                                               | 
|Consolidated balance sheets                                                    |  | F-4 
|                                                                               | 
|Consolidated statements of cash flows                                          |  | F-6 
|                                                                               | 
|Notes to consolidated financial statements                                     |  | F-8 
|                                                                               | 
|Schedule:                                                                      |  |     
|                                                                               | 
|Valuation and qualifying accounts                                              |  | F-34
|                                                                               | 
|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, as amended as confirmed by notarial deed as of December 23, 2004 (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).**
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | 10. | Annual Report 2004, 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.*
| | --- | ----------------------------------------------------------------------------------------------



59



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##### Table of Contents

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

---

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

|** | 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.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



60



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##### Table of Contents

OCÉ N.V. AND SUBSIDIARIES

TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                           |  |     
|------------------------------------------------------------------------------------------ |  | ----
|                                                                                           |  | Page
|Report of the Independent Registered Public Accounting Firm                                |  | F-2 
|                                                                                           | 
|Consolidated Statements of Operations for the years ended November 30, 2002, 2003 and 2004 |  | F-3 
|                                                                                           | 
|Consolidated Balance Sheets as of November 30, 2003 and 2004                               |  | F-4 
|                                                                                           | 
|Consolidated Statements of Cash Flows for the years ended November 30, 2002, 2003 and 2004 |  | F-6 
|                                                                                           | 
|Notes to Consolidated Financial Statements                                                 |  | F-8 
|                                                                                           | 
|Schedule:                                                                                  |  |     
|                                                                                           | 
|II Valuation and qualifying accounts as of November 30, 2002, 2003 and 2004                |  | F-34



F-1



---

##### Table of Contents

REPORT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



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-1 present fairly, in all material respects, the financial position
of Océ N.V. and its subsidiaries at November 30, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended November 30, 2004 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 financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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. Information relating to the nature and effect of such differences is presented in Note 26 to the consolidated financial statements.



Amsterdam, The Netherlands



February 28, 2005



PricewaterhouseCoopers
Accountants N.V.



F-2



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##### Table of Contents

OCÉ N.V. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                                                                        |  |                                         |  |           |  |           |  |          
|------------------------------------------------------------------------------------------------------- |  | --------------------------------------- |  | --------- |  | --------- |  | ---------
|                                                                                                        |  | Years ended November 30,               
|                                                                                                        |  | 2002                                    |  | 2003      |  | 2004      |  | 2004     
|                                                                                                        |  | (in thousands except per share amounts)
|                                                                                                        |  | Euro                                    |  | Euro      |  | Euro      |  | $*       
|Net sales                                                                                               |  | 1,792,144                               |  | 1,552,760 |  | 1,563,783 |  | 2,073,420
|Rentals and service                                                                                     |  | 1,267,485                               |  | 1,118,939 |  | 1,020,493 |  | 1,353,072
|Interest from financial leases                                                                          |  | 116,514                                 |  | 97,564    |  | 68,177    |  | 90,396   
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Total revenues                                                                                          |  | 3,176,143                               |  | 2,769,263 |  | 2,652,453 |  | 3,516,888
|                                                                                                        |  |                                         |  |          
|Cost of sales                                                                                           |  | 1,076,531                               |  | 943,820   |  | 938,855   |  | 1,244,828
|Cost of rentals and service                                                                             |  | 771,117                                 |  | 660,230   |  | 610,203   |  | 809,068  
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Gross margin                                                                                            |  | 1,328,495                               |  | 1,165,213 |  | 1,103,395 |  | 1,462,992
|                                                                                                        |  |                                         |  |          
|Selling expenses                                                                                        |  | 704,847                                 |  | 623,660   |  | 614,969   |  | 815,387  
|Research and development expenses                                                                       |  | 212,830                                 |  | 208,321   |  | 208,105   |  | 275,927  
|General and administrative expenses                                                                     |  | 184,747                                 |  | 183,226   |  | 162,044   |  | 214,854  
|Impairment                                                                                              |  |                                        |  | 25,175    |  | 7,888     |  | 10,459   
|                                                                                                        |  |                                         |  |           |  |           |  |          
|                                                                                                        |  | 1,102,424                               |  | 1,040,382 |  | 993,006   |  | 1,316,627
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Operating income                                                                                        |  | 226,071                                 |  | 124,831   |  | 110,389   |  | 146,365  
|                                                                                                        |  |                                         |  |          
|Financial expense (net)(Note 19)                                                                        |  | 54,101                                  |  | 30,552    |  | 18,089    |  | 23,984   
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Income before income taxes, equity in income of investments in minority interests and minority interest |  | 171,970                                 |  | 94,279    |  | 92,300    |  | 122,381  
|                                                                                                        |  |                                         |  |          
|Income taxes (Note 18)                                                                                  |  | 57,425                                  |  | 30,522    |  | 12,196    |  | 16,171   
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Income before equity in income of investments in minority interests and minority interest               |  | 114,545                                 |  | 63,757    |  | 80,104    |  | 106,210  
|                                                                                                        |  |                                         |  |          
|Equity in income of investments in minority interests                                                   |  | 279                                     |  | 90        |  | 507       |  | 672      
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Income before minority interest                                                                         |  | 114,824                                 |  | 63,847    |  | 80,611    |  | 106,882  
|                                                                                                        |  |                                         |  |          
|Minority interest in net income of subsidiaries                                                         |  | 2,293                                   |  | 2,385     |  | 2,535     |  | 3,361    
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Net income                                                                                              |  | 112,531                                 |  | 61,462    |  | 78,076    |  | 103,521  
|                                                                                                        |  |                                         |  |          
|Basic earnings per ordinary share                                                                       |  | 1.30                                    |  | 0.69      |  | 0.89      |  | 1.18     
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Diluted earnings per ordinary share                                                                     |  | 1.29                                    |  | 0.69      |  | 0.88      |  | 1.17     
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Net income in accordance with US GAAP (Note 26)                                                         |  | 65,008                                  |  | 50,718    |  | 59,302    |  | 78,630   
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Earnings per ordinary share in accordance with US GAAP                                                  |  |                                         |  |           |  |           |  |          
|Basic                                                                                                   |  | 0.73                                    |  | 0.57      |  | 0.67      |  | 0.89     
|                                                                                                        |  |                                         |  |           |  |           |  |          
|Diluted                                                                                                 |  | 0.73                                    |  | 0.56      |  | 0.66      |  | 0.88     
|                                                                                                        |  |                                         |  |           |  |           |  |          

---

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



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



F-3



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##### Table of Contents

OCÉ N.V. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



|                                               |  |                |  |           |  |          
|---------------------------------------------- |  | -------------- |  | --------- |  | ---------
|                                               |  | November 30,  
|                                               |  | 2003           |  | 2004      |  | 2004     
|                                               |  | (in thousands)
|                                               |  | Euro           |  | Euro      |  | $*       
|CURRENT ASSETS:                                |  |                |  |           |  |          
|                                               |  |                | 
|Cash and cash equivalents (Note 1)             |  | 55,709         |  | 313,060   |  | 415,086  
|Prepaid expenses                               |  | 24,330         |  | 17,025    |  | 22,573   
|Accounts receivable (Note 2)                   |  | 578,495        |  | 535,415   |  | 709,907  
|Financial lease receivables (Note 7)           |  | 348,911        |  | 172,495   |  | 228,711  
|Inventories (Note 3)                           |  | 310,404        |  | 317,335   |  | 420,754  
|                                               |  |                |  |           |  |          
|Total current assets                           |  | 1,317,849      |  | 1,355,330 |  | 1,797,031
|                                               |  |                | 
|FIXED ASSETS:                                  |  |                |  |           |  |          
|                                               |  |                | 
|Intangible fixed assets (Note 4)               |  | 48,721         |  | 37,207    |  | 49,333   
|                                               |  |                | 
|Property, plant and equipment (Notes 5 and 15) |  | 430,527        |  | 423,490   |  | 561,505  
|Rental equipment (Note 6)                      |  | 63,279         |  | 57,891    |  | 76,758   
|                                               |  |                |  |           |  |          
|Tangible fixed assets                          |  | 493,806        |  | 481,381   |  | 638,263  
|                                               |  |                | 
|Investments in minority interests              |  | 2,535          |  | 1,553     |  | 2,059    
|Financial lease receivables (Note 7)           |  | 451,848        |  | 230,962   |  | 306,233  
|Other long term assets (Note 8)                |  | 106,503        |  | 126,654   |  | 167,931  
|                                               |  |                |  |           |  |          
|                                               |  | 560,886        |  | 359,169   |  | 476,223  
|                                               |  |                | 
|Total fixed assets                             |  | 1,103,413      |  | 877,757   |  | 1,163,819
|                                               |  |                |  |           |  |          
|TOTAL ASSETS                                   |  | 2,421,262      |  | 2,233,087 |  | 2,960,850
|                                               |  |                |  |           |  |          

