<PAGE>

                                                     COMMISSION FILE NO. 0-23860

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                  FORM 20-F/A

                     ANNUAL REPORT PURSUANT TO SECTION 13 OR
                  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000


                                   INDIGO N.V.
            (Exact name of Registrant as specified in its charter and
                 translation of Registrant's name into English)

                                 THE NETHERLANDS
                 (Jurisdiction of incorporation or organization)

               5 LIMBURGLAAN, 6221 SH MAASTRICHT, THE NETHERLANDS
                    (Address of principal executive offices)


              Securities registered or to be registered pursuant to
                           Section 12(b) of the Act:

                                      NONE

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

                   COMMON SHARES, PAR VALUE NLG 0.04 PER SHARE
                                (Title of Class)

        Securities for which there is a reporting obligation pursuant to
                           Section 15(d) of the Act:

                   COMMON SHARES, PAR VALUE NLG 0.04 PER SHARE
                                (Title of Class)


Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report: As of December 31, 2000, there were approximately 110,399,353 common
shares outstanding and approximately 2,000,000 litigation warrants outstanding.

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 [ ] ITEM 18 [X]
<PAGE>
<TABLE>
<S>                                                                           <C>
PART I......................................................................   3

    ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS..........   3
    ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE........................   3
    ITEM 3.  KEY INFORMATION................................................   3
    ITEM 4.  INFORMATION ON THE COMPANY.....................................  17
    ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS...................  34
    ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.....................  43
    ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS..............  51
    ITEM 8.  FINANCIAL INFORMATION..........................................  57
    ITEM 9.  THE OFFER AND LISTING..........................................  58
    ITEM 10. ADDITIONAL INFORMATION.........................................  60
    ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.....  70
    ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.........  72

PART II.....................................................................  73

    ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES................  73
    ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
             AND USE OF PROCEEDS............................................  73
    ITEM 15. RESERVED.......................................................  73
    ITEM 16. RESERVED.......................................................  73

PART III....................................................................  74

    ITEM 17. FINANCIAL STATEMENTS...........................................  74
    ITEM 18. FINANCIAL STATEMENTS...........................................  74
    ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS..............................  77
</TABLE>


                                       2
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                                     PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not Applicable

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable

ITEM 3. KEY INFORMATION

A. SELECTED FINANCIAL DATA

The following selected consolidated financial information is qualified by
reference to, and should be read in conjunction with, the Consolidated Financial
Statements and Notes located in the back portion of this document. The statement
of operations data set forth below and the balance sheet data have been derived
from Indigo's Consolidated Financial Statements.

STATEMENT OF OPERATIONS DATA:

      Amounts stated in thousands of U.S. dollars except for per share data

<TABLE>
<CAPTION>
                                                               Year Ended December 31
                                            -------------------------------------------------------------
                                               2000         1999         1998         1997         1996
                                            -------------------------------------------------------------
<S>                                         <C>          <C>          <C>          <C>          <C>
Revenues:

Equipment and post-sales
revenue .................................   $ 164,719    $ 140,704    $ 137,037    $ 105,493    $ 100,424

License fees, royalties and other .......          89        4,328       10,335        1,357        3,449

      Total revenues ....................     164,808      145,032      147,372      106,850      103,873

Costs and expenses:

Equipment and post-sales cost of
goods sold ..............................      83,658       74,644       71,037       69,590       77,209

Research and development, net ...........      19,534       14,160       16,682       15,314       13,396

Selling, general and administrative .....      71,927       57,596       61,549       62,734       72,940

Restructuring charges ...................                                 2,764        3,565        3,514

Litigation settlement ...................                                (1,200)                    6,770

      Total costs and expenses ..........     175,119      146,400      150,832      151,203      173,829

Operating loss ..........................     (10,311)      (1,368)      (3,460)     (44,353)     (69,956)
</TABLE>


                                       3
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<TABLE>
<S>                                         <C>          <C>          <C>          <C>          <C>
Other income (expenses):

Interest expenses .......................      (1,240)      (1,671)      (2,641)      (2,508)      (4,068)

Interest income and other income, net ...       3,013        2,406        3,458        3,732        3,817

Loss before provision
for income taxes ........................      (8,538)        (633)      (2,643)     (43,129)     (70,207)

Provision for income taxes ..............        1097          739        2,428        1,961        3,602

Net loss before cumulative  effect of an
accounting change, net ..................      (9,635)      (1,372)      (5,071)     (45,090)     (73,809)

Cumulative  effect of an accounting
change, net  as of beginning of the
year ....................................      (1,935)

Net loss before dividend requirements
Dividend on Convertible Preferred
shares ..................................     (11,570)      (1,372)      (5,071)     (45,090)     (73,809)

Current .................................      (8,793)     (11,098)     (10,961)     (11,383)      (5,472)

Inducement regarding conversion of
Series A Preferred Shares ...............     (58,685)

Loss applicable to common
shares outstanding ......................   $ (79,048)   $ (12,470)   $ (16,032)   $ (56,473)   $ (79,281)

Basic and diluted weighted average number
of common shares outstanding ............      85,298       77,282       71,822       63,924       53,712

Basic and diluted loss per common share
before cumulative effect of an accounting
change, net .............................   $   (0.90)   $   (0.16)   $   (0.22)   $   (0.88)   $   (1.48)

Basic and diluted loss per common share
of cumulative effect of an accounting
change, net .............................   $   (0.03)

Basic and diluted loss per common share
after cumulative effect of an accounting
change, net .............................   $   (0.93)   $   (0.16)   $   (0.22)   $   (0.88)   $   (1.48)

Pro forma amounts assuming the accounting
change is applied retroactively: ........

    Net loss applicable to common
    shares outstanding ..................   $ (79,048)   $ (11,896)   $ (16,769)   $ (56,473)   $ (79,281)
    Basic and diluted loss per common
    share ...............................   $   (0.93)       (0.15)   $   (0.23)   $   (0.88)   $   (1.48)
</TABLE>


BALANCE SHEET DATA:

<TABLE>
<CAPTION>
                                    ----------------------------------------------------
                                      2000       1999       1998       1997       1996
                                    ----------------------------------------------------
<S>                                 <C>        <C>        <C>        <C>        <C>
Working capital .................   $108,551   $ 46,108   $ 47,142   $ 25,462   $ 33,213
Total assets ....................    216,780    140,638    125,859    122,207    163,666
Short-term debt .................      5,428     17,191         --      5,607     35,950
Long-term debt ..................         --         --         --         --         --
Total shareholders' equity (1) ..    124,397   $ 57,835   $ 57,086   $ 44,292   $ 56,993
</TABLE>


(1)   In 2000, the Company granted stock dividends and cash dividends to the
      holders of the Series A preferred shares in a total amount of $104,867.


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B. CAPITALIZATION AND INDEBTEDNESS

      Not applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

      Not applicable.

D. RISK FACTORS

      CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES A "SAFE HARBOR"
FOR CERTAIN FORWARD-LOOKING STATEMENTS. THE FACTORS DISCUSSED UNDER "RISK
FACTORS" BELOW, AMONG OTHERS, COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE CONTAINED IN FORWARD-LOOKING STATEMENTS MADE IN THIS ANNUAL REPORT,
INCLUDING, WITHOUT LIMITATION, IN THE "INFORMATION ON THE COMPANY - BUSINESS
OVERVIEW" AND "OPERATING AND FINANCIAL REVIEW AND PROSPECTS" SECTIONS, IN FUTURE
FILINGS BY THE COMPANY WITH THE SEC, IN THE COMPANY'S PRESS RELEASES AND IN ORAL
STATEMENTS MADE BY AUTHORIZED OFFICERS OF THE COMPANY. WHEN USED IN THIS ANNUAL
REPORT, THE WORDS "ESTIMATE," "PROJECT," "ANTICIPATE," "EXPECT," "INTEND,"
"BELIEVE" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS.

FLUCTUATIONS IN REVENUES AND OPERATING RESULTS

Our quarterly revenues and operating results, which, in the past, have varied
and fluctuated significantly from quarter to quarter, may continue to do so in
the future, which could cause the price of our stock to decline. These
fluctuations have been due to a number of factors, many of which are outside of
our control, including: fluctuations in demand for and sales of our products and
services; our success in developing and introducing new products and the timing
of new product introductions; our ability to introduce enhancements to our
existing products in a timely manner; the introduction of new or enhanced
products by our competitors and changes in the pricing policies of these
competitors; the discretionary nature of our customers' purchase and budget
cycles; the amount and timing of operating costs and capital expenditures
relating to the expansion of our business; deferrals by our customers of orders
in anticipation of new products or product enhancements; and the mix of our
sales by geography, together with fluctuations in foreign currency exchange
rates. Shortfalls in revenues or earnings from the levels anticipated by the
public markets could have an immediate and significant effect on the trading
price of our stock in any given period. Such shortfalls may result from events
that are beyond our immediate control, can be unpredictable and, since a
significant proportion of our sales during each fiscal quarter tend to occur


                                       5
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in the latter stages of the quarter, may not be discernible until the end of a
financial reporting period.

We expect to face increasing competition in the future, which could cause
reduced sales levels and result in price reductions, reduced gross margins or
loss of market share.

SEASONALITY

We have experienced seasonality in our revenues and earnings, with the fourth
quarter of the year typically having the highest revenue and earnings for the
year and significantly higher revenue and earnings than the first quarter of the
following year, which is traditionally our weakest quarter. In general, the
second quarter of the year is also stronger than the third quarter, which
coincides with summer vacations in our main markets of Europe and North America.
We believe that this seasonality results primarily from the budgeting cycles of
our customers. We expect this seasonality to continue in the future. Due to
these and other factors, we believe that period-to-period comparisons of our
results of operations are not necessarily meaningful and should not be relied
upon as indications of future performance. If our operating results are below
the expectations of investors or securities analysts, the price of our common
stock could decline.

DEPENDENCE UPON STRATEGIC ALLIANCES

We depend on strategic relationships and business alliances for continued growth
of our business. Our development, marketing and distribution strategies rely
increasingly on our ability to form strategic relationships with third parties.
These relationships range from OEM and distribution relationships with companies
like Hewlett-Packard, DataCard and A.B. Dick to cooperative marketing programs
and joint customer seminars with software companies. In certain of these
relationships, the third party is not contractually committed to make any
particular level of purchases from Indigo and can, effectively, terminate the
relationship at will. Divergence in strategy or change in focus by, or
competitive product offerings by, any of these companies may interfere with our
ability to develop, market, sell or support our products, which in turn could
harm our business. Further, if these companies enter into strategic alliances
with other companies or are acquired, they could reduce their support of our
products. Our existing relationships may be jeopardized if we enter into
alliances with competitors of our strategic partners. In addition, one or more
of these companies may use the information they gain from their relationship
with us to develop or market competing products.


                                       6
<PAGE>
ABILITY TO MANAGE GROWTH

If we are unable to manage our growth, our business may be harmed. Since the
initial introduction of our Digital Offset Color presses in 1993, Indigo has
experienced periods of rapid growth as well as contraction, placing a
significant strain on its management, manufacturing operations and other
resources. In anticipation of increased demand for the Company's products, the
Company's work force expanded significantly in 1994 and the first half of 1995.
This expansion proved to be unjustified in light of the slower than anticipated
growth in sales. As a result, in the fourth quarter of 1995, and during the
course of 1996, a significant number of employees were terminated. The slower
than expected growth of the Company's market in 1995 and 1996 resulted in an
imbalance in the Company's revenues and expenses. In February 1997, the Company
announced an additional management restructuring and recorded a restructuring
charge of $3.2 million in the first quarter of 1997 to reflect these changes. In
late 2000 and early 2001, Indigo significantly expanded its work force,
especially in the areas of research and development, in light of the three-part
alliance that it entered into with the Hewlett-Packard Company. If we cannot
manage this growth effectively, our business, competitive position, operating
results and financial condition could suffer.

DEPENDENCE UPON KEY PERSONNEL

The success of our business depends on the efforts and abilities as well as the
continued services and performance of our senior key personnel. We do not have
long-term employment agreements with most of our key personnel. The loss of any
of our executive officers or other key employees could hurt our business. If we
cannot hire qualified personnel, our ability to manage our business, develop new
products and increase our revenues will suffer. We believe that our ability to
attract and retain qualified personnel at all levels in our organization is
essential to the successful management of our growth. In particular, our ability
to achieve revenue growth in the future will depend, in large part, on our
success in expanding our direct sales force and in maintaining a high level of
research and development, training and customer support. There is substantial
competition for experienced personnel in the fields in which we work. If we are
unable to retain our existing key personnel or to attract and retain additional
qualified individuals, we may from time to time experience inadequate levels of
staffing. As a result, our growth could be limited due to our lack of capacity
to develop our products and market them to our customers.

OPERATIONS IN ISRAEL

Because our research and development and manufacturing operations are located in
Israel, we may be affected by volatile economic, political and military
conditions in that country and by restrictions imposed by that country on the
transfer of technology. Our operations depend on the availability of
highly-skilled and relatively low-cost scientific and technical personnel in
Israel. Our business also depends on trading relationships between Israel and
other countries. In addition to the risks associated with international sales
and operations generally, our operations could be adversely affected if major


                                       7
<PAGE>
hostilities involving Israel should occur or if trade between Israel and its
current trading partners were interrupted or curtailed. These risks are
compounded due to the restrictions on our ability to manufacture or transfer
outside of Israel, without the prior written consent of the Government of
Israel, certain technology developed under research and development grants from
the Government of Israel. If we are unable to obtain the consent of the
Government of Israel, we may not be able to take advantage of strategic
manufacturing and other opportunities outside of Israel. We have, in the past,
obtained royalty-bearing grants from various Israeli governmental agencies. In
addition, we participate in special Israeli governmental programs that provide
significant tax advantages. The loss of or any material decrease in these tax
benefits could negatively affect our financial results.

The Company's costs of operations have also been affected by increases in the
cost of its operations in Israel, resulting both from appreciation of the
Israeli shekel relative to the United States dollar in certain periods and
devaluation of the Israeli shekel at rates insufficient to offset cost increases
in others, and from increases in the cost of attracting and retaining qualified
scientific, engineering and technical personnel in Israel, where the demand for
such personnel is growing rapidly with the expansion of high technology
industries in that country. Continuation of such trends could have a material
adverse effect on our future results of operations.

FOREIGN CURRENCY FLUCTUATIONS

Our financial results may be negatively impacted by foreign currency
fluctuations. Our operations throughout the world are generally transacted
through our international sales subsidiaries. As a result, these sales and
related expenses are denominated in currencies other than the U.S. Dollar.
Because our financial results are reported in U.S. Dollars, our results of
operations may be harmed by fluctuations in the rates of exchange between the
U.S. Dollar and other currencies, including: a decrease in the value of European
currencies relative to the U.S. Dollar, which would decrease our reported U.S.
Dollar revenue, as we generate revenues in these local currencies and report the
related revenues in U.S. Dollars; and an increase in the value of European or
Israeli currencies relative to the U.S. Dollar, which would increase our sales
and marketing costs in these countries and would increase research and
development costs in Israel. We attempt to limit foreign exchange exposure
through operational strategies and by using forward contracts to offset the
effects of exchange rate changes on intercompany trade balances. This requires
us to estimate the volume of transactions in various currencies. We may not be
successful in making these estimates. If these estimates are overstated or
understated during periods of currency volatility, we could experience material
currency gains or losses.

VOLATILITY OF STOCK PRICE

The price of our common stock may fluctuate significantly, which may result in
losses for investors and possible lawsuits. The market price for our common
stock has been and may continue to be volatile. For example, during the 52-week
period ended March


                                       8
<PAGE>
20, 2001, the closing prices of our common stock as reported on the Nasdaq
National Market ranged from a high of $9.00 to a low of $2 15/16. We expect our
stock price to be subject to fluctuations as a result of a variety of factors,
including factors beyond our control. These factors include: actual or
anticipated variations in our quarterly operating results; announcements of
technological innovations or new products or services by us or our competitors;
announcements relating to strategic relationships or acquisitions; changes in
financial estimates or other statements by securities analysts; changes in
general economic conditions; conditions or trends affecting the printing
industry; and changes in the economic performance and/or market valuations of
other hi-tech companies. Because of this volatility, we may fail to meet the
expectations of our stockholders or of securities analysts at some time in the
future, and our stock price could decline as a result. In addition, the stock
market has experienced significant price and volume fluctuations that have
particularly affected the trading prices of equity securities of many hi-tech
companies, including the equity securities of the Company. These fluctuations
have often been unrelated or disproportionate to the operating performance of
these companies.

PRODUCT PROTECTION AND INFRINGEMENT

If we fail to adequately protect our proprietary rights and intellectual
property, we may lose valuable assets, experience reduced revenues and incur
costly litigation to protect these rights and property. We rely on a combination
of patents, copyrights, trademark, service mark and trade secret laws and
contractual restrictions to establish and protect our proprietary rights in our
products and services. We currently have over 550 issued and pending patents. We
will not be able to protect our intellectual property if we are unable to
enforce our rights or are unable to detect unauthorized use of our intellectual
property. Despite our precautions, it may be possible for unauthorized third
parties to copy our products and use information that we regard as proprietary
to create products that compete with ours. Further, the laws of some countries
do not protect proprietary rights to the same extent as the laws of the United
States. The Company also relies, to some extent, on unpatented trade secrets. It
is our policy to have employees sign confidentiality agreements, to have
selected parties sign non-competition agreements and to have third parties sign
non-disclosure agreements. No assurance can be given that these agreements will
be effective in controlling access to and distribution of our products and
proprietary information or to our trade secrets. Further, these agreements do
not prevent our competitors from independently developing technologies that are
substantially equivalent or superior to our products. Litigation may be
necessary in the future to enforce our intellectual property rights and to
protect our trade secrets. Litigation like this, whether successful or
unsuccessful, could result in substantial costs and diversions of our management
resources, either of which could seriously harm our business. Third parties
could assert that our products and services infringe their intellectual property
rights, which could expose us to litigation that, with or without merit, could
be costly to defend. We may from time to time be subject to claims of
infringement of other parties' proprietary rights. We could incur substantial
costs in defending ourselves and our customers against these claims. Parties
making these claims may be able to obtain injunctive or other equitable relief
that could effectively


                                       9
<PAGE>
block our ability to sell our products in the United States and abroad and could
result in an award of substantial damages against us. In the event of a claim of
infringement, we may be required to obtain licenses from third parties, develop
alternative technology or to alter our products or processes or cease activities
that infringe the intellectual property rights of third parties. If we are
required to obtain licenses, we cannot be sure that we will be able to do so at
a commercially reasonable cost, or at all. Defense of any lawsuit or failure to
obtain required licenses could delay shipment of our products and increase our
costs. In addition, any such lawsuit could result in our incurring significant
costs or the diversion of the attention of our management.

PRODUCT LIABILITY

Defects in our products may subject us to product liability claims and make it
more difficult for us to achieve market acceptance for these products, which
could harm our operating results. Our products may contain errors or "bugs" that
may be detected at any point in the life of the product. Any future product
defects discovered after shipment of our products could result in loss of
revenues and a delay in the market acceptance of these products that could
adversely impact our future operating results.

REGULATORY MATTERS

Our presses and consumable products are subject to a variety of regulations
throughout the world, including those relating to product safety, environmental
protection and hazardous materials. Though we believe that we are currently in
material compliance with all such regulations that apply to our products in our
principal markets, the areas of product safety and environmental regulation are
quickly evolving ones and there can be no assurance that certain jurisdictions
will not adopt regulations in the future with which we will not be able to
comply or with which we will be able to comply only at significant cost. Such a
development could have a material adverse affect on Indigo and its financial
condition as well as upon the marketing, sale and use of its products.

GENERAL ECONOMIC CONDITIONS

Our future operating results and financial condition might be adversely affected
should economic instability result in widespread slowdown or recessionary
conditions in major world markets, or in severe trade or currency disruptions.
The trading price of our shares may be affected by the factors noted above as
well as prevailing economic and financial trends and conditions in the public
securities markets. Share prices of companies in technology and government
contracting businesses, and particularly publicly- traded companies such as
Indigo, tend to exhibit a high degree of volatility. These factors contribute to
the volatility of the trading value of its shares regardless of the Company's
long-term prospects. The trading price of the Company's shares may also be
affected by developments, including reported financial results and fluctuations
in trading prices of the shares of other publicly-held companies, and Indigo's
industry in particular, which may not have any direct relationship with our
business or prospects.


                                       10
<PAGE>
HISTORICAL LOSSES AND POSSIBILITY OF FUTURE LOSSES

Although we have had profitable quarters since commencing operations, we have
not yet had a profitable fiscal year. We have had net losses for the years ended
December 31, 1998, 1999 and 2000 of approximately $5.1 million, $1.4 million,
and $11.6 million, respectively. For these periods, the Company has also
incurred negative cash flow from operations. There can be no assurance that we
will not continue to experience losses in 2001 and beyond. Although there can be
no assurances that this will be the case, the Company does expect to be able to
meet its funding requirements through 2001 from existing cash, cash equivalents,
marketable securities and the financings concluded to date.

NEW TECHNOLOGY; PRODUCT DEVELOPMENT AND DIFFICULTIES

The likelihood of our success must be considered in light of the difficulties
and delays frequently encountered - and which we have encountered - in
connection with the development of new technologies and related products. Market
and customer acceptance of our presses depends, among other things, on their
operational performance. We and certain of our customers have, in the past,
encountered certain operational problems with the presses, including problems
relating to the press's paper-handling capabilities, contamination of inks and
durability and consistency of the photo imaging plates. Our product development
group has focused significant efforts on, and has had success in, improving the
reliability and productivity of our presses and imaging products. Although our
product development group continues to devote much time and efforts on such
improvements, there can be no assurance that we will continue to be successful
in these endeavors. Further, there can be no assurance that we will not
encounter additional problems in the future.

CONTINUED SIGNIFICANT RESEARCH AND DEVELOPMENT EXPENDITURES

The development of our Digital Offset Color printing technology has required,
and will continue to require, significant research and development expenditures.
We are continuing to address issues relating to quality control and
manufacturing that have had a negative impact, in the past, on product
acceptance among our customers. In particular, we have addressed these issues
through the development of new products and new enhancements for existing
products. We also realize that future sales of certain of our industrial
printing presses will be dependent upon our ability to develop, independently
and through relationships with strategic partners, commercial applications for
such presses. Any failure to anticipate or respond adequately to changes in
technology or customer preferences, or to any significant delays in product
development or introduction, would have a material adverse effect on our
business.

SLOWER THAN EXPECTED MARKET DEVELOPMENT

During the second half of 1995 and throughout 1996, we found that the level of
our shipments fell below both market and internal expectations. We attributed
this to a number of factors, including (i) the slower than expected development
of our customers'


                                       11
<PAGE>
markets for digitally-printed products, which resulted in fewer successful
customers who might encourage others to buy our products, (ii) technical
difficulties with our presses and imaging products that resulted in low
utilization, and (iii) concerns of potential customers regarding our financial
stability due to our history of losses. Though the reliability of our products
has improved significantly since such period, as has our overall financial
condition, and our customers are progressively increasing their overall
utilization rates and reaching profitability, customers did not achieve success
with our products as rapidly as had been anticipated. As a result, we have
intensified our focus on market development and customer support in an effort to
strengthen the success of our customers. These steps included expansion of our
sales force and investing in lead generation programs, sales management tools
and advertising and public relations campaigns, customer training and seminars,
the development and marketing of new applications and the establishment of
strategic relationships with personalization software vendors. There can be no
assurance that we will be successful in our attempts to accelerate the
penetration of our markets and the success of our customers. Failure of such
markets to develop, or of our customers to succeed, will have a material adverse
effect on Indigo.

REVENUE RECOGNITION

Revenue from product sales to customers is currently recognized upon
installation, provided that collectability is reasonably assured, our
obligations are considered insignificant and the cost of these obligations can
be reliably estimated. Sales of products that do not initially meet the criteria
for recognition are recognized on the date when all criteria are met. We provide
for returns and allowances based on historical experience.

For sales to leasing companies for lease to third party end-users, revenue is
recognized when the obligations that we retain are insignificant, all risks of
ownership have been transferred from us and there are no uncertainties regarding
customer acceptance. We provide for estimated potential loss on these
obligations at the time the sale is recognized. In certain leasing transactions,
the leasing company is obligated to pay us an amount in excess of the purchase
price of the equipment if the third party performs fully under the leasing
arrangement. The additional revenue is recognized when realized.

PENDING LITIGATION

One of Indigo's Israeli subsidiaries is party to a dispute regarding the amount
of rent payable pursuant to a long-term lease for a tract of land adjacent to
Indigo's manufacturing facilities in Nes-Ziona, Israel. The dispute involves
issues of contract interpretation and real estate appraisal. Arbitration
proceedings commenced in March 1998, and in August 1999 the arbitrator issued
his decision, which was invalidated by the Tel Aviv District Court in June 2001.
In July 2001, the landlord petitioned Israel's Supreme Court for permission to
appeal the District Court's ruling and in October 2001, Indigo's subsidiary
filed its response to such petition. A hearing on the petition has been
scheduled for September 2002. In the event that the parties are


                                       12
<PAGE>
unable to resolve the dispute amicably, we intend to continue to defend the
claim vigorously, since we believe that the amount of rent sought by the
landlord is unreasonable and not supported by the terms of the lease. A decision
by the new arbitrator in favor of the landlord's position or our inability to
conclude the dispute on terms favorable to us might have a material adverse
effect on our financial condition.

DEPENDENCE ON KEY PRODUCTS

We are dependent on the success of our Digital Offset Color presses and related
consumable products to achieve profitability. In addition to manufacturing and
selling presses, we manufacture and sell certain imaging products, including
ElectroInk products, Photo-Imaging Plates, and Blankets, all of which are
essential to the operation of our presses. Though we had always anticipated that
a significant portion of our revenues would be generated from sales of such
consumable products, our actual revenues from sales of consumable products have,
throughout our history, due to the slower than expected development of the
short-run color printing market as well as the lower than expected operational
efficiency of the machines sold, been lower than originally expected. There can
be no assurance that all of these problems will be solved, or that revenues from
consumable products will continue to increase in the future. At present, there
are no known alternative suppliers of products that can readily substitute for
our consumables. However, there can be no assurance that substitute consumable
products will not be developed and offered for sale by others in the future. If
such substitute consumables are developed and offered for sale by others in the
future, or if sales of our presses and related consumables do not increase
significantly, there would be a material adverse effect on our business.

COMPETITION

The printing equipment industry is highly competitive, and many of the industry
participants possess greater management, financial, technical, manufacturing,
marketing, sales, distribution and other resources than we do. We believe that
our ability to compete depends on factors both within and outside of our
control, including the performance and acceptance of our Digital Offset Color
presses and any new or related products that we introduce, as well as the
successful manufacturing, marketing, distribution and customer support of our
products. Although, to our knowledge, no competitor has developed liquid
ink-based Digital Offset Color printing technology to produce high quality color
documents in a cost-effective manner for short-run color printing, certain
competitors have developed color printing products that target the short-run
color printing market and thereby compete with our presses. These competitors
have substantially greater financial, distribution, management and other
resources than we do. There is no assurance that competitors will not develop
additional products, utilizing existing or new technology, that are competitive
in price and/or performance with our presses, and there can be no assurance that
we could compete effectively with any such products and their distribution
channels.

TAX RISKS


                                       13
<PAGE>
We are subject to the risk of increased taxes. We have structured our operations
in a manner designed to maximize income in Israel where tax rate incentives have
been extended to encourage foreign investment. Our taxes could increase if these
tax rate incentives are not renewed upon expiration or tax rates applicable to
us are increased. Tax authorities could challenge the manner in which profits
are allocated among us and our subsidiaries, and we may not prevail in any such
challenge. If the profits recognized by our subsidiaries in jurisdictions where
taxes are lower became subject to income taxes in other jurisdictions, our
worldwide effective tax rate would increase.

In addition, under Israeli law, entities located outside of Israel may, if they
are managed and controlled in Israel or by an Israeli resident, be subject to
tax in Israel on their income. The Israeli income tax authorities have
determined, pursuant to a ruling, that the taxable income of the Landa Family
Trust's non-Israeli assets (which include Indigo and its subsidiaries outside of
Israel) be quantified and limited to an annual management fee of between
$200,000 and $500,000 per annum, payable in Israel, which sums relate to the
management and control over such companies and assets by members of the Landa
family. The Israeli Tax Ruling further provides that (i) the Landa Family Trust
will not be deemed an Israeli resident for purposes of Israeli income tax, even
if certain members of the Landa family, who are beneficiaries under the Landa
Family Trust, reside or may reside in Israel, and (ii) investments by the Landa
Family Trust will be considered foreign for purposes of Israel's incentive laws.
Although the Israeli Tax Ruling is not legally binding on the Israeli tax
authorities, we believe that such ruling will be honored because, although few
such rulings have been issued, it appears to be the policy of the Israeli tax
authorities to honor such rulings, in the absence of fraud. However, no
assurance can be given that such rulings will remain in effect or continue to be
honored. If the Israeli Tax Ruling were revoked or were not honored, then Indigo
and its non-Israeli subsidiaries might become subject to company tax in Israel.
Further, some of the tax benefits that are presently afforded to the Approved
Enterprise of the Company's Israeli manufacturing subsidiary, Indigo Electronic
Printing Systems Ltd. ("IEPS"), might no longer be available to IEPS. Those tax
benefits include, among others, a reduction in the Israeli corporate tax rates
applicable to Approved Enterprises from 25% to 10%, and an extension of the
period of the lower Israeli corporate tax rate from three years up to eleven
years following the first four years of exemption from the first year in which
IEPS earns taxable income from its Approved Enterprise (subject to certain
limitations as to the maximum length of benefit period). An "Approved
Enterprise" is defined, under the Law for the Encouragement of Capital
Investments, 1959, as a capital investment in a production facility, which is
designated as an Approved Enterprise, upon application to the Investment Center
of the Ministry of Industry and Commerce of the State of Israel. In addition,
the foregoing and other tax benefits might not be available, or might be reduced
substantially, if IEPS were to fail to qualify as an "Industrial Company," which
is defined as an enterprise whose major activity during the tax year is
industrial manufacturing activity, or as an Approved Enterprise, or if the level
of foreign ownership of IEPS (without regard to the Israeli Tax Ruling) were to
be reduced below 90%. The loss of the foregoing benefits would, and the
reduction of the foregoing benefits might, have a material adverse effect on us.