---

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



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



F-4



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##### Table of Contents

OCÉ N.V. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



|                                                    |  |                                     |  |           |  |          
|--------------------------------------------------- |  | ----------------------------------- |  | --------- |  | ---------
|                                                    |  | November 30,                       
|                                                    |  | 2003                                |  | 2004      |  | 2004     
|                                                    |  | (in thousands except share amounts)
|                                                    |  | Euro                                |  | Euro      |  | $*       
|CURRENT LIABILITIES:                                |  |                                     |  |           |  |          
|Borrowings under bank lines of credit (Note 9)      |  | 1,638                               |  | 15,052    |  | 19,957   
|Short term borrowings (Note 9)                      |  | 888                                 |  |          |  |         
|Current portion of long term debt (Note 9 and 11)   |  | 165,895                             |  | 27,790    |  | 36,847   
|Accounts and notes payable, trade                   |  | 132,593                             |  | 132,411   |  | 175,564  
|Other current- and accrued liabilities (Note 17)    |  | 345,934                             |  | 306,014   |  | 405,744  
|Deferred income (Note 10)                           |  | 45,830                              |  | 45,155    |  | 59,871   
|                                                    |  |                                     |  |           |  |          
|Total current liabilities                           |  | 692,778                             |  | 526,422   |  | 697,983  
|                                                    |  |                                     | 
|LONG TERM DEBT:                                     |  |                                     |  |           |  |          
|Long term debt (Note 11)                            |  | 380,793                             |  | 438,409   |  | 581,286  
|                                                    |  |                                     |  |           |  |          
|Total long term debt                                |  | 380,793                             |  | 438,409   |  | 581,286  
|                                                    |  |                                     | 
|LONG TERM LIABILITIES (PROVISIONS):                 |  |                                     |  |           |  |          
|Deferred income taxes (Note 18)                     |  | 29,325                              |  | 6,918     |  | 9,173    
|Long term provisions (Note 12)                      |  | 566,779                             |  | 509,059   |  | 674,961  
|                                                    |  |                                     |  |           |  |          
|Total long term liabilities                         |  | 596,104                             |  | 515,977   |  | 684,134  
|                                                    |  |                                     | 
|COMMITMENTS AND CONTINGENT LIABILITIES              |  |                                     |  |           |  |          
|(Note 14)                                           |  |                                     |  |           |  |          
|                                                    |  |                                     | 
|MINORITY INTEREST                                   |  | 38,822                              |  | 38,209    |  | 50,661   
|                                                    |  |                                     | 
|SHAREHOLDERS EQUITY (Note 13):                     |  |                                     |  |           |  |          
|Priority Shares                                     |  | 2                                   |  | 2         |  | 3        
|(30 with a nominal or par value Euro 50)            |  |                                     |  |           |  |          
|Ordinary Shares                                     |  |                                     |  |           |  |          
|(87,268,562) with a nominal or par value Euro 0.50) |  | 43,631                              |  | 43,634    |  | 57,854   
|Financing Preference Shares                         |  |                                     |  |           |  |          
|(20,000,000 with a nominal or par value Euro 0.50)  |  | 10,000                              |  | 10,000    |  | 13,259   
|Paid-in capital                                     |  | 511,408                             |  | 511,445   |  | 678,125  
|Legal reserve                                       |  | 592                                 |  | 2,441     |  | 3,237    
|Retained earnings                                   |  | 200,147                             |  | 208,863   |  | 276,931  
|Accumulated translation adjustment                  |  | -114,477                            |  | -140,391  |  | -186,144 
|Net income                                          |  | 61,462                              |  | 78,076    |  | 103,521  
|                                                    |  |                                     |  |           |  |          
|Total shareholders equity                          |  | 712,765                             |  | 714,070   |  | 946,786  
|                                                    |  |                                     |  |           |  |          
|TOTAL LIABILITIES & SHAREHOLDERS EQUITY            |  | 2,421,262                           |  | 2,233,087 |  | 2,960,850
|                                                    |  |                                     |  |           |  |          

---

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



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



F-5



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##### Table of Contents

OCÉ N.V. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                    |  |                          |  |          |  |          |  |         
|----------------------------------------------------------------------------------- |  | ------------------------ |  | -------- |  | -------- |  | --------
|                                                                                    |  | Years ended November 30,
|                                                                                    |  | 2002                     |  | 2003     |  | 2004     |  | 2004    
|                                                                                    |  | (in thousands)          
|                                                                                    |  | Euro                     |  | Euro     |  | Euro     |  | $*      
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                        |  | 40,133                   |  | 37,385   |  | 55,709   |  | 73,865  
|                                                                                    |  |                          |  |         
|CASH FLOW FROM OPERATING ACTIVITIES:                                                |  |                          |  |          |  |          |  |         
|Net income                                                                          |  | 112,531                  |  | 61,462   |  | 78,076   |  | 103,521 
|Adjustments to reconcile net income to cash flow generated by operating activities: |  |                          |  |          |  |          |  |         
|Depreciation and amortization                                                       |  | 197,150                  |  | 173,370  |  | 147,626  |  | 195,737 
|Impairment                                                                          |  |                         |  | 25,175   |  | 7,888    |  | 10,459  
|Additions to rental equipment                                                       |  | -106,884                 |  | -83,025  |  | -116,797 |  | -154,861
|Proceeds from sale of rental equipment                                              |  | 77,181                   |  | 67,747   |  | 77,268   |  | 102,450 
|Financial lease receivables                                                         |  | -11,143                  |  | 45,347   |  | 74,337   |  | 98,563  
|Equity in income of investments in minority interests                               |  | -3                       |  | 271      |  | -402     |  | -533    
|Net income for minority interests                                                   |  |                         |  | 2,385    |  | 2,535    |  | 3,361   
|Long term liabilities (provisions)                                                  |  | 27,633                   |  | -41,241  |  | -104,640 |  | -138,742
|Changes in working capital:                                                         |  |                          |  |          |  |          |  |         
|Accounts receivable and other receivables                                           |  | 69,888                   |  | 70,786   |  | 30,938   |  | 41,020  
|Provisions for financial lease receivables, inventories and accounts receivable     |  | 59,162                   |  | 52,140   |  | 42,470   |  | 56,311  
|Inventories                                                                         |  | 20,525                   |  | 5,458    |  | -63,003  |  | -83,536 
|Trade accounts payable                                                              |  | 4,901                    |  | -31,342  |  | 1,806    |  | 2,395   
|Net change in other working capital accounts **                                     |  | -4,687                   |  | -8,992   |  | -41,329  |  | -54,798 
|                                                                                    |  |                          |  |          |  |          |  |         
|Total cash flow from operating activities                                           |  | 446,254                  |  | 339,541  |  | 136,773  |  | 181,347 
|                                                                                    |  |                          |  |         
|CASH FLOW FROM INVESTING ACTIVITIES:                                                |  |                          |  |          |  |          |  |         
|Additions to intangible fixed assets                                                |  | -19,370                  |  | -11,497  |  | -9,354   |  | -12,402 
|Additions to property, plant and equipment                                          |  | -115,936                 |  | -97,129  |  | -86,738  |  | -115,006
|Other long term financial assets                                                    |  | -4,635                   |  | -1,925   |  | 3,340    |  | 4,428   
|Divestment of intangible fixed assets                                               |  |                         |  | 94       |  |         |  |        
|Proceeds from sale of property, plant and equipment                                 |  | 14,684                   |  | 16,599   |  | 12,910   |  | 17,117  
|Acquisition of minority interests                                                   |  | -23                      |  | -17      |  |         |  |        
|Proceeds from disposition of minority interests                                     |  | 930                      |  | 5        |  | 1,305    |  | 1,730   
|Proceeds from sale of lease portfolio                                               |  | 70,800                   |  | 79,768   |  | 312,254  |  | 414,018 
|Acquisitions (disposal) at net asset value (net of cash)                            |  | -55,008                  |  | 2,379    |  |         |  |        
|                                                                                    |  |                          |  |          |  |          |  |         
|Total cash flow from investing activities                                           |  | -108,558                 |  | -11,723  |  | 233,717  |  | 309,885 
|                                                                                    |  |                          |  |         
|CASH FLOW FROM FINANCING ACTIVITIES:                                                |  |                          |  |          |  |          |  |         
|Proceeds from long term debt                                                        |  | 132,904                  |  | 9,116    |  | 141,476  |  | 187,583 
|Repayment of long term debt                                                         |  | -123,635                 |  | -329,623 |  | -76,524  |  | -101,463
|Borrowings and current portion of long term debts                                   |  | -300,386                 |  | 81,727   |  | -124,822 |  | -165,502
|Movement repurchased shares Option Plan                                             |  | -6,047                   |  | -924     |  | 1,074    |  | 1,424   
|Dividends paid                                                                      |  | -52,336                  |  | -51,963  |  | -51,971  |  | -68,908 
|Minority interests                                                                  |  | -1,004                   |  | -3,361   |  | -3,099   |  | -4,109  
|Other                                                                               |  | -5,320                   |  |         |  |         |  |        
|                                                                                    |  |                          |  |          |  |          |  |         
|Total cash flow from financing activities                                           |  | -355,824                 |  | -295,028 |  | -113,866 |  | -150,975
|Effect of exchange rate changes                                                     |  | 15,380                   |  | -14,466  |  | 727      |  | 964     
|                                                                                    |  |                          |  |         
|CASH AND CASH EQUIVALENTS, END OF YEAR                                              |  | 37,385                   |  | 55,709   |  | 313,060  |  | 415,086 

---

|* | 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,
|                                                               |  | 2002                     |  | 2003    |  | 2004    |  | 2004    
|                                                               |  | (in thousands)          
|                                                               |  | Euro                     |  | Euro    |  | Euro    |  | $*      
|SPECIFICATION OF NET CHANGE IN OTHER WORKING CAPITAL ACCOUNTS: |  |                          |  |         |  |         |  |         
|Prepaid expenses                                               |  | 410                      |  | 5,138   |  | 6,360   |  | 8,433   
|Income taxes                                                   |  | 24,896                   |  | 12,205  |  | -31,173 |  | -41,332 
|Value added taxes, social security and other taxes payable     |  | -1,176                   |  | 2,929   |  | 1,823   |  | 2,417   
|Pension liabilities                                            |  | -3,779                   |  | -2,395  |  | -586    |  | -777    
|Other liabilities                                              |  | -24,551                  |  | -3,229  |  | -8,665  |  | -11,489 
|Accrued liabilities                                            |  | -5,146                   |  | -17,037 |  | -9,764  |  | -12,946 
|Deferred income                                                |  | 4,659                    |  | -6,603  |  | 676     |  | 896     
|                                                               |  |                          |  |         |  |         |  |         
|                                                               |  | -4,687                   |  | -8,992  |  | -41,329 |  | -54,798 
|                                                               |  |                          |  |        
|Supplemental cash flow information:                            |  |                          |  |         |  |         |  |         
|                                                               |  |                          |  |        
|Income taxes paid (net)                                        |  | -4,060                   |  | -24,624 |  | -92,627 |  | -122,814
|Interest received (net)                                        |  | 52,328                   |  | 61,540  |  | 44,373  |  | 58,834  
|                                                               |  |                          |  |        
|Non cash transactions:                                         |  |                          |  |         |  |         |  |         
|                                                               |  |                          |  |        
|Conversion of convertible bonds into share capital             |  | 9                        |  | 8       |  | 40      |  | 53      

---

|* | 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



Basis of presentation



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 year.



The dollar amounts at November
30, 2004 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 $ 1.3259 per Euro 1, the Noon Buying
Rate on November 30, 2004. 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



The accounting principles applied in financial year 2004 are unchanged compared to the previous year, except for the modifications made to the balance sheet
classifications. These changes had no impact on the results and equity and have been made in order to ensure a better link-up with the International Financial Reporting Standards [IFRS] that will become applicable to Océ as from the 2006
financial year. The principal changes relate to the reclassification of showroom machines from inventories to property, plant and equipment and the classification of all software, which was previously included partly under property, plant and
equipment, under intangible assets.



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 controlling interest in it. 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 123 and 124 of the Océ Annual Report 2004, which are incorporated herein by reference. Intercompany transactions and account balances
have been eliminated upon consolidation. Unrealized gains on transactions between Group companies are eliminated. Unrealized losses are eliminated unless it is clear that no margin has been realized on inventories transferred.



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.



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.



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##### Table of Contents

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.



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 when it is probable that the project will be a success
considering its commercial and technological feasibility, and costs can be measured reliably.



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.



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##### Table of Contents

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.



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.



Option Plan



To encourage the long term achievement of the Companys objectives Océ operates a Stock Option Plan under which decisions are taken each year on the granting to certain senior company executives of option
rights and/or Share Appreciation Rights (SARs) in respect of ordinary shares in Océ.



Options have an exercise price equivalent to the stock market price on the date of granting. The difference between the stock market price of the shares on the day of exercise and the exercise price is charged to
equity having taken into account the repurchased shares for this option plan.



In 2004 the option plan for the members of the Board of Executive Directors was replaced by a share plan. At the beginning of 2005 shares will be conditionally granted to the members of the Board of Executive Directors for the first time.
During 2005 the option plan for the other participants will also be replaced by a share plan, under which shares will be granted in 2006.



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
fixed assets



Intangible fixed assets are valued at historical cost, less
cumulative depreciation and any impairments.



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 and generates economic benefits for several years. 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.       





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##### Table of Contents

Property, plant and equipment



Property, plant and equipment are valued at historical cost, less cumulative depreciation and any impairments. 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.  



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 for making it effectively operational at the customer. 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 costprice, in accordance with the first-in first-out method, or market value. 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



This comprises the long term receivables and residual values in respect
of financial lease contracts. 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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##### Table of Contents

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 entitlements are calculated according to the projected unit credit method. All actuarial gains and losses, above a threshold of 10% of the (highest of the) pension liabilities or fair value of the pension assets, are charged
to the Statement of Operations over the remaining periods of service. Changes in pension plans and back service costs are charged direct to the Statement of Operations provided that they are unconditional in nature. These calculations are made
annually by qualified actuaries. The pension liabilities as recognized in the balance sheet are shown at the net present value of the promised pension entitlements at balance sheet date, less the fair value of the pension assets and after adding or
deducting the actuarial gains or losses that have not yet been incorporated in the result and the back service costs.



Early retirement liabilities relate to specific mostly individual agreements.



Long service leave liabilities relate in most cases to statutory liabilities, whereby an amount related to the salary is payable for each year of service. Payments take
place upon leaving company service. These also include jubilee provisions.



The
restructuring provision relates to costs connected with the reorganization of business activities.



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 recorded in the Statement of Operations.



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##### Table of Contents

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.



1. Cash and cash
equivalents



Cash and cash equivalents include time deposits of Euro 11.4
million and Euro 286.7 million at November 30, 2003 and 2004, 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,  
|                          |  | 2003           |  | 2004   
|                          |  | (in thousands)
|                          |  | Euro           |  | Euro   
|Trade accounts receivable |  | 502,555        |  | 451,911
|Discounted trade bills    |  | -324           |  | -11    
|Current income tax        |  | 9,256          |  | 25,555 
|Other                     |  | 67,008         |  | 57,960 
|                          |  |                |  |        
|Total                     |  | 578,495        |  | 535,415
|                          |  |                |  |        



Allowances for doubtful accounts
amounts to Euro 53.7 million and Euro 54.0 million at November 30, 2003 and 2004, respectively.



3. Inventories



Inventories consist of
the following:



|                                       |  |                |  |        
|-------------------------------------- |  | -------------- |  | -------
|                                       |  | November 30,  
|                                       |  | 2003           |  | 2004   
|                                       |  | (in thousands)
|                                       |  | Euro           |  | Euro   
|Raw materials and other materials      |  | 39,733         |  | 35,723 
|Semi-finished products and spare parts |  | 107,048        |  | 135,087
|Finished products and trade stock      |  | 163,623        |  | 146,525
|                                       |  |                |  |        
|Total                                  |  | 310,404        |  | 317,335
|                                       |  |                |  |        



Allowances for obsolescence are in
total Euro 165.8 million and Euro 178.8 million at November 30, 2003 and 2004, 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 |  | Trademarksand other |  | Total  
|                                 |  | Euro     |  | Euro     |  | Euro       |  | Euro         |  | Euro                |  | Euro   
|At December 1, 2002              |  |          |  |          |  |            |  |              |  |                     |  |        
|Acquisition value                |  | 31,687   |  | 41,709   |  | 8,112      |  | 13,324       |  | 5,731               |  | 100,563
|Accumulated amortization         |  | 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 in 2003: |  |          |  |          |  |            |  |              |  |                     |  |        
|Expenditure                      |  |         |  | 10,212   |  | 696        |  | 589          |  |                    |  | 11,497 
|Divestments                      |  |         |  | 94       |  |           |  |             |  |                    |  | 94     
|                                 |  |          |  |          |  |            |  |              |  |                     |  |        
|Net investments                  |  |         |  | 10,118   |  | 696        |  | 589          |  |                    |  | 11,403 
|                                 |  |          |  |          |  |           
|Amortization                     |  | 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 December 1, 2003              |  |          |  |          |  |            |  |              |  |                     |  |        
|Acquisition value                |  | 28,087   |  | 47,312   |  | 7,399      |  | 11,669       |  | 4,756               |  | 99,223 
|Accumulated amortization         |  | 18,705   |  | 16,179   |  | 3,481      |  | 11,148       |  | 989                 |  | 50,502 
|                                 |  |          |  |          |  |            |  |              |  |                     |  |        
|Book value                       |  | 9,382    |  | 31,133   |  | 3,918      |  | 521          |  | 3,767               |  | 48,721 
|                                 |  |          |  |          |  |           
|Movements in book value in 2004: |  |          |  |          |  |            |  |              |  |                     |  |        
|Expenditure                      |  | 756      |  | 6,608    |  | 1,990      |  |             |  |                    |  | 9,354  
|Reclassification                 |  |         |  | 7,891    |  | -73        |  | 268          |  |                    |  | 8,086  
|Amortization                     |  | 1,063    |  | 15,749   |  | 1,588      |  | 201          |  | 444                 |  | 19,045 
|Impairment                       |  | 7,207    |  |         |  |           |  | 280          |  |                    |  | 7,487  
|Foreign currency translations    |  | -264     |  | -1,560   |  | -271       |  |             |  | -327                |  | -2,422 
|                                 |  |          |  |          |  |            |  |              |  |                     |  |        
|At November 30, 2004             |  | 1,604    |  | 28,323   |  | 3,976      |  | 308          |  | 2,996               |  | 37,207 
|                                 |  |          |  |          |  |           
|At December 1, 2004              |  |          |  |          |  |            |  |              |  |                     |  |        
|Acquisition value                |  | 11,652   |  | 71,859   |  | 8,737      |  | 10,969       |  | 4,305               |  | 107,522
|Accumulated amortization         |  | 10,048   |  | 43,536   |  | 4,761      |  | 10,661       |  | 1,309               |  | 70,315 
|                                 |  |          |  |          |  |            |  |              |  |                     |  |        
|Book value                       |  | 1,604    |  | 28,323   |  | 3,976      |  | 308          |  | 2,996               |  | 37,207 
|                                 |  |          |  |          |  |            |  |              |  |                     |  |        