                                       14
<PAGE>
Because all of our intellectual property rights are owned or otherwise held by
Indigo N.V., IEPS, which manufactures our presses and consumable products and
sells them to affiliates and to third parties, pays royalties to Indigo N.V.
Under the tax convention currently in force between The Netherlands and Israel,
Israeli withholding tax on such royalty payments is reduced from 25% to 5%.
Indigo, however, would not be eligible for the benefits under the convention if
it were considered a resident of Israel, or if it were deemed not to be a
resident of The Netherlands (e.g., by reason of lack of sufficient economic
substance in The Netherlands), or if it were deemed to be based in The
Netherlands primarily for reasons related to the availability of such benefits
and not for valid business reasons. The loss of the foregoing benefits would,
and the reduction of the foregoing benefits might, have a material adverse
affect on us.

DEPENDENCE UPON SOLE AND LIMITED SUPPLIERS

Certain components and sub-assemblies used in our presses and consumable
products are currently available only from sole sources (including an essential
component of the printing blankets, purchased from Reeves S.p.A.) and other
components and sub-assemblies are currently available from only a limited number
of sources. We employ many unaffiliated subcontractors to manufacture most of
the components and sub-assemblies for our products. We have, in the past,
experienced delays in obtaining timely deliveries of certain components and
sub-assemblies, although such delays have not had a material adverse effect on
our results of operations. While, in recent years, we have been able to obtain,
on a timely basis, adequate supplies of components, sub-assemblies and raw
materials used in the manufacture of our consumable products, and have
experienced no material problems with our subcontractors, our failure to develop
alternative sources for certain such components, sub-assemblies or raw materials
on a timely basis, if and as required, or to obtain sufficient sole-source or
limited-source components, sub-assemblies or raw materials on a timely basis,
could result in delays or reductions in product shipments and/or in decreases in
sales of consumable products, which could have a material adverse effect on our
operating results. We have established a procedure to ensure that the
components, sub-assemblies and raw materials provided by our subcontractors and
suppliers and used in the manufacture of our products meet our specifications
and quality standards. However, because of the large number of subcontractors,
suppliers, components, sub-assemblies and raw materials, there is no assurance
that we will be able to ensure that all such parts, components, sub-assemblies
and raw materials will continue to satisfy our quality standards and delivery
requirements.

CONCENTRATION OF OWNERSHIP

Approximately 43.9% of Indigo's voting stock is owned, in the aggregate, by
entities that are owned by a foundation (the "Landa Family Trust") established
mainly for the benefit of the Landa family, which includes Mr. Benzion Landa,
founder, Chairman of the Board and CEO of Indigo. Approximately 23.5% of the
voting stock of the Company is owned, in the aggregate, by S-C Indigo C.V., a
Netherlands Antilles limited partnership, the


                                       15
<PAGE>
general partner of which is controlled by Purnendu Chatterjee (a member of
Indigo's Supervisory Board) and a limited partner of which is controlled by
George Soros. An additional 13.4% is owned by Hewlett-Packard Company. The Landa
Family Trust, S-C and HP are able to elect a majority of the members of Indigo's
Supervisory and Management Boards and to determine the outcome of all material
corporate actions requiring shareholder approval, regardless of how other
shareholders of Indigo may vote.

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Sales of a substantial number of Common Shares by Indigo's major shareholders in
the public market could have an adverse effect on the market price of the stock.
Pursuant to registration rights agreements among Indigo and its major
shareholders, the Landa Family Trust has an unlimited number of demand
registration rights with respect to all of the common shares that it holds while
S-C has two demand registration rights with respect to certain shares that it
holds. In addition, HP has two demand registration rights with respect to all of
the shares that it purchased from Indigo in 2000.

NO ANTICIPATED DIVIDENDS ON COMMON SHARES

Indigo's Board does not currently anticipate authorizing the payment of any
dividends on the common shares in the foreseeable future.

DILUTION

We currently have outstanding (i) 3,917,999 Series A Warrants that expire on May
6, 2003, and are exercisable at a price of $7.00 per warrant; (ii) 1,333,344
Series C Warrants that expire on March 4, 2004 and are exercisable at a price of
$6.30 per warrant; and (iii) 593,333 Series C Warrants that expire on June 10,
2004, and are exercisable at a price of $6.30 per warrant. At the time of the
exercise of these warrants, the holders of Common Shares will experience
dilution. See "Item 7. Major Shareholders and Related Party Transactions; B.
Related Party Transactions - Financings - 1997 Private Placement."

In addition, in connection with the settlement of several shareholder class
action lawsuits, Indigo issued 2,000,000 Settlement Warrants in April 1999. The
exercise price of the Settlement Warrants is $7.50 per share and they expire in
October 2001. At the time of the exercise of the Settlement Warrants, the
holders of Common Shares will experience dilution.

As of December 31, 2000, Indigo had granted, pursuant to employee stock option
plans, in the aggregate, net of canceled options, approximately 15.7 million
options. Approximately 4.5 million options had been exercised as of December 31,
2000, and nearly all of the Common Shares underlying such options have been
sold. Approximately 2.6 million options are held by the Company's officers and
directors, of which approximately 1.5 million are exercisable as of June 30,
2001. Exercise prices for the options granted range from $0.87 to $45.75 per
Common Share.


                                       16
<PAGE>
In September 2000, we issued an acquisition warrant to Hewlett-Packard Company
to purchase 14,814,815 common shares at a price of $6.75 per share in the event
that HP acquires Indigo. The acquisition warrant expires in October 2004. In
addition, HP received a performance warrant to purchase 12 million common shares
at a price of $6.75 per share. The performance warrant vests at the rate of 2
million shares for every $100 million of revenue we receive from HP. The vesting
period ends in October 2006 and the exercise period for the vested portion of
the warrant expires at the earlier of three years from the vesting date or
October 2008. See "Item 7. Major Shareholders and Related Party Transactions; B.
Related Party Transactions - Hewlett-Packard Transaction."

NON-APPLICABILITY OF TAX CONVENTION WITH UNITED STATES

Under the tax convention between The Netherlands and the United States, the rate
of withholding on U.S.-source royalty income is reduced from 30% to 0% and the
rate of withholding on dividends from a U.S. corporation to a Dutch corporation
owning at least 10% of its voting power is reduced from 30% to 5%. Indigo may
not currently qualify for the benefit of this convention. Accordingly, it may be
subject to 30% withholding on U.S.-source royalty and dividend income and a
39.6% tax on "undistributed personal holding company income" (which, with regard
to royalty income, would equal U.S.-source royalty income reduced by related
expenses and U.S. and Netherlands' taxes on such income). We do not currently
expect to receive significant U.S.-source royalty or dividend income. We believe
that, in the event we were to expect to receive significant U.S.-source royalty
or dividend income at a time during which we did not believe that we were
entitled to the benefits of the convention, we would attempt to restructure our
operations to become eligible for the benefits of the convention or to become
listed on the New York Stock Exchange, which, depending upon the annual volume
of trading on such exchange, could result in the benefits of the convention
becoming available. However, no assurances can be given that Indigo would become
eligible for the benefits of the tax convention or would become listed on the
New York Stock Exchange. If, contrary to our expectations, we do receive a
significant amount of U.S.-source royalty or dividend income, we would become
subject to significant additional tax if we are not eligible for the benefits of
the convention, which tax could adversely affect our results of operations.

ITEM 4. INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

Indigo N.V. was incorporated in The Netherlands in 1977 under the name Spectrum
Sciences B.V. It is a Netherlands corporation (naamloze vennootschap),
established under Book 2, Articles 64-69 of the Dutch Civil Code. The address of
its registered office is Limburglaan 5, 6221 SH Maastricht, The Netherlands, and
its telephone number is 31-43-356-5656.


                                       17
<PAGE>
Since 1997, Indigo's main capital expenditures have been related to the
development and marketing of its new products, in particular, the internal
infrastructure required for the UltraStream press. See "B. Business Overview -
Products - Commercial Printing Products." The Company's most significant current
capital expenditures relate to the expansion of its ink plant in Israel.

B. BUSINESS OVERVIEW

Indigo N.V. and its subsidiaries (collectively, "Indigo") develop, manufacture,
market and service proprietary Digital Offset Color(TM) printing presses used in
the production of on-demand, short-run color digitally-printed products.
Indigo's main products are digital color printing presses targeted at the
commercial, industrial and photographic markets. Indigo also sells proprietary
imaging products (consumables) essential to the operation of its presses,
including ElectroInk(R) products, photo imaging plates ("PIPs") and image
transfer blankets. Indigo also manufactures a number of presses that are
marketed through OEM channels. Indigo owns over 550 issued and pending patents
throughout the world, of which certain key patents have a remaining life of
approximately five to fifteen years.

INDUSTRY BACKGROUND

Throughout the 500-year history of printing, the common element in virtually all
printing processes has been the use of liquid ink. Liquid ink printed images are
of high resolution and brilliant color.

Direct Printing

The first printing presses used a process called letterpress, in which blocks of
relief characters were inked with a liquid ink and then pressed against paper to
produce a printed page. With each pressing, or impression, the same image was
duplicated over and over again. Today, letterpress has been largely supplanted
by lithography. Lithography replaces the blocks of relief characters with a
smooth-surfaced sheet of metal or plastic on which an image is chemically formed
in such a way that only the image areas accept the ink; the background areas
repel the ink. These lithographic images were originally transferred directly to
paper.

Offset Printing

Since the turn of the century, direct lithographic printing has been largely
replaced by the offset process. Offset printing first transfers the liquid ink
image to a rubbery surface, called a blanket, which then offsets the image to
paper and provides very high quality printing on a broad range of paper stocks.
The combined properties of liquid ink and the offset process have led to today's
high standard of printing quality. Nonetheless, printing has remained
essentially a mechanical process capable only of duplicating the same image,
page after page. In addition, there are many complex and labor-intensive stages
involved in the printing process. Although recently the pre-press phase of the
printing process has become computerized, the mechanical nature of printing has
remained fundamentally unchanged for decades. Moreover, the cost of


                                       18
<PAGE>
film separations, printing plates and proofing, as well as the lengthy press
set-up time, render offset color printing an expensive, complicated,
labor-intensive task. Because of the complex steps involved in the conventional
printing process, each printing job, whether small or large, involves
substantial set-up time and costs. When this high initial cost is spread out
over a long print run, the cost per page can be economical. For short runs,
however, the cost is often prohibitive.

Electronic Printing -- Xerography

Xerography, invented over fifty years ago, is a dynamic printing process
whereby, unlike offset printing, a new image can be printed on each successive
page. In the xerographic process, the electrostatic image is developed with a
powder toner rather than traditional liquid ink. This powder toner image is then
transferred to paper, on which the toner is melted or fused. Over time, advances
have been made in the xerographic process, including the improvement of image
quality, the ability to use a variety of papers, the increase in the speed of
printing, the decrease in the cost per page and the ability to produce color
images. However, the images resulting from xerography's use of powder particles
are of relatively low resolution and have poor gloss uniformity and edge
sharpness compared to offset lithography, which utilizes liquid ink. As a
consequence, while powder toner xerography has dominated the office copying and
office printing markets, it has not been able to compete effectively with offset
printing in the color printing market.

Short-Run Color Printing

Short-run color printing is often regarded in the printing industry as run
lengths ranging from fewer than 500 to up to several thousand copies. Because of
the high cost-per-copy of short-run color printing using the conventional offset
method, the use of short-run color printing has been limited. Indigo believes
that the potential market demand for short-run color printing is significant,
and that, as the market develops, it will be satisfied through electronic
printing products capable of producing high quality color printing, on demand.

Personalized Printing

Personalized printing, where the content of the page, image or text is changed
from one page to the next, has been limited in use. Conventional printing is
inherently limited in this area, and xerographic or ink-jet printers are limited
to low-quality black and white personalized printing. With the introduction of
digital color presses, high-quality full-color printing has become possible.
Indigo believes that the potential market demand for personalized color printing
is significant and that, as the market develops, its demands will be satisfied
by electronic printing products capable of producing high-quality printing
on-demand.

Packaging and Decorative Printing

In 1994, Indigo identified the packaging business as an opportunity for
expansion and diversification of its business. This market includes the
packaging and decoration of materials designed to merchandise, protect and
preserve a wide variety of consumable and non-consumable products. Indigo
developed the Indigo Omnius press to target the


                                       19
<PAGE>
packaging and decorative printing markets, for which the United States, Europe
and Japan are regarded as the three key geographical markets. Variations of the
Omnius press are currently sold as the Omnius WebStream and Omnius MultiStream
presses.

Digital Card Printing

During 1997, Indigo identified the card-printing market as an additional
opportunity for the expansion and diversification of its business. This market
includes printing on various types of plastic for the production of cards.
Indigo developed the Indigo Omnius CardPress to target the card-printing
markets, which, geographically, are predominantly in Europe and the United
States. In 1999, we granted exclusive worldwide distribution rights to this
plastic card printing press to DataCard Corporation under a joint venture
agreement.

Digital Offset Color Printing

Indigo's electronic printing process, called Digital Offset Color, combines high
performance digital imaging technology with a liquid ink offset printing
process, merging the benefits of on-demand electronic printing with the
qualities of offset printing.

As in conventional offset printing, Digital Offset Color printing transfers the
ink image from the imaging surface to a blanket, and from the blanket to paper.
However, unlike conventional offset printing, Digital Offset Color printing
creates a new ink image with each impression and leaves no residual ink on the
blanket. This complete transfer is enabled by ElectroInk, Indigo's proprietary
liquid ink, which has a high degree of cohesiveness during transfer. The unique
features of the Digital Offset Color printing system include:

      -     ElectroInk, a dispersion of tentacle-shaped pigmented particles; and

      -     a heated blanket to which the ElectroInk image is transferred. The
            heated blanket transfers the ElectroInk image to the paper, where
            the ink forms a dry film and sets immediately. Since the entire ink
            image is transferred to paper, the blanket can receive a different
            image with each revolution of the printing cylinder. In addition,
            Indigo's automatic "on-the-fly" ink color switching technology
            enables each revolution to print not only a new image, but each one
            in a different color.

Indigo's presses can produce color printing jobs directly from digital files.
Unlike conventional offset printing, which requires film separations, printing
plates, complex ink balance or registration adjustments, and other customary
make-ready procedures, Indigo's presses can economically print short-run jobs,
on-demand. In addition, unlike conventional printing, in which one set of
printing cylinders is required for each color, Indigo's presses use one set of
cylinders for all colors. Indigo offers four-color printing to all its customers
and offers an option of six-or seven-color printing for certain model presses.

Indigo's sheet-fed presses target the short-run and on-demand color printing
market. Many color printing jobs that are presently produced in longer runs,
such as product brochures and promotional materials, may be printed more
effectively on an Indigo press as multiple, on-demand, short-run jobs. By
printing on-demand, users can make


                                       20
<PAGE>
last-minute changes in order to update, modify or customize the finished
product. Indigo believes that this feature, unique to digital printing, allows
customers to respond promptly to commercial opportunities and, simultaneously,
obviates the need for customers to maintain a large inventory of printed
materials. In addition, the advent of the Indigo presses gives rise to entirely
new printed products which, if printed conventionally, would not be economically
feasible. These new products range from customized color text books to
individually-targeted catalogs.

Economic Advantages

Because Indigo's presses significantly reduce the expensive materials, set-up
costs and highly-skilled labor associated with conventional printing, the Indigo
presses make short-run color printing more economical.

      -     No Films or Plates. Electronic data is received directly from the
            pre-press system. No film separations or printing plates are
            required.

      -     No Proofing. On-demand single prints eliminate the need for proofs.

      -     No Traditional Press Make-Ready. Registration is automatic and color
            balance is electronic.

      -     Minimal Operator Training. Although the Indigo presses require an
            operator specially trained and proficient in the operation of the
            machine, no special color printing skills are required of the
            operator, unlike conventional color printing.

PRODUCTS

PRINTING PRESSES

Indigo's printing presses can be divided into several product families:

      -     Commercial Printing

      -     Industrial Printing

      -     Photographic Printing

      -     OEM Products

Commercial Printing Products

-     The Indigo e-Print Pro+, launched in 1999, is a four-color low-cost,
      entry-level press, suitable for simple digital printing applications such
      as short runs, on-demand and proofing, at low to medium printing volumes.
      Features such as electronic collation and automatic duplex printing are
      optional.

-     The Indigo TurboStream, which was introduced in early 1998, adds high
      value applications such as electronic collation, versioning and
      personalization, and a six-color printing capability.

-     The Indigo UltraStream 2000, a sheet-fed single-engine press, is designed
      for high volume printing and applications requiring a seven-color
      capability. Automatic duplex printing is optional.


                                       21
<PAGE>
-     The Publisher 4000 is a twin-engine digital web press, capable of handling
      even lightweight papers, for the mid-volume commercial printing,
      publishing and direct mail markets. Automatic duplex printing is standard.

-     The Publisher 8000 is a four-engine web press and is suited to mainstream
      commercial printing, publishing and high volume direct mail markets.
      Automatic duplex printing is standard. We currently expect that the
      Publisher products will be commercially available in the second half of
      2002.

Industrial Printing Products

-     The Omnius WebStream family of One-Shot Color presses, the Omnius
      WebStream 50, the single-engine WebStream 100, the twin-engine WebStream
      200 and four-engine WebStream 400, bring on-demand color printing to the
      main packaging and labelling markets, including food, beverage,
      pharmaceutical and personal care products in virtually any packaging
      medium, including self-adhesive labels, flexible film, folding carton and
      selected plastics. We currently expect the new WebStream products to be
      commercially available in 2002.

-     The Omnius MultiStream uses Indigo's One-Shot Color technology to print on
      plastic sheets for the production of specialty products, such as graphic
      attachments, mousepads, and panels for appliances, computers, switches,
      keypads, and dials.

Photographic Printing Products

Indigo's Photo-e-Print products offer high quality and high speed, combined with
low cost per print, to the photofinishing labs. The Photo-e-Print product range
includes products for retail and professional photographic labs, as well as
centralized wholesale photofinishing operations. We do not expect these products
to be commercially available before 2002.

-     The Photo-e-Print ProLab operates at a process speed of 120 feet per
      minute. It produces cut sheet prints in different cut lengths (up to 18"),
      with up to 680 prints per hour of maximum format size (12"x18"). The
      ProLab is targetted at professional labs for printing portraits and for
      other professional applications.

-     The Photo-e-Print MetroLab operates at a process speed of 120 feet per
      minute. It produces cut prints in standard formats (e.g., 3"x5", 4"x6",
      etc.). Operating at a speed of up to 5,440 4"x6" cut prints per hour, the
      printer is targeted at high-end minilabs and citylabs.

-     The Photo-e-Print CentroLab 5K produces rolls of various strand (e.g., 3",
      4", 5", 6", etc.) at a speed of up to 5,440 prints per hour. The printer
      is targeted at medium volume central labs and wholesalers.

-     The Photo-e-Print CentroLab 10K operates at a process speed of 240 feet
      per minute and is targeted at high volume central labs and wholesalers. It
      produces rolls of various strand widths at a speed of up to 10,880 prints
      per hour.


                                       22
<PAGE>
-     The Photo-e-Print CentroLab 20K, a twin-engine printer, produces similar
      output formats as the CentroLab 10K, at double the speed. Targeted at very
      high volume central labs and wholesalers, it prints at a speed of up to
      21,760 4"x6" prints per hour.

OEM Products

-     Indigo also manufactures products that are offered through its OEM
      channels:

-     The Datacard CardPress uses the Indigo engine to print on plastic cards,
      and is exclusively marketed on a worldwide basis by Datacard, a leading
      manufacturer of card-printing presses, under our joint venture agreement
      with Datacard.

-     The A.B. Dick Colour is an entry-level digital press for small commercial
      printers, and is sold by A.B. Dick Company throughout North America and
      parts of Western Europe, under our OEM agreement with A.B. Dick.

-     The Indigo-Kammann K15 Digital press prints digitally in all mainstream
      disc formats, including audio CDs, CD-ROMs and DVDs, and was developed by
      Werner Kammann Maschinenfabrik together with Indigo.

-     The HP 6600 Digital Press, based on the Indigo TurboStream press, is sold
      by Hewlett-Packard as part of its OEM relationship with Indigo. HP
      launched this product in June 2001.


                                       23
<PAGE>
The following chart provides some important information about our presses:

                INDIGO COMMERCIAL AND INDUSTRIAL PRINTING PRESSES

<TABLE>
<CAPTION>
                                                                      ------------------------------------
                                                                                      SPEED
-------------------------------------------------------------------------------------------------------------------------
    PRODUCT        SHEET/WEB    NUMBER   NUMBER OF       FORMAT       4-COLOR A3    4-COLOR A4    BLACK &     ANTICIPATED
                                  OF      COLORS                       IMAGES/HR    IMAGES/MIN     WHITE     AVAILABILITY
                               ENGINES                                  (OR A4        (4/0)      PAGES/MIN
                                                                         4/4)                       (A4)
-------------------------------------------------------------------------------------------------------------------------
<S>                <C>         <C>       <C>         <C>              <C>           <C>          <C>         <C>
E-PRINT PRO+         Sheet        1          4              A3           1000            34         136        immediate
-------------------------------------------------------------------------------------------------------------------------
TURBOSTREAM          Sheet        1          6              A3           1000            34         136        immediate
-------------------------------------------------------------------------------------------------------------------------
ULTRASTREAM 2000     Sheet        1          7              A3           2000            68         272        immediate
-------------------------------------------------------------------------------------------------------------------------
PUBLISHER 4000        Web         2          7       320 mm (12.6")      4000           136         272        late 2002
-------------------------------------------------------------------------------------------------------------------------
PUBLISHER 8000        Web         4          7       320 mm (12.6")      8000           272         544        late 2002
-------------------------------------------------------------------------------------------------------------------------
XB2                  Sheet        1          7              B2           4000           136         544      undetermined
-------------------------------------------------------------------------------------------------------------------------
MultiStream          Sheet        1          6              A3           1000            --          --        immediate
-------------------------------------------------------------------------------------------------------------------------
WebStream 50          Web         1          6       320 mm (12.6")       --             --          --        immediate
-------------------------------------------------------------------------------------------------------------------------
WebStream 100         Web         1          7       320 mm (12.6")       --             --          --          2002
-------------------------------------------------------------------------------------------------------------------------
WebStream 200         Web         2          7       320 mm (12.6")       --             --          --          2002
-------------------------------------------------------------------------------------------------------------------------
WebStream 400         Web         4          7       320 mm (12.6")       --             --          --      undetermined
-------------------------------------------------------------------------------------------------------------------------
</TABLE>


POST-SALES ACTIVITIES

Imaging Products (Consumables)

Indigo manufactures and sells several imaging products essential to the
operation of its presses, including ElectroInk products, PIPs and image transfer
blankets. We distribute our imaging products to our customers, distributors and
OEMs around the world.

ElectroInk Products

ElectroInk is Indigo's trademark for a unique, electrically-responsive liquid
ink having a high degree of cohesiveness and rigidity during transfer. This
cohesiveness and rigidity facilitate the efficient transfer of images to a range
of selected paper stocks and other media. The unique properties of ElectroInk
products assist in rendering high quality images, with brilliant colors, sharp
edges and well-defined half-tones.

Although the raw materials comprising the ElectroInk formula are acquired from
third-party vendors outside of Israel, the actual ink manufacturing process
takes place at the Company's plant in Israel. In 1994, we entered into an
agreement with Toyo Ink Mfg. Co., Ltd. regarding the manufacture of ElectroInk
products in Japan and the distribution


                                       24
<PAGE>
of ElectroInk products in Japan and certain other countries in the Pacific Rim.
See " -- Patents, Licenses and Other Intellectual Property -- Licenses" below.

Photo-Imaging Plates

The Digital Offset Color printing process begins when the PIP is exposed by the
laser writing head to information from electronic memory, thereby forming an
image. The PIP's special properties facilitate the dynamic printing process of
the Indigo presses, allowing the printing of a new and different image with each
impression. Although the core material for the PIP is supplied by third party
vendors, Indigo's plant in Israel carries out further processing steps that
enable the use of the PIP in the presses.

Image Transfer Blankets

The image transfer blanket receives the ink image from the PIP and transfers it
to the paper or other substrate, leaving no residual ink on the blanket. As a
result of this complete transfer, which is enabled by ElectroInk, the blanket
can receive a different image with each revolution of the printing cylinder.
Although the substrate material of the blanket is furnished by a vendor,
Indigo's manufacturing plant in Israel applies special coating layers to create
the final blanket. The resilience of the blanket allows Indigo presses to
transfer micron-thin ElectroInk images to the printing substrate, while
preserving very high image sharpness.

SALES AND MARKETING

Indigo is committed to its original strategy of penetrating major segments of
the commercial color printing market as well as industrial printing market
segments, such as label and packaging printing, cards and CDs, and the
photographic printing market. To this end, Indigo has adopted an aggressive
marketing strategy aimed at strengthening its market leadership. The strategy
focuses on Indigo's current market segments while seeking to broaden its direct
and indirect sales channels.

Introducing unique product features with compelling benefits

Indigo continues to devote research and development resources to developing
features that enhance the performance of its Digital Offset Color presses, or
that differentiate its printing products from those of its competitors. This
approach includes offering its presses to customers in various print
environments.

In February 2000, Indigo unveiled a new generation of higher-productivity
presses, such as the UltraStream 4000, WebStream and Publisher presses, aimed at
the higher end of the commercial printing market, as well as other products
targeted at additional market segments. In September 2000, Indigo showcased its
Photo-e-Print family of photographic printers for the photofinishing market. See
" -- Products" above.

Broadening and strengthening the customer base by exploring and pursuing new
markets and fields of application

We hope to diversify our customer base by focusing on major accounts, with the
potential for multi-unit placements. This includes, among others, the in-plant
segment of the market and the growing "facilities management" market.


                                       25
<PAGE>
We take the initiative in identifying opportunities for repeat sales to
customers whose high volume usage justifies an additional press. In addition, we
hope to address new market segments with specific application needs.

Working with third parties to offer systems solutions to customers

We work with current and potential strategic partners, OEMs and customers to
develop and offer complete system solutions. Among our OEMs are market leaders
in various fields, including Hewlett-Packard, A.B. Dick, Datacard and Werner
Kammann Maschinen Fabrik. We also cooperate with other market leaders, such as
Adobe, Avery Dennison, Mactac and Mobil, through which we seek to provide
systems solutions to our customers and to add value to our presses. We also
cooperate with Internet-based print providers, and Internet-based printers, who
both provide system solutions to customers as well as add value to our products.

Expanding distribution channels

We market and sell our presses, and related imaging products, primarily through
our direct sales forces in the United States, Canada, the United Kingdom, The
Netherlands, Germany, Belgium, France, Italy and Israel, and through national
distributors throughout Scandinavia, Southern, Central and Eastern Europe, Latin
America, the Far East, Africa and the Middle East as well as through dealer
networks.

During 2000, Indigo increased its direct sales force to more than 120 and plans
to continue to increase its sales force in the future in order to expand its
market reach.

In September 2000, we entered into a three-pronged strategic alliance with
Hewlett-Packard, which included a $100 million equity investment by HP in
Indigo, a program for the joint development of future products and the
distribution by HP of Indigo products as an OEM. In June 2001, HP launched the
sale of the first such product, the HP 6600 Digital Press. See " -- Products"
above and "Item 7. Major Shareholders and Related Party Transactions."

Penetrating the packaging and decorative printing markets by working with OEM
partners and selling the Indigo Omnius press directly to customers

Indigo expects to continue to develop the Omnius-dedicated portions of its
organization to focus on exploiting Indigo's unique capability to bring digital
printing, either directly or through OEM partners, to various segments of the
packaging and decorative printing industries.

Penetrating the photofinishing market

Indigo expects to penetrate the photofinishing market by offering its line of
Photo-e-Print products, which are capable of digitally printing photographs.
With the continuing increase in the use of digital cameras and Internet-based
photofinishing, we believe that digital photofinishing is a natural fit in this
market. Indigo plans on working with partners and leading customers in order to
pursue this opportunity.


                                       26
<PAGE>
Lowering the barrier to entry

We have determined that certain prospective customers are hesitant to risk the
initial significant investment required to purchase one of our presses, thereby
delaying many sales opportunities. We have therefore initiated several programs
that offer a low initial investment to minimize the initial risk that a customer
must take. One of these programs, for example, enables customers to purchase
Indigo presses at a lower initial investment while committing to a minimum
monthly print volume. In addition, we have tried to address the need for a lower
entry price by introducing a program for the sale of used equipment. We have
also announced an upgrade/uptrade program, enabling customers to upgrade their
Indigo presses to higher-performance Indigo products, thereby protecting their
initial investment. Most significantly, in 1999, we introduced the e-Print Pro+
press which, at a list price of $149,000, is our lowest-priced product, and is
one of the lowest-priced digital color presses on the market. This product
enables Indigo digital printing to be priced competitively with
copiers/printers.

Improvement of the commercial success and profitability of current customers

We continue to focus our efforts on identifying the evolving needs of our
customer base, in order to improve the commercial success of current customers.

We have initiated plans for continuing customer training through the Market
Express(TM) and Market Maximizer(TM) programs in the United States and Europe,
respectively. These programs provide training for Indigo customers on sales and
business strategies and on the selection of successful applications.

We have developed an application concept called the "Indigo Value Factor." The
"Indigo Value Factor" graphically illustrates how the value of digital printing
jobs increases with the digital content of the job. It also highlights unique
values and applications of Indigo products. We believe the "Indigo Value Factor"
guides customers towards these value-added applications and jobs where Indigo
products offer a clear advantage.

In addition, we realize that the marketing of applications for our presses is
crucial to both our success and that of our customers. We anticipate that the
introduction and implementation of additional applications will increase the
usage of our presses and, consequently, will enhance the success of our
customers.