F-14



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##### Table of Contents

5. Property, plant and equipment



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



|                                 |  |                   |  |                    |  |                   |  |                                   |  |                                               |  |          
|-------------------------------- |  | ----------------- |  | ------------------ |  | ----------------- |  | --------------------------------- |  | --------------------------------------------- |  | ---------
|                                 |  | Propertyand plant |  | Productionmachines |  | Other fixedassets |  | Underconstructionand pre-payments |  | Not inproductionprocess andinvestmentproperty |  | Total    
|                                 |  | Euro              |  | Euro               |  | Euro              |  | Euro                              |  | Euro                                          |  | Euro     
|At December 1, 2002              |  |                   |  |                    |  |                   |  |                                   |  |                                               |  |          
|Acquisition value                |  | 326,226           |  | 432,621            |  | 417,387           |  | 46,781                            |  | 19,978                                        |  | 1,242,993
|Accumulated depreciation         |  | 142,813           |  | 321,595            |  | 304,376           |  | 83                                |  | 15,274                                        |  | 784,141  
|                                 |  |                   |  |                    |  |                   |  |                                   |  |                                               |  |          
|Book value                       |  | 183,413           |  | 111,026            |  | 113,011           |  | 46,698                            |  | 4,704                                         |  | 458,852  
|                                 |  |                   |  |                    |  |                  
|Movements in book value in 2003: |  |                   |  |                    |  |                   |  |                                   |  |                                               |  |          
|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 December 1, 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  
|                                 |  |                   |  |                    |  |                  
|Movements in book value in 2004: |  |                   |  |                    |  |                   |  |                                   |  |                                               |  |          
|Expenditure                      |  | 1,936             |  | 23,111             |  | 44,413            |  | 16,592                            |  | 686                                           |  | 86,738   
|Divestments                      |  | 1,410             |  | 911                |  | 10,589            |  |                                  |  |                                              |  | 12,910   
|                                 |  |                   |  |                    |  |                   |  |                                   |  |                                               |  |          
|Net investments                  |  | 526               |  | 22,200             |  | 33,824            |  | 16,592                            |  | 686                                           |  | 73,828   
|                                 |  |                   |  |                    |  |                  
|Reclassification                 |  | 3,688             |  | 4,040              |  | 3,878             |  |                                  |  | -947                                          |  | 10,659   
|Depreciation                     |  | 10,202            |  | 32,848             |  | 42,223            |  |                                  |  | 216                                           |  | 85,489   
|Impairment                       |  | 85                |  | 206                |  | 110               |  |                                  |  |                                              |  | 401      
|Foreign currency translations    |  | -1,354            |  | -1,934             |  | -2,164            |  | -138                              |  | -44                                           |  | -5,634   
|                                 |  |                   |  |                    |  |                   |  |                                   |  |                                               |  |          
|At November 30, 2004             |  | 179,376           |  | 98,537             |  | 107,118           |  | 34,746                            |  | 3,713                                         |  | 423,490  
|                                 |  |                   |  |                    |  |                  
|At December 1, 2004              |  |                   |  |                    |  |                   |  |                                   |  |                                               |  |          
|Acquisition value                |  | 349,396           |  | 428,331            |  | 420,489           |  | 34,746                            |  | 13,018                                        |  | 1,245,980
|Accumulated depreciation         |  | 170,020           |  | 329,794            |  | 313,371           |  |                                  |  | 9,305                                         |  | 822,490  
|                                 |  |                   |  |                    |  |                   |  |                                   |  |                                               |  |          
|Book value                       |  | 179,376           |  | 98,537             |  | 107,118           |  | 34,746                            |  | 3,713                                         |  | 423,490  
|                                 |  |                   |  |                    |  |                   |  |                                   |  |                                               |  |          



The book value of Other fixed
assets contains an amount of  4.7 million for financial leases [2003:  9.3 million].



The reclassification of  10.7 million is composed of an addition of showroom machines of  18.7 million and a reduction particularly of software of  8.1 million.



F-15



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##### Table of Contents

6. Rental equipment



Rental equipment consists of the following:



|                             |  |                |  |        
|---------------------------- |  | -------------- |  | -------
|                             |  | 2003           |  | 2004   
|                             |  | (in thousands)
|                             |  | Euro           |  | Euro   
|At December 1, 2002/2003     |  |                |  |        
|Cost                         |  | 469,131        |  | 364,469
|Accumulated depreciation     |  | 350,189        |  | 301,190
|                             |  |                |  |        
|Book value                   |  | 118,942        |  | 63,279 
|                             |  |                |  |        
|Movements in book value:     |  |                |  |        
|Installed on rental          |  | 83,025         |  | 116,797
|Divestments                  |  | -68,590        |  | -77,268
|Depreciation                 |  | 64,851         |  | 43,092 
|Foreign currency translation |  | -5,247         |  | -1,825 
|                             |  |                |  |        
|At November 30               |  | 63,279         |  | 57,891 
|                             |  |               
|Cost                         |  | 364,469        |  | 302,798
|Accumulated depreciation     |  | 301,190        |  | 244,907
|                             |  |                |  |        
|Book value at November 30    |  | 63,279         |  | 57,891 
|                             |  |                |  |        



7. Financial lease receivables



Financial lease receivables consist of the following:



|                               |  |                |  |         
|------------------------------ |  | -------------- |  | --------
|                               |  | 2003           |  | 2004    
|                               |  | (in thousands)
|                               |  | Euro           |  | Euro    
|Financial lease receivables    |  | 974,470        |  | 490,806 
|Allowance for uncollectibility |  | -29,928        |  | -19,011 
|Current lease receivables      |  | -348,911       |  | -172,495
|Unearned interest              |  | -149,428       |  | -71,528 
|Residual value                 |  | 5,015          |  | 3,190   
|                               |  |                |  |         
|Total                          |  | 451,848        |  | 230,962 
|                               |  |                |  |         



8. Other long term assets



|                                    |  |                |  |        
|----------------------------------- |  | -------------- |  | -------
|                                    |  | 2003           |  | 2004   
|                                    |  | (in thousands)
|                                    |  | Euro           |  | Euro   
|Book value at December 1, 2002/2003 |  | 99,109         |  | 106,503
|New amounts receivable              |  | 13,365         |  | 31,284 
|Repayments                          |  | -2,850         |  | -7,608 
|Foreign currency translations       |  | -3,121         |  | -3,525 
|                                    |  |                |  |        
|Book value at November 30           |  | 106,503        |  | 126,654
|                                    |  |                |  |        



This item includes deferred tax claims
of Euro 106.6 million (in 2003: Euro 82.8 million). An amount of Euro 1.1 million (2003: Euro 1.8 million) was provided to personnel in the form of loans.



Other long term assets also include an amount of Euro 0.4 million (2003: 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,



F-16



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##### Table of Contents

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. 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, 2004 amounted to Euro 373 million (2003: Euro 771 million) for the parent company and its Dutch subsidiaries. At November 30, 2004 no
amount of this facility was utilized.



Borrowing facilities for the
subsidiaries outside of the Netherlands totaled Euro 287 million at November 30, 2004 (2003: Euro 435 million). These facilities are denominated in various currencies.



At November 30, 2004 the used portion of these facilities amounted to Euro 33 million (2003: Euro 159 million) classified as current portion
short term and Euro 93 million (2003: Euro 4 million) classified as long term debt, bearing interest of 2.4 % in 2004.



Commitment fees of approximately Euro 1.1 million were paid for unused credit facilities in 2004 (2003 Euro 1.3 million and 2002 Euro 0.9 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,  
|                                                                                                                |  | 2003           |  | 2004    
|                                                                                                                |  | (in thousands)
|                                                                                                                |  | Euro           |  | Euro    
|LOANS                                                                                                           |  |                |  |         
|U.S. dollar denominated, average interest of 1.6% and 4.3%, maturing through 2008                               |  | 80,761         |  | 84,215  
|Euro denominated, average interest of 5.9% and 5.9%, maturing through 2013                                      |  | *395,076       |  | *320,258
|Norwegian Crown denominated, average interest of 3.0%                                                           |  | 1,273          |  |        
|Swedish Crown denominated, average interest 3.2% and 2.7%, maturing through 2006                                |  | 1,139          |  | 1,456   
|Czech Crown denominated, average interest of 2.5% and 3.3%, maturing through 2006                               |  | 1,707          |  | 5,604   
|Swiss Franc denominated, average interest 0.4% and 1.0%, maturing through 2006                                  |  | 39,300         |  | 30,992  
|Australian Dollar denominated, average interest 5.0%                                                            |  | 2,419          |  |        
|Hong Kong Dollar denominated, average interest 0.6%                                                             |  | 387            |  |        
|Japanese Yen denominated, average interest 0.3% and 0.8%, maturing through 2006                                 |  | 731            |  | 2,122   
|Pound Sterling denominated, average interest 3.9%                                                               |  | 8,033          |  |        
|Mexican Peso denominated, average interest 6.7% and 9.3%, maturing through 2008                                 |  | 219            |  | 249     
|Singapore Dollar denominated, average interest 1.0% and 2.6%, maturing through 2006                             |  | 920            |  | 1,380   
|Hungarian Florin denominated, average interest 11.4%, maturing through 2006                                     |  |               |  | 609     
|Slovak Koruna denominated, average interest 4.6%, maturing through 2006                                         |  |               |  | 1,317   
|Convertible Euro debenture bonds to Company Personnel, average interest of 4.5% and 4.4%, maturing through 2010 |  | 11,507         |  | 11,619  
|Thailand Bath denominated, average interest 2.5% and 3.1%, maturing through 2006                                |  | 677            |  | 1,147   
|Capitalized lease obligations, average interest of 11.7% and 6.0%, maturing through 2009                        |  | 2,539          |  | 5,231   
|                                                                                                                |  |                |  |         
|Total other long term debt                                                                                      |  | 546,688        |  | 466,199 
|Current portion                                                                                                 |  | 165,895        |  | 27,790  
|                                                                                                                |  |                |  |         
|Total long term portion                                                                                         |  | 380,793        |  | 438,409 
|                                                                                                                |  |                |  |         

---

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



F-17



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##### Table of Contents

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



|                          |  |                
|------------------------- |  | ---------------
|Years ending November 30, |  | Euro           
|                          |  | ( in thousands)
|2005                      |  | 27,790         
|2006                      |  | 239,619        
|2007                      |  | 181,381        
|2008                      |  | 8,567          
|2009                      |  | 1,764          
|Thereafter                |  | 7,078          
|                          |  |                
|Total                     |  | 466,199        
|                          |  |                



12. Long term liabilities
(provisions)



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



|                                                      |  |                    |  |                          |  |                              |  |                        |  |        |  |         
|----------------------------------------------------- |  | ------------------ |  | ------------------------ |  | ---------------------------- |  | ---------------------- |  | ------ |  | --------
|                                                      |  | Pensionliabilities |  | Earlyretirementprovision |  | Longservice leaveliabilities |  | Restructuringprovision |  | Other  |  | Total   
|                                                      |  | Euro               |  | Euro                     |  | Euro                         |  | Euro                   |  | Euro   |  | Euro    
|At December 1, 2002                                   |  | 177,620            |  | 10,756                   |  | 28,874                       |  | 89,613                 |  | 43,069 |  | 349,932 
|Change in opening balance due to transition to IAS 19 |  | 260,007            |  |                         |  |                             |  |                       |  |       |  | 260,007 
|                                                      |  |                    |  |                          |  |                             
|Additions                                             |  | 57,251             |  | 12,951                   |  | 4,835                        |  | 10,979                 |  | 4,306  |  | 90,322  
|Usage                                                 |  | -54,786            |  | -15,443                  |  | -3,255                       |  | -48,296                |  | -5,775 |  | -127,555
|Foreign currency translations                         |  | -8.365             |  | 3,858                    |  | 48                           |  | -261                   |  | -1,207 |  | -5,927  
|                                                      |  |                    |  |                          |  |                              |  |                        |  |        |  |         
|At November 30, 2003                                  |  | 431,727            |  | 12,122                   |  | 30,502                       |  | 52,035                 |  | 40,393 |  | 566,779 
|                                                      |  |                    |  |                          |  |                             
|Additions                                             |  | 53,160             |  | 5,580                    |  | 2,988                        |  | 11,351                 |  | 7,905  |  | 80,984  
|Release                                               |  |                   |  |                         |  |                             |  | -14,709                |  | -9,865 |  | -24,574 
|Usage                                                 |  | -75,408            |  | -1,504                   |  | -983                         |  | -23,734                |  | -9,983 |  | -111,612
|Foreign currency translations                         |  | -2,233             |  | -3                       |  | -51                          |  | -142                   |  | -89    |  | -2,518  
|                                                      |  |                    |  |                          |  |                              |  |                        |  |        |  |         
|At November 30, 2004                                  |  | 407,246            |  | 16,195                   |  | 32,456                       |  | 24,801                 |  | 28,361 |  | 509,059 



The table below displays a rollforward
of the restructuring provision from November 30, 2002 to November 30, 2004 (in millions).



|                     |  |                  |  |           |  |         |  |          |  |                 
|-------------------- |  | ---------------- |  | --------- |  | ------- |  | -------- |  | ----------------
|Type of costs        |  | BalanceNov. 2002 |  | Additions |  | Release |  | Utilized |  | BalanceNov. 2003
|                     |  | Euro             |  | 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            
|                     |  |                  |  |           | 
|Type of costs        |  | BalanceNov. 2003 |  | Additions |  | Release |  | Utilized |  | BalanceNov. 2004
|                     |  | Euro             |  | Euro      |  | Euro    |  | Euro     |  | Euro            
|Write-down of assets |  | 5.2              |  |          |  |        |  | -5.2     |  |                
|Personnel costs      |  | 46.8             |  | 11.3      |  | -14.7   |  | -18.6    |  | 24.8            
|                     |  |                  |  |           |  |         |  |          |  |                 
|Total long term part |  | 52.0             |  | 11.3      |  | -14.7   |  | -23.8    |  | 24.8            



F-18



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##### Table of Contents

13. Shareholders equity



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



|                                                   |  |                           |  |                |     |  |                |  |                      |  |                |  |                  |  |                                |  |                          
|-------------------------------------------------- |  | ------------------------- |  | -------------- | --- |  | -------------- |  | -------------------- |  | -------------- |  | ---------------- |  | ------------------------------ |  | -------------------------
|                                                   |  | FinancingPreferenceshares |  | Ordinaryshares |     |  | Paid incapital |  | RevaluationAccount * |  | Legalreserve * |  | Retainedearnings |  | Accumul.translationadjustments |  | Total Share-holdersequity
|                                                   |  | Euro                      |  | Euro           |     |  | Euro           |  | Euro                 |  | Euro           |  | Euro             |  | Euro                           |  | Euro                     
|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                  
|                                                   |  |                           |  |                |     |  |                | 
|Net income                                         |  |                           |  |                |     |  |                |  |                      |  |                |  | 78,076           |  |                                |  | 78,076                   
|Transfer                                           |  |                           |  |                |     |  |                |  |                      |  | 1,849          |  | -1,849           |  |                                |  |                         
|Dividends (b)                                      |  |                           |  |                |     |  |                |  |                      |  |                |  | -51,971          |  |                                |  | -51,971                  
|Conversions of convertible loans                   |  |                           |  | 3              |     |  | 37             |  |                      |  |                |  |                  |  |                                |  | 40                       
|Purchase of shares                                 |  |                           |  |                |     |  |                |  |                      |  |                |  | 1,266            |  |                                |  | 1,266                    
|Result on shares purchased via exercise of options |  |                           |  |                |     |  |                |  |                      |  |                |  | -192             |  |                                |  | -192                     
|                                                   |  |                           |  |                |     |  |                | 
|Foreign currency translations                      |  |                           |  |                |     |  |                |  |                      |  |                |  |                  |  | -25,914                        |  | -25,914                  
|                                                   |  |                           |  |                |     |  |                |  |                      |  |                |  |                  |  |                                |  |                          
|Balance November 30, 2004                          |  | 10,000                    |  | 43,636         | (a) |  | 511,445        |  |                     |  | 2,441          |  | 286,939          |  | -140,391                       |  | 714,070                  
|                                                   |  |                           |  |                |     |  |                |  |                      |  |                |  |                  |  |                                |  |                          

---

|* | 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 (rounded), Euro 0.58 and Euro 0.58 for respectively 2002, 2003 and 2004. The dividend of cumulative financing preference shares is
included.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-19



---

##### Table of Contents

Information regarding the various classes of shares at November 30, 2004 is as follows:



|                                                                                                  |  |                    |  |                                 |  |                       
|------------------------------------------------------------------------------------------------- |  | ------------------ |  | ------------------------------- |  | ----------------------
|Authorized capital                                                                                |  | Authorized shares  |  | Nominal value per share in Euro |  | Voting rightsper share
|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                                                                                   |  | 2002OrdinaryShares |  | 2003 Ordinary Shares            |  | 2004OrdinaryShares    
|Balance at beginning of period                                                                    |  | 87,261,509         |  | 87,262,525                      |  | 87,263,488            
|Conversion of convertible loans                                                                   |  | 1,016              |  | 963                             |  | 5,074                 
|                                                                                                  |  |                    |  |                                 |  |                       
|Balance at end of period                                                                          |  | 87,262,525         |  | 87,263,488                      |  | 87,268,562            
|                                                                                                  |  |                    |  |                                 |  |                       
|Convertible loans consist of convertible Euro debenture
bonds to Company personnel (see Note 11).
|Purchased number of ordinary shares                                                               |  | 2002               |  | 2003                            |  | 2004                  
|Balance beginning of the year                                                                     |  | 3,149,840          |  | 3,768,942                       |  | 3,856,942             
|Purchased                                                                                         |  | 619,102            |  | 100,000                         |  |                      
|Exercise of options                                                                               |  |                   |  | -12,000                         |  | -106,500              
|                                                                                                  |  |                    |  |                                 |  |                       
|Balance end of the year                                                                           |  | 3,768,942          |  | 3,856,942                       |  | 3,750,442             
|                                                                                                  |  |                    |  |                                 |  |                       



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 2002, 2003 and 2004.



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



F-20



---

##### Table of Contents

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 and M.W. den Boogert.



No Protective Preference Shares are outstanding.



14. Commitment and contingent liabilities



The Company is contingently liable for the following items:



|                                                                                                                                                                                                               |  |               |  |     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ----
|                                                                                                                                                                                                               |  | November 30, 
|                                                                                                                                                                                                               |  | 2003          |  | 2004
|                                                                                                                                                                                                               |  | (in millions)
|                                                                                                                                                                                                               |  | Euro          |  | Euro
|Government development credits and related surcharges (maximum position of repayment obligation) depending on the commercial success of
related development projects for which these credits have been granted |  | 48.3          |  | 49.2
|Guarantee commitments                                                                                                                                                                                          |  | 3.9           |  | 2.8 
|Recourse liabilities in respect of bills discounted                                                                                                                                                            |  | 0.3           |  |    



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, 2004 of Euro 7.9 million (2003: Euro 6.2 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, operations or cash flows 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, 
|                              |  | 2003          |  | 2004 
|                              |  | (in millions)
|                              |  | Euro          |  | Euro 
|Buildings and improvements    |  | 11,738        |  |     
|Equipment and vehicles        |  | 6,139         |  | 7,410
|                              |  |               |  |      
|                              |  | 17,877        |  | 7,410
|Less accumulated depreciation |  | 8,604         |  | 2,718
|                              |  |               |  |      
|Total                         |  | 9,273         |  | 4,692
|                              |  |               |  |      



F-21



---

##### Table of Contents

At November 30, 2004 minimum rental payments are as follows (in thousands):



|                                                |  |      
|----------------------------------------------- |  | -----
|Years ending November 30,                       |  | Euro 
|2005                                            |  | 1,832
|2006                                            |  | 1,404
|2007                                            |  | 1,190
|2008                                            |  | 475  
|2009                                            |  | 330  
|Thereafter                                      |  |     
|                                                |  |      
|Total minimum rental payments                   |  | 5,231
|Interest and executory costs                    |  |     
|                                                |  |      
|Present value of future minimum rental payments |  | 5,231
|                                                |  |      



16. Operating leases



The Company has future minimum rental commitments under operating leases
of approximately Euro 313 million at November 30, 2004. Sublease rental income is insignificant. Future rental payments (in thousands) are as follows:



|                              |  |        
|----------------------------- |  | -------
|Years ending November 30,     |  | Euro   
|2005                          |  | 76,034 
|2006                          |  | 54,627 
|2007                          |  | 45,315 
|2008                          |  | 33,681 
|2009                          |  | 28,770 
|Thereafter                    |  | 75,030 
|                              |  |        
|Total minimum rental payments |  | 313,457
|                              |  |        



Total rental expense was Euro 112
million, Euro 102 million and Euro 103 million for the years ended November 30, 2002, 2003 and 2004, respectively.