SERVICE AND SUPPORT

Indigo provides a high level of customer service, technical support and
training, which, we believe, are crucial factors in achieving system and Imaging
Products sales and customer satisfaction. Service and technical support
activities include site preparation and inspection, operator training, equipment
installation, preventive and corrective maintenance and product modifications.
Indigo continues to strengthen its direct support organization in North America
and Europe. The field service engineers are dedicated to servicing the Indigo
presses and are trained by Indigo, over a period of several months, in the
operation, maintenance and service of the presses. The field service engineers
not only provide support to Indigo's customers but also function as a


                                       27
<PAGE>
source of valuable operational and service information for Indigo's engineering
and manufacturing departments. Indigo offers its customers training courses for
press operators. Indigo also provides its customers remote support through its
multi-national response centers and service hotlines.

In addition, Indigo trains the service personnel of its distributors and OEMs to
provide service and support for presses sold by such distributors. Indigo also
provides secondary support to the service personnel of its distributors.

Many of our United States customers participate in a users' group known as the
Indigo Customer Exchange. Many European customers participate in users' groups,
as well. Participation in these users' groups enables us to stay advised of
current customer issues relating to our products, utilization rates and
applications. We view customer feedback from such forums as valuable sources of
information. We also provide a unique service to our customers, called
IndigoServe(TM), by which customers, as well as Indigo, can access data on
product utilization and productivity via the Internet.

RESEARCH AND DEVELOPMENT

We are committed to enhancing our existing products and developing new products
and applications that we believe are essential to our future success. We intend
to continue to devote substantial resources to research and development relating
to the improvement of our existing products as well as an expanded line of
Digital Offset Color printing products in the future.

Currently, more than 20% of our work force is involved in research, development
and engineering. We are undertaking enhancements to our products. These
enhancements are aimed at improving the reliability of the presses, the
consistency of our consumables and the image uniformity and print quality of the
printed images. We are also developing new products and special applications for
existing products. In addition, Indigo has begun a major effort in the
development of products jointly with HP. We are also concentrating significant
efforts on materials research, electro-optical development, software and
screening algorithms, and the application of the Digital Offset Color printing
process to additional market-driven applications.

In the past, we and certain of our customers have encountered operational
problems with the presses, including problems relating to the presses'
paper-handling capabilities, contamination of inks and durability and
consistency of the PIPs and blankets, as well as quality control and
manufacturing. Our research and development and manufacturing work to date has
resulted in considerable improvements in the reliability and productivity of our
presses and imaging products. Although our product development group continues
to concentrate efforts on such improvement, there can be no assurance that we
will be able to overcome all technical problems or that additional technical
problems will not arise. Failure by us to anticipate or respond to changes in
technology or customer preferences, or any significant delays in product
development or introduction, could have a material adverse effect on our
business. See "Item 3. Key Information; D. Risk Factors."

The Government of Israel encourages research and development projects oriented
towards products for export. Indigo has received in the past, and continues to
receive,


                                       28
<PAGE>
grants from the Office of the Chief Scientist in the Ministry of Industry and
Commerce for the development of systems and products. Under the terms of the
Chief Scientist's participation received by Indigo, a royalty of up to 3.5% of
either 50% or 100% of the net sales of products, including related service
revenues, developed in a Chief Scientist-funded project must be paid, beginning
with the commencement of sales of products developed with grant funds. The
maximum amount of royalties payable by Indigo will not exceed 100% of the
original grant received.

The Israeli Ministry of Industry and Commerce amended the Chief Scientist
Regulations in June 1996. The new regulations include the following changes:

-     limiting the total amount of royalties that must be repaid to 100% of the
      dollar value of the amount granted; and

-     in the case of the approved transfer of manufacturing rights out of
      Israel, raising the maximum amount to be repaid to between 120% and 300%
      of the amount granted, depending on the extent of the manufacturing to be
      conducted outside of Israel.

These percentages apply to programs approved after December 31, 1993 and are
effective as of January 1, 1996. Notwithstanding the above, under further
amendments to the regulations in December 1998, for the three-year period from
January 1, 1997 through December 31, 1999, the percentage of royalties paid was
based on 3% of product sales. Grants received after January 1, 1999 bear
interest at LIBOR. If no product is commercialized, no royalties are payable.
The terms of the Chief Scientist's participation also require that the
manufacture of products developed with government grants be performed in Israel,
unless a special approval has been granted for manufacture abroad.

If approval is obtained, the maximum amount to be repaid would range from 120%
to 300% of the amount granted. Separate Chief Scientist consent is required to
transfer to third parties technologies developed through projects in which the
Chief Scientist participates. These restrictions do not bar exports from Israel
of products developed with such technologies.

Since Indigo has neither requested nor received Chief Scientist grants relating
to the imaging products, these products are not subject to any of the above
requirements.

PATENTS, LICENSES AND OTHER INTELLECTUAL PROPERTY

Patents

Indigo relies on a combination of patents, trade secrets, copyrights, trademarks
and licenses, together with non-disclosure, confidentiality and non-competition
agreements, to establish and protect its proprietary rights in its products.
Indigo has over 550 issued and pending patents throughout the world. Some of
Indigo's patents were acquired from third parties. As described below, many of
Indigo's patents are licensed to third parties. Certain of Indigo's patents
relate to its presses, the Digital Offset Color process and ElectroInk products.
Certain other patents relate to technology and products that are presently under
development, while others are relevant to Indigo's licensing activities but not
to its products.


                                       29
<PAGE>
Certain of the patents that relate directly to our products have a remaining
life of up to fifteen years. We continue to actively pursue patent protection in
our major markets in North America, Western Europe and Asia.

Licenses

Indigo has not granted any entity a license for the manufacture of its presses
and has not licensed its Digital Offset Color process for use in the manufacture
of products competitive with its presses. However, certain of Indigo's patents
have been licensed to third parties. Some of these licenses relate to ElectroInk
products and their use in office copying, electronic printing, color proofing
and certain other industrial applications, and some relate to office copiers.

In May 1994, Indigo appointed Toyo Ink as its exclusive distributor, through
2005, of the Indigo E-PRINT 1000 press, now the e-Print Pro and TurboStream
presses, in Japan and certain other countries in the Far East and Pacific Rim,
and licensed Toyo Ink to manufacture and sell ElectroInk products, subject to
certain conditions, in such countries. In consideration of this appointment and
license, Toyo Ink agreed to purchase certain quantities of machines during the
term of its agreement with us and to pay us royalties on Toyo Ink's sales of
ElectroInk products. See "Item 5. Operating and Financial Review and Prospects."
In 1994, the Company received a $3.7 million non-refundable payment from Toyo
Ink upon issuance of a Japanese patent relating to ElectroInk products. In 1995,
Indigo appointed Toyo Ink as a distributor of the Indigo Omnius press in the
same territory in which it distributed the Indigo E-PRINT 1000+ press. Though
Toyo Ink's exclusive distribution rights terminated as of the end of 2000, its
non-exclusive right to distribute certain of Indigo's presses continues through
2005.

Trademarks and Other Intellectual Property

Indigo has registered the INDIGO, E-PRINT, OMNIUS, ELECTROINK, TURBOSTREAM and
other trademarks in The Netherlands, Belgium, Luxembourg, and the United States.
It has also filed for protection of the INDIGO, E-PRINT, OMNIUS, ELECTROINK and
other trademarks in countries that are signatories to the Madrid Arrangement
Concerning International Registration of Marks (the "Madrid Arrangement") by
registering the trademarks with the World Intellectual Property Organization in
Geneva, Switzerland. Indigo has applied to register the trademarks ULTRASTREAM,
WEBSTREAM and MULTISTREAM in the United States, the European Union, Canada and
Japan. Indigo is awaiting registration of certain of its trademarks in the
United States, Japan, France, Germany, Italy, Switzerland, the United Kingdom
and certain other countries.

In addition, registration of the INDIGO mark has either been granted or is being
sought in 28 non-Madrid Arrangement countries. In the United States, Indigo has
established rights to use the INDIGO mark relating to the development,
manufacture, marketing, sale and service of inks, including toners; ink
manufacturing equipment; ink testing instruments; plotting devices; copiers;
printers; printing devices and printing systems that produce hard copy output;
peripheral devices and equipment relating to its products; and related services,
components, supplies, software, manuals and marketing materials, as well as
other products and services.


                                       30
<PAGE>
COMPETITION

Competition in the printing industry is intense. The industry consists of major
international companies, many of which have substantially more management,
financial, technical, manufacturing, marketing, sales, distribution and other
resources than we do. We compete primarily by selling products that provide
features and offer qualities not otherwise currently available on the market. We
expect that electronic printing and related technology will continue to be
afforded substantial protection in those markets in which we hold patents. See
"-- Patents, Licenses and Other Intellectual Property" above.

Our presses are targeted primarily at the value-added, short-run, on-demand and
variable data color printing markets. Several companies have announced or
introduced products aimed at these markets, or are believed to be planning to
announce such products in the future. However, in contrast to Indigo, most of
the products developed by such companies are based on conventional offset
printing or color xerography. We believe that the success of any of the products
developed by our competitors will, to an extent, depend upon the printing
process technology that is embodied in their products.

The Indigo Digital Offset Color presses are the only color electronic printing
products available that combine digital printing and ink-on-paper offset
quality. Vendors active in the color copier market, such as Canon Inc., IBM,
Xeikon and Xerox, and some of their distributors, offer digital printing that is
based on a xerographic process, which is incapable of achieving the high
definition, the brilliant glossy color, the variety of available substrates and
the range of special colors that Indigo's Digital Offset Color process achieves
using liquid ink. Heidelberg, on the other hand, active in the conventional
printing market, offers automated semi-digital offset printing, and has also
introduced a xerographic product with a full digital capability in an industry
exhibition in May 2000 which it expects to be commercially available in the
second half of 2001 or first half of 2002.

Offset Printing

There are many manufacturers of conventional offset color printing presses.
Since conventional offset printing produces the highest quality of all the
processes competing for the short-run market, certain requirements can be
satisfied only by conventional offset printing. However, the viability of a
conventional offset printing press for value-added, short-run, on-demand color
work is determined by the degree to which the press is able to reduce or
eliminate the use of costly materials and the time-consuming, labor-intensive
steps associated with the conventional offset printing process. Although certain
conventional offset printing presses, such as the Heidelberg GTO-DI, QuickMaster
DI, SpeedMaster DI, the Man Roland DicoWeb, the Dainippon Screen TruePress 544
and 744, the Xerox PAX-DI and the Scitex/KBA 74-Karat, have become more
automated, no manufacturer has successfully eliminated the need for printing
plates. Consequently, the conventional offset printing press cannot perform many
of the functions of the Indigo Digital Offset Color presses, such as value-added
on-demand printing, personalization and electronic collation.


                                       31
<PAGE>
Xerographic Products

Currently, there are several companies that offer xerographic color printing
products that could be considered competitive with Indigo's presses. These
companies include Canon, Xerox, Ricoh, NexPress (a Heidelberg/Kodak joint
venture) and Xeikon. Some of their offerings are digital color copier/printers
that are, in general, able to interface with desktop publishing systems, thereby
operating as printers at output speeds that may compete with the speed of
Indigo's presses. Xeikon, Xerox, Canon and Heidelberg have introduced digital
color printing products that, in some instances, produce output at speeds in
excess of the Indigo presses and that may, in certain respects, be of
competitive quality to the output of the Indigo presses. Xeikon offers roll-fed
and large-format products, which have advantages in certain markets. However,
all of these Xeikon products have lower resolution and inferior image sharpness,
and do not offer the variety of substrates and wide range of colors that are
offered by the Indigo presses. Because xerographic technology is widely
available, Indigo believes that additional companies that currently produce and
sell xerographic copiers, including color copiers, will attempt to penetrate the
short-run digital color printing market with xerographic products.

Other Competing Technologies

Various color hard copy technologies exist, including silver photography, dye
sublimation, thermal transfer, ink jet, liquid electrophotography,
electro-coagulation and ionography. We are aware of several companies that claim
to be developing electronic products for the printing market.

MANUFACTURING AND SOURCES OF SUPPLIES

Indigo's manufacturing facilities are located in Nes Ziona, Israel. Indigo
procures, on a purchase order basis, components and custom-made sub-assemblies
from approximately 350 suppliers and subcontractors world-wide, and
manufactures, assembles, integrates and tests its Digital Offset Color presses
at its Israeli facilities. Subcontractors purchase components used in the
manufacture of sub-assemblies in accordance with Indigo's drawings and
specifications. Most of the components and sub-assemblies used by Indigo in the
manufacture and assembly of its presses are available from several sources,
although Indigo presently purchases certain essential items from single
suppliers. Indigo believes that such suppliers have the financial capacity to
meet its needs as its business grows. Indigo is currently in the process of
locating additional suppliers of such single source items. While, in recent
years, Indigo has been able to obtain, on a timely basis, adequate supplies of
components, sub-assemblies and raw materials used in the manufacture of its
imaging products, and has experienced no material problems with its
subcontractors, a failure by Indigo to develop alternative sources for certain
such components, sub-assemblies or raw materials that meet Indigo's
specifications and quality standards, on a timely basis, if and as required, or
to obtain sufficient sole-source or limited-source components, sub-assemblies or
raw materials on a timely basis, could result in delays or reductions in product
shipments and/or in decreases in sales of consumable products which could have a
material adverse effect on Indigo's business. Indigo has adopted a world-wide
strategic inventory policy that is intended to overcome or mitigate the effects
of any


                                       32
<PAGE>
such shortages. Indigo has also established a procedure to ensure that the
components, sub-assembles and raw materials provided by its subcontractors and
suppliers, and used in the manufacture of the Indigo presses, meet its
specifications and quality standards. Approximately 60% of Indigo's
subcontractors and suppliers are located in Israel, 20% in the United States and
20% in Europe and the Far East.

Quality control is conducted at various stages in the manufacturing process,
both at our subcontractors' facilities and at our facilities. In addition, to
ensure quality at the subcontractor level, we have a program in place to qualify
our suppliers. After a press is completely assembled, we conduct a final
inspection, which includes testing of each press. We generate daily, weekly and
monthly reports to monitor operations, including statistical reports that track
the performance of our presses from initial inspection to shipment, using "total
quality management" methods.

We also manufacture imaging products, including ElectroInk, PIPs, blankets and
imaging oil, at our facilities in Israel.

In September 1998, Indigo Electronic Printing Systems Ltd., our Israeli
research, development and manufacturing subsidiary, received ISO 9001
certification. ISO 9001 is the highest level of ISO 9000 certification, and
Indigo's certification covers the areas of research and development,
manufacturing, sales, service and technical support of printing systems,
consumables and material for digital offset printing. In November 1999, Indigo
Electronic Printing Systems received ISO 9000.3 certification for software
development in the field of digital color printing.

C. ORGANIZATIONAL STRUCTURE

Indigo N.V.'s significant subsidiaries are as follows:

<TABLE>
<CAPTION>
NAME OF ENTITY                           JURISDICTION OF INCORPORATION     STATUS         PERCENT HELD BY INDIGO N.V. (directly and
                                                                                          indirectly)
<S>                                      <C>                               <C>            <C>
Schnellpress B.V.                        The Netherlands                   Active         100%
Indigo N.V. & Co. Deutschland KG         Germany                           Active         100%
Indigo Electronic Printing Systems Ltd.  Israel                            Active         100%
P.F.E. Investments Ltd.                  Israel                            Active         100% (subsidiary of Indigo Electronic
                                                                                          Printing Systems Ltd.)
Indigo International, Inc.               Delaware, U.S.A.                  Active         100%
Indigo America, Inc.                     Delaware, U.S.A.                  Active         100%
Indigo Canada Inc.                       Ontario, Canada                   Active         100% (subsidiary of Indigo America, Inc.)
</TABLE>


                                       33
<PAGE>
D. PROPERTY, PLANT AND EQUIPMENT

Indigo's principal executive office is located in Maastricht, The Netherlands,
from which Indigo manages its European operations, distribution and marketing
support, worldwide indirect sales operations and carries out its treasury
activities. Indigo presently leases 28,524 square feet of office space in
Maastricht under a lease that expires in 2005. Indigo's manufacturing and
research and development facilities are located in several buildings in Nes
Ziona, Israel, and consist of 154,333 square feet of office and manufacturing
space under a lease that expires in 2008, and an additional 13,444 square feet
of space under a lease that expires in 2006. This space is used primarily for
research and development, manufacturing and quality assurance, sales, product
marketing, distribution and administrative services. Indigo is currently
expanding its existing ink plant in order to accommodate the growing demand for
ElectroInk. Indigo also leases approximately 27,000 square feet in Woburn,
Massachusetts, under a lease which expires in January 2004, of which 7,829 feet
is sublet to a third party. Indigo's principal North American sales and
marketing office is located in the Woburn facility. Indigo also leases
additional space in various other cities in North America, including Los
Angeles, California; Atlanta, Georgia; and Schaumburg, Illinois, which space is
primarily used for sales offices. A lease for a 6,700 square feet demonstration
and sales center in Los Angeles, California commenced in July 2000. In Europe,
Indigo leases an aggregate of approximately 17,000 square feet in Mainz-Kastel,
Germany; Milan, Italy; London, England; and Paris, France. This space, too, is
used primarily for sales offices.

Indigo is considering leasing additional space for its facilities in Israel,
Germany and the United Kingdom, but otherwise believes that its facilities,
together with the current expansion of its manufacturing plant, are adequate to
meet its needs through the end of 2001.

ITEM 5.     OPERATING AND FINANCIAL REVIEW AND PROSPECTS

In conjunction with the Private Securities Litigation Reform Act of 1995, Indigo
N.V. wishes to avail itself of the stated "safe harbor" provisions and to
caution readers that certain of the statements contained herein, including
statements relating to Indigo's expected performance for the year ending
December 31, 2001, as well as later periods, are forward-looking statements.
Actual results could differ materially from those projected in forward-looking
statements as a result of various factors set forth herein and in Indigo's
Reports on Form 6-K, and Registration Statements on Forms F-3 and S-8, filed
with the Securities and Exchange Commission.

Overview

Indigo N.V. and its subsidiaries operate in two business segments: equipment and
post-sales activities. The equipment segment produces printing presses used in
the


                                       34
<PAGE>
production of on-demand, short-run, digitally-printed color products. The
post-sales segment includes consumable products and service that are consumed
by, and provided to, the equipment sold.

Indigo develops, manufactures, markets, sells and services liquid ink-based
Digital Offset Color printing products. Indigo's principal products consist of
digital printing presses geared for the commercial, industrial and photographic
printing markets, and related consumable products, including ElectroInk
products, photo-imaging plates, and printing blankets. Indigo markets its
products directly and through distributors in Europe, through a wholly-owned
subsidiary in the United States and through distributors in other parts of the
world. Indigo also manufactures a number of presses that are marketed by other
parties through OEM relationships. Indigo conducts its research and development
and manufacturing activities through a wholly owned subsidiary in Israel.
Indigo's proprietary electronic printing process combines high performance
digital imaging technology with a liquid ink offset printing process. Indigo
owns over 550 issued and pending patents around the world, of which certain key
patents have a remaining life of approximately five to ten years.

Indigo has customers in over 40 countries, with the United States, Europe and
Japan accounting for over 90% of Indigo's installed base.

As of December 31, 2000, Indigo had offices in eight countries: The Netherlands,
Israel, the United States, the United Kingdom, Germany, Spain, France and Italy.

Strategic Relationships and Product Releases in 2000

In February 2000, Indigo unveiled a new generation of ultra-high speed Digital
Offset Color presses, both sheet-fed and web. The Series 2 generation of presses
includes two sheet-fed models for commercial printing, two web presses for
commercial printing, publishing and direct mail applications, and three web
presses for label printing.

In addition, Indigo and Werner Kammann Maschinenfabrik, Germany, jointly
announced the Indigo-Kammann K15 Digital Press, a full-color, offset quality,
digital printing press for CDs, CD-ROMs and DVDs. Combining Indigo's Digital
Offset Color printing technology and Kammann's unique disc processing
capabilities, the K15 Digital can produce high quality discs in all mainstream
disc formats including audio CD's, CD-ROMS and DVDs.

In September 2000, Indigo and Hewlett-Packard Company, in furtherance of a
strategic alliance formed in 1998, entered into agreements providing for the
co-development of next-generation digital color printing systems, HP's OEM
distribution of certain existing Indigo digital color printing products, and
HP's $100 million equity investment in Indigo. See also "B. -Liquidity and
Capital Resources" below.

Subsequent Events

In May 2001, the Company's shareholders, at their annual general meeting,
authorized the Management Board, through November 9, 2002, to repurchase up to 5
million of


                                       35
<PAGE>
Indigo's common shares, at prices of up to $10 per share. See "Item 6.
Directors, Senior Management and Employees; D. Employees."


A. OPERATING RESULTS

2000 COMPARED WITH 1999

In 2000, pursuant to Securities and Exchange Commission, Staff Accounting
Bulletin No.101, "Revenue Recognition in Financial Statements", Indigo
implemented a change in its revenue recognition policy. Previously, Indigo had
recognized revenue upon shipment of equipment, which preceded installation,
provided collectibility was reasonably assured, future obligations of the
Company were considered insignificant and the costs of such obligations could be
reasonably estimated. Under the new policy, revenue on sales of equipment to
customers is recognized upon installation at the customer's site within the
reporting period, where applicable, provided collectibility is reasonably
assured, future obligations of the Company are considered insignificant and the
costs of such obligations can be reasonably estimated.

Total revenue, which is comprised of revenues from equipment, post-sales
activities, license fees and royalties, increased by 13.7% to $164.8 million in
2000 from $145.0 million in 1999 (implementation of SAB 101 in 1999 would have
resulted in total revenue of $146.2 million in year 1999).

Equipment revenues increased by 21.1% to $95.3 million in 2000 compared with
$78.7 million in 1999 (implementation of SAB 101 in 1999 would have resulted in
equipment revenue of $79.9 million in year 1999). During 2000, Indigo's unit
sales increased by 24% compared to 1999 primarily due to sales of the new
generation of ultra-high speed Digital Offset Color presses - the UltraStream
2000 and an increase in sales of the e-Print Pro+ .

Post-sales revenues, which include revenues from consumable products and
service, increased by 12.0% to $69.4 million in 2000 from $62.0 million in 1999.
The increase is primarily attributable to the increased installed base. The
increase in equipment and post-sales revenues was offset by the devaluation of
the Euro.

Revenues from license fees and royalties were $0.09 million for 2000, compared
to $4.3 million for 1999. The 1999 revenues from licensing fees and royalties
resulted primarily from patent-licensing agreements relating to document
scanning and handling technologies.

Equipment and post-sales revenues in North America increased by 46.9% to $71.1
million in 2000 from $48.4 million in 1999. Equipment and post-sales revenues in
Europe increased by 7.1% to $75.8 million in 2000 from $70.8 million in 1999.
Equipment and post-sales revenues in Europe were negatively influenced by the
devaluation of the Euro during 2000. Equipment and post-sales revenues in other
territories increased by 45% to $8.7 million in 2000 from $6.0 million in 1999.
The increase in these revenues is primarily attributable to the increase of
sales in Latin America.


                                       36
<PAGE>
Gross margin (net of royalties and license fees) increased by 22.7% to $81.1
million in 2000 from $66.1 million in 1999 (implementation of SAB 101 in 1999
would have resulted in gross margin of $66.7 million in year 1999). Gross margin
as a percentage of revenues increased to 49.2% in 2000 compared with 47.0% in
1999. Gross margin on equipment sales increased by 23.0% to $41.7 million in
2000, compared to $33.9 million in 1999. Gross margin as a percentage of
equipment sales for 2000 increased to 43.7% compared with 43.1% in 1999. The
increase is attributable primarily to sales of the UltraStream 2000. Gross
margin on post-sales revenues increased by 22.4% to $39.4 million in 2000,
compared to a gross margin of $32.2 million in 1999. Gross margin as a
percentage of post-sales revenues for 2000 increased to 56.8% compared with
52.0% in 1999. The improvement in 2000 is attributable primarily to increased
post-sales revenues as a result of the increased installed base, improvement in
the reliability of consumable products, and to the continuing improvement in
equipment reliability resulting in a reduction of cost of service per unit.

Gross research and development costs, before participation grants, increased to
$24.4 million in 2000 from $20.4 million in 1999. The high level of costs during
the last two years reflects Indigo's focus on the development of new products,
including the products which were first presented in the Drupa exhibition in
Dusseldorf, Germany, in May 2000 and the Photo-e-Print products.

Net research and development costs, after participation grants, increased to
$19.5 million in 2000, from $14.2 million in 1999. Participation grants from the
Israeli Office of the Chief Scientist decreased to $4.9 million in 2000 compared
to $6.2 million in 1999. The high level in the Chief Scientist's participation
in the last two years is directly associated with the development of Indigo's
new products and Indigo's participation in the Magnet Program.

Indigo is committed to pay royalties to the Chief Scientist upon successful
completion of projects that the Chief Scientist funds, and upon sales of the
resulting products, until the amount of the grant has been repaid. This expense
has been reflected in selling, general and administrative expenses.

Selling, general and administrative expenses increased to $71.9 million during
2000 from $57.6 million in 1999. The increase primarily reflects an increase in
selling expenses due to an increase in the number of sales personnel, which is
consistent with Indigo's policy of increasing its presence in the direct sales
market. The increase is also attributable to an increase in marketing expenses
due to the Drupa exhibition in May 2000 and the Graph-Expo exhibition in
September 2000.

Interest income and other, net of interest expense and other, was $1.8 million
in 2000, compared to interest income, net of interest expense, of $0.7 million
in 1999. The increase is primarily a result of the increase in cash, cash
equivalents, short-term deposits and marketable securities and a decrease in
short-term loans in the fourth quarter of 2000 following Hewlett-Packard's
investment.

Indigo operates worldwide and in a variety of currencies. When operating in
several currencies other than the U.S. dollar, Indigo's cash flows and earnings
are exposed to fluctuations in foreign currency exchange rates. Indigo attempts
to reduce this exposure through operational strategies and hedge-oriented
financial instruments.


                                       37
<PAGE>
Indigo does not enter into derivative contracts for trading or speculative
purposes, nor is it a party to any leveraged financial instruments. Cash flow
hedges protect Indigo from fluctuations in income and expenses incurred in
subsidiaries that operate in non-U.S. dollar-based environments.

To date, Indigo has utilized monetary assets and liabilities and forward
contracts and purchased option contracts to mitigate the exposure from changes
in foreign currency rates. However, there can be no assurance that the steps
taken by Indigo will be successful in protecting Indigo from the above-described
risks. See "Item 11. Quantitative and Qualitative Disclosures About Market
Risk".

Provision for income taxes includes taxes on income reported by Indigo to the
respective taxing jurisdictions. Provision for income taxes increased to $1.1
million in 2000 from $0.7 million in 1999.

The cumulative effect of an accounting change, net as of the beginning of year
2000, was a loss of $1.9 million. The accounting change is attributed to SAB 101
"Revenue Recognition in Financial Statements" as described above.

Net loss increased to $11.6 million in 2000 compared to a net loss of $1.4
million for 1999. Basic and diluted loss per common share before the cumulative
effect of an accounting change, net, was $0.90 and $0.16 for 2000 and 1999,
respectively. Basic and diluted loss per common share after the cumulative
effect of an accounting change, net, was $0.93 and $0.16 for 2000 and 1999,
respectively. The increase in net loss is primarily attributed to the increase
in selling and marketing expenses and research and development expenses as
described above.

1999 COMPARED WITH 1998

Total revenue, which is comprised of revenues from equipment, post-sales
activities, license fees and royalties, decreased by 2% to $145.0 million in
1999 from $147.4 million in 1998.

Equipment revenues remained flat at $78.7 million in 1999 compared with $79.0
million in 1998. During 1999, Indigo sold substantially more units than in 1998.
However, the average selling price of the systems was reduced following the
introduction and sale of the e-Print Pro+ during the second half of 1999. The
combination of these two factors, and the lower Euro exchange rate in Europe,
led to equipment revenues remaining at the same levels as in 1998.

Post-sales revenues, which include revenues from consumable products and
service, increased by 7% to $62.0 million in 1999 from $58.0 million in 1998.
The increase is primarily attributable to the increased installed base, which
was partially offset by rebates in respect of accounts receivable in Europe.

Revenues from license fees and royalties were $4.3 million for 1999, compared to
$10.3 million for 1998. The 1999 revenues from licensing fees and royalties
resulted primarily from patent-licensing agreements relating to document
scanning and handling technologies.


                                       38
<PAGE>
During 1999, Indigo undertook a new strategy targeted at the lower end of its
market by introducing a new system, the e-Print Pro+, with a list price of
$149,000. Under an OEM agreement with A.B. Dick, A.B. Dick is marketing its own
branded digital press that incorporates this technology. This system is targeted
at copy shops, in-plant printers, quick printers and small commercial printers.
During the second half of 1999, the e-Print Pro+ became Indigo's most popular
unit, increasing Indigo's installed base, but lowering Indigo's average selling
price of units sold.

Equipment and post-sales revenues in North America increased by 3% to $48.4
million in 1999 from $46.9 million in 1998. Equipment and post-sales revenues in
Europe increased by 3.2% to $70.8 million in 1999 from $68.6 million in 1998.
The lower sales activity in North America as compared to Europe is primarily
attributable to fewer available sales channels in North America.

Sales of equipment to Toyo Ink, Indigo's distributor in Japan and much of
Southeast Asia and the Pacific Rim, increased by 20% to $7.7 million in 1999
from $6.4 million in 1998. Total revenues from Toyo Ink in 1999 and 1998
constituted 11% of Indigo's equipment and post-sales revenues. During the third
quarter of 1998, Indigo signed an agreement with Toyo Ink to repurchase from
Toyo Ink's inventory 30 systems to be upgraded to one of Indigo's newly
announced products (the e-Print Pro+). The transaction was initiated by Indigo
in order to be able to supply the demand for the newly announced e-Print Pro+
and included a repurchase of systems at a purchase price lower than Indigo's own
manufacturing cost for the product. Sixteen of these systems were upgraded to
the e-Print Pro+ and resold during the fourth quarter of 1998 and the remaining
systems were resold during the first half of 1999.