17. Other current- and accrued liabilities



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



|                                                           |  |         |  |        
|---------------------------------------------------------- |  | ------- |  | -------
|                                                           |  | 2003    |  | 2004   
|                                                           |  | Euro    |  | Euro   
|Current liabilities:                                       |  |         |  |        
|Value added taxes, social security and other taxes payable |  | 56,528  |  | 57,999 
|Pension liabilities                                        |  | 2,365   |  | 1,699  
|Dividend (preference shares)                               |  | 3,551   |  | 3,551  
|Income taxes                                               |  | 25,569  |  | 10,622 
|Other                                                      |  | 21,796  |  | 12,784 
|Accrued liabilities:                                       |  |         |  |        
|Salaries and payroll taxes                                 |  | 149,624 |  | 144,949
|Other                                                      |  | 86,501  |  | 74,410 
|                                                           |  |         |  |        
|Total                                                      |  | 345,934 |  | 306,014
|                                                           |  |         |  |        



F-22



---

##### Table of Contents

18. Income taxes



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



|            |  |                          |  |       |  |      
|----------- |  | ------------------------ |  | ----- |  | -----
|            |  | Years ended November 30,
|            |  | 2002                     |  | 2003  |  | 2004 
|            |  | (in millions)           
|            |  | Euro                     |  | Euro  |  | Euro 
|Netherlands |  | 9.9                      |  | -14.9 |  | 3.2  
|Foreign     |  | 35.9                     |  | 34.0  |  | 61.0 
|            |  |                          |  |       |  |      
|Current     |  | 45.8                     |  | 19.1  |  | 64.2 
|            |  |                          | 
|Netherlands |  | 2.9                      |  | 10.9  |  | -10.4
|Foreign     |  | 8.7                      |  | 0.5   |  | -41.6
|            |  |                          |  |       |  |      
|Deferred    |  | 11.6                     |  | 11.4  |  | -52.0
|            |  |                          |  |       |  |      
|Total       |  | 57.4                     |  | 30.5  |  | 12.2 
|            |  |                          |  |       |  |      



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,
|                                                |  | 2002                     |  | 2003 |  | 2004 
|                                                |  | %                        |  | %    |  | %    
|Dutch statutory tax rate                        |  | 35.0                     |  | 34.5 |  | 34.5 
|Non-deductible expenses                         |  | 1.7                      |  | 6.6  |  | 2.2  
|Tax credits                                     |  | -1.9                     |  | -3.3 |  | -2.2 
|Foreign taxes deviating from the Dutch tax rate |  | 2.1                      |  | -4.8 |  | -12.5
|Released valuation allowance                    |  | -4.5                     |  | -1.7 |  | -6.7 
|Other                                           |  | 1.0                      |  | 1.1  |  | -2.1 
|                                                |  |                          |  |      |  |      
|Effective income tax rate                       |  | 33.4                     |  | 32.4 |  | 13.2 
|                                                |  |                          |  |      |  |      



Deferred taxes exist for the following
time differences:



|                                      |  |                          |  |         |  |        
|------------------------------------- |  | ------------------------ |  | ------- |  | -------
|                                      |  | Years ended November 30,
|                                      |  | 2002                     |  | 2003    |  | 2004   
|                                      |  | (in thousands)          
|                                      |  | Euro                     |  | Euro    |  | Euro   
|Accelerated depreciation              |  | 17,553                   |  | 25,244  |  | 25,682 
|Inventory obsolescence                |  | -1,481                   |  | -2,088  |  | -4,542 
|Sundry provisions / accrued expenses  |  | 21,396                   |  | 25,633  |  | -9,789 
|Tax benefit of tax loss carry-forward |  | 1,577                    |  | 114     |  | -1,141 
|Leasing                               |  | -24,086                  |  | -40,605 |  | -67,767
|Other                                 |  | -3,325                   |  | 3,150   |  | 5,490  
|                                      |  |                          |  |         |  |        
|                                      |  | 11,634                   |  | 11,448  |  | -52,067
|                                      |  |                          |  |         |  |        



F-23



---

##### Table of Contents

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



|                                                         |  |               |  |                 |  |            |  |                
|-------------------------------------------------------- |  | ------------- |  | --------------- |  | ---------- |  | ---------------
|                                                         |  | 2003          |  | 2004           
|                                                         |  | (in millions)
|                                                         |  | assetsEuro    |  | liabilitiesEuro |  | assetsEuro |  | liabilitiesEuro
|Intangible fixed assets                                  |  | 30.9          |  |                |  | 19.9       |  |               
|Leasing                                                  |  |              |  | 69.0            |  |           |  | 37.9           
|Other fixed assets                                       |  | 24.8          |  | 12.1            |  | 45.5       |  | 0.7            
|Current assets                                           |  | 38.6          |  | 0.5             |  | 44.2       |  |               
|Other long term liabilities                              |  | 83.2          |  |                |  | 71.1       |  |               
|Current liabilities                                      |  | 0.3           |  | 14.1            |  | 0.1        |  | 20.3           
|                                                         |  |               |  |                 |  |            |  |                
|Total deferred tax assets/liabilities                    |  | 177.8         |  | 95.7            |  | 180.8      |  | 58.9           
|                                                         |  |               |  |                
|Net deferred tax position                                |  | 111.4         |  | 29.3            |  | 128.8      |  | 6.9            
|Tax loss carry forwards                                  |  | 14.2          |  |                |  | 14.4       |  |               
|Valuation allowance                                      |  | -42.8         |  |                |  | -36.6      |  |               
|                                                         |  |               |  |                 |  |            |  |                
|Provision for deferred income tax assets and liabilities |  | 82.8          |  | 29.3            |  | 106.6      |  | 6.9            
|                                                         |  |               |  |                 |  |            |  |                



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 than probable.



At November 30, 2004 no provision is made for withholding taxes on dividends of approximately Euro 0.6 million relating to undistributed earnings of certain subsidiaries
which management intends to reinvest indefinitely.



Operating loss carry
forwards existing at November 30, 2004 expire as follows (in millions):



|       |  |      |  |      |  |            |  |           |  |      
|------ |  | ---- |  | ---- |  | ---------- |  | --------- |  | -----
|Year   |  | 2008 |  | 2009 |  | thereafter |  | unlimited |  | Total
|Amount |  | 0.9  |  | 1.0  |  | 2.5        |  | 10.0      |  | 14.4 



19. Financial expense (net)



Financial expense consists of:



|                                      |  |                          |  |        |  |       
|------------------------------------- |  | ------------------------ |  | ------ |  | ------
|                                      |  | Years ended November 30,
|                                      |  | 2002                     |  | 2003   |  | 2004  
|                                      |  | (in thousands)          
|                                      |  | Euro                     |  | Euro   |  | Euro  
|Interest and similar income items     |  | -4,422                   |  | -5,753 |  | -6,440
|Interest charges and similar expenses |  | 56,751                   |  | 34,589 |  | 22,103
|Other financial expenses              |  | 1,772                    |  | 1,716  |  | 2,426 
|                                      |  |                          |  |        |  |       
|Financial expense (net)               |  | 54,101                   |  | 30,552 |  | 18,089
|                                      |  |                          |  |        |  |       



Amounts of interest capitalized in
each year were immaterial.



F-24



---

##### Table of Contents

20. Foreign exchange results



Results on foreign exchange hedging are included in cost of goods sold for an amount of Euro 7.9 million (profit), Euro 22.4 million
(profit) and Euro 6.3 million (profit) in 2002, 2003 and 2004, 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, 2004, minimum future receipts totaled approximately Euro 153 million to be
received as follows (in millions):



|                          |  |     
|------------------------- |  | ----
|Years ending November 30, |  | Euro
|2005                      |  | 66  
|2006                      |  | 41  
|2007                      |  | 23  
|2008                      |  | 14  
|2009                      |  | 7   
|Thereafter                |  | 2   
|                          |  |     
|Total                     |  | 153 
|                          |  |     



The amount above the contractual
minimum receivables included in the Consolidated Statements of Operations were approximately Euro 117 million, Euro 98 million and Euro 68 million for 2002, 2003 and 2004, respectively.



F-25



---

##### Table of Contents

22. Segment information



Below is shown the information specified per SBU:



|                                                        |  |                           |  |                         |  |      
|------------------------------------------------------- |  | ------------------------- |  | ----------------------- |  | -----
|                                                        |  | WideFormatPrintingSystems |  | DigitalDocumentsSystems |  | Total
|                                                        |  | (in millions)            
|                                                        |  | Euro                      |  | Euro                    |  | Euro 
|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  
|                                                        |  |                           | 
|Net expenditure in tangible and intangible fixed assets |  | 38                        |  | 112                     |  | 150  
|Depreciation                                            |  | 32                        |  | 150                     |  | 182  
|Amortization                                            |  | 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  
|                                                        |  |                           | 
|Net expenditure in tangible and intangible fixed assets |  | 24                        |  | 82                      |  | 106  
|Depreciation                                            |  | 32                        |  | 125                     |  | 157  
|Amortization                                            |  | 6                         |  | 11                      |  | 17   
|Impairment                                              |  | 11                        |  | 14                      |  | 25   
|                                                        |  |                           | 
|2004                                                    |  |                           |  |                         |  |      
|Total revenues                                          |  | 818                       |  | 1,834                   |  | 2,652
|Operating income                                        |  | 55                        |  | 55                      |  | 110  
|Net income                                              |  | 43                        |  | 35                      |  | 78   
|                                                        |  |                           | 
|Assets                                                  |  | 617                       |  | 1,616                   |  | 2,233
|Liabilities                                             |  | 328                       |  | 1,153                   |  | 1,481
|Shareholders equity and minority interests             |  | 289                       |  | 463                     |  | 752  
|                                                        |  |                           | 
|Net expenditure in tangible and intangible fixed assets |  | 24                        |  | 99                      |  | 123  
|Depreciation                                            |  | 31                        |  | 98                      |  | 129  
|Amortization                                            |  | 11                        |  | 8                       |  | 19   
|Impairment                                              |  | 8                         |  |                        |  | 8    



F-26



---

##### Table of Contents

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



|                  |  |                               |  |                              |  |                         |  |       |  |      |  |     
|----------------- |  | ----------------------------- |  | ---------------------------- |  | ----------------------- |  | ----- |  | ---- |  | ----
|                  |  | revenues pergeographical area |  | geographical spreadof assets |  | geographicalinvestments
|Countries         |  | 2003                          |  | 2004                         |  | 2003                    |  | 2004  |  | 2003 |  | 2004
|                  |  | Euro                          |  | Euro                         |  | Euro                    |  | Euro  |  | Euro |  | Euro
|United States     |  | 1,046                         |  | 925                          |  | 626                     |  | 414   |  | 23   |  | 19  
|Germany           |  | 335                           |  | 333                          |  | 434                     |  | 347   |  | 17   |  | 18  
|Netherlands       |  | 284                           |  | 291                          |  | 626                     |  | 855   |  | 39   |  | 53  
|France            |  | 199                           |  | 191                          |  | 163                     |  | 115   |  | 5    |  | 6   
|United Kingdom    |  | 183                           |  | 180                          |  | 140                     |  | 100   |  | 5    |  | 4   
|Rest of Europe    |  | 519                           |  | 534                          |  | 333                     |  | 305   |  | 14   |  | 18  
|Rest of the World |  | 203                           |  | 198                          |  | 99                      |  | 97    |  | 3    |  | 5   
|                  |  |                               |  |                              |  |                         |  |       |  |      |  |     
|Total             |  | 2,769                         |  | 2,652                        |  | 2,421                   |  | 2,233 |  | 106  |  | 123 
|                  |  |                               |  |                              |  |                         |  |       |  |      |  |     



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, 2004 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%               |  | 2.53%                 |  | 2.81                                         |  | Euro                          |  | 279



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



|                                     |  |                                    |  |                               |  |    
|------------------------------------ |  | ---------------------------------- |  | ----------------------------- |  | ---
|Weighted average fixed rate payments |  | Remainingaverage maturity in years |  | Notional amount (in millions)
|%                                    |  |                                    |  |                               |  |    
|3.75                                 |  | 1.56                               |  | Pound Sterling                |  | 11 
|4.64                                 |  | 1.70                               |  | U.S. dollars                  |  | 30 
|2.96                                 |  | 0.87                               |  | Euro                          |  | 115



The aggregated estimated fair value of
above swap contracts was approximately Euro 21 million based on the interest rates at November 30, 2004.



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 2004 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, 2004, the countervalue in Euro of such contracts in foreign currencies amounted to Euro 225.0 million in respect of the hedge of forecasted cash flows and Euro 79.8 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 7.9 million and Euro 1.3 million respectively higher than the contracted value at November 30, 2004.



F-27



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##### Table of Contents

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.



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 26.5 million higher than the carrying value based on similar terms and remaining maturities (2003: Euro 31.6
million).



24. Pension disclosures



With the effect from 2003 the pensions accounting standard IAS 19 has been
applied.



|                                                                   |  |                |  |           
|------------------------------------------------------------------ |  | -------------- |  | ----------
|                                                                   |  | 2003           |  | 2004      
|                                                                   |  | %              |  | %         
|The principal actuarial assumptions are:                           |  |                |  |           
|Discount rate percentage                                           |  | 5.29           |  | 4.87      
|Expected return on pension assets                                  |  | 6.59           |  | 6.62      
|Expected increase in salaries                                      |  | 2.78           |  | 2.70      
|Expected increase in benefits                                      |  | 2.00           |  | 2.05      
|                                                                   |  |               
|                                                                   |  | 2003           |  | 2004      
|                                                                   |  | (in thousands)
|                                                                   |  | Euro           |  | Euro      
|The amounts charged to the Statement of Operations are as follows: |  |                |  |           
|Service costs                                                      |  | 45,058         |  | 42,663    
|Interest costs                                                     |  | 66,227         |  | 65,285    
|Expected return on pension assets                                  |  | -53,090        |  | -54,322   
|Other                                                              |  | -718           |  | -249      
|                                                                   |  |                |  |           
|Pension costs                                                      |  | 57,477         |  | 53,377    
|                                                                   |  |                |  |           
|The amounts included in the balance sheet are shown below:         |  |                |  |           
|                                                                   |  |               
|Present values of funded obligations                               |  | -1,017,321     |  | -1,169,973
|Fair value of plan assets                                          |  | 788,404        |  | 896,934   
|                                                                   |  |                |  |           
|                                                                   |  | -228,917       |  | -273,039  
|Present value of unfunded obligations                              |  | -186,747       |  | -216,981  
|                                                                   |  |                |  |           
|Status of the funds                                                |  | -415,664       |  | -490,020  
|Actuarial losses/gains not yet included                            |  | -15,286        |  | 83,515    
|Back service not yet included                                      |  | -177           |  | 161       
|                                                                   |  |                |  |           
|Pension provisions included in the balance sheet                   |  | -431,127       |  | -406,344  
|                                                                   |  |                |  |           
|Movements in pension liabilities:                                  |  |                |  |           
|Pension liabilities at December 1, 2002/2003                       |  | -1,181,643     |  | -1,204,068
|Service costs                                                      |  | -45,058        |  | -42,663   
|Interest costs                                                     |  | -66,227        |  | -65,285   
|Employee contributions                                             |  | -12,523        |  | -12,478   
|Amendments                                                         |  | 896            |  | 684       
|Actuarial gains/losses                                             |  | 32,957         |  | -109,712  
|Benefits paid                                                      |  | 30,702         |  | 33,193    
|Exchange rate differences                                          |  | 36,828         |  | 13,375    
|                                                                   |  |                |  |           
|Pension liabilities at November 30                                 |  | -1,204,068     |  | -1,386,954
|                                                                   |  |                |  |           



F-28



---

##### Table of Contents

|                                                      |  |                |  |        
|----------------------------------------------------- |  | -------------- |  | -------
|                                                      |  | 2003           |  | 2004   
|                                                      |  | (in thousands)
|                                                      |  | Euro           |  | Euro   
|Changes in pension assets:                            |  |                |  |        
|Fair value of pension assets at December 1, 2002/2003 |  | 743,185        |  | 788,404
|Actual return on investments                          |  | 34,656         |  | 62,456 
|Employer contributions                                |  | 55,414         |  | 76,221 
|Employee contributions                                |  | 12,523         |  | 12,478 
|Benefits paid                                         |  | -30,702        |  | -33,193
|Exchange rate differences                             |  | -26,672        |  | -9,432 
|                                                      |  |                |  |        
|Fair value of pension assets at November 30           |  | 788,404        |  | 896,934
|                                                      |  |                |  |        



25. Earnings per share calculations



|                                                                           |  |                                          |  |        |  |       
|-------------------------------------------------------------------------- |  | ---------------------------------------- |  | ------ |  | ------
|                                                                           |  | Years ended November 30,                
|                                                                           |  | 2002                                     |  | 2003   |  | 2004  
|                                                                           |  | (in thousands, except per share amounts)
|                                                                           |  | Euro                                     |  | Euro   |  | Euro  
|Net income attributable to holders of ordinary shares                      |  | 108,980                                  |  | 57,911 |  | 74,525
|Weighted average number of ordinary shares outstanding                     |  | 84,086                                   |  | 83,409 |  | 83,488
|Net income per ordinary share in Euro                                      |  | 1.30                                     |  | 0.69   |  | 0.89  
|                                                                           |  |                                          | 
|Net income attributable to holders of ordinary shares                      |  | 108,980                                  |  | 57,911 |  | 74,525
|Interest costs of convertible loans (net)                                  |  | 322                                      |  | 300    |  | 322   
|                                                                           |  |                                          |  |        |  |       
|Net income based on full conversion                                        |  | 109,302                                  |  | 58,211 |  | 74,847
|                                                                           |  |                                          | 
|Weighted average number of ordinary shares outstanding                     |  | 84,086                                   |  | 83,409 |  | 83,488
|Adjustment for assumed conversion                                          |  | 568                                      |  | 729    |  | 728   
|Adjustment for options                                                     |  | 125                                      |  | 30     |  | 543   
|                                                                           |  |                                          |  |        |  |       
|Weighted average number of ordinary shares on the basis of full conversion |  | 84,779                                   |  | 84,168 |  | 84,759
|                                                                           |  |                                          | 
|Net income per ordinary share on the basis of full conversion in Euro      |  | 1.29                                     |  | 0.69   |  | 0.88  