Gross margin (net of royalties and license fees) remained flat at $66.1 million
in 1999 from $66.0 million in 1998. Gross margin as a percentage of revenues
decreased to 47% in 1999 compared with 48% in 1998. Gross margin on equipment
sales decreased by 17% to $33.9 million in 1999, compared to $40.8 million in
1998. Gross margin as a percentage of equipment sales for 1999 decreased to 43%
compared with 52% in 1998. The decrease in gross margin as a percentage of
equipment sales is primarily attributable to the increase in sales of the lower
priced e-Print Pro+ during 1999. Gross margin on post-sales revenues increased
by 28% to $32.2 million in 1999, compared to a gross margin of $25.2 million in
1998. Gross margin as a percentage of post-sales revenues for 1999 increased to
52% compared with 43% in 1998. The improvement in 1999 is attributed primarily
to increased revenue from the increased installed base, improvement in the
reliability of imaging products, and to the continuing improvement in equipment
reliability resulting in a reduction of cost of service per unit.

Gross research and development costs, before participation grants, decreased to
$20.4 million in 1999 from $21.0 million in 1998. The high level of costs during
those two years reflects Indigo's focus on the development of new products,
including those unveiled in February 2000.

Net research and development costs, after participation grants, decreased to
$14.2 million in 1999, from $16.7 million in 1998. Participation grants from the
Chief Scientist increased to $6.2 million in 1999 compared to $4.4 million in
1998. The increase in the


                                       39
<PAGE>
Chief Scientist's participation is directly associated with the development of
Indigo's new products and Indigo's participation in the Magnet Program.

Selling, general and administrative expenses decreased to $57.6 million during
1999 from $61.5 million in 1998. The reduction was primarily in the areas of
general and administrative costs, due to Indigo's restructuring in 1998, as well
as Indigo's continuing efforts to reduce its general and administrative costs.
This decrease was partially offset by an increase in the number of sales
personnel, which is consistent with Indigo's policy to increase its presence in
the direct sales market. During 1999, Indigo paid all outstanding payments
relating to the 1998 and prior year's restructuring,.

Interest income and other, net of interest expense and other, was $0.7 million
in 1999, compared to interest income, net of interest expense, of $0.8 million
in 1998. Indigo operates worldwide and in a variety of currencies. When
operating in several currencies other than the U.S. dollar, Indigo's cash flows
and earnings are exposed to fluctuations in foreign currency exchange rates.
Indigo attempts to reduce this exposure through operational strategies and
hedge-oriented financial instruments.

Indigo does not enter into derivative contracts for trading or speculative
purposes, nor is it a party to any leveraged financial instruments. Cash flow
hedges protect Indigo from fluctuations in income and expenses incurred in
subsidiaries that operate in non-U.S. dollar-based environments.

To date, Indigo has utilized monetary assets and liabilities and forward
contracts to mitigate the exposure from changes in foreign currency rates.
However, there can be no assurance that the steps taken will be successful in
protecting Indigo from the above-described risks.

Provision for income taxes includes taxes on income reported by Indigo to the
respective taxing jurisdictions. Provision for income taxes decreased to $0.7
million in 1999 from $2.4 million in 1998. This decrease is primarily a result
of a revision of estimates made by Indigo in 1999 with respect to tax
liabilities by a net amount of approximately $1.5 million.

Net loss decreased by 73% to $1.4 million in 1999 compared to a net loss of $5.1
million for 1998. Basic and diluted loss per common share was $0.16 and $0.22
for 1999 and 1998, respectively.

B.      LIQUIDITY AND CAPITAL RESOURCES

During the three year-period ended December 31, 2000, prior to the HP
investment, Indigo financed its operations primarily through funds provided by
short-term loans and the net proceeds from two private placements of
approximately $17.2 million and $28.9 million, in 1998 and 1997, respectively.

Pursuant to HP's investment in September 2000, the Company received gross
proceeds of $100 million in cash. The Company reduced its short-term loans to
$5.4 million at the end of 2000, and is expected to meet all of its working
capital


                                       40
<PAGE>
requirements, through the end of 2001, primarily from the proceeds of the HP
investment as well as ongoing revenues.

Indigo's cash, cash equivalents, restricted cash and marketable securities
amounted to $95.0 million as of December 31, 2000, compared to $46.3 million as
of December 31, 1999. Cash, cash equivalents, restricted cash and marketable
securities, net of bank debt, were $89.6 million as of December 31, 2000,
compared with $29.1 million as of December 31, 1999. Restricted cash relates to
amounts with specific liens to banks and escrows for leases.

Indigo's trade accounts receivables increased to $35.0 million at December 31,
2000 compared to $31.3 million at December 31, 1999, primarily due to an
increase in sales. Indigo's inventory increased to $47.8 million as of December
31, 2000 compared to $28.5 million at December 31, 1999. The increase in
inventory is primarily a result of an increase in the equipment, finished goods
and raw materials inventories relating to the UltraStream 2000 presses that
Indigo started manufacturing in 2000.

In 2000, Indigo had credit facilities in place with three major Israeli banks.
These facilities, two of which expired on March 31, 2001, provided for total
advances of up to $30 million. Substantially all of Indigo's assets were pledged
as collateral under these facilities. Indigo is in the process of renewing these
facilities and entering into new ones on more favorable terms. As of December
31, 2000, Indigo had $5.4 million outstanding debt under these facilities
(primarily in Euros). The loan in Euros was taken to hedge against fluctuation
of the Euro exchange rate that would partially affect the expected collection
from accounts receivable in Europe.

In the fourth quarter of 2000, Indigo issued 14,814,814 common shares and
received $100 million in connection with the Hewlett-Packard investment. See
also "Strategic Relationships and Product Releases in 2000" above and "Item 7.
Major Shareholders and Related Party Transactions; B. Related Party Transactions
- Financings - Hewlett-Packard Transaction." In addition, Hewlett Packard
received an acquisition warrant to purchase an additional 14,814,815 common
shares at a price of $6.75 per share in the event that it acquires substantially
all of Indigo's outstanding stock. The acquisition warrant expires in October
2004. Hewlett Packard also received a performance warrant to purchase 12 million
common shares at a price of $6.75 per share. The performance warrant vests at
the rate of 2 million shares for every $100 million of revenue that Indigo
receives from Hewlett Packard and the vesting period ends in October 2006. The
vested portion of the warrant expires at the earlier of three years from the
vesting date or October 2008.

In 2000, all 6,758,637 outstanding Series A preferred shares were converted into
6,758,637 common shares. An additional 9,312,712 shares and $20 million in cash
were also issued to the Series A preferred shareholders.

During March 2000, 511,000 Series D warrants were exercised in consideration for
net proceeds of $1.5 million, and 511,000 common shares were issued in exchange.

As of December 31, 2000, Indigo's working capital was $108.6 million, an
increase of $62.5 million, compared to working capital of $46.1 million at
December 31, 1999. The increase in working capital is primarily due to an
increase in cash and cash equivalents


                                       41
<PAGE>
and short-term deposits and marketable securities, a decrease in short-term
loans, an increase in inventories and accounts receivables which was offset by
an increase in accounts payable, accrued expenses, deferred revenue and other
current liabilities.

Cash flow used in operating activities decreased in 1% to $6.8 million in 2000
compared with $6.9 million 1999. Cash flows used in investing activities was
$54.2 million in 2000 compared to cash used in investing activities in 1999 of
$11.5 million. Cash flow used in investing activities in 2000 included a
purchase of $42.0 million of short-term deposits and marketable securities (net
of proceeds from sales of short-term deposits and marketable securities). Cash
flows provided by financing activities was $67.8 million for 2000, compared to
cash provided by financing activities of $19.3 million for 1999. In 2000, cash
provided by financing activities included primarily proceeds from the issuance
of common shares of $100 million pursuant to the HP investment, payments to the
Series A preferred shareholders of $20 million and short-term loan repayments of
$11.8 million.

Indigo's investments in property and equipment, net, increased by $3.5 million
to $23.0 million as of December 31, 2000, compared to $19.5 million at December
31, 1999. The increase in 2000 primarily relates to newly-developed systems,
which are used in Indigo's research and development, customer demonstration and
training departments.

C.      RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

See "Item 4. Information on the Company; B. Business Overview - Research and
Development" and "Item 4. Information on the Company; B. Business
Overview-Patents, Licenses and Other Intellectual Property."


D.      TREND INFORMATION

See "A. Operating Results" above.


LITIGATION

One of Indigo's Israeli subsidiaries is party to a dispute regarding the amount
of rent payable pursuant to a long-term lease for a tract of land adjacent to
Indigo's manufacturing facilities in Nes-Ziona, Israel. The dispute involves
issues of contract interpretation and real estate appraisal. One of Indigo's
Israeli subsidiaries is party to a dispute regarding the amount of rent payable
pursuant to a long-term lease for a tract of land adjacent to Indigo's
manufacturing facilities in Nes-Ziona, Israel. The dispute involves issues of
contract interpretation and real estate appraisal. Arbitration proceedings
commenced in March 1998, and in August 1999 the arbitrator issued his decision,
which was invalidated by the Tel Aviv District Court in June 2001. A hearing on
the petition has been scheduled for September 2002. In the event that the
parties are unable to resolve the dispute amicably, we intend to continue to
defend the claim vigorously, since we believe that the amount of rent sought by
the landlord is unreasonable and not supported by the terms of the lease.


                                       42
<PAGE>
ITEM 6.     DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

Indigo has a Supervisory Board and a Management Board. In addition, Indigo has a
Combined Board (the "Board") that is comprised of all of the members of the
Supervisory Board and the Management Board. Directors serve on the Board until
they resign or their successors are appointed.

The Supervisory and Managing Directors of Indigo, as of June 1, 2001, are as
follows:

<TABLE>
<CAPTION>
Name                                                     Age          Position
----                                                     ---          --------
<S>                                                      <C>          <C>
Benzion Landa .................................          54           Chairman of the Board and Managing Director
Rafi Maor......................................          51           Managing Director
Roger Mattalon.................................          62           Managing Director
Hans S. Leijdesdorff ..........................          46           Managing Director
Tis Prager (1) (2) ............................          53           Supervisory Director, Chairman of Supervisory Board
Dilip M. Advani (2) ...........................          48           Supervisory Director
Rob G. P. Jeurissen (1) (2)....................          45           Supervisory Director
Richard C. E. Morgan (1) (2) ..................          56           Supervisory Director
Purnendu Chatterjee ...........................          51           Supervisory Director
Joel Birnbaum .................................          63           Supervisory Director
</TABLE>

------------------
(1)  Member of Compensation Committee
(2)  Member of Audit Committee

Benzion Landa has been Chairman of the Board of one or more of the corporations
now comprising Indigo since founding the business in 1977, and presently serves
as its Chief Executive Officer, as he has during twenty-two of the twenty-three
years since he founded it. He was a founding director of Imtec, a vendor of
micrographics equipment in the United Kingdom. Mr. Landa has been personally
involved in Indigo's research and development activities since its inception.
Mr. Landa has been awarded over 140 United States patents. These patents include
some of Indigo's Digital Offset Color patents and patents for ElectroInk.

Rafi Maor, a Managing Director of Indigo since January 1999, has served as
Indigo's President and Chief Operating Officer since December 1998. Previously,
he had served as President of Indigo's Israeli operations since December 1995.
He was also responsible for non-European distributor operations. In addition,
Mr. Maor was appointed General Manager of Corporate Operations in February 1997.
Mr. Maor has, during the past twenty years, held various executive positions
with Israel Aircraft Industries Ltd., Israel's largest high technology
enterprise. From 1993 to 1995, he served as Managing Director of the MALAT
Unmanned Air Vehicle Division of Israel Aircraft Industries. Mr. Maor has also
served as a member of the boards of a number of international ventures of Israel
Aircraft Industries, including Pioneer UAV Inc., of which he was the President
of the Board.

Roger Mattalon, a Managing Director of Indigo since January 1999, was its Vice
Chairman from January 2000 until his retirement in January 2001 and served as


                                       43
<PAGE>
Indigo's President - Worldwide Sales and Marketing, from December 1998 to
January 2000. From April 1994 to December 1998, he served as President of
Indigo's European operations. From 1991 to early 1994, Mr. Mattalon served as
Chairman of the Board of Dai Nippon Screen U.K. Ltd., President of Dai Nippon
Screen France S.A., and President of Dai Nippon Screen Belgium S.A., where he
established Dai Nippon Screen's European headquarters. From 1989 to 1991, he
established, and served as the President of, Dai Nippon Screen France S.A. From
1977 to 1989, Mr. Mattalon served in various management positions at Scitex,
becoming Vice President - Scitex Europe S.A. in 1984.

Hans S. Leijdesdorff, a Managing Director of Indigo since June 1996, is a
managing director and co-founder of IMFC Netherlands N.V., a management and
administrative services company providing services to holding, finance and
licensing companies organized in The Netherlands. Previously, he served in
senior positions at corporate management and services companies. Mr.
Leijdesdorff serves on the boards of a number of holding companies.

Dr. Tis Prager has been Chairman of the Supervisory Board since May 1994. Dr.
Prager is a senior partner with the law firm Prager Dreifuss in Zurich, Bern and
Brussels. His special fields of practice are corporate and contract law. He has
served as Chairman of the Board of the Landa Family Trust since 1987. He chairs
various boards of Swiss and international entities.

Dilip M. Advani, a Supervisory Director since May 1998, serves as a Principal of
The Chatterjee Group. Mr. Advani has also founded, managed, consulted for and
overseen a number of companies in a broad range of industries. Before joining
The Chatterjee Group, Mr. Advani served for six years as Executive Vice
President of PlyGem Industries, Inc., and, prior to that, served as a consultant
with McKinsey & Company and as President of Applied Data, Inc. Mr. Advani is
also a director of Call Services Ltd., an enhanced communication application
services provider, SkyTech LLC, an information technology company servicing the
airline industry, and LabVantage Solutions, a laboratory information management
systems company. He is also on the Supervisory Board of UpDate.com.

Rob G. P. Jeurissen, a Supervisory Director of Indigo since June 1996, is a
Managing Director of CTB Holding BV, Ede, The Netherlands, in which capacity he
has served since 1992. From 1989 to 1992, Mr. Jeurissen served as Managing
Director of HCS Networks BV and, later, HCS Office Systems Group, HCS
Network/HCS Office Systems Group, Utrecht/'s-Hertogenbosch. From 1980 to 1989,
Mr. Jeurissen served as National Service Manager for Nashua Nederland
B.V.'s-Hertogenbosch.

Richard C. E. Morgan, a Supervisory Director of Indigo since June 1996, is the
Chairman and Chief Executive Officer of VennWorks LLC and Managing Member of
Amphion Capital Management LLC. Previously, he had served as the Managing
General Partner of Wolfensohn Partners L.P. since 1986. Between 1984 and 1986,
Mr. Morgan was a partner of James D. Wolfensohn, Inc., an investment banking and
advisory firm. Prior to joining Wolfensohn, Mr. Morgan was a Managing Director
of J. Henry Schroder Wagg & Co. Ltd., a British merchant bank, and was the head
of the Schroder Strategy Group, a strategic consulting group. Mr. Morgan is also
chairman


                                       44
<PAGE>
and director of Quidel Corporation, a supplier of rapid diagnostic tests, and
chairman of AXCESS Inc., formerly, Lasertechnics, Inc., a supplier of products
and services to the access control and secure card markets. Mr. Morgan is also a
director of Celgene Corporation, a company developing and marketing
biotechnology products, and Chroma Vision Medical Systems, Inc., a company
developing an automated cellular imaging system.

Dr. Purnendu Chatterjee, a Supervisory Director of Indigo since June 1996,
serves as Chairman of The Chatterjee Group. Dr. Chatterjee is an investor in
public and private companies and has been associated with the George Soros
organization for approximately 15 years. Dr. Chatterjee also serves on the
Boards of Haldia Petrochemicals Ltd., a $1.5 billion naphtha-based petrochemical
complex in eastern India, LabVantage Solutions, a laboratory information
management systems company, Call Sciences Ltd., an enhanced communication
application services provider, and Financial Technologies Inc., a New York-based
software company.

Dr. Joel S. Birnbaum, a Supervisory Director of the Company since January 2001,
serves as Special Technical Assistant to the Chairman and CEO of the
Hewlett-Packard Company, Carly Fiorina. In this role, Dr. Birnbaum helps HP
shape its technology strategy and communicate it to the marketplace. Before
assuming his present position at HP, he served, between 1984 and 1999, as HP's
vice president (and, later, senior vice president) for research and development
and director of HP Laboratories, in which capacities he coordinated HP's
worldwide R&D activities and served as the company's chief technical officer.
Before joining HP in 1980, Dr. Birnbaum held various positions, over a 15-year
period, at IBM Corporation's Thomas J. Watson Research Center, where he last
served as director of computer sciences.

B. COMPENSATION

The aggregate remuneration paid or accrued by Indigo, during the fiscal year
ended December 31, 2000, to all directors of Indigo, as a group, was
approximately $1.7 million. This amount includes salaries, fees, directors'
fees, bonuses and amounts set aside or accrued by Indigo to provide pension,
retirement or similar benefits.

Since January 1, 1996, Indigo has paid each Supervisory Director of Indigo a fee
of $24,000 per annum, plus expenses, which sum includes payment for the
participation of such directors in audit and compensation committee meetings.
Pursuant to Dutch law, none of the Supervisory Directors is an officer of
Indigo.

During 2000, Indigo granted 30,000 stock options to Supervisory Board members
who are not employees of Indigo, pursuant to the Flexible Stock Incentive Plan
described in "D. Employees" below. The stock options entitle such directors to
purchase Indigo's common shares at an exercise price determined on the basis of
such shares' fair market value as of the date of grant. The stock options vest
over a four- or five-year period.


                                       45
<PAGE>
C. BOARD PRACTICES

Board Appointment Rights

As long as S-C Indigo C.V. owns equity representing six percent (6%) or more of
the Initial Equity (as defined in the Amended and Restated Shareholders'
Agreement. See "Item 7. Major Shareholders and Related Party Transactions; B.
Related Party Transactions - S-C Investments"), S-C has the right to nominate
two members of the Supervisory Board pursuant to the Amended and Restated
Shareholders' Agreement. Another group of investors in the 1996 Private
Placement also received the right to nominate a director to Indigo's Supervisory
Board, which right lapsed with the conversion of the Series A Preferred Shares
in late 2000. In addition, under the terms of its equity investment in Indigo in
2000, HP received the right to appoint one member to the Supervisory Board. Both
S-C and HP are currently exercising these rights. The Principal Shareholders
have agreed to vote in favor of the appointment of such directors. In addition,
pursuant to a Shareholders' Agreement among the Principal Shareholders, S-C and
HP, the Principal Shareholders have the right to appoint a majority of the
members of the Supervisory Board. See "Item 3. Key Information; D. Risk Factors
- Concentration of Ownership."

None of the Managing or Supervisory Directors has a formal term of office.

Audit and Compensation Committees

Indigo also has an Audit Committee and a Compensation Committee.

The members of the Audit Committee are: Rob G.P. Jeurissen (Chairman), Dr. Tis
Prager, Dilip Advani and Richard C. E. Morgan.

-    Indigo's Audit Committee has defined its purposes as:

-    Oversight of financial reporting, internal audits and controls, and
     compliance with relevant SEC and NASDAQ regulations and the U.S. Foreign
     Corrupt Practices Act.

-    To report to the Combined Board and the Supervisory Board.

Among its responsibilities are the following:

-    Review the adequacy of the Company's system of internal controls.

-    Review the independent auditors' proposed audit scope and approach.

-    Conduct a post-audit review of the financial statements and audit findings,
     including any significant suggestions for improvements provided to
     management by the independent auditors.

-    Review the performance of the independent auditors.

-    Review the independent auditors' fee arrangements.

-    Recommend appointment of the independent auditors to the Combined Board.


                                       46
<PAGE>
-    Review management's monitoring of compliance with the Company's code of
     business conduct, relevant SEC and NASDAQ regulations, and the U.S. Foreign
     Corrupt Practices Act.

-    Review the Company's corporate and tax structure.

The members of the Compensation Committee are: Richard C. E. Morgan (Chairman),
Dr. Tis Prager and Rob G.P. Jeurissen.

-    Indigo's Compensation Committee has defined its purposes as:

-    To establish and monitor the Company's compensation policies.

-    To continuously ensure that the executive compensation package for key
     officers are competitively established relative to the packages offered by
     peer group companies of comparable size, complexity and business nature as
     well as relative to the performance of the Company.

-    To report to the Combined Board and the Supervisory Board.

Among its reponsibilities are the following:

-    Establish and monitor the executive compensation program.

-    Make compensation decisions regarding senior executives.

-    Establish and monitor incentive programs, including the setting of
     performance criteria.

-    Administer the Company's stock option plan, based upon recommendations of
     the Company's management.

-    Approve all grants of stock options, based upon recommendations of the
     Company's management.

D. EMPLOYEES

As of December 31, 2000, Indigo had approximately 950 employees, approximately
22% of whom were engaged primarily in research, development and engineering;
approximately 22% of whom were engaged primarily in manufacturing and quality
assurance; approximately 20% of whom were engaged primarily in customer support,
including service and training; and the remainder of whom were engaged in
marketing and sales, general and administration. As of December 31, 1998, and
1999, the Company had, respectively, 740 and 770 employees.

Indigo's employees are not represented by any collective bargaining organization
and Indigo has never experienced a work stoppage or other difficulties with its
employees. Indigo's future success will depend, in part, on its ability to
continue to attract, retain, motivate and develop highly-qualified technical,
marketing, sales and management personnel, all of whom are in great demand.


                                       47
<PAGE>
Certain provisions of the collective bargaining agreements between the
Histadrut, the General Federation of Labor in Israel, and the Coordination
Bureau of Economic Organizations, including the Industrialists' Associations,
are applicable to the employees of Indigo's Israeli subsidiary by order of the
Israel Ministry of Labor. Israeli law generally requires the payment by
employers of severance pay upon the death, retirement or termination of an
employee, and Indigo provides for the major part of these obligations through
monthly contributions to severance funds. Israeli employees and employers are
required to pay pre-determined sums to the National Insurance Institute, which
provides benefits similar to the benefits provided by the United States Social
Security Administration.

Since the introduction of its presses, Indigo has experienced periods of rapid
growth as well as contraction, placing a significant strain on its management,
manufacturing operations and other resources. In anticipation of increased
demand for Indigo's products, its work force expanded significantly in 1994 and
the first half of 1995. This expansion proved to be unjustified in light of the
slower than anticipated growth in sales. As a result, in the fourth quarter of
1995 and the first half of 1996, Indigo terminated a significant number of
employees. As part of a restructuring at the end of 1998, Indigo terminated
approximately 10% of its work force. As a result of its strategic alliance with
HP, Indigo's workforce began to grow significantly in late 2000, especially in
the areas of research and development. In the event that Indigo's revenues do
not continue to grow as expected, Indigo may be required to reduce its employee
base. Our failure to deal effectively with periods of growth and contraction
could have a material adverse effect on our business.

In September 1993, Indigo adopted a Flexible Stock Incentive Plan (the "Stock
Incentive Plan"). The Stock Incentive Plan provides for grants to employees
(including directors) of stock options and stock appreciation rights (entitling
holders to cash compensation measured by appreciation in the value of the common
shares), and for the purchase by such employees of common shares as bonus
shares. To date, Indigo has granted stock options rather than stock appreciation
rights or bonus shares, and it is Indigo's present intention to continue this
policy in the foreseeable future. An aggregate amount of not more than 9,551,376
stock options were initially authorized for grant under the Stock Incentive
Plan. Of such amount, (i) not more than 5,100,826 were authorized for grant as
stock options on the basis of past or future services (such options, "Service
Options") and (ii) not more than 4,450,550 were authorized for grant as stock
options on the basis of Indigo's performance (such options, "Performance
Options"). The Stock Incentive Plan allows for sub-plans with respect to
citizens or residents of one or more countries. In September 1993, Indigo
adopted the 1993 United States Stock Option Plan for United States employees,
the 1993 Netherlands Stock Option Plan for European employees and the 1993
Israel Stock Option Plan for Israeli employees (collectively, the "Sub-Plans").

The Compensation Committee has broad discretion to determine which employees
will be granted options under the Stock Incentive Plan and the Sub-Plans, the
timing of grants, the terms thereof and the number of shares to be granted.
Unless otherwise determined by the Compensation Committee, the exercise price
for common shares


                                       48
<PAGE>
subject to options under the Stock Incentive Plan and the Sub-Plans, for certain
employees of Indigo at the time of the initial public offering, may not be less
than 80% of the fair market value of such common shares at the time of grant
and, for all other employees of Indigo, may not be less than 100% of the fair
market value of such common shares at the time of grant. At present, the Options
granted under the Stock Incentive Plan or Sub-Plans vest based upon years of
service with Indigo (20% or 25% per year). However, Options will vest only if,
on the date such option would otherwise vest, the participant is an employee of
Indigo. No options may be assigned or transferred except upon the death of an
option holder.

In December 1995, Indigo adopted the 1996 Flexible International Stock Incentive
Plan (the "1996 Plan") for its non-United States employees, and reserved 1.5
million common shares for issuance under that Plan. In June 1996, Indigo's
shareholders approved the 1996 Plan in order to allow it to cover United States
employees as well. During 1997, the Compensation Committee decided to
consolidate the 1993 and 1996 Plans for purposes of option grants and also
determined that any unvested or ungranted Performance Options would vest on the
basis of years of service and not Company performance. In 1998, Indigo reserved
an additional 1.5 million common shares for issuance under the Consolidated
Plan, and in 1999, an additional 4.0 million common shares were reserved for
issuance under the Consolidated Plan. In May 2001, Indigo's shareholders
approved the reservation of an additional 4.0 million common shares for issuance
under the Consolidated Plan.

Exercise prices for options granted range from $0.87 to $45.75 per common share.
In October 1998, Indigo offered its employees the opportunity to reprice their
options to $2.02 per share, under certain conditions. These conditions were met
for current employees as of December 31, 1999.

As of March 1, 2001, Indigo had granted, in the aggregate, net of canceled
options, approximately 16 million options. Approximately 4.5 million options had
been exercised as of March 1, 2001, and nearly all of the common shares
underlying such options have been sold. Approximately 2.6 million options are
held by Indigo's officers and directors, of which approximately 1.5 million are
exercisable as of June 30, 2001.

Indigo permits its employees to buy and sell stock only during certain periods.
In general, such periods start approximately two (2) days after the announcement
of Indigo's quarterly earnings and end approximately one (1) week before the end
of the quarter. The Company anticipates that, further to recent SEC rulings,
certain of its directors and senior employees may enter into 10b-5 trading
plans.

Employee Share Purchase Plan

In May 1994, Indigo adopted the Indigo N.V. 1994 United States Employee Share
Purchase Plan for United States employees, the Indigo N.V. 1994 Netherlands
Employee Share Purchase Plan for European employees and the Indigo N.V. 1994
Israel Employee Share Purchase Plan for Israeli employees (collectively, the
"ESPP") to provide to substantially all of its employees an opportunity to
purchase common shares through accumulated payroll deductions. A total of 3.9
million common shares have been reserved for issuance under the ESPP. In the
event of certain extraordinary events relating to Indigo's capital structure,
such as a stock split, reverse stock split,


                                       49
<PAGE>
stock dividend, combination or reclassification of common shares, the Board may
make such adjustments in the total number or the price of common shares
available for issuance under the ESPP as it deems appropriate, subject to any
required action by the shareholders. The ESPP is administered by the Board, or a
committee appointed by the Board, which will have the authority to construe,
apply and interpret the terms of the ESPP.

Pursuant to the ESPP, eligible employees are permitted to purchase common shares
in each offering period through payroll deductions not exceeding 10% of an
employee's compensation, and at a price per share which will be equal to 85% of
the Fair Market Value (as defined in the ESPP) of a Common Share on the first
day of the offering period or on the last day of the offering period, whichever
is lower. The employee's payroll deductions accumulated during the offering
period are applied to the purchase of common shares on the last day of each
offering period. An employee does not have the right to purchase common shares
under the ESPP if, immediately after the right to purchase the common shares is
granted, (i) such employee would own or hold outstanding options to purchase
capital stock possessing 5% or more of the total voting power or value of all
classes of capital stock of Indigo or of any subsidiary of Indigo, or (ii) such
employee would have rights to purchase common shares under the ESPP or any other
share purchase plans of Indigo or any subsidiary at a rate that exceeds $25,000
worth of capital stock during each calendar year that such rights are
outstanding. Employees may end their participation in any offering at any time
prior to the last day of an offering period, and participation ends
automatically on termination of employment with Indigo. In the event of a
termination of an employee's participation in the ESPP, payroll deductions
credited to the employee's account during the offering period, but not used to
exercise the option, will be returned to the employee.

E.      SHARE OWNERSHIP

See "Item 7. Major Shareholders and Related Party Transactions; B. Major
Shareholders." Any officers or directors of Indigo whose names do not appear
therein hold less than one percent of the Company's outstanding common stock.
For information on employee participation in capital of the Company, see "D.
Employees" above.


                                       50
<PAGE>
ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.   MAJOR SHAREHOLDERS

The following table sets forth the beneficial share ownership, as of May 31,
2001, by (i) each person known by Indigo to own more than 5% of Indigo's shares
of common stock, par value NLG 0.04 per share, and (ii) all directors and
executive officers of Indigo as a group. As of May 31, 2001, there were
110,522,043 common shares outstanding.

<TABLE>
<CAPTION>
Name and Address of Beneficial Owner                    Number of Shares                Total Percentage
------------------------------------                    ----------------                ----------------
<S>                                                     <C>                             <C>
Landa Family Trust(1)(3)                                   49,312,894                         43.9
c/o Prager Dreifuss
Muhlebachstrasse 6
8008 Zurich, Switzerland

Tis Prager(1)(2)(3)                                        49,417,132                         44.0
c/o Prager Dreifuss
Muhlebachstrasse 6
8008 Zurich, Switzerland

Gemini Systems Corporation N.V.(1)                         19,573,838                         17.7
De Ruyterkade 58A
Curacao
Netherlands Antilles

Toscal N.V. (formerly Spectrum                             27,426,955                         24.4
Sciences N.V.) (1)(3)(4)
De Ruyterkade 58A
Curacao
Netherlands Antilles

OZF Ltd.(1)                                                 2,312,101                          2.1
Tropic Isle Building
Wickhams Cay
P.O.  Box 964
RoadTown
Tortola, British Virgin Islands

Visionvest N.V.(1)(5)                                       3,845,571                          3.5
c/o Prager Dreifuss
Muhlebachstrasse 6
8008 Zurich, Switzerland

Walthroup Corporation N.V.(1)(5)                            4,032,619                          3.6
c/o Prager Dreifuss
Muhlebachstrasse 6
8008 Zurich, Switzerland

Deering Corporation N.V.(1)(5)                              2,602,752                          2.3
c/o Prager Dreifuss
Muhlebachstrasse 6
8008 Zurich, Switzerland

S-C Indigo C.V.(6)(8)                                      26,356,385                         23.5
Kaya Flamboyan 9
Curacao, Netherlands Antilles
</TABLE>


                                       51
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner                    Number of Shares                Total Percentage
------------------------------------                    ----------------                ----------------
<S>                                                     <C>                             <C>
Purnendu Chatterjee(6)(7)(8)                               26,397,135                         23.5
c/o Valcoflex Management Co.
888 Seventh Avenue
Suite 3300
New York, New York 10106

Hewlett-Packard Company (9)                                14,814,814                         13.4
3000 Hanover Street
Palo Alto, California 94304

All current executive officers and                         77,360,106                         67.0%
directors as a group (13 persons)(10)
</TABLE>

(1)  The outstanding equity interests of Gemini Systems Corporation N.V., a
     corporation organized in The Netherlands Antilles, Toscal N.V., a
     corporation organized in The Netherlands Antilles, Visionvest N.V., a
     corporation organized in The Netherlands Antilles, Walthroup Corporation
     N.V., a corporation organized in the British Virgin Islands, Deering
     Corporation N.V., a corporation organized in The Netherlands Antilles and
     OZF Ltd., a corporation organized in the British Virgin Islands. Together,
     these corporations will be referred to as the "Principal Shareholders."
     They are beneficially owned by the "Landa Family Trust," established mainly
     for the benefit of the Landa family, which includes Mr. Benzion Landa,
     Chairman of the Board of Indigo. No member of the Landa Family, including
     Mr. Benzion Landa, has voting or investment power with respect to the
     common shares owned by the Principal Shareholders and, consequently, Mr.
     Landa disclaims beneficial ownership of any common shares owned by the
     Principal Shareholders. Dr. Tis Prager is the President of the Board of the
     Landa Family Trust and has sole voting and investment power with respect to
     the common shares owned by the Principal Shareholders. Although Dr. Prager
     is not a beneficiary of the Landa Family Trust, he may be deemed to own
     beneficially the common shares owned by the Principal Shareholders. Dr.
     Prager is the Chairman of the Supervisory Board of Indigo and, as such, is
     also a member of Indigo's Combined Board. In addition to the common shares
     owned by the Landa Family Trust, as a member of Indigo's Supervisory Board,
     Dr. Prager holds, as of June 30, 2001, 30,063 vested options to purchase
     common shares.

(2)  The number of common shares indicated includes 30,063 stock options to
     purchase common shares that vest as of June 30, 2001 and that were granted
     to Dr. Prager as a member of Indigo's Supervisory Board, as well as 74,175
     common shares owned by a Swiss corporation of which Dr. Prager is a
     director and of which Dr. Prager disclaims beneficial ownership. The number
     of common shares indicated above also includes common shares beneficially
     owned by the Landa Family Trust for the reasons set forth in Note 1.

(3)  The number of common shares indicated above includes 1,746,672 common
     shares underlying the 1,080,000 Series A warrants exercisable at $7.00 per
     warrant, and 666,672 common shares underlying the Series C warrants
     exercisable at $6.30 per warrant, owned by Walthroup, Visionvest and
     Deering, each of which is a wholly-owned subsidiary of Toscal.

(4)  The number of common shares indicated above includes common shares owned by
     Visionvest, Walthroup and Deering.

(5)  The number of common shares indicated above for Visionvest includes 640,000
     common shares underlying the Series A warrants, the number of common shares
     indicated above for Walthroup includes 440,000 common shares underlying the
     Series A warrants and the number of common shares indicated above for
     Deering includes 666,672 common shares underlying the Series C warrants.

(6)  S-C Indigo C.V. is a Netherlands Antilles limited partnership, the general
     partner of which is an entity controlled by Purnendu Chatterjee, who has
     voting and investment power with respect to the common shares owned by S-C
     and, consequently, Mr. Chatterjee is deemed to beneficially own such common
     shares.

(7)  The number of common shares indicated above includes (a) 25,000 common
     shares owned by another limited partnership, the general partner of which
     is an entity controlled by Mr. Chatterjee and, consequently, Mr. Chatterjee
     is deemed to beneficially own such common shares and (b) 27,063 stock
     options to purchase common shares that vest as of June 30, 2001, which were
     granted to Mr. Chatterjee as a member of Indigo's Supervisory Board.

(8)  The number of common shares indicated above includes 1,200,000 common
     shares underlying the Series A warrants and 500,000 common shares
     underlying the Series C warrants.

(9)  This number does not include 14,814,815 common shares underlying an
     acquisition warrant held by HP which can be exercised at a price of $6.75
     per share upon HP acquiring substantially all of Indigo's outstanding
     stock. The acquisition warrant expires in October 2004. The number also
     does not include 12,000,000 common shares underlying a performance warrant
     which can be exercised at a price of $6.75 per share. The performance
     warrant vests at the rate of 2 million common shares for every $100 million
     in revenue that Indigo receives from HP and the vesting period ends in
     October 2006. The vested portion of the warrant expires at the earlier of
     three years from the vesting date or October 2008.

(10) Includes 1,531,652 stock options to purchase common shares that were
     granted to Indigo's directors and officers and that vest as of June 30,
     2001.


                                       52
<PAGE>
B.       RELATED PARTY TRANSACTIONS

S-C INVESTMENTS

Initial Investments

On June 8, 1993, S-C Indigo made its initial investment in Indigo under the S-C
Stock Purchase Agreement, dated as of February 25, 1993, among Indigo, Indigo
Ltd., a Bermuda corporation and subsidiary of Indigo, and S-C. S-C purchased, on
a pre-split basis, 250,000 shares of Class A convertible preferred stock of
Indigo and 12,500 warrants to purchase common shares of Indigo. Simultaneously
with its investment in Indigo, S-C purchased 250,000 shares of Class A
convertible preferred stock of Indigo Bermuda, and 12,500 warrants to purchase
common shares of Indigo Bermuda. The aggregate purchase price for the
acquisition of shares in both companies was $50.1 million. Upon completion of
these purchases, S-C held Class A convertible preferred stock of Indigo and
Indigo Bermuda that were convertible into common shares of Indigo and common
shares of Indigo Bermuda, respectively, equivalent to 13.7% of the shares issued
and outstanding of each company. In May 1997, S-C exercised its warrants to
purchase 8,241,925 common shares of Indigo.

In connection with the purchase of shares by S-C, Indigo, Indigo Bermuda and the
Principal Shareholders entered into agreements with S-C that provided certain
rights to S-C and contained certain restrictions regarding S-C's holdings in
each company prior to Indigo's initial public offering in May 1994. Among the
rights was the right of S-C to cause Indigo to register common shares held by
S-C in the event that Indigo filed a registration statement other than one
relating to its initial public offering. These agreements also imposed
restrictions on the ability of S-C to transfer common shares of Indigo.

On December 30, 1993, S-C entered into an agreement to purchase from the
Principal Shareholders an additional 653,637 common shares of Indigo for an
aggregate purchase price of $5 million. This purchase was consummated on January
5, 1994. In addition, S-C acquired, for nominal consideration, from the
Principal Shareholders options to purchase an additional 1,960,912 common shares
of Indigo. S-C exercised these options for an aggregate price of $15 million on
February 28, 1994, and Indigo issued the common shares on March 11, 1994.

1995 Investment

As part of a $20 million investment made as of December 28, 1995, S-C acquired
an additional 379,925 common shares of Indigo, and Visionvest, a subsidiary of
Toscal and one of the entities comprising the Landa Family Trust, acquired
1,519,699 common shares of Indigo. Pursuant to the terms of the stock purchase
agreement entered into in connection with this investment, S-C and Visionvest
each had the option, under certain circumstances, (1) to adjust the number of
common shares they acquired and (2) to acquire any different securities of
Indigo and to receive additional rights granted to investors in any financings
consummated by Indigo subsequent to December 28, 1995 and prior to September 30,
1996.


                                       53
<PAGE>
1996 Private Placement

Visionvest and S-C exercised this option and exchanged their respective common
shares acquired in 1995 for Series A preferred shares and Series A warrants
issued by Indigo through a private placement in 1996. Visionvest exchanged its
1,519,699 common shares for 1,151,019 Series A preferred shares and 640,000
Series A warrants and S-C exchanged its 379,925 common shares for 287,755 Series
A preferred shares and 160,000 Series A warrants. The common shares exchanged by
Visionvest and S-C in the 1996 Private Placement are no longer outstanding.

In connection with the 1996 Private Placement, S-C made an additional $26
million investment and purchased 1,870,405 Series A preferred shares and
1,040,000 Series A warrants. S-C and Visionvest are parties to the registration
rights agreement and the shareholders agreement executed in connection with the
1996 Private Placement. See " -- Financings -- 1996 Private Placement" below. In
2000, S-C converted all of its Series A Preferred Shares into approximately 4.8
million common shares and $8.96 million.

1997 Private Placement

In connection with a private placement by Indigo in 1997, S-C made an additional
$7.5 million investment in Indigo and purchased 1,000,000 shares of Series C
convertible preferred stock, par value NLG 0.04 per share, and 500,000 Series C
warrants. S-C converted all of its Series C preferred shares into 1,452,060
common shares during the second half of 1997. S-C is also party to the
registration rights agreement executed in connection with the 1997 Private
Placement. See " -- Financings -- 1997 Private Placement" below.

1998 Private Placement

In connection with a private placement by Indigo in 1998, S-C made an additional
$3.6 million investment in Indigo and purchased 735,840 shares of Series D
convertible preferred stock, par value NLG 0.04 per share, and 183,960 Series D
warrants. S-C is also party to the registration rights agreement and the
shareholders agreement executed in connection with the 1998 Private Placement.
In January 1999, S-C exercised all of its Series D warrants and exchanged them
for common shares. See "-- Financings -- 1998 Private Placement" below.

Related Agreements

In connection with the Initial Investment in Indigo, Gemini, Spectrum, OZF and
S-C entered into Shareholders' Agreements, dated as of June 8, 1993. Under the
1993 Shareholders' Agreements, S-C was entitled to designate one Supervisory
Director to the Indigo Board. The 1993 Shareholders' Agreements were amended and
restated to clarify the rights of the shareholders at the time of the initial
public offering in June 1994, pursuant to the terms of an Amended and Restated
Shareholders' Agreement, dated as of June 1, 1994. The Amended and Restated
Shareholders' Agreement was then amended in connection with the 1996 Private
Placement to provide the right to S-C to appoint a total of two Supervisory
Directors to the Indigo Board as long as S-C


                                       54
<PAGE>
owned equity representing six percent (6%) or more of the Initial Equity, as
that term is defined in the Amended and Restated Shareholders' Agreement.

In connection with the 1996 Private Placement, the S-C Stock Purchase Agreement
was amended pursuant to the terms of the Amendment to the S-C Stock Purchase
Agreement. This amendment expanded S-C's registration rights to include the
common shares underlying the Series A preferred shares and Series A warrants
acquired by S-C in the 1996 Private Placement and eliminated certain
restrictions on the transfer of common shares held by S-C.

In addition, Indigo granted demand and piggy-back registration rights to the
LFT-related entities.

S-C is also party to a Shareholders' Agreement, dated September 14, 2000, among
the Principal Shareholders, HP and Indigo. See " - Financings - Hewlett-Packard
Transaction" below.

FINANCINGS

1996 Private Placement

In the 1996 Private Placement, we issued 5,607,618 Series A preferred shares and
3,917,999 Series A warrants to purchase common shares, in the form of units,
each unit comprised of one Series A preferred share and 0.556 warrants. The
price of each unit was $13.90. The Series A warrants are exercisable at a price
of $7.00 per warrant. The Series A warrants expire on May 6, 2003. In addition,
we issued 2,882,241 shares of Series B convertible preferred stock, par value
NLG 0.04 share, at a price of $10.53 per share. We raised approximately $103
million, excluding fees paid to the placement agents, in the 1996 Private
Placement. Among the investors were S-C, the Landa Family Trust and Toyo Ink. In
addition, we exchanged 1,899,624 common shares issued to S-C and Visionvest in
connection with the 1995 Investment for 1,438,773 Series A preferred shares and
800,000 Series A warrants pursuant to a Stock Purchase Agreement, dated as of
December 28, 1995, between Indigo S-C and Visionvest. There are currently no
Series A or Series B preferred shares outstanding. In 2000, all of the
outstanding Series A preferred shares were converted into approximately 12.6
million common shares and $13.4 million.

The holders of the Series A preferred shares were entitled to receive,
cumulative preferential dividends, payable in cash at a rate per share of nine
percent (9%) per annum of the purchase price of such shares, from May 7, 1996
through May 7, 1999. Thereafter, holders became entitled to receive dividends on
the Series A preferred shares payable at a rate per share of eleven percent
(11%) per annum in equal quarterly installments on June 30, September 30,
December 31 and March 31 of each year. Under the terms of the 1996 Private
Placement, Indigo had the option to pay the dividends in cash or in common
shares as an adjustment to the conversion rate. Indigo opted to pay all
dividends in common shares on conversion. As a result, accrued dividends on the
Series A preferred shares were paid at the following increased rates on
conversion:


                                       55
<PAGE>
     (1)  the dividend rate payable between May 7, 1996 and May 7, 1999 was
          eleven percent (11%) per annum; and

     (2)  the dividend rate payable after May 7, 1999 was thirteen percent
          (13%).

The holders of the Series A preferred shares and Series A warrants also received
three demand registration rights and unlimited piggy-back registration rights
pursuant to the terms of a Series A Preferred Shareholders Registration Rights
Agreement, dated as of May 7, 1996.

In connection with the 1996 Private Placement, the Series A shareholders, the
Series B shareholders and the Principal Shareholders entered into a Shareholders
Agreement, dated as of May 7, 1996. Under the terms and conditions of the
Shareholders Agreement, the Principal Shareholders agreed to vote in favor of
one Supervisory director, designated by a limited number of Series A
shareholders, for membership on Indigo's Supervisory and Combined Board, for so
long as a majority of the Series A preferred shares purchased by these
shareholders was outstanding and owned by these shareholders. See "Item 6.
Directors, Senior Management and Employees."

1997 Private Placement

In the 1997 Private Placement, we issued 3,853,333 shares of Series C
convertible preferred stock, par value NLG 0.04 per share, and 1,926,677 related
Series C warrants to purchase common shares, to a group of investors, which
included a company affiliated with the Landa Family Trust, and a new investor.
The securities were issued in the form of units, each unit consisting of one
Series C preferred share and 0.5 Series C warrants, under the terms of a
Subscription Agreement, dated as of February 28, 1997, between us and each of
the investors. The price of each unit was $7.75. The Series C warrants are
exercisable at a price of $6.30 per warrant. 1,333,344 Series C warrants expire
on March 4, 2004 and 593,333 Series C Warrants expires on June 10, 2004. As of
March 1, 2000, there were 1,926,667 Series C warrants outstanding. All of the
Series C preferred shares were converted into common shares during 1997.

The holders of the Series C warrants received certain demand and piggy-back
registration rights granted pursuant to the terms of an Amended and Restated
Series C Preferred Shareholders Registration Rights Agreement, dated as of June
9, 1997. Subject to certain conditions, the holders of the Series C warrants are
entitled to two demand registration rights and unlimited piggy-back registration
rights.

1998 Private Placement

In the 1998 Private Placement, we issued an aggregate of 3,515,680 shares of
Series D convertible preferred stock, par value NLG 0.04 per share, and 878,920
related Series D warrants, in the form of units, each unit consisting of four
Series D preferred shares and one Series D warrant, in consideration for gross
proceeds of $17.2 million. The price of each unit was $19.58 and the price per
Series D preferred share was $4.895. All of the Series D preferred shares were
converted into common shares during 1998. In addition, 367,920 Series D warrants
were exercised during the first quarter of 1999. The remaining 511,000 Series D
warrants were exercised in the first quarter of 2000.


                                       56
<PAGE>
Hewlett-Packard Transaction

In September 2000, Hewlett-Packard Company made a $100 million investment in
Indigo for which it received 14,814,814 common shares. In addition, HP received
an acquisition warrant to purchase an additional 14,814,815 common shares at a
price of $6.75 per share in the event that it acquires substantially all of the
outstanding stock of the Company. The acquisition warrant expires in October
2004. HP also received a performance warrant to purchase up to 12 million common
shares at a price of $6.75 per share. The performance warrant vests at the rate
of 2 million shares for every $100 million of revenue that the Company receives
from HP, and the vesting period ends in October 2006. The exercise period for
the vested portion of the warrant expires at the earlier of three years from the
vesting date or October 2008. HP also received the right, pursuant to a
shareholders' agreement among the Principal Shareholders, S-C, HP and the
Company, to appoint one member to Indigo's Supervisory Board. HP also received
registration rights with respect to the common shares it holds or would hold
upon exercise of the acquisition warrant and the performance warrant. In
addition, the shareholders' agreement contains standstill, first-refusal,
drag-along, bring-along and other rights. Simultaneously with the equity
investment, HP and Indigo also entered into agreements for the joint development
of products and the sale by HP, as an OEM, of presses manufactured by Indigo.
See "Item 4. Key Information on the Company; B. Business Overview - Products."



C.   INTERESTS OF EXPERT AND COUNSEL

Not Applicable.



ITEM 8.  FINANCIAL INFORMATION

A.   CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See the consolidated financial statements, including the notes thereto, and
exhibits listed in Item 18 hereof and incorporated herein by this reference.

B.   SIGNIFICANT CHANGES

None


                                       57
<PAGE>
ITEM 9.  THE OFFER AND LISTING

A.   PRICE RANGE OF SECURITIES

COMMON SHARES

Our common shares have traded on The Nasdaq National Market since May 24, 1994,
and trade under the symbol "INDG." The common shares are not traded on any other
securities exchange.

The following table sets forth the range of high and low sales prices on The
Nasdaq National Market, for each calendar quarter during the periods indicated,
rounded to the nearest U.S. cent.

<TABLE>
<CAPTION>
                                                        INDG
                                             ---------------------------
                                              HIGH                  LOW
                                             ------                -----
<S>                                          <C>                   <C>
                1996                         $20.13                $3.25
                1997                          $8.75                $3.44
                1998                          $7.63                $1.50
                1999                          $5.69                $2.56
                2000                          $9.00                $2.88

              Q1 1999                         $5.69                $3.41
              Q2 1999                         $5.25                $3.25
              Q3 1999                         $4.13                $2.75
              Q4 1999                         $3.75                $2.56
              Q1 2000                         $8.88                $2.88
              Q2 2000                         $9.00                $4.59
              Q3 2000                         $8.63                $5.06
              Q4 2000                         $6.88                $2.97

           December 2000                      $4.38                $2.97
            January 2001                      $4.94                $3.63
           February 2001                      $6.13                $4.25
             March 2001                       $5.50                $3.75
             April 2001                       $4.50                $3.30
              May 2001                        $5.10                $4.20
</TABLE>


                                       58
<PAGE>
LITIGATION WARRANTS

The warrants that we issued in April 1999 in settlement of several shareholder
class action lawsuits are exercisable until October 21, 2001, at an exercise
price of $7.50 per warrant. The warrants expired on October 21, 2001. They have
traded on Nasdaq since October 4, 1999 under the symbol "INDGW." They are not
traded on any other securities exchange.

The following table sets forth the range of high and low sales prices on Nasdaq
during the period indicated, rounded to the nearest U.S. cent.

<TABLE>
<CAPTION>
                                                        INDGW
                                             ---------------------------
                                              HIGH                  LOW
                                             ------                -----
<S>                                          <C>                   <C>
                1996                           N/A                  N/A
                1997                           N/A                  N/A
                1998                           N/A                  N/A
                1999                          $0.75                $0.50
                2000                          $4.44                $0.34

              Q1 1999                          N/A                  N/A
              Q2 1999                          N/A                  N/A
              Q3 1999                          N/A                  N/A
              Q4 1999                         $0.75                $0.50
              Q1 2000                         $4.44                $0.34
              Q2 2000                         $3.25                $1.31
              Q3 2000                         $2.25                $1.13
              Q4 2000                         $2.06                $0.44

           December 2000                      $0.94                $0.44
            January 2001                      $0.69                $0.44
           February 2001                      $0.94                $0.50
             March 2001                       $0.50                $0.22
             April 2001                       $0.42                $0.25
              May 2001                        $0.45                $0.20
</TABLE>

B.   PLAN OF DISTRIBUTION

Not applicable

C.   NATURE OF TRADING MARKET

The Common Shares and Litigation Warrants are listed for trading on the NASDAQ
National Market.


                                       59
<PAGE>
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. ARTICLES OF ASSOCIATION

The Company is registered with the Chamber of Commerce in Maastricht, The
Netherlands with Registration Number 632804.

Company's Objects and Purpose

The objects of the Company are set out in Article 3 of the Company's Articles of
Association as follows:

1.       To perform any and all activity of an industrial, financial or
         commercial nature;

2.       To design, develop, manufacture, market, sell and service products of
         any nature, including without limitation any hardware and/or software;

3.       To incorporate, to participate in any way whatsoever, to manage, to
         supervise, to operate and to promote enterprises, companies and
         businesses;

4.       To develop and trade in patents, trademarks, copyrights, licenses,
         know-how and other intellectual property rights;

5.       To borrow, to lend and to raise funds, including the issuance of bonds,
         promissory notes or other securities or evidence of indebtedness, as
         well as to enter into agreements in connection with the aforementioned;

6.       To furnish advice and to render services to enterprises and companies
         with which the company forms a group and to third parties;

7.       To render guarantees, to bind the company and to pledge its assets for
         obligations of the companies and enterprises with which it forms a
         group, including its subsidiaries, and on behalf of third parties;


                                       60
<PAGE>
8.       To obtain, alienate, manage and exploit real estate and items of
         property in general;

9.       To trade in securities and items of property in general;

as well as everything pertaining to the foregoing, relating thereto or in
furtherance thereof, all in the widest sense of the word.

Indigo's Combined Board includes all of the members of its Management Board and
Supervisory Board. The members of the Combined Board determine the remuneration
for all of the members of the Management and Supervisory Boards. The Combined
Board may also grant, as it sees fit, titles to members of the Management Board.

The following actions require the approval of the Combined Board:

1.       The approval of any transaction involving all or substantially all of
         the assets of the Company and its subsidiaries, taken as a whole;

2.       The approval of any transaction involving a material portion of the
         assets of the Company and its subsidiaries, taken as a whole (which may
         include joint ventures and licensing agreements);

3.       The approval of any transaction between the Company or one of its
         subsidiaries, on the one hand, and a major shareholder or an affiliate
         of a major shareholder, on the other hand (other than transactions
         between the Company and its subsidiaries);

4.       The declaration of any dividend or distribution with respect to the
         shares; and

5.       Any action that could cause the Company to become a Structuur
         Vennootschap (subject to certain Dutch laws applicable to large
         enterprises).

The Combined Board is also authorized to issue shares and to determine dividend
payments, if any. All resolutions of the Supervisory Board require the approval
of the Chairman of the Supervisory Board.

The annual general meeting of shareholders must be held no later than six months
after the end of the fiscal year. The agenda for such meeting must include the
annual report, adoption of annual accounts, appropriation of profits and filling
of Board vacancies and, if necessary, the appointment of accountants. In
addition, the Combined Board, Supervisory Board, Management Board and
shareholders holding at least 10% of the issued capital of the Company may
submit proposals for discussion at the annual general meeting. Extraordinary
meetings of shareholders may be convened by the Combined Board, at any time, or
at the request of a shareholder holding at least 10% of the issued capital of
the Company. General meetings of shareholders may be held only in The
Netherlands, in Amsterdam, Eindhoven, Rotterdam, Amstelveen, The Hague, Utrecht,
Delft, Maastricht or Schiphol Airport. Each shareholder as of the day of a
shareholders' meeting is entitled to vote at such meeting.


                                       61
<PAGE>
There are no restrictions or limitations on the right of non-resident or foreign
shareholders to hold shares or exercise voting rights with respect to such
shares.

C.       MATERIAL CONTRACTS

On June 30, 1999, the Company entered into an Asset Purchase Agreement with
Ferber & Hanusa GmbH Systeme Digitaler Reprografie of Bodenheim, Germany. Under
this Agreement, Ferber & Hanusa acquired all of Indigo's assets, rights and
interests, on a worldwide basis, relating to the wide-format 536
Plotter/Duplicator, one of Indigo's early products. Indigo ceased the
manufacture of this product in 1995. Under this agreement, Ferber & Hanusa
received all of Indigo's existing rights under 536 service contracts, all of
Indigo's 536-related inventories, the right to sell, service and support the 536
product throughout the world and the right to use 536-related trademarks and
trade names.

On June 30, 1999, Indigo entered into an OEM Agreement with A.B. Dick Company,
which provided for AB Dick to distribute, as an OEM, its own branded version of
the e-Print Pro+ press as an OEM in the US, Canada, UK and Benelux. In late
1999, AB Dick introduced the AB Dick Colour press. See "Item 4. Information on
the Company; B. Business Overview - Products."

On July 28, 1999, Indigo entered into a Joint Venture Agreement with Datacard
Corporation, the world's largest manufacturer of card personalization equipment.
Under this Agreement, Datacard was appointed the exclusive distributor and
servicer, on a worldwide basis, of the Indigo Omnius CardPress, an
Indigo-manufactured press designed for the printing of plastic cards. This
Agreement terminates on September 30, 2004.

On December 1, 1999, Indigo entered into a Purchase Agreement with Reeves
Brothers, Inc. for an essential component of Indigo's printing blankets. Reeves
sells Indigo the component on the basis of purchase orders issued by Indigo to
Reeves from time to time. This agreement terminates on December 31, 2001.

On September 13, 2000, Indigo entered into an OEM Agreement with Hewlett-Packard
pursuant to which HP agreed to select one or more Indigo-manufactured printers
that it will sell on an OEM basis as an HP product. Indigo granted HP most
favored OEM status with respect to prices and payment terms. Indigo warrants the
OEM printers and spare parts purchased by HP against defects arising from faulty
materials or workmanship for a three-month period following receipt by HP. The
OEM Agreement terminates on December 31, 2003 and is automatically extended for
additional three-year periods unless HP gives Indigo 90 days notice of
termination.

The Indigo product which HP initially selected for distribution under the OEM
Agreement is similar in configuration to Indigo's Platinum press. HP commenced
selling this product in June 2001 as the HP 6600 digital press. In December
2001, Indigo and HP agreed to add several different models of Indigo presses to
the products HP could purchase under the OEM Agreement and HP satisfied our
prior commitment to purchase 6600 digital presses by issuing a purchase order
for $5,010,000 for such additional Indigo products in the fourth quarter of
2001.


                                       62
<PAGE>
On September 13, 2000, Indigo and HP also entered into a Co-Development
Agreement pursuant to which HP and Indigo agreed to cooperate in the development
of a family of low-cost digital color printers. HP agreed to define the
technical specifications of such products. HP agreed to focus on the development
of the formatter and system, while Indigo agreed to focus on the development of
the ink and engine. HP agreed to finance up to $25 million of Indigo's R&D
activities related to the project over a three-year period, which funding is
matched by Indigo. The agreement also provides for the relocation of
approximately 10 HP technical experts to Indigo's facilities in Israel. Each
party shall have the right to brand and sell such products. Transfer prices for
the products shall be based upon a margin sharing formula that varies based upon
the branding and mode of sale of the product. The Co-Development Agreement
terminates by its terms, in 2020 (subject to renewal by HP for 2 additional
five-year terms) but can be unilaterally terminated by HP on June 30, 2002 or
September 30, 2003.

Pursuant to the Co-development Agreement, HP paid Indigo $5,000,000 in December
2000 and in December 2001 HP paid Indigo an additional $3,750,000. After such
payment, HP may determine within 10 days of June 30, 2002 whether to continue
with the co-development agreement or terminate the agreement. If HP decides to
terminate the agreement within such ten day period, HP shall have no obligation
to make any further payments under the agreement other than fair "exit charges"
payable to Indigo. If HP elects to continue with the co-development agreement,
HP will be required to make additional payments under the agreement of
$3,750,000 in June 2002 and $12,500,000 in January 2003.

On September 13, 2000, Indigo also entered into a Share Purchase Agreement with
HP pursuant to which HP invested US$100 million in the Company in exchange for
14,814,814 common shares. In addition, HP received an acquisition warrant to
purchase an additional 14,814,815 common shares in the event that it acquires
substantially all of the outstanding stock of the Company. The acquisition
warrant expires in October 2004. HP also received a performance warrant to
purchase up to 12 million common shares at a price of $6.75 per share. The
performance warrant vests at the rate of 2 million common shares for every $100
million of revenue that Indigo receives from HP and the vesting period ends in
October 2006. The exercise period for the vested portion of the warrant expires
at the earlier of three years from the vesting date or October 2008. In
addition, pursuant to a Shareholders' Agreement among HP, Indigo, the Principal
Shareholders and S-C, HP received the right to appoint one member to Indigo's
Supervisory Board. In addition, the Shareholders' Agreement provides for
standstill, first refusal, tag-along, drag-along and other rights. HP also
received, pursuant to a registration rights Agreement with the Company,
registration rights with respect to the common shares that it holds, and may
hold in the future.

D. EXCHANGE CONTROLS

We do not believe that there are any Dutch laws (other than relevant tax laws
and administrative notifications to the Central Bank of The Netherlands) that
restrict the export or import of capital or that affect payment of dividends or
other distributions to


                                       63
<PAGE>
nonresident holders of the common shares. There are no limitations imposed by
Netherlands law or our Articles of Association on the rights of holders of
common shares not resident in The Netherlands to hold or vote the common shares.

E. TAXATION

Taxation of Holders

The following discussion is a summary of the material tax consequences of an
investment in the common shares under United States federal income tax laws and
the tax laws of The Netherlands. The discussion does not address all possible
tax consequences relating to an investment in the common shares. In particular,
the discussion does not address the tax consequences under state, local and
other tax laws. In addition, the discussion does not address United States
federal income tax consequences to persons

-        that own, or are deemed to own, 10% or more of Indigo,

-        who do not hold the common shares as capital assets, or

-        who are subject to special tax rules, such as banks, insurance
         companies, dealers in securities, tax-exempt organizations or persons
         who acquired common shares pursuant to the exercise of employee stock
         options or otherwise as compensation.

Accordingly, each prospective investor should consult its tax advisor regarding
the tax consequences to it of an investment in the common shares. The following
discussion is based upon laws and relevant interpretations thereof in effect as
of the date of this Annual Report on Form 20-F/A, all of which are subject to
change.


Netherlands Taxes

The following is a summary of Netherlands tax consequences to an owner of common
shares who is not, or is not deemed to be, a resident of The Netherlands for
purposes of the relevant tax codes (a "non-resident shareholder"). The summary
does not address taxes imposed by The Netherlands and its political
subdivisions, other than the dividend withholding tax, individual income tax,
corporate income tax, net wealth tax, and gift and inheritance tax.

Netherlands Dividend Withholding Tax

Indigo does not expect to pay dividends in the foreseeable future. To the extent
that we do distribute dividends, such dividends would be subject, under
Netherlands tax law, to withholding tax at a rate of 25%. Dividends include
dividends in cash or in kind, constructive dividends and liquidation proceeds in
excess of, for Netherlands tax purposes, recognized paid-in capital. Stock
dividends are also subject to withholding tax unless distributed out of Indigo's
paid-in share premium, as recognized for Netherlands tax purposes. Repayment of
share capital can, under certain conditions, take place without attracting Dutch
dividend withholding tax. Repayment of share premiums in cash will result in
Dutch withholding tax, unless no profits are available in Indigo.


                                       64
<PAGE>
No withholding tax applies on the sale or disposition of common shares to
persons other than Indigo. Except under certain conditions, however, Indigo's
repurchase of its own shares will result in withholding tax.

A holder of common shares can be eligible for a reduction or refund of
Netherlands dividend withholding tax under a tax convention that is in effect
between the country of residence of the shareholder and The Netherlands. The
Netherlands has concluded such conventions with, among others, the United
States, Canada, most European Union countries, Switzerland and Japan. Under most
of these conventions, Netherlands dividend withholding tax is reduced to a rate
of 15% or less.

Under the tax convention currently in force between the United States and The
Netherlands, dividends paid by Indigo to an individual shareholder resident in
the United States or a corporate shareholder organized under the laws of the
United States or any State or territory thereof (and meeting one of the required
tests for the entitlement of benefits under the convention) are generally
eligible for a reduction in the rate of withholding to 15% unless such United
States holder has a permanent establishment in The Netherlands with which the
common shares are effectively connected.

A reduction of Dutch dividend withholding tax can be obtained under certain
conditions in case a Dutch company transfers dividends received from foreign
subsidiaries (that paid foreign withholding tax) to its own shareholders. The
Dutch company may offset the lower of 3% of the gross dividend paid or 3% of the
gross dividend received against the Dutch dividend withholding tax due. This
provides a benefit to the Dutch company rather than to the shareholders. This
benefit may be treated for United States tax purposes, however, as reducing the
amount of Dutch tax paid by a United States shareholder in calculating such
shareholder's foreign tax credits.

Netherlands Income Tax and Corporate Income Tax

A non-resident shareholder will not be subject to Netherlands income tax with
respect to dividends distributed by Indigo on the common shares or with respect
to capital gains derived from the sale or disposal of common shares, provided
that: (i) the non-resident shareholder does not carry on a business in The
Netherlands through a permanent establishment or a permanent representative to
which or to whom the common shares are attributable, and (ii) the shares,
insofar as they do not belong to the entrepreneurial capital of the non-resident
holder of common shares, are not part of a substantial interest in Indigo. Dutch
income tax or corporate income tax on dividends or capital gains from a
substantial interest may not be due, depending upon the double taxation
convention (if any) in effect between The Netherlands and the country of
residence of the shareholder.

Generally, an individual or entity is considered to have a substantial interest
in Indigo if the non-resident shareholder of Indigo has held, directly or
indirectly (and either independently or together with his/her spouse, if any),
(i) at least 5% of the nominal paid-up amount of one or more different classes
of shares of Indigo, (ii) a right to at least 5% of the annual profit of Indigo,
or (iii) a right to at least 5% of the liquidation surplus. Please note that the
right to purchase at least 5% of the nominal paid up capital of Indigo (either
independently or together with his or her spouse, if any) also


                                       65
<PAGE>
constitutes a substantial interest.

Furthermore, if the spouse or certain relatives of the non-resident individual
or his/her spouse have a substantial interest in Indigo, any shares, profit
shares or loans (or the right to purchase such shares, profit shares or loans)
of the non-resident individual will also be considered a substantial interest.

Netherlands Net Wealth Tax

A non-resident shareholder who is an individual is not subject to Netherlands
net wealth tax with respect to the common shares, provided the non-resident
shareholder does not carry on a business in The Netherlands through a permanent
establishment or a permanent representative to which or to whom the common
shares are attributable. Corporations are not subject to Netherlands net wealth
tax.

Netherlands Gift and Inheritance Tax

A gift or inheritance of common shares from a non-resident shareholder will not
be subject to a Netherlands gift and inheritance tax, provided that:

1.       the non-resident shareholder is not a Netherlands citizen at the time
         of the gift or death;

2.       the non-resident shareholder has not been a resident of The Netherlands
         at any time during the ten (10) years preceding the time of the gift or
         death; and

3.       the non-resident shareholder does not carry on a business in The
         Netherlands through a permanent establishment or a permanent
         representative to which or to whom the common shares are attributable.

Notwithstanding the preceding regulations, a gift tax will be due if the
non-resident shareholder has been a resident of The Netherlands at any time
during the twelve (12) months preceding the time of the gift.



United States Federal Income Tax


Taxation of Dividends

Dividends received from a Netherlands corporation are includable in income for
United States federal income tax purposes as foreign source ordinary income to
the extent paid out of Indigo's current or accumulated earnings and profits, as
determined for United States federal tax purposes, if the recipient is (i) a
citizen or resident of the United States, (ii) a corporation or partnership
created or organized under the laws of the United States or any state thereof,
(iii) a trust if a court within the United States is able to exercise primary
supervision over its administration and one or more U.S. persons have the
authority to control all of its substantial decisions, (iv) an electing trust
meeting certain requirements or (v) an estate the income of which is subject to
United States federal income tax regardless of its source (a "U.S. Holder"). To
the extent distributions exceed the earnings and profits of Indigo, they will be
treated as a non-taxable return of capital to the extent of the holder's
adjusted tax basis in the common shares, and generally as a capital gain
thereafter. These dividends are not eligible for the dividends received
deduction otherwise allowed to United States corporate


                                       66
<PAGE>
shareholders on dividends from United States domestic corporations. U.S. Holders
may elect, annually, to either deduct foreign taxes, including The Netherlands
withholding tax, against their income or take the foreign taxes as a credit
against their United States tax liability, subject to foreign tax credit
limitation rules. See "E. Taxation -- Taxation of Holders -- Netherlands Taxes"
above.


Taxation of Capital Gains

A U.S. Holder of common shares will generally recognize gain or loss for United
States federal income tax purposes upon the sale, exchange or other disposition
of common shares in an amount equal to the difference between the amount
realized from such sale, exchange or other disposition and the holder's adjusted
tax basis for such common shares. The gain or loss will generally be U.S. source
capital gain or loss, and will be long-term capital gain or loss if such U.S.
Holder's holding period for the common shares is more than one (1) year.


Passive Foreign Investment Companies

Indigo may be classified as a "passive foreign investment company" ("PFIC") for
United States federal income tax purposes if certain tests are met. Indigo will
be a PFIC with respect to a U.S. Holder if, for any taxable year in which the
U.S. Holder held the common shares, either (i) 75% or more of its gross income
for the taxable year is passive income; or (ii) the average value during the
taxable year (calculated quarterly) of its assets that produce passive income or
that are held for the production of passive income is at least 50% of the
average value of all of its assets for such year. Passive income means, in
general, dividends, interest (other than certain dividends and interest received
from a related party), royalties, rents (other than rents and royalties derived
in the active conduct of a trade or business and not derived from a related
person), annuities and certain securities, commodities and foreign exchange
gains. For purposes of the PFIC test, if a foreign corporation owns at least 25%
by value of the stock of another corporation, the foreign corporation is treated
as owning its proportionate share of the assets of the other corporation, and as
if it had received directly its proportionate share of the income of such other
corporation. The effect of this special provision with respect to Indigo and its
ownership of its subsidiaries is that Indigo, for purposes of the income and
assets tests described above, will be treated as owning directly its
proportionate share of the assets of the subsidiaries and of receiving directly
its proportionate share of each of those company's income, if any, so long as
Indigo owns, directly or indirectly, at least 25% by value of the particular
company's stock. Active business income of the Company's subsidiaries will be
treated as active business income of Indigo.

If Indigo were to be classified as a PFIC, a U.S. Holder would be subject to an
interest charge on taxes deemed deferred by such U.S. Holder on receipt of
certain "excess" dividend distributions from Indigo (generally, any distribution
that is greater than 125% of the average annual distributions received by such
Holder in the three preceding years (or such shorter period as such Holder may
have held the common shares)) and on realization of gain on disposition of any
of the U.S. Holder's common shares (all of which distributions and gains would
be taxable as ordinary income and an interest charge would be imposed), or if a
U.S. Holder were to so elect, and Indigo were to


                                       67
<PAGE>
agree to comply with certain reporting requirements, such U.S. Holder would be
currently taxable on the U.S. Holder's pro-rata share of Indigo's ordinary
earnings and profits and long-term capital gains for each year (at ordinary
income or capital gains rates, respectively), even if no dividend distributions
were received. Based on the nature of Indigo's expected income and assets, the
Company does not believe that Indigo should be classified as a PFIC for the
taxable year ending December 31, 2001.


Foreign Personal Holding Companies

Indigo or any of its non-U.S. subsidiaries may be classified as a "foreign
personal holding company" ("FPHC") if, in any taxable year, five (5) or fewer
persons who are United States citizens or residents own more than 50% of
Indigo's stock (a "U.S. group") and more than 60% of the gross income of Indigo
or the subsidiary consists of passive income for purposes of the FPHC rules. For
purposes of determining whether the stock ownership test is met, certain
constructive ownership rules are applied, including rules that treat stock owned
by a corporation as owned by its shareholders and treat stock subject to an
option as actually owned, but only if such ownership would cause the corporation
to be a FPHC. In the event that a substantial amount of Indigo's income were to
consist of royalties, which generally are passive income for purposes of the
FPHC rules, it is possible that Indigo would meet the income test. Similarly, if
more than 60% of the gross income of a non-U.S. subsidiary of Indigo were to
consist of dividends, interest, royalties or other types of passive income, the
subsidiary would likely meet the FPHC income test.

If Indigo or any of its subsidiaries is or becomes an FPHC, each U.S. Holder of
Indigo (including a United States corporation) that held stock in Indigo on the
last day of its taxable year, or, if earlier, the last day of its taxable year
on which a U.S. group existed with respect to Indigo or that subsidiary, would
be required to include in gross income, as a dividend, such shareholder's pro
rata portion of the undistributed income of Indigo or the subsidiary, even if no
cash dividend were actually paid. In such case, if Indigo were the FPHC, a U.S.
Holder would be entitled to increase its tax basis in the shares of Indigo by
the amount of a deemed dividend from Indigo. If a subsidiary of Indigo were the
FPHC, a U.S. Holder in Indigo should be afforded similar relief, although the
law is unclear as to the form of the relief.

One or more members of the Landa Family may be deemed, under United States
federal income tax law, to own all of the stock of Indigo owned by each member
of the Landa Family (constituting less than 50% of the outstanding stock of
Indigo) for purposes of the FPHC rules. If a member of the Landa Family who is
deemed to own common shares were to become a United States citizen or resident,
or to marry a United States citizen or resident, Indigo may be classified as a
FPHC as the result of the shares considered owned by such family member together
with up to four other U.S. individuals who own shares, including by attribution.
Mr. Landa has informed Indigo that no relevant member of the Landa Family is or
intends to become a United States resident or citizen or to marry a United
States resident or citizen. Although we believe that, at the present time, no
U.S. group exists, we can give no assurances regarding future deemed ownership
of common shares by members of the Landa Family, or future changes in
citizenship or residence of Landa Family members, which


                                       68
<PAGE>
could result in the creation of a U.S. group and, thus, cause Indigo to be
treated as an FPHC. We will use our reasonable best efforts to determine whether
Indigo is an FPHC, and to inform shareholders if we believe that Indigo is an
FPHC. However, we can give no assurance that we will have timely knowledge of
the formation of a U.S. group. Moreover, since Indigo does not intend to
maintain its books and records in accordance with United States tax accounting
principles, U.S. Holders may not have information available with which to
determine accurately any deemed dividend in the event Indigo becomes an FPHC and
would have to estimate the amount of such deemed dividend.

If Indigo becomes an FPHC, a United States person who acquires common shares
from a decedent would be denied the step-up of tax basis of such shares to fair
market value on the decedent's date of death that otherwise would have been
available, and, instead, would have a tax basis equal to the lower of fair
market value or the decedent's adjusted tax basis.

As noted above, certain United States federal income tax consequences are
dependent upon the composition of the income of Indigo and its subsidiaries. The
tax law is not entirely clear as to the proper classification of all relevant
types of income that Indigo and its subsidiaries may realize. Accordingly, there
can be no assurance that our expectations described above will be fulfilled.


Controlled Foreign Corporations

U.S. Shareholders, as defined below, of a controlled foreign corporation (a
"CFC"), as defined below, are required to include in gross income their pro rata
shares of certain items of passive income derived by the CFC (including, in
certain circumstances, income invested in U.S. property) whether or not such
amounts are actually distributed, and U.S. Shareholders also are subject to
special rules with respect to gain realized upon the disposition of CFC stock
and the calculation of the foreign tax credit. A foreign corporation is a CFC
for U.S. federal income tax purposes if more than 50% of its stock (by vote or
value) is owned (directly, indirectly, or by attribution) by U.S. Shareholders
(U.S. Holders, including corporate holders, who each own directly, indirectly,
or by attribution 10% or more of the total combined voting power of its shares,
taking into account a number of constructive ownership rules). Indigo does not
believe that it is currently a CFC. If Indigo were a CFC, the PFIC rules
described above would not apply to its U.S. Shareholders. See "Foreign Personal
Holding Companies" above for a general discussion of the possibility that one or
more members of the Landa Family may become a U.S. person.

F. DIVIDENDS AND PAYING AGENTS

    Not Applicable

G. STATEMENT BY EXPERTS

    Not Applicable


                                       69
<PAGE>
H. DOCUMENTS ON DISPLAY

The company is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended, as applicable to "foreign private issuers" as defined
in Rule 3b-4 under the Exchange Act, and in accordance therewith must file
periodic reports and other information with the Securities and Exchange
Commission. As a foreign private issuer, the Company is exempt from certain
provisions of the Exchange Act, including those that prescribe the furnishing
and content of proxy statements distributed to shareholders and those that
relate to reporting and liability for short-swing profits by directors and other
insiders.

This annual report and the exhibits thereto and any periodic reports or other
information filed pursuant to the Exchange Act may be inspected without charge
and copied at prescribed rates at the Public Reference Section of the Commission
at Room 1024, 450 Fifth Street, N.V., Washington D.C. 20549.

I. SUBSIDIARY INFORMATION

    Not Applicable

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to Indigo's operations result primarily from changes in
exchange rates. To address this risk, Indigo uses various financial instruments.
These instruments are composed of monetary assets and liabilities, derivative
forward exchange contracts and purchased options. These financial instruments
enable Indigo to manage and reduce the impact of fluctuation in foreign currency
exchange rates. Cash flow hedges protect Indigo from fluctuations in income and
expenses incurred in subsidiaries that operate in non-U.S. dollar-based
environments. Changes in interest rates do not have a material effect on
Indigo's operations. Indigo does not enter into derivative contracts for trading
or speculative purposes, nor is it a party to any leveraged financial
instruments.

Foreign Currency Risk

Indigo operates in several countries and in a variety of currencies. When
operating in currencies other than the U.S. dollar, Indigo's cash flows and
earnings are exposed to fluctuations in foreign currency exchange rates,
including exposure due to compensation expenses which are mainly in New Israeli
Shekels (NIS) and European currency. Indigo strives to limit its exposure
through "natural" hedging by attempting to have similar levels of assets and
liabilities in any one currency. The rest of the exposure, which is not set off
naturally, is mainly hedged by derivative financial instruments.


                                       70
<PAGE>
Indigo enters into foreign exchange forward contracts and purchased option
contracts to hedge a substantial portion of its foreign currency exposure.
Indigo uses such contracts to hedge exposure to changes in foreign currency
exchange rates associated with monetary assets and liabilities in the balance
sheet and anticipated sales transactions to be incurred in a foreign currency.
The exposure to Indigo is in European currencies and NIS. Indigo seeks to
minimize the risk that the fair value of its revenues and cash flow, required
for its operational expenses denominated in a currency other than U.S. dollars,
will be affected by changes in exchange rates. See also Note 2 to the Financial
Statements.

During 2000, Indigo utilized monetary assets and liabilities, purchased option
contracts and forward contracts to reduce the exposure from changes in foreign
currency rates.


                                       71
<PAGE>
The table below details the net current assets balance (net current liabilities
balance) of the balance sheet exposure, by currency and geography (at fair
value). All data in the table has been converted into U.S. dollar equivalents
(in thousands). See the explanatory notes below the table.

<TABLE>
<CAPTION>
                  EUROPEAN CURRENCIES  NEW ISRAELI SHEKEL          TOTAL
                      DECEMBER 31          DECEMBER 31          DECEMBER 31
                   2000        1999      2000      1999      2000         1999
<S>               <C>         <C>      <C>        <C>      <C>          <C>
THE NETHERLANDS   17,082      16,838        -         -     17,082       16,838
ISRAEL            (6,596)     (8,069)  (20,442)   (8,459)  (27,038)     (16,528)
TOTAL             10,486       8,769   (20,442)   (8,459)   (9,956)         310
</TABLE>

Explanatory notes:

1.       Total exposure is the summation of the absolute figures.

2.       The data presented in the table reflects the exposure after the use of
         natural hedging.

3.       In light of the large correlation between the European currencies,
         Indigo does not differentiate between these currencies when measuring
         its exposure. Therefore, the data in the column under the title
         "European currencies" includes, primarily, exposures in Euros, German
         marks, Netherland florins and British pounds.

As of December 31, 2000, Indigo held a purchased option contract and several
forward contracts to hedge forecasted sales transactions in Euro and GBP in an
aggregate amount of $6 million. The Company's outstanding debt consisted of
approximately $5,326,000 in Euros, $85,000 in U.S. dollars and $17,000 in NIS.
The loan in Euros was taken to hedge against fluctuation of the Euro exchange
rate that would partially affect the expected collection from account
receivables in Europe.

Interest Rate Risk

The fair value of Indigo's cash, cash equivalents and short-term debt portfolio
at December 31, 2000 approximated its carrying value due to its short-term
nature. The cash, cash equivalents and short-term debt portfolio as at December
31, 2000 was composed of cash, short-term deposits and short-term loans bearing
mainly fixed interest rates. A change in interest rate would have no material
effect upon the fair value of the cash, cash equivalents and short-term loans
portfolio as of December 31, 2000.


ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

None


                                       72
<PAGE>
                                     PART II


ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

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

None.

ITEM 15. RESERVED

ITEM 16. RESERVED


                                       73
<PAGE>
                                    PART III


ITEM 17. FINANCIAL STATEMENTS

The Registrant has responded to item 18 in lieu of responding to this item.

ITEM 18. FINANCIAL STATEMENTS

Financial Statements

Report of Independent Accountants on Consolidated Financial Statements and
Financial Statement Schedule of Indigo N.V. and Subsidiaries

Consolidated Statements of Operations of Indigo N.V. and Subsidiaries for each
of the last three years in the period ended December 31, 2000

Consolidated Balance Sheets of Indigo N.V. and Subsidiaries as of December 31,
2000 and 1999

Consolidated Statements of Changes in Shareholders' Equity (Deficiency) of
Indigo N.V. and Subsidiaries for each of the last three years in the period
ended December 31, 2000

Consolidated Statements of Cash Flows of Indigo N.V. and Subsidiaries for each
of the last three years in the period ended December 31, 2000 Notes to
Consolidated

Financial Statements of Indigo N.V. and Subsidiaries

Financial Statements

Schedule II - Valuation and Qualifying Accounts for the years ended December 31,
2000, 1999 and 1998


                                       74
<PAGE>
INDIGO N.V. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                       PAGE(S)
<S>                                                                  <C>
Report of Independent Accountants on Consolidated Financial
Statements of Indigo N.V. and Subsidiaries.......................        F-1

Consolidated Statements of Operations of Indigo N.V. and
Subsidiaries for each of the last three years in the
period ended December 31, 2000...................................        F-2

Consolidated Balance Sheets of Indigo N.V. and Subsidiaries
as of December 31, 2000 and 1999.................................        F-3

Consolidated Statements of Changes in Shareholders' Equity
(Deficiency) of Indigo N.V. and Subsidiaries for each of the
last three years in the period ended December 31, 2000...........     F-4 to F-6

Consolidated Statements of Cash Flows of Indigo N.V. and
Subsidiaries for each of the last three years in the period
ended December 31, 2000..........................................     F-7 to F-8

Notes to Consolidated Financial Statements of Indigo N.V.
and Subsidiaries.................................................    F-9 to F-36
</TABLE>

<PAGE>
                         REPORT OF INDEPENDENT AUDITORS


TO THE BOARD OF DIRECTORS AND THE SHAREHOLDERS OF
INDIGO N.V. AND SUBSIDIARIES


We have audited the consolidated balance sheets of Indigo N.V. and Subsidiaries
(the "Company") as of December 31, 2000 and 1999 and the related consolidated
statements of operations, changes in shareholders' equity and cash flows for
each of the three years in the period ended December 31, 2000. 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 in accordance with auditing standards generally accepted
in the United States of America. 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company as of
December 31, 2000 and 1999 and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
2000, in conformity with accounting principles generally accepted in the United
States of America.

As discussed in note 2i(1) to the consolidated financial statements, pursuant to
U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 101 the
Company changed its method of accounting for certain revenues in the year ended
December 31,2000.



Kesselman & Kesselman
Certified Public Accountants (Isr.)

Tel-Aviv, Israel
February 20, 2001


                                      F-1

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                             YEAR ENDED DECEMBER 31
                                                                                 --------------------------------------------
                                                                                   2000              1999              1998
                                                                                  ------            ------            ------
REVENUES:
<S>                                                                              <C>              <C>              <C>
     Equipment                                                                   $  95,349        $  78,742        $  79,027
     Post-sales                                                                     69,370           61,962           58,010
     License fees and royalties                                                         89            4,328           10,335
                                                                                 ---------        ---------        ---------
             T o t a l revenues                                                    164,808          145,032          147,372
                                                                                 =========        =========        =========

COSTS AND EXPENSES:
     Cost of equipment                                                              53,687           44,842           38,223
     Cost of post-sales                                                             29,971           29,802           32,814
     Research and development, net                                                  19,534           14,160           16,682
     Selling, general and administrative                                            71,927           57,596           61,549
     Restructuring charges                                                                                             2,764
     Litigation settlement                                                                                            (1,200)
                                                                                 ---------        ---------        ---------
             T o t a l  costs and expenses                                         175,119          146,400          150,832
                                                                                 =========        =========        =========
             Operating loss                                                        (10,311)          (1,368)          (3,460)
INTEREST EXPENSE                                                                    (1,240)          (1,671)          (2,641)
INTEREST INCOME AND OTHER INCOME, NET                                                3,013            2,406            3,458
                                                                                 ---------        ---------        ---------
         Loss before provision for income taxes                                     (8,538)            (633)          (2,643)
PROVISION FOR INCOME TAXES                                                           1,097              739            2,428
                                                                                 ---------        ---------        ---------
NET LOSS BEFORE CUMULATIVE EFFECT OF AN ACCOUNTING CHANGE                           (9,635)          (1,372)          (5,071)
Cumulative effect, at beginning of year, of an accounting
     change, net                                                                    (1,935)
                                                                                 ---------        ---------        ---------
NET LOSS BEFORE DIVIDEND REQUIREMENTS                                              (11,570)          (1,372)          (5,071)
DIVIDEND ON CONVERTIBLE PREFERRED SHARES:
Current                                                                             (8,793)         (11,098)         (10,961)
Inducement regarding conversion of Series A
     Preferred Shares                                                              (58,685)
                                                                                 ---------        ---------        ---------
NET LOSS APPLICABLE TO COMMON SHARES OUTSTANDING                                 $ (79,048)       $ (12,470)       $ (16,032)
                                                                                 =========        =========        =========
Basic and diluted weighted average number of common
     shares outstanding                                                             85,298           77,282           71,822
                                                                                 =========        =========        =========
Basic and diluted loss per common share before
     cumulative effect of an accounting change, net                              $   (0.90)       $   (0.16)       $   (0.22)
BASIC AND DILUTED LOSS PER COMMON SHARE OF
     CUMULATIVE EFFECT OF AN ACCOUNTING CHANGE, NET                              $   (0.03)
                                                                                 ---------        ---------        ---------
BASIC AND DILUTED LOSS PER COMMON SHARE AFTER
     CUMULATIVE EFFECT OF AN ACCOUNTING CHANGE, NET                              $   (0.93)       $   (0.16)       $   (0.22)
                                                                                 =========        =========        =========
PRO  FORMA AMOUNTS ASSUMING THE ACCOUNTING CHANGE IS APPLIED RETROACTIVELY
     (SEE NOTE 2i):
     NET LOSS APPLICABLE TO COMMON SHARES OUTSTANDING                            $ (77,113)       $ (11,896)       $ (16,769)
                                                                                 =========        =========        =========
     BASIC AND DILUTED LOSS PER COMMON SHARE                                     $   (0.90)       $   (0.15)       $   (0.23)
                                                                                 =========        =========        =========
</TABLE>



    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.



                                      F-2
<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share par value amounts)

<TABLE>
<CAPTION>
                                                                                          DECEMBER 31
                                                                                    -------------------------
                                                                                       2000            1999
                                                                                    ---------      ----------
                                              A S S E T S
CURRENT ASSETS:
<S>                                                                                 <C>            <C>
     Cash and cash equivalents                                                      $  47,458      $  40,690
     Restricted cash                                                                      330            399
     Short-term deposits and marketable securities                                     47,255          5,245
     Accounts receivable:
       Trade, net of allowance for doubtful accounts: $7,622 and $6,321
         as of December 31, 2000 and 1999, respectively                                35,018         31,328
       Other                                                                            3,874          4,110
     Inventories                                                                       47,776         28,536
     Other current assets                                                               2,222          2,855
                                                                                    ---------      ---------
             T o t a l  current assets                                                183,933        113,163
                                                                                    ---------      ---------
ACCOUNTS RECEIVABLE - LONG-TERM                                                         1,848            587
INVESTMENTS - AMOUNTS FUNDED FOR EMPLOYEE RIGHTS UPON RETIREMENT                        6,886          5,922
PROPERTY AND EQUIPMENT, net                                                            23,021         19,510
OTHER ASSETS, net                                                                       1,092          1,456
                                                                                    ---------      ---------
             T o t a l  assets                                                        216,780        140,638
                                                                                    =========      =========
                                  LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable, trade                                                           25,454         18,362
     Accrued expenses                                                                  30,981         24,504
     Loans payable, short-term                                                          5,428         17,191
     Income taxes payable                                                                 906          1,674
     Deferred revenue                                                                   6,844          4,806
     Other current liabilities (including related party of $ 5,000 on
         December 31, 2000)                                                             5,769            518
                                                                                    ---------      ---------
             Total current liabilities                                                 75,382         67,055
                                                                                    ---------      ---------
LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT                                          11,167         10,791
OTHER LIABILITIES                                                                       5,834          4,957
                                                                                    ---------      ---------
             T o t a l  liabilities                                                    92,383         82,803
                                                                                    ---------      ---------
COMMITMENTS AND CONTINGENCIES (note 10)
SHAREHOLDERS' EQUITY:
     Common Shares, NLG 0.04 par value; 240,000 shares authorized; 113,182 and
        77,643 issued and outstanding on December 31, 2000 and in 1999,
        Respectively                                                                    2,273          1,660
     Preferred Shares, at NLG 0.04 par value; 26,950 authorized on
         December 31, 2000 and 1999:
         Series A Convertible Preferred Shares NLG 0.04 par value; 6,759
             issued and outstanding on December 31, 1999                                                 161
     Additional paid-in capital                                                       547,978        345,363
     Accumulated deficit                                                             (405,786)      (289,349)
     Accumulated other comprehensive loss                                                 (68)
     Common shares held in treasury, at cost; 2,751 shares on December 31, 2000       (20,000)
                                                                                    ---------      ---------
             T o t a l  shareholders' equity                                          124,397         57,835
                                                                                    ---------      ---------
             T o t a l  liabilities and shareholders' equity                        $ 216,780      $ 140,638
                                                                                    =========      =========
</TABLE>

    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.



                                      F-3
<PAGE>
(Continued) - 1

                          INDIGO N.V. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                     (In thousands, except number of shares)

<TABLE>
<CAPTION>


                                                                          SERIES A      SERIES B       SERIES D
                                                                        CONVERTIBLE    CONVERTIBLE    CONVERTIBLE
                                                            COMMON       PREFERRED      PREFERRED     PREFERRED        ADDITIONAL
                                                            SHARES         SHARES         SHARES        SHARES      PAID-IN CAPITAL
                                                            ------         ------         ------        ------      ---------------
<S>                                                         <C>            <C>             <C>                      <C>
BALANCE AT JANUARY 1, 1998                                   $ 1,511        $ 161           $ 6                      $ 326,368
Net loss
Issuance of  3,515,680 Series D
   Convertible Preferred Shares
   and 878,920 Series D
   Warrants                                                                                                68           17,133
Conversion of 130,577 Series B
   Convertible Preferred Shares
   to 130,577 Common Shares                                        4                         (4)
Conversion of 3,515,680 Series D Convertible
   Preferred Shares to
   5,374,614 Common Shares                                       110                                      (68)             (42)
Stock issuance costs                                                                                                      (603)
Issuance of  134,188 Common
   Shares in connection with
   the exercise of stock options                                   2                                                       114
Issuance of  393,964 Common
   Shares in connection with
   the exercise of Employee
   Share Purchase Plan                                             8                                                     1,495
Amortization of unearned compensation
Adjustment of warrants pursuant to litigation
   settlement                                                                                                           (1,200)
Change in unrealized gain on marketable
   securities available for sale
                                                             -------      -------       -------      --------         --------
 BALANCE AT DECEMBER 31, 1998                                $ 1,635        $ 161           $ 2             -        $ 343,265
                                                             =======      =======       =======      ========         ========
</TABLE>

<TABLE>
<CAPTION>
                                                                                                TOTAL
                                                 ACCUMULATED     UNEARNED                   SHAREHOLDERS'
                                                  DEFICIT      COMPENSATION    OTHER            EQUITY
                                                  -------      ------------    -----            ------
<S>                                            <C>             <C>            <C>           <C>
BALANCE AT JANUARY 1, 1998                     $ (282,906)         $ (841)     $ (7)          $ 44,292
Net loss                                           (5,071)                                      (5,071)
Issuance of  3,515,680 Series D
   Convertible Preferred Shares
   and 878,920 Series D
   Warrants                                                                                     17,201
Conversion of 130,577 Series B
   Convertible Preferred Shares
   to 130,577 Common Shares                                                                          -
Conversion of 3,515,680 Series D Convertible
   Preferred Shares to
   5,374,614 Common Shares                                                                           -
Stock issuance costs                                                                              (603)
Issuance of  134,188 Common
   Shares in connection with
   the exercise of stock options                                                                   116
Issuance of  393,964 Common
   Shares in connection with
   the exercise of Employee
   Share Purchase Plan                                                                           1,503
Amortization of unearned compensation                                 841                          841
Adjustment of warrants pursuant to litigation
   settlement                                                                                   (1,200)
Change in unrealized gain on marketable
   securities available for sale                                                  7                  7
                                                 --------        --------   --------          --------
 BALANCE AT DECEMBER 31, 1998                  $ (287,977)              -         -           $ 57,086
                                                 ========        ========   ========          ========
</TABLE>




    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.


                                      F-4
<PAGE>
(Continued) - 2


                          INDIGO N.V. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                     (In thousands, except number of shares)




<TABLE>
<CAPTION>
                                                         SERIES A      SERIES B
                                                       CONVERTIBLE    CONVERTIBLE       ADDITIONAL                       TOTAL
                                          COMMON         PREFERRED     PREFERRED         PAID-IN        ACCUMULATED    SHAREHOLDERS'
                                          SHARES          SHARES        SHARES           CAPITAL          DEFICIT         EQUITY
                                         --------      ------------   ------------     ----------       ------------   -------------

<S>                                     <C>            <C>            <C>              <C>              <C>            <C>
BALANCE AT JANUARY 1, 1999                 $ 1,635          $ 161           $ 2         $ 343,265        $ (287,977)      $ 57,086
Net loss                                                                                                     (1,372)        (1,372)
Issuance of  367,920 Common Shares
   in connection with the exercise of
   Series D Warrants                             9                                            739                              748
Conversion of 104,463 Series B
   Convertible Preferred Shares to
   104,463 Common Shares                         2                           (2)                                           -
Issuance of 437,876 Common Shares
   in connection with the exercise of
   Employee Share Purchase Plan                  9                                          1,241                            1,250
Stock issuance costs                                                                          (26)                             (26)
Issuance of  177,167 Common
   Shares in connection with
   the exercise of stock  options                5                                            144                              149
                                           -------        -------      --------          --------          --------       --------
BALANCE AT DECEMBER 31, 1999               $ 1,660          $ 161             -         $ 345,363        $ (289,349)      $ 57,835
                                           =======        =======      ========          ========          ========       ========
</TABLE>

    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.


                                      F-5

<PAGE>
                                                                 (Concluded) - 3

                          INDIGO N.V. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                     (In thousands, except number of shares)



<TABLE>
<CAPTION>
                                                           SERIES A                    ACCUMULATED
                                                         CONVERTIBLE    ADDITIONAL        OTHER                        TREASURY
                                               COMMON      PREFERRED     PAID-IN       COMPREHENSIVE    ACCUMULATED     SHARES
                                               SHARES       SHARES       CAPITAL          LOSS           DEFICIT      (SEE 13C)
                                               -------------------------------------------------------------------------------------

<S>                                            <C>       <C>           <C>             <C>            <C>             <C>
BALANCE AT JANUARY 1, 2000                     $ 1,660       $ 161     $ 345,363                      $ (289,349)

Comprehensive loss:
   Net loss                                                                                              (11,570)
   Other comprehensive loss:
       Unrealized loss on derivatives
       designated as cash flow hedge                                                        (68)

Total comprehensive loss
Issuance of  511,000 Common Shares
   in connection with the exercise of
   Series D Warrants                                 9                     1,443
Issuance of 393,131 Common Shares
   in connection with the exercise of
   Employee Share Purchase Plan                      7                     1,190
Issuance of  996,975 Common
   Shares in connection with
   the exercise of stock  options                   17                     1,492
Issuance of 14,814,814 Common
   Shares in connection with
   Hewlett Packard investment (see 13b)            235                    99,765
Issuance of 18,822,381 Common
   Shares and purchase of treasury shares in
   connection with the conversion
   of  Series A Preferred Shares (see 13c)         345        (161)      104,683                        (104,867)      (20,000)
Stock issuance costs                                                      (5,958)
                                              --------    --------      --------       --------         --------      --------
BALANCE AT DECEMBER 31, 2000                   $ 2,273           -     $ 547,978          $ (68)      $ (405,786)    $ (20,000)
                                              ========    ========      ========       ========         ========      ========
</TABLE>






<TABLE>
<CAPTION>
                                                 TOTAL
                                              SHAREHOLDERS'
                                                 EQUITY
                                            ----------------
<S>                                         <C>
BALANCE AT JANUARY 1, 2000                      $ 57,835
                                                --------
Comprehensive loss:
   Net loss                                      (11,570)
   Other comprehensive loss:
       Unrealized loss on derivatives
       designated as cash flow hedge                 (68)
                                                --------
Total comprehensive loss                         (11,638)
Issuance of  511,000 Common Shares
   in connection with the exercise of
   Series D Warrants                               1,452
Issuance of 393,131 Common Shares
   in connection with the exercise of
   Employee Share Purchase Plan                    1,197
Issuance of  996,975 Common
   Shares in connection with
   the exercise of stock  options                  1,509
Issuance of 14,814,814 Common
   Shares in connection with
   Hewlett Packard investment (see 13b)          100,000
Issuance of 18,822,381 Common
   Shares and purchase of treasury shares in
   connection with the conversion
   of  Series A Preferred Shares (see 13c)       (20,000)
Stock issuance costs                              (5,958)
                                                --------
BALANCE AT DECEMBER 31, 2000                   $ 124,397
                                                ========
</TABLE>

    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.


                                      F-6

<PAGE>
(Continued) - 1

                          INDIGO N.V. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                                YEAR ENDED DECEMBER 31
                                                                                    -------------------------------------------
                                                                                       2000              1999           1998
                                                                                    ---------         ---------       ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                  <C>               <C>             <C>
         Net loss                                                                    $ (11,570)        $ (1,372)       $ (5,071)
     ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH FLOWS USED IN
         OPERATING ACTIVITIES:
         Depreciation, amortization and write-off of property and
             equipment                                                                   6,593            5,501           9,869
         Cumulative effect of an accounting change                                       1,935
         Compensation on stock options                                                                                      841
         Charge related to issuance of warrants pursuant to litigation
             settlement                                                                                                  (1,200)
         Deferred income taxes                                                                              191            (191)
         Provision for doubtful accounts                                                 1,301            2,620           1,224
         Loss on disposal of fixed assets                                                                    94
     CHANGES IN ASSETS AND LIABILITIES:
         Increase in accounts receivable                                                (5,357)          (7,913)         (5,794)
         Decrease (increase) in inventories                                            (16,088)           4,128          (3,729)
         Decrease (increase)  in other current assets                                      633           (1,055)           (381)
         Increase (decrease) in accounts payable and accrued expenses                   11,690           (9,342)         (5,061)
         Increase (decrease) in income taxes payable                                      (768)            (678)            843
         Increase in deferred revenue                                                   (1,694)             842              42
         Increase (decrease) in other current liabilities                                5,251             (663)           (418)
         Increase in liability for employee rights upon retirement                         376              903           1,672
         Increase (decrease) in other liabilities                                          877             (120)            (69)
                                                                                       -------          -------         -------
     Net cash flows used in operating activities                                        (6,821)          (6,864)         (7,423)
                                                                                       -------          -------         -------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of short term deposits and  marketable securities                        (47,187)          (5,360)
     Proceeds from sale of short term deposits and marketable
         securities                                                                      5,177              116             391
     Decrease (increase) in restricted cash                                                 69            2,276            (318)
     Capital expenditures                                                              (11,317)          (8,175)         (6,715)
     Amounts funded for employee rights upon retirement                                   (964)            (353)           (746)
     Proceeds from sale of fixed assets                                                                      31
                                                                                       -------          -------         -------
     Net cash flows used in investing  activities                                      (54,222)         (11,465)         (7,388)
                                                                                       -------          -------         -------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of Common shares (see 13b)                                 100,000
     Purchase of treasury shares (see 13c)                                             (20,000)
     Proceeds from issuance of  Series D Convertible Preferred Shares
       and Warrants                                                                                                      17,201
     Proceeds from exercise of warrants                                                  1,452              748
     Stock issuance costs                                                               (3,925)             (50)           (591)
     Proceeds from exercise of employee stock purchase plan                                537            1,250           1,503
     Proceeds from exercise of stock options                                             1,509              149             116
     Short-term loans payable, net                                                     (11,762)          17,191          (5,606)
                                                                                       -------          -------         -------
     Net cash flows provided by financing activities                                    67,811           19,288          12,623
                                                                                       -------          -------         -------
NET INCREASE (DECREASE)  IN CASH AND CASH
     EQUIVALENTS                                                                         6,768              959          (2,188)
BALANCE OF CASH AND CASH EQUIVALENTS AT
     BEGINNING OF YEAR                                                                  40,690           39,731          41,919
                                                                                       -------          -------         -------
 BALANCE OF CASH AND CASH EQUIVALENTS AT
     END OF YEAR                                                                      $ 47,458         $ 40,690        $ 39,731
                                                                                       =======          =======         =======
</TABLE>


    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.


                                      F-7

<PAGE>
(Concluded) - 2

                          INDIGO N.V. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                       YEAR ENDED DECEMBER 31
                                                                               ----------------------------------------------
                                                                                 2000               1999              1998
                                                                               --------           --------           --------
<S>                                                                             <C>                  <C>             <C>
SUPPLEMENTARY DISCLOSURE OF CASH
   FLOW INFORMATION:
   Interest paid                                                                $ 1,492              $ 508           $ 1,087
                                                                                =======            =======           =======
   Advances to income tax authorities                                             $ 807            $ 1,482           $ 1,885
                                                                                =======            =======           =======
</TABLE>


SUPPLEMENTARY INFORMATION OF FINANCING ACTIVITY NOT INVOLVING CASH FLOWS:

1.       As of December 31, 2000, 1999 and 1998, the Company acquired additional
         property and equipment for $654, $732, and $378, respectively, which
         had not been paid as of those dates.

2.       As of December 31, 2000, 1999 and 1998, the Company incurred stock
         issuance costs of $2,033, $6 and $30, respectively, which had not been
         paid as of those dates.

3.       As of December 31, 2000, the Company issued Common shares of $660 in
         connection with Employee Share Purchase Plan, which has been received
         by the Company subsequent to the year end.

4.       In 2000, The Company issued share dividend of $ 104,867 in connection
         with the conversion of Series A Preferred Shares (see 13c).




    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.


                                      F-8

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - DESCRIPTION OF BUSINESS

               Indigo N.V., a Dutch corporation, and its wholly-owned
               subsidiaries (the "Company"), develop, manufacture, market and
               service proprietary Digital Offset Color(TM) printing presses
               used in the production of on-demand, short-run color
               digitally-printed products. The Company also develops,
               manufactures and markets imaging products and provides service to
               its customers. The imaging products and service activities are
               referred to in these financial statements as "Post-sales" (see
               note 2i). The Company markets products directly and through
               distributors in Europe, directly in the United States and through
               distributors in other parts of the world. The Company conducts
               its research and development and manufacturing activities in
               Israel. In 2000, 1999 and 1998, 6 %, 11% and 10%, respectively,
               of the Company's equipment and post-sales revenue were from a
               distributor in Japan.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES :

               a.    BASIS OF PRESENTATION

                     The consolidated financial statements include the accounts
                     of the Company and its subsidiaries, all of which are
                     wholly-owned. All intercompany accounts and transactions
                     have been eliminated in consolidation.

                     The consolidated financial statements of the Company have
                     been prepared based upon accounting principles generally
                     accepted in the United States of America. The preparation
                     of financial statements in conformity with generally
                     accepted accounting principles requires management to make
                     estimates and assumptions that affect the reported amounts
                     of assets and liabilities and disclosure of contingent
                     assets and liabilities at the dates of the financial
                     statements and the reported amounts of revenues and
                     expenses during the reporting periods.

                     The Company's most significant estimates relate to doubtful
                     accounts, inventory reserves, warranty provisions, other
                     equipment-related provisions, deferred tax asset valuation
                     allowances, tax contingencies and litigation. Actual
                     results could differ from these estimates as a result of
                     changes in circumstances related to market development,
                     competition, the level of performance of the Company's
                     products, technologies and other factors.

               b.    FOREIGN CURRENCY TRANSLATION

                     The U.S. dollar ("dollar") is the functional and reporting
                     currency for all of the Company's entities as it is the
                     currency of the primary economic environment in which the
                     Company conducts its operations. Gains or losses from
                     non-dollar currency transactions are recognized in
                     consolidated income in the period of occurrence. The
                     non-dollar currency gains (losses) were approximately
                     $149,000, $ (720,000) and $1,651,000 for the years ended
                     December 31,2000, 1999 and 1998, respectively, which were
                     recorded in interest income (expense).

               c.    CASH EQUIVALENTS

                     The Company considers all highly liquid investments, which
                     include short-term (up to 3 months from date of deposit)
                     bank deposits that are not restricted as to withdrawal or
                     use, to be cash equivalents.


                                      F-9

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):



               d.    MARKETABLE SECURITIES

                     At December 31,2000, marketable securities, representing
                     investments in debt securities in which the Company has the
                     ability and the intent to hold to maturity, are classified
                     as "held to maturity" and are carried at amortized cost.
                     Interest income, including amortization of the premium and
                     discount arising on acquisition, is included in the
                     statement of operation.

                     In 1999, marketable securities were classified as
                     "available for sale", and were stated at market value.

               e.    FINANCIAL INSTRUMENTS

                     The Company enters into forward exchange contracts and
                     purchases currency options to hedge existing non-dollar
                     assets and liabilities and forecasted sales transactions.
                     The Company does not hold or issue derivative financial
                     instruments for trading purposes.

                     In June 1998, the Financial Accounting Standards Board ("
                     FASB") issued SFAS 133, "Accounting for Derivative
                     Instruments and Hedging Activities". SFAS 133 establishes a
                     new model for accounting for derivatives and hedging
                     activities that supersedes and amends a number of existing
                     standards.

                     SFAS 133 standardizes the accounting for derivative
                     instruments and hedging activities, including certain
                     derivative instruments embedded in other contracts. SFAS
                     133 requires that an entity recognizes derivative
                     instruments as assets or liabilities in the balance sheet
                     and measure them at fair value. Gains or losses resulting
                     from changes in the values of these derivatives would be
                     accounted for depending on the use of the derivatives and
                     whether it qualifies for hedge accounting.

                     According to SFAS 133, derivatives designated for hedging
                     foreign currency exposures will impact the financial
                     statements as follows:

                     (1)    The derivative instruments will be presented in the
                            balance sheet at their fair-value.

                     (2)    For a derivative designated as hedging the exposure
                            of the variability of cash-flows; the gain or loss
                            is reported in other comprehensive income and
                            subsequently reclassified into earnings when the
                            hedged item effects earning. The ineffective portion
                            of the gain or loss is reported in earnings
                            immediately.

                     (3)    For a derivative designated as hedging the exposure
                            of existing assets or liabilities fair-value - the
                            gain or loss is recognized in earnings in the period
                            of change, together with the offsetting loss or gain
                            on the hedged item attributable to the risk being
                            hedged.

                     The Company adopted SFAS 133 starting the fourth quarter of
                     year 2000. The adoption has no material cumulative effect
                     on the Company results or on its financial position.


               f.    INVENTORIES

                     Inventories are valued at the lower of cost or market. Cost
                     is determined as follows:

                     Raw materials - on moving average basis.

                     Products in process and finished products - on basis of
                         production costs: Raw materials - on moving average
                         basis. Labor and overhead component - on average basis.


                                      F-10

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):


               g.    PROPERTY AND EQUIPMENT

                     Property and equipment are recorded at cost and depreciated
                     on a straight-line basis over the estimated useful lives of
                     such assets. Maintenance and repairs are charged to expense
                     as incurred; leasehold improvements are capitalized. Annual
                     depreciation and amortization by major category is as
                     follows:

<TABLE>
<CAPTION>
                                                    ESTIMATED USEFUL LIFE
                                                  --------------------------------
<S>                                               <C>
      Machinery and equipment                     3 - 10 years
      Office furniture and equipment              5 - 16 years
      Leasehold improvements                      Estimated useful life or term of
                                                  lease, whichever is shorter
</TABLE>

                     Upon retirement or sale, the cost of assets disposed of and
                     related accumulated depreciation are eliminated and the
                     related gains or losses are reflected in the Statements of
                     Operations.


               h.    IMPAIRMENT OF LONG-LIVED ASSETS

                     The Company reviews its long-lived assets for impairment
                     whenever events or changes in circumstances indicate that
                     the carrying amount of the assets may not be recoverable.
                     Accordingly, when indicators of impairment are present, the
                     Company evaluates the carrying value of the foregoing
                     assets in relation to the operating performance and future
                     discounted cash flows of the underlying assets.

               i.    REVENUE RECOGNITION:


                     1)    Equipment sales

                           Effective January 1, 2000 and pursuant to Securities
                           and Exchange Commission, Staff Accounting Bulletin
                           No.101, "Revenue Recognition in Financial
                           Statements", the Company has implemented a change in
                           its revenue recognition policy that has added
                           installation as a requirement for recognition of
                           direct sales of equipment. Previously, the Company
                           had recognized revenue upon shipment of equipment, as
                           installation being perfunctory, provided
                           collectibility is reasonably assured, future
                           obligations of the Company are considered
                           insignificant and the costs of such obligations can
                           be reasonably estimated. Under the new policy,
                           revenue on sales of equipment to customers is
                           recognized upon installation at the customer's site,
                           where applicable, provided collectibility is
                           reasonably assured, future obligations of the Company
                           are considered insignificant and the costs of such
                           obligations can be reasonably estimated. Sales of
                           equipment that do not initially meet the criteria for
                           recognition are recognized when all such criteria are
                           met.

                           The cumulative effect of the change as of January 1,
                           2000, recorded in the Statements of Operations for
                           the year 2000, was an increase of the net loss
                           amounted to $1,935,000.

                           The pro forma amounts presented in the Statements of
                           Operation were calculated assuming the change in the
                           accounting policy was made retroactively to all prior
                           periods.


                                      F-11

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

                           Revenue from sales to leasing companies for lease to
                           third party end-users is recognized according to the
                           policy of revenue recognition of equipment sales as
                           described above. In certain leasing transactions, the
                           leasing company is obligated to pay the Company an
                           additional amount in excess of the purchase price of
                           the equipment if the third party performs fully under
                           the leasing arrangement; such additional revenue is
                           recognized when realized.

                           Customer deposits and other payments received prior
                           to sales recognition are included in customer
                           advances and deferred revenue in the consolidated
                           balance sheets.

                     2)    Post-sales

                           Post-sales revenues include revenues from imaging
                           products, service and click charges. Revenues from
                           post-sale activities are generally recognized upon
                           shipment for products and usage for click charges.
                           Revenues from customer service contracts are
                           recognized ratably over the contract period or as
                           services are performed.

                     3)    License fees and royalties

                           Fees and royalties received on technology are
                           recognized in the periods in which the licenses are
                           granted, provided no future performance is required.

               j.    WARRANTY OBLIGATIONS

                     The Company provides a limited warranty for certain
                     manufacturing and material defects in certain equipment
                     sold. Estimated costs related to warranty obligations are
                     initially provided at the time sales of equipment are
                     recognized, and are revised to reflect any subsequent
                     changes in circumstances and estimates.

               k.    RESEARCH AND DEVELOPMENT

                     Research and development expenses are charged to income as
                     incurred. Participation from government departments for
                     development of approved projects is recognized as a
                     reduction of expense as the related cost is incurred (see
                     Notes 10b and 15).

               l.    ALLOWANCE FOR DOUBTFUL ACCOUNTS

                     The allowance for doubtful accounts is determined for
                     specific debts doubtful of collection. The expenses in
                     respect of bad debts and allowance for doubtful accounts
                     were approximately $ 1,301,000, $ 2,620,000 and $ 1,224,000
                     for the years ended December 31, 2000, 1999 and 1998,
                     respectively.

               m.    ADVERTISING COSTS

                     These costs are expensed as incurred.

               n.    INCOME TAXES

                     Deferred income taxes are recognized for the tax
                     consequences in future years of differences between the tax
                     bases of assets and liabilities and their financial
                     reporting amounts at each balance sheet date on the basis
                     of tax laws and statutory tax rates applicable to the
                     periods in which the differences are expected to affect
                     taxable income. Tax benefits related to stock issuance
                     costs and to the exercise of stock options, which are
                     attributable to the excess of the fair market value at the
                     date exercised over the fair market value at the date of
                     grant, are credited to equity. Valuation allowances are
                     established when necessary to reduce deferred tax assets to
                     the amounts expected to be realized.


                                      F-12

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):


               o.    COMPREHENSIVE LOSS


                     The Company presents its comprehensive loss in the
                     consolidated statements of changes in shareholders' equity.
                     In 1999 and 1998 there was no other comprehensive income or
                     loss items other than net loss.

               p.    TREASURY SHARES

                     Company's shares held by the Company are presented as a
                     reduction of shareholders' equity, at their cost to the
                     Company.

               q.    NET LOSS PER COMMON SHARE

                     Basic earnings per share (EPS) are based upon the weighted
                     average number of Common Shares outstanding during the
                     year. Since the basic EPS for the reported years represent
                     loss per share, the effect of including the incremental
                     common shares from assumed conversion of preferred shares
                     and exercise of stock options and warrants in EPS
                     computation is anti-dilutive and accordingly the basic and
                     diluted EPS are the same amount.

               r.    RECLASSIFICATION

                     Certain amounts in prior years' figures have been
                     reclassified to conform with the current year's
                     presentation.



NOTE 3 - SHORT-TERM DEPOSITS AND MARKETABLE SECURITIES:

<TABLE>
<CAPTION>
                                                                             DECEMBER 31                WEIGHTED AVERAGE
                                                                       ------------------------          INTEREST RATE AT
                                                                        2000             1999          DECEMBER 31, 2000
                                                                       ------           -------        ------------------
                                                                           (IN THOUSANDS)                      %
                                                                       ------------------------        ------------------
                                                                                                               -
<S>                                                                    <C>              <C>           <C>
     Term deposits mature within twelve months                         $ 41,611         $ 5,000               6.4
     Marketable securities - financial institutions
         debt securities due within twelve months                         5,644             245               6.4
                                                                        -------         -------
                                                                       $ 47,255         $ 5,245
                                                                        =======         =======
</TABLE>


                     Due to their short maturities, the fair value of the
                     marketable securities approximate their carrying value.


                                      F-13

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



NOTE 4 - ACCOUNTS RECEIVABLE - OTHER:

<TABLE>
<CAPTION>
                                                                               DECEMBER 31
                                                                         ----------------------
                                                                          2000            1999
                                                                         ------          ------
                                                                             (IN THOUSANDS)
                                                                         ----------------------
<S>                                                                       <C>           <C>
     Research and development grants                                      $ 849         $ 1,466
     Refundable value-added taxes                                         1,161           1,209
     Employee loans and advances                                            234             456
     Income tax receivable                                                    -             294
     Escrow account regarding Employee Stock
          Purchase Plan                                                     660               -
     Other                                                                  970             685
                                                                        -------         -------
                                                                        $ 3,874         $ 4,110
                                                                        =======         =======
</TABLE>



NOTE 5 - INVENTORIES:

<TABLE>
<CAPTION>
                                                                             DECEMBER 31
                                                                       ----------------------
                                                                        2000            1999
                                                                       ------          ------
                                                                           (IN THOUSANDS)
                                                                       ----------------------
<S>                                                                    <C>              <C>
     Raw materials                                                     $ 13,512         $ 9,566
     Products in process                                                 10,940           5,799
     Finished products                                                   23,324          13,171
                                                                       --------        --------
                                                                       $ 47,776        $ 28,536
                                                                       ========        ========
</TABLE>



NOTE 6 - PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
                                                                                  ACCUMULATED
                                                                                  DEPRECIATION                     DEPRECIATED
                                                     COST                       AND AMORTIZATION                     BALANCE
                                            -----------------------          ------------------------        ----------------------
                                                  DECEMBER 31                      DECEMBER 31                     DECEMBER 31
                                            -----------------------          ------------------------        ----------------------
                                             2000            1999             2000              1999          2000            1999
                                                            ------           ------            ------        ------          ------
                                                 (IN THOUSANDS)                   (IN THOUSANDS)                  (IN THOUSANDS)
                                            -----------------------          ------------------------        ---------------------
<S>                                         <C>             <C>              <C>             <C>             <C>            <C>
     Machinery and equipment*               $ 40,883        $ 42,194         $ 24,231        $ 27,472        $ 16,652       $ 14,722
     Vehicles                                      -              85                -              79               -              6
     Furniture and office
         equipment                             3,631           3,624            2,047           2,481           1,584          1,143
     Leasehold improvements                   11,688          10,307            6,903           6,668           4,785          3,639
                                             -------         -------          -------         -------         -------       --------
                                            $ 56,202        $ 56,210         $ 33,181        $ 36,700        $ 23,021       $ 19,510
                                             =======         =======          =======         =======        ========       ========
</TABLE>


                                      F-14

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 6 - PROPERTY AND EQUIPMENT (continued):



               Depreciation and amortization expense for the years ended
               December 31,2000, 1999, and 1998 was $6,230,000, $5,137,000 and
               $9,503,000, respectively. As of December 31, 2000, property and
               equipment of $ 7,814,000, which was still in use, was fully
               depreciated.


               *   The amount at December 31, 2000 and 1999 includes machinery
                   and equipment leased to others in a depreciated amount of
                   $1,277,000 and $695,000 respectively.

                   Future minimum rentals to be received in respect of leased
                   machinery and equipment, at rates in effect at December 31,
                   2000, are as follows:

                   Year ending December 31:

<TABLE>
<CAPTION>
                                               (IN THOUSANDS)
                                               --------------
<S>                                            <C>
                   2001                            $ 575
                   2002                              575
                   2003                              575
                   2004                              475
                   2005                              400
                                                  ------
                                                  $2,600
                                                  ======
</TABLE>



NOTE 7 - ACCRUED EXPENSES:

<TABLE>
<CAPTION>
                                                                     DECEMBER 31
                                                               -----------------------
                                                                 2000           1999
                                                               -------        --------
                                                                   (IN THOUSANDS)
<S>                                                            <C>            <C>
       Salaries and employee benefits                          $ 11,910       $ 8,567
       Warranty                                                   3,131         2,283
       Other equipment-related provisions                           511           161
       Recourse obligations                                         745           660
       Accrued royalties                                          3,695         2,321
       Value-added taxes payable                                  1,513         2,487
       Other                                                      9,476         8,025
                                                                -------       -------
                                                               $ 30,981      $ 24,504
                                                                =======       =======
</TABLE>


                                      F-15

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



NOTE 8 - SHORT-TERM LOANS:



               Short-term bank loans at December 31, 2000 amount to $ 5,428,000.

               In April 2000, the Company signed three independent agreements
               with the three major Israeli banks. The Company's bank
               facilities, provide for total advances up to $30 million, require
               to maintain financial covenants and the pledge of substantially
               all of the Company's assets as a collateral under those
               facilities. The facilities expire on March 31, 2001, the Company
               is negotiating its option to extend the facilities.


               Unutilized credit lines at December 31, 2000 aggregate $
               24,572,000. These credit lines are denominated in U.S. dollars
               and in Euro and bear interest at the rate of 7.3% and 5.7%,
               respectively.

               As of December 31, 2000, classified by currency of repayment,
               linkage terms and interest rates, the total amount of the loans
               is as follows:

<TABLE>
<CAPTION>
                                                           WEIGHTED AVERAGE               AMOUNT
                                                            INTEREST RATE              (IN THOUSANDS)
                                                            -------------              --------------
                                                                  %
                                                                  -
<S>                                                        <C>                         <C>
       In dollars                                                7.3                          $ 85
       In, or linked to, other currencies:
           Euro                                                  5.7                         5,326
           New Israeli Shekels (NIS)                             9.0                            17
                                                                                           -------
                                                                                           $ 5,428
                                                                                           =======
</TABLE>


NOTE 9  - EMPLOYEE RIGHTS UPON RETIREMENT:

               a.  LIABILITY FOR SEVERANCE PAY IN RESPECT OF ISRAELI EMPLOYEES

                   Israeli law generally requires payment of severance pay upon
                   dismissal of an employee or upon termination of employment in
                   certain other circumstances. The Company' severance pay
                   liability to its Israeli employees (one month's salary for
                   each year worked) is calculated based on the assumption of
                   full settlement at balance sheet dates, based upon the number
                   of years of service and the latest monthly salary. The
                   Company purchases insurance policies and deposits monies in
                   severance pay funds, managed by major Israeli banks, which
                   are earmarked as cover for this liability. The amounts funded
                   - $ 6,886,000 and $ 5,922,000, as of December 31, 2000 and
                   1999, respectively - are presented among the Company's
                   assets.

               b.  PENSION FOR RETIRING EMPLOYEES AND EARLY RETIREMENT

                   Certain European subsidiaries had defined benefit pension
                   plans for their employees, some of whom are no longer in the
                   employ of these subsidiaries. The plans included certain
                   disability, retirement and dependents' benefits. Generally,
                   the terms of the plans provided that the employees are
                   entitled to receive pension payments computed as a percentage
                   of their salary near retirement, based, inter alia, upon
                   number of years of service.

                   During 2000, the Company converted the defined benefit
                   pension plans to defined premium pension plans. As a result,
                   and according to SFAS 88, the net pension liability as of
                   December 31, 1999, which represented the present value of the
                   amounts due by the Company per actuary calculations, net of
                   amounts funded in respect thereof was released in 2000.


                                      F-16

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



NOTE 9  - EMPLOYEE RIGHTS UPON RETIREMENT (continued):

               c.    THE LIABILITY IS COMPOSED AS FOLLOWS:

<TABLE>
<CAPTION>
                                                                                      DECEMBER 31
                                                                                -----------------------
                                                                                 2000             1999
                                                                                ------           ------
                                                                                      (IN THOUSANDS)
                                                                                -----------------------
<S>                                                                             <C>               <C>
Liability for severance pay in respect of Israeli
      employees                                                                 $ 11,167          $ 8,540
                                                                                 -------          -------
Liability for pension and early retirement -
      projected benefit obligation, in respect of
      European employees                                                               -            3,471
L e s s - amounts funded - plan assets                                                 -            1,220
                                                                                 -------          -------
                                                                                       -          $ 2,251
                                                                                 -------          -------
                                                                                $ 11,167         $ 10,791
                                                                                 =======          =======
</TABLE>


               d.    THE CHANGES IN ACCRUED SEVERANCE PAY AND PENSION (NET) ARE
                     AS FOLLOWS:

<TABLE>
<CAPTION>
                                                                                      DECEMBER 31
                                                                                -----------------------
                                                                                 2000             1999
                                                                                ------           ------
                                                                                      (IN THOUSANDS)
                                                                                -----------------------
<S>                                                                             <C>               <C>
 Balance at beginning of year                                                   $ 10,791          $ 9,705
 Increase in liability                                                             3,325            2,041
 Decrease in pension liability, net (see b above)                                 (2,251)               -
 Changes in plan assets, net                                                           -             (758)
 Benefit paid                                                                       (698)            (197)
                                                                                 -------          -------
 Balance at end of year                                                         $ 11,167         $ 10,791
                                                                                 =======          =======
</TABLE>


               e.  COMPONENTS OF NET PERIODIC SEVERANCE PAY AND PENSION EXPENSE
                   WERE AS FOLLOWS:

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31
                                                                            2000            1999            1998
                                                                         ---------       ---------        ---------
                                                                                       (IN THOUSANDS)
                                                                         ------------------------------------------
<S>                                                                      <C>                 <C>          <C>
       In respect of pension:
           Service costs                                                         -            $ 603           $ 738
             Interest costs                                                      -              119             113
             Net amortization and deferral                                       -              (51)           (200)
             Settlement of the plan( see b above)                         $ (2,251)               -               -
             Other                                                               -             (348)            364
                                                                           -------          -------         -------
                                                                            (2,251)             323           1,015
       In respect of severance pay                                         $ 1,505          $ 1,513         $ 1,365
       In respect of defined premium pension                                 1,257                -               -
                                                                           -------          -------         -------
                                                                             $ 511          $ 1,836         $ 2,380
                                                                           =======          =======         =======
</TABLE>


                                      F-17

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 10 - COMMITMENTS AND CONTINGENCIES:

               a.  LEASE COMMITMENTS

                   The Company's facilities in the Netherlands are leased under
                   a non-cancelable operating lease expiring in 2005, with an
                   option to extend the lease until 2020 (the Company has the
                   option to sublease these premises under certain conditions).
                   In addition, the Company has entered into various other
                   operating leases, extending through 2004.

                   The property where the Company's research and development and
                   production facilities in Israel are located is leased under
                   non-cancelable operating leases expiring through 2008.

                   The Company also leases land in Israel under a non-cancelable
                   operating lease expiring 2040, with an option to extend the
                   lease until 2090. The annual commitment increases over the
                   term of the lease, with the average estimated annual
                   commitment approximating $541,500 as per the company's
                   estimate. This amount is currently in dispute with the lessor
                   as described in c. below.

                   The U.S. facility is leased under a non-cancelable operating
                   lease expiring in 2003, with an option to extend the lease
                   until 2008 (the Company has the option to sublease these
                   premises under certain conditions). In addition, the Company
                   has entered into various other operating leases, extending
                   through 2005.


                   The following is a schedule of future minimum rental payments
                   under non-cancelable operating leases (excluding option
                   periods) as of December 31, 2000:

<TABLE>
<CAPTION>
                                                                  (IN THOUSANDS)
                            ====================================================
<S>                                                               <C>
                            2001                                      $ 4,124
                            ====================================================
                            2002                                      $ 3,803
                            ====================================================
                            2003                                      $ 3,450
                            ====================================================
                            2004                                      $ 2,738
                            ====================================================
                            2005                                      $ 2,253
                            ====================================================
                            Thereafter (through 2040)                $ 24,629
                            ====================================================
</TABLE>


                   Rent expense, principally in connection with the above
                   leases, was approximately $ 3,936,000, $4,715,000, and
                   $5,121,000 for the years ended December 31, 2000, 1999 and
                   1998, respectively.

               b.  ROYALTY COMMITMENTS:

                   1)    The Company is committed to pay royalties to the
                         Government of Israel relating to research and
                         development and marketing grants, in which the
                         Government participates by way of grants. At the time,
                         the grants were received, successful development of the
                         related project was not assured. The royalty rate is
                         3%-3.5% of either 50% or 100% of sales of the products
                         (for research and development grants) and 3% of the
                         increase of total sales of certain products (for
                         marketing expenses), until the cumulative amount of the
                         royalties equals 100% of the grants received; as from
                         January 1, 1998 for research and development grants
                         with the addition of an annual interest rate based on
                         LIBOR. Repayment of such grants is not required in the
                         event that there are no sales of product with respect
                         to such grants. At December 31, 2000, the Company had
                         received and accrued cumulative grants, net of
                         royalties paid and accrued, of approximately $21
                         million.


                                      F-18

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



NOTE 10 - COMMITMENTS AND CONTINGENCIES (continued):

                   2)    In 1998, the Company renewed an agreement with a
                         software supplier, pursuant to which the Company pays
                         the supplier a royalty for each unit sold which
                         incorporates the supplier's products. This agreement is
                         for a term of three years expiring in December 2001.

                   3)    The Company is obligated to pay royalties to certain
                         parties, based on agreements which allow it to use
                         technologies developed by these parties. Such royalties
                         are based on the revenues from sales of products which
                         incorporate these technologies, or on quantities of
                         such products sold.

                         Total royalties paid to the Government of Israel, the
                         software supplier and certain parties for the years
                         ended December 31, 2000, 1999 and 1998 were $4,411,000
                         , $3,371,000 and $2,873,000 respectively.

               c.  LEGAL PROCEEDINGS

                   One of the Company's Israeli subsidiaries is party to a
                   dispute regarding the amount of rent payable pursuant to a
                   long-term lease for a tract of land adjacent to the Company's
                   manufacturing facilities in Nes-Ziona, Israel. The dispute
                   involves issues of contract interpretation and real estate
                   appraisal. In October 1999, the proceedings moved from
                   arbitration (which ended inconclusively) to the District
                   Court in Jerusalem. In January 2000, the District Court in
                   Jerusalem granted the Company's motion to remove the case to
                   the District Court in Tel Aviv, where several hearings
                   regarding the validity of the arbitrator's decision have been
                   held since April 2000.

                   In June 2000, the court characterized the arbitrator's
                   decision as problematic (in view of questions regarding
                   ostensible error by the arbitrator and issues of
                   interpretation), and in November 2000, the court granted the
                   Company's motion to present additional arguments in support
                   of the Company's position that the arbitrator's decision is
                   invalid. The parties submitted their respective arguments on
                   this issue to the court in writing in January 2001, and oral
                   arguments are scheduled for March 2001. Efforts to resolve
                   the dispute through mediation commenced in July 2000 and were
                   discontinued in November 2000, at which time direct
                   settlement discussions were renewed. Such discussions were
                   suspended in February 2001. In the event that the parties are
                   unable to resolve the dispute amicably, the Company intends
                   to continue to defend the claim vigorously, as management
                   believes that the amount of rent sought by the landlord is
                   unreasonable and not supported by the terms of the lease.

               FOUR.      PLEDGES OF THE COMPANY'S ASSETS

                    In connection with the pledges granted, see Note 8.


                                      F-19

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 11 - RESTRUCTURING CHARGES:


                 In December 1998, the Company announced senior management
restructuring, resulting in severance pay costs of $ 2,764,000.

                 The restructuring charges for the year ended December 31, 1998
consisted of:

<TABLE>
<CAPTION>
                                                                             1998
                                                                        -------------
                                                                        (IN THOUSANDS)
                                                                        -------------
<S>                                                                     <C>
Severance pay and other employee-related costs                             $ 2,006
Abandonment of premises                                                        292
Other                                                                          466
                                                                          --------
                                                                           $ 2,764
                                                                          ========
</TABLE>


                 In 1999, the Company paid $2,473,000 in respect of the
                 abovementioned restructuring charges. As of December 31, 1999,
                 there were no remaining unpaid amounts with respect to the
                 restructuring in 1998.


NOTE 12 - INCOME TAXES:

                 The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31
                                                                         ------------------------------------------
                                                                           2000             1999              1998
                                                                         -------          -------           -------
                                                                                        (IN THOUSANDS)
<S>                                                                       <C>                 <C>         <C>
Domestic - current                                                                                        $    63
Foreign:
   Current                                                                $1,097              $ 548         2,799
   Benefit of net operating losses carried forward                                                           (243)
   Deferred                                                                                     191          (191)
                                                                         -------            -------       -------
Total                                                                     $1,097              $ 739       $ 2,428
                                                                         =======            =======       =======
</TABLE>

                   Income taxes include taxes on income reported by the Company
                   to the respective taxing jurisdictions, mainly due on taxable
                   income in the European branches. Income taxes also include
                   withholding taxes due on income earned by Indigo N.V. from
                   both third parties and subsidiaries of Indigo N.V.

                   Domestic provision for income tax reflects the provision of
                   Indigo N.V. for Dutch taxes. The foreign provision includes
                   the provision for taxes due to taxing authorities in the
                   United States, Israel, Japan, Europe (other than The
                   Netherlands) and other jurisdictions.


                                      F-20

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



NOTE 12 - INCOME TAXES (continued):

                   Income (loss) before taxes is as follows:

<TABLE>
<CAPTION>
                                                                           YEAR ENDED DECEMBER 31
                                                                  ------------------------------------------
                                                                     2000              1999           1998
                                                                  ---------         ---------      ---------
                                                                                  (IN THOUSANDS)
<S>                                                               <C>              <C>            <C>
     Domestic                                                       $2,953           $ 6,473       *$11,826
     Foreign                                                       (11,491)           (7,106)       (14,469)
                                                                   -------           -------        -------
     Total                                                         $(8,538)          $  (633)       $ (2,643)
                                                                   =======           =======        =======
</TABLE>


                            *      Represents tax exempt income.


              Domestic income includes income of Indigo N.V. and its European
              branches. The foreign loss includes the loss of all the other
              entities in the group.

              Income taxes at the effective rate differ from the statutory rate
              of 35% in The Netherlands because certain income taxes are based
              on amounts other than income before income taxes, foreign tax
              rates vary and net operating losses from certain subsidiaries are
              not deductible (see Note 12a for further discussion).



              Deferred income taxes comprise the following:

<TABLE>
<CAPTION>
                                                                                       DECEMBER 31
                                                                        --------------------------------------
                                                                          2000           1999             1998
                                                                        -------        -------          -------
                                                                                   (IN THOUSANDS)
DOMESTIC -
<S>                                                                     <C>            <C>              <C>
   net operating loss and tax credit carryforwards*                     $6,096          $6,187           $6,679
FOREIGN:
   Net operating loss carryforwards*                                       856           1,187            1,251
   Accrued expenses                                                         79             538              960
   Allowance for doubtful accounts                                         683             508              511
                                                                       -------         -------          -------
                                                                         7,714           8,420            9,401
Valuation allowances                                                    (7,714)         (8,420)          (9,401)
                                                                       -------         -------          -------
Net deferred tax                                                      $    -,-         $   -,-          $   -,-
                                                                       =======         =======          =======
</TABLE>



*      Deferred income tax does not include net operating losses that will be
       credited to additional paid in capital when realized, see also a. and c.
       below.


                                      F-21

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 12 - INCOME TAXES (continued):


                     SPECIFIC INFORMATION REGARDING INDIGO N.V. AND ITS
                     SUBSIDIARIES:

                     a.     INDIGO N.V.

                            Dutch companies are subject to a corporate tax in
                            The Netherlands at a rate of 35% (37% for the first
                            NLG 100,000 of taxable income) on profits realized
                            less deductible expenses. However, the effective tax
                            rate payable by Indigo N.V. is considerably less.
                            Under Dutch tax law, Indigo N.V. is not subject to
                            tax on dividends and gains arising from qualifying
                            share ownership in any of its subsidiaries that are
                            subject to a profit tax at a national level. Under a
                            ruling effective January 1, 1994, for Dutch tax
                            purposes, Indigo N.V.'s intangibles were revalued
                            and capitalized and amortized as a percentage of
                            royalties received. The capitalization and
                            amortization method was approved by the Dutch tax
                            inspectorate. Based on Dutch tax law and tax
                            treaties that The Netherlands has concluded with
                            various countries, Indigo N.V. may credit
                            withholding tax due in foreign jurisdictions against
                            its Dutch tax liability on such royalties.

                            Pursuant to the above ruling, the Company was
                            required to make a one-time payment of approximately
                            $3.8 million, to be expensed over the period of the
                            tax benefits. The balance as of December 31, 2000
                            and 1999 was $1,092,000 and $1,456,000,
                            respectively, net of accumulated amortization of
                            $2,686,000 and $2,321,000, respectively. The
                            balances are presented as other assets in the
                            Company's consolidated balance sheets.

                            Indigo N.V. has tax credit carryforwards of
                            approximately $3.5 million and net operating losses
                            of approximately $38.6 million (out of which $31.3
                            million will be recorded as a credit to additional
                            paid-in-capital when realized) in The Netherlands.
                            There are no net operating losses in other European
                            countries available for carryforward to future
                            years. The Dutch net operating losses and tax
                            credits may be carried forward indefinitely. The
                            utilization of these tax credit carryforwards may be
                            subject to certain limitations under Dutch tax law.
                            Indigo N.V has received final tax assessments
                            through the 1994 tax year.

                     B.     ISRAELI SUBSIDIARIES

                            The Israeli subsidiaries have net operating losses
                            of approximately $ 176 million incurred through
                            December 31, 2000, available for loss carryforward
                            indefinitely. The Israeli subsidiaries have received
                            final tax assessments through the 1994 tax year.

                            The Company's main production facility (the
                            "production facility") has been granted "Approved
                            Enterprise" status under the Israeli Law for the
                            Encouragement of Capital Investments, 1959 (the
                            "Investment Law"). Income derived from the
                            production facility's Approved Enterprise is tax
                            exempt during the first four years of the tax
                            benefit period, beginning from the first year of
                            taxable income, which is determined after
                            utilization of the above mentioned carryforward
                            losses, and is subject to a reduced tax rate
                            thereafter until 2010. Such status is conditioned
                            upon the portion of foreign investment remaining
                            above 74%; otherwise, the reduced rate will not be
                            available beyond the year 2005. The reduced tax
                            rates are determined each tax year during the period
                            of benefit on the basis of the portion of foreign
                            investment, as follows:

<TABLE>
<CAPTION>
                PERCENTAGE OF                              REDUCED TAX
              FOREIGN INVESTMENT                             RATE (%)
   -----------------------------------------------------------------------
<S>                                                        <C>
   Over 90                                                      10
   74 to 90                                                     15
   49 to 74                                                     20
   Less than 49                                                 25
</TABLE>


                                      F-22

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



NOTE 12 - INCOME TAXES (continued):

                       The eligibility for the reduced tax rates is also subject
                       to the fulfillment of certain conditions stipulated by
                       law and the above-mentioned approval.

                       In the event of distribution of cash dividends from
                       income which is tax exempt as described above, the
                       Company would be required to pay tax at a reduced rate
                       (according to the portion of foreign investment) on an
                       amount equal to the total of the amount distributed plus
                       the corporate tax thereon in addition to any withholding
                       taxes applicable.

                       Should the Israeli subsidiaries derive income from
                       sources other than the Approved Enterprise, such income
                       will be taxable at the regular corporate tax rate of 36%.


                   c.  U.S. SUBSIDIARIES

                       The U.S. subsidiaries are taxed based upon tax laws in
                       the United States. The U.S. subsidiaries have net
                       operating losses of approximately $6.4 million (including
                       $4.3 million, which will be recorded as a credit to
                       additional paid-in-capital when realized) incurred
                       through December 31, 2000, available for carryforward to
                       future years. These net operating losses expire in the
                       years 2011 through 2019.


                   d.  ISRAELI TAX RULING

                       Under Israeli law, entities located outside of Israel
                       might, if they are managed and controlled in Israel or by
                       an Israeli resident, be subject to tax in Israel on their
                       income. The Israeli income tax authority has determined,
                       pursuant to a ruling (the "Israeli Tax Ruling") dated
                       January 26, 1993 and amended on January 4, 1994, that the
                       taxable income from the largest shareholder's non-Israeli
                       assets (which include Indigo N.V. and its subsidiaries
                       outside of Israel) be quantified and limited to a
                       management fee to be received in Israel of between
                       $200,000 and $500,000 per annum, which relates to the
                       management and control over such companies and assets by
                       members of the largest shareholder (the "Landa Family
                       Trust"). Because the Israeli Tax Ruling results in a
                       benefit to the Company in defining and limiting its
                       potential Israeli tax liability, the Company has agreed
                       to pay two thirds of the tax liability and the primary
                       shareholder has agreed to pay the remaining one third.
                       The Israeli Tax Ruling further provides that (i) the
                       Landa Family Trust will not be deemed an Israeli resident
                       for purposes of Israeli income tax, even if certain
                       members of the Landa Family, who are beneficiaries under
                       the Landa Family Trust, reside, or may reside, in Israel,
                       and (ii) investments by the Landa Family Trust will be
                       considered foreign for purposes of Israel's incentive
                       laws. Although the Israeli Tax Ruling is not legally
                       binding on the Israeli tax authorities, the Company,
                       after consulting with legal counsel, believes that it
                       will be honored.


                                      F-23

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



NOTE 13 - SHAREHOLDERS' EQUITY:

                     a.     The Company's Common Shares are traded on NASDAQ.

                            At December 31, 2000, the Company's shares were
                            quoted at $ 3.625.

                     b.     HEWLETT PACKARD TRANSACTION

                            In September 2000, Hewlett-Packard Company ("HP")
                            made a $100 million investment in the Company for
                            which they received 14,814,814 Common Shares. In
                            addition, HP received an acquisition warrant to
                            purchase an additional 14,814,814 Common Shares at a
                            price of $6.75 per share, in the event that it
                            acquires substantially all of the outstanding stock
                            of the Company. The number of Common Shares
                            purchasable pursuant to this warrant shall be
                            reduced by the number of Common Shares issuable upon
                            exercise of any performance warrant as described
                            below. The acquisition warrant expires in October
                            2004. No value was attributed to the acquisition
                            warrant, due to immateriality. HP also received a
                            performance warrant to purchase up to 12 million
                            Common Shares at a price of $6.75 per share. The
                            performance warrant vests at the rate of 2 million
                            shares for every $100 million of revenue that the
                            Company receives from HP and the vesting period
                            expires in October 2006. The vested portion of the
                            warrant expires at the earlier of three years from
                            the vesting date or October 2008. Based on the minor
                            volume of sales to HP, for the period until December
                            31, 2000, no entry was recorded in respect with the
                            performance warrant.

                            Simultaneously with the equity investment, HP and
                            the Company also entered into agreements for the
                            joint development of products and the sale by HP, as
                            an OEM, of presses manufactured by the Company.

                     c.     SERIES A CONVERTIBLE PREFERRED SHARES

                            In 2000, all the 6,758,637 outstanding Series A
                            Preferred Shares were converted to 6,758,637 Common
                            Shares. 3,460,797 Common Shares were issued as share
                            dividend to the shareholders of the Series A
                            Preferred Shares, in accordance with the original
                            terms of the Preferred Shares. An additional
                            8,602,947 Common Shares were issued as an inducement
                            for an accelerated conversion of the Preferred
                            Shares into Common Shares. Of the 12,063,744 Common
                            Shares issued, as share dividend and inducement,
                            2,751,032 Common Shares were purchased back by the
                            Company at total cost of $20 million.


                                      F-24

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)



NOTE 13 - SHAREHOLDERS' EQUITY (continued):

                     d.     CLASS ACTION LAWSUITS

                            Effective April 7, 1998, the Company settled all the
                            federal securities class action lawsuits that were
                            filed in the last half of 1995 against Indigo and
                            certain of its officers and directors. The
                            settlement provided for a cash payment of $ 3.35
                            million (of which $ 2.6 million was covered by the
                            Company's director and officer liability insurance)
                            and the issuance of warrants to purchase 2,000,000
                            Common Shares. The warrants have a term of 2.5 years
                            from the date of issuance and will have an exercise
                            price of $ 7.50 per warrant. The Company recorded,
                            in the second quarter of 1996, a charge of $ 6.8
                            million, of which a substantial portion related to
                            the issuance of warrants. Upon the removal of all
                            contingencies related to the settlement during the
                            second quarter of 1998, the Company recorded, in
                            shareholders' equity and in the consolidated
                            statement of operations, a benefit of $ 1.2 million
                            as an adjustment to the original charge, reflecting
                            the reduced valuation of the warrants as of April 7,
                            1998. The warrants were issued in April 1999.

                     e.     WARRANTS:

                            1)     At December 31, 2000, the Company had
                                   outstanding warrants as follows:

<TABLE>
<CAPTION>
                                              NUMBER OF      EXERCISE       EXPIRY
                                              WARRANTS        PRICE         DATE
                                             ----------      -------     ------------
<S>                                        <C>              <C>        <C>
Series A warrants                            3,917,999        $7.00      June 5, 2003
Series C warrants                            1,926,667        $6.30      April 3, 2004
Litigation warrants                          2,000,000        $7.50      October 20, 2001
Acquisition warrants                        14,814,814        $6.75      September 13, 2004
Performance warrants                        12,000,000        $6.75      September 13, 2006
</TABLE>

                     All of the abovementioned warrants are exercisable into
                     Common Shares, at the ratio of one warrant to one Common
                     Share. The rights of the Common Shares obtained upon
                     exercise of the warrants will be identical to those of the
                     other Common Shares of the Company.

              2)     During 2000, 511,000 series D warrants were exercised into
                     511,000 Common Shares, for net proceeds of $1.5 million.

              3)     As to stock options granted to employees, see f. below.

              4)     The number of Common Shares purchasable pursuant to the
                     acquisition warrants shall be reduced by the number of
                     Common Shares issuable upon exercise of any performance
                     warrant.


                                      F-25

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 13 - SHAREHOLDERS' EQUITY (continued):

              f.     EMPLOYEE STOCK COMPENSATION PLANS:

                     1)     Stock incentive plan

                            The Company adopted a flexible stock incentive plan
                            that provides for grants of options to employees and
                            directors (the plan was originally adopted in 1993
                            and was expanded in 1996).

                            Service Options for the 1996 Plan vest over a four
                            year period. The terms of the options are ten years,
                            or five years for options granted to European
                            employees. An option holder is to receive one Common
                            Share for each option exercised. The rights of the
                            Common Shares received upon exercise of the options
                            will be identical to those of the other Common
                            Shares of the Company.


                     A SUMMARY OF THE STATUS OF THE COMPANY'S STOCK OPTION PLANS
                     GRANTED AS OF DECEMBER 31, 2000, 1999, AND 1998, AND
                     CHANGES DURING THE YEARS ENDING ON THOSE DATES, ARE
                     PRESENTED BELOW:

<TABLE>
<CAPTION>
                                           NUMBER OF       WEIGHTED AVERAGE
                                            OPTIONS        EXERCISE PRICE
                                         ------------    ------------------
<S>                                      <C>             <C>
Outstanding at January 1, 1998 (*)         7,306,738        $4.54
Granted - at market value                  2,234,000        $2.20
Exercised                                   (134,188)       $0.87
Canceled                                    (733,149)       $5.70
                                         -----------        -----
Outstanding at January 1, 1999             8,673,401        $2.71
Granted - at market value                  3,165,000        $3.11
Exercised                                   (177,167)       $0.99
Canceled                                    (488,950)       $2.68
                                         -----------        -----
Outstanding at January 1, 2000            11,172,284        $2.82
Granted - at market value                  1,416,000        $5.79
Exercised                                   (996,975)       $1.51
Canceled                                    (421,944)       $2.77
                                         -----------        -----
Outstanding at December 31, 2000          11,169,365        $3.35
                                         ===========        =====
</TABLE>



                     At December 31, 2000, 847,958 options are available for
                     future grant.

       (*)    On October 22, 1998, 2,953,264 stock options that had an exercise
              price that exceeded $2.02 were repriced to $2.02 which was the
              market price of the Company's shares at such date. The repricing
              was subject to the optionee remaining an employee of the Company
              until December 31, 1999.


                                      F-26

<PAGE>

                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 13 - SHAREHOLDERS' EQUITY (continued):


                  The following table summarizes information about stock options
                  outstanding at December 31, 2000:


<TABLE>
<CAPTION>
                                                          WEIGHTED AVERAGE
                                                             REMAINING
                             NUMBER OUTSTANDING AT      CONTRACTUAL LIFE IN
     EXERCISE PRICES           DECEMBER 31, 2000               YEARS
     ---------------           -----------------               -----
<S>                          <C>                        <C>
        $   0.87             1,895,771                  2.83
        $   2.02             2,041,214                  5.83
        $   2.06             1,610,750                  7.84
        $   2.63             156,000                    8.78
        $   3.13             2,719,000                  8.74
        $   3.19             82,500                     9.01
        $   3.50             15,000                     8.48
        $   4.06             55,000                     9.08
        $   4.13             600                        7.00
        $   4.88             530,017                    4.84
        $   5.25             32,000                     9.83
        $   5.50             9,832                      4.57
        $   5.63             15,000                     9.40
        $   5.75             22,500                     7.48
        $   5.81             25,000                     9.50
        $   5.94             25,000                     9.77
        $   6.00             810,000                    9.17
        $   6.25             98,750                     8.90
        $   6.31             15,000                     9.49
        $   6.38             268,000                    9.66
        $   6.63             24,900                     6.72
        $   6.94             9,000                      6.72
        $  10.50             451,000                    4.93
        $  12.13             71,645                     5.48
        $  12.25             168,562                    3.90
        $  13.38             4,646                      3.53
        $  13.50             654                        4.01
        $  15.00             1,000                      3.97
        $  17.78             2,238                      4.06
        $  20.00             5,795                      3.39
        $  45.75             2,991                      4.36
                             ----------
                             11,169,365
                             ==========
</TABLE>


                                      F-27

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 13 - SHAREHOLDERS' EQUITY (continued):


                  The following table summarizes information about stock options
                  exercisable at December 31, 2000:

<TABLE>
<CAPTION>
                         NUMBER OF OPTIONS
                          EXERCISABLE AT
     EXERCISE PRICES     DECEMBER 31, 2000
     ---------------     -----------------
<S>                      <C>
        $   0.87             1,895,771
        $   2.02             807,774
        $   2.06             378,250
        $   2.63             39,000
        $   3.13             666,250
        $   3.50             3,000
        $   4.13             600
        $   4.88             514,017
        $   5.50             9,832
        $   5.75             9,000
        $   6.00             28,000
        $   6.25             13,500
        $   6.63             28,830
        $   6.94             6,000
        $  10.50             451,000
        $  12.13             51,810
        $  12.25             164,676
        $  13.38             4,646
        $  13.50             654
        $  15.00             1,000
        $  17.78             2,238
        $  20.00             5,795
        $  45.75             2,991
                             ---------
                             5,084,634
                             =========
</TABLE>

                  Total compensation expense for the year ended December 31,
                  1998 was $841,000. No compensation expenses were recognized
                  for the years ended December 31, 2000 and 1999.

         2)       Employee Share Purchase Plan

                  In 1994, the