F-29



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##### 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 principal 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,                           
|                                                                                               |  | 2002                                                |  | 2003       |  | 2004       |  | 2004      
|                                                                                               |  | (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 |  | 112,531                                             |  | 61,462     |  | 78,076     |  | 103,521   
|                                                                                               |  |                                                     |  |           
|US GAAP adjustments                                                                            |  |                                                     |  |            |  |            |  |           
|Goodwill                                                                                       |  | -8,130                                              |  | -931       |  | -2,311     |  | -3,064    
|Restructuring provision                                                                        |  | -43,511                                             |  | -5,250     |  | -12,423    |  | -16,472   
|Self insurance franchise                                                                       |  | -907                                                |  |           |  |           |  |          
|Pension provision                                                                              |  | 2,633                                               |  | -14,992    |  | -14,242    |  | -18,883   
|Use of tax-deductible goodwill                                                                 |  | -7,721                                              |  |           |  |           |  |          
|Realized translation adjustments                                                               |  |                                                    |  | -1,789     |  |           |  |          
|Derivative instruments                                                                         |  | -4,230                                              |  | 8,260      |  | 4,261      |  | 5,650     
|Option plan                                                                                    |  | -598                                                |  | 154        |  | -1,256     |  | -1,665    
|Product development costs                                                                      |  |                                                    |  |           |  | -1,492     |  | -1,978    
|Sale of lease portfolio                                                                        |  |                                                    |  |           |  | -13,880    |  | -18,403   
|Tax effect on adjustments                                                                      |  | 14,941                                              |  | 3,804      |  | 22,569     |  | 29,924    
|                                                                                               |  |                                                     |  |            |  |            |  |           
|Net income under US GAAP                                                                       |  | 65,008                                              |  | 50,718     |  | 59,302     |  | 78,630    
|                                                                                               |  |                                                     |  |            |  |            |  |           
|Earnings per ordinary share:                                                                   |  |                                                     |  |            |  |            |  |           
|Basic                                                                                          |  | 0.73                                                |  | 0.57       |  | 0.67       |  | 0.89      
|Diluted                                                                                        |  | 0.73                                                |  | 0.56       |  | 0.66       |  | 0.88      
|                                                                                               |  |                                                     |  |           
|Weighted average number of ordinary shares outstanding:                                        |  |                                                     |  |            |  |            |  |           
|Basic                                                                                          |  | 84,086,202                                          |  | 83,408,783 |  | 83,487,576 |  | 83,487,576
|Diluted                                                                                        |  | 84,779,196                                          |  | 84,167,802 |  | 84,758,630 |  | 84,758,630
|                                                                                               | 
|                                                                                               |  | Statement of Comprehensive Income                  
|                                                                                               |  | 2002                                                |  | 2003       |  | 2004       |  | 2004      
|                                                                                               |  | (in thousands)                                     
|                                                                                               |  | Euro                                                |  | Euro       |  | Euro       |  | $*        
|Net income                                                                                     |  | 65,008                                              |  | 50,718     |  | 59,302     |  | 78,630    
|Foreign currency translation adjustment                                                        |  | -55,920                                             |  | -74,671    |  | -26,644    |  | -35,327   
|Additional minimum liability                                                                   |  | -127,501                                            |  | 47,573     |  | -34,919    |  | -46,299   
|Derivative instruments                                                                         |  | -4,729                                              |  | 150        |  | -481       |  | -638      
|                                                                                               |  |                                                     |  |            |  |            |  |           
|Comprehensive income                                                                           |  | -123,142                                            |  | 23,770     |  | -2,742     |  | -3,634    
|                                                                                               |  |                                                     |  |            |  |            |  |           

---

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



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##### 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,
|                                                                                               |  | 2003                     |  | 2004      |  | 2004     
|                                                                                               |  | (in thousands)          
|                                                                                               |  | Euro                     |  | Euro      |  | $*       
|Shareholders equity under Dutch GAAP as shown in the accompanying Consolidated Balance Sheets |  | 712,765                  |  | 714,070   |  | 946,786  
|US GAAP adjustments                                                                            |  |                          |  |           |  |          
|Goodwill                                                                                       |  | 197,627                  |  | 195,316   |  | 258,969  
|Restructuring provisions                                                                       |  | 34,596                   |  | 22,173    |  | 29,399   
|Pension provision                                                                              |  | 289,649                  |  | 274,678   |  | 364,196  
|Additional minimum liability                                                                   |  | -111,101                 |  | -163,816  |  | -217,204 
|Derivative instruments                                                                         |  | 25,366                   |  | 28,893    |  | 38,309   
|Option plan                                                                                    |  | -444                     |  |          |  |         
|Product development costs                                                                      |  |                         |  | -1,492    |  | -1,978   
|Sale of lease portfolio                                                                        |  |                         |  | -13,880   |  | -18,403  
|Deferred income taxes on above adjustments                                                     |  | -69,145                  |  | -28,527   |  | -37,824  
|                                                                                               |  |                          |  |           |  |          
|Shareholders equity under US GAAP                                                             |  | 1,079,313                |  | 1,027,415 |  | 1,362,250
|                                                                                               |  |                          |  |           |  |          



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



|                      |  |                                          |  |                          |  |          |  |         
|--------------------- |  | ---------------------------------------- |  | ------------------------ |  | -------- |  | --------
|                      |  |                                          |  | Years ended November 30,
|                      |  |                                          |  | 2003                     |  | 2004     |  | 2004    
|                      |  |                                          |  | (in thousands)          
|                      |  |                                          |  | Euro                     |  | Euro     |  | $*      
|Intangible assets     |  | Gross                                    |  | 409,022                  |  | 414,904  |  | 550,121 
|                      |  | Amortization                             |  | -159,717                 |  | -181,345 |  | -240,445
|Long term liabilities |  | Deferred income taxes                    |  | 98,470                   |  | 35,445   |  | 46,997  
|                      |  | Long term provisions                     |  | 242,534                  |  | 212,208  |  | 281,367 
|Current liabilities   |  | Other incl. additional minimum liability |  | 110,932                  |  | 164,115  |  | 217,600 

---

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



F-31



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##### Table of Contents

Goodwill



Under Dutch GAAP, the excess of the purchase price over the fair value of the net assets of an acquired company is reflected as goodwill effective December 1, 2000.
Previously goodwill was charged directly to shareholders equity. Under US GAAP, upon the adoption of SFAS 142, Goodwill and Other Intangible Assets, effective December 1, 2002, goodwill is no longer amortized, but rather is subject
to at least an annual impairment test. Prior to December 1, 2002, goodwill was amortized on a straight-line basis over a period of 10 to 40 years.



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 portion of the restructuring
provisions under US GAAP are recognized in periods subsequent to the recognition under Dutch GAAP.



Self -insurance franchise



Upto
November 2002, under Dutch GAAP, the Company provided for uninsured potential future losses that had not yet occurred. In accordance with 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           |  | 2004   
|                                    |  | (in thousands)
|                                    |  | Euro           |  | Euro   
|Service cost                        |  | 45,058         |  | 42,855 
|Interest cost                       |  | 66,227         |  | 65,441 
|Expected return on plan assets      |  | -53,090        |  | -54,721
|Amortization of transition costs    |  | -2,948         |  | -142   
|Amortization of prior service costs |  | -152           |  | 100    
|Amortization of losses              |  | 17,623         |  | 14,184 
|Other costs                         |  | 323            |  |       
|Curtailment                         |  | -572           |  | -24    
|                                    |  |                |  |        
|Net periodic pension cost           |  | 72,469         |  | 67,693 
|                                    |  |                |  |        



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



F-32



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##### Table of Contents

Use of tax-deductable 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.



Realized translation adjustments



Under US GAAP, upon disposal of investments, the accumulated translation adjustment related
to that investment is recognized in the Statement of Operations. Under Dutch GAAP this is not required.



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. Unrealized gains and losses on interest rate
swaps used in hedging relationships are deferred until settlement or termination.



US GAAP, SFAS 133, Accounting for Derivative Instruments, as amended, was adopted by the company as of FY 2001. This statement establishes accounting and reporting standards for derivative instruments and hedging activities.
SFAS 133 require that every derivative instrument is carried at fair value with changes in fair value recorded in the Statement of Operations unless specific hedge criteria are met.



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.



Product development costs



In accordance with Dutch GAAP, product development costs can be capitalized and amortized
over their useful lives under certain conditions. Under US GAAP, SFAS 2, Accounting for Research and Development Costs, product development costs are expensed as incurred.



Sale lease portfolio



The assets related to existing financial lease contracts transferred to a buyer can be split into finance lease receivables and the equipment residual value. Under US
GAAP (FAS 13 and related additional guidance by the SEC), the unguaranteed equipment residual value related to these financial lease contracts does not yet qualify for sales type- and off balance sheet treatment. The gain recognition on the sale of
the equipment residual values must, therefore, be postponed until the end of the lease contract. Under Dutch GAAP, the gain on the unguaranteed equipment residual values is recognized upon sale of the related financial lease contract.



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.



27. Subsequent events



On December 10, 2004 Océ in America announced that the business activities of Océ Display Graphics Systems, Inc., which is headquartered in San José, USA, will be taken over by the Océ
business in Canada. The related restructuring costs will amount to approximately  2.5 million.



F-33



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##### Table of Contents

SCHEDULE II



OCÉ N.V. AND
SUBSIDIARIES



VALUATION AND QUALIFYING ACCOUNTS AS OF

NOVEMBER 30, 2002, 2003 AND 2004



|                                            |  |                                |  |                             |  |             |  |            |  |                         
|------------------------------------------- |  | ------------------------------ |  | --------------------------- |  | ----------- |  | ---------- |  | ------------------------
|                                            |  | Balance at beginning of period |  | Additions charged to income |  | Acquisition |  | Deductions |  | Balance at end of period
|                                            |  | (In thousands)                
|                                            |  | Euro                           |  | Euro                        |  | Euro        |  | Euro       |  | Euro                    
|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                  
|                                            |  |                                |  |                             | 
|2004                                        |  |                                |  |                             |  |             |  |            |  |                         
|Allowance for doubtful accounts:            |  |                                |  |                             |  |             |  |            |  |                         
|- Accounts receivable                       |  | 53,663                         |  | 15,524                      |  |            |  | 15,205     |  | 53,982                  
|- Finance lease debtors                     |  | 29,298                         |  | -1,152                      |  |            |  | 9,135      |  | 19,011                  
|Allowance for stock obsolescence            |  | 165,829                        |  | 28,121                      |  |            |  | 15,137     |  | 178,813                 
|Valuation allowance for deferred tax assets |  | 42,819                         |  | -6,215                      |  |            |  |           |  | 36,604                  



F-34



---

##### 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: February 28, 2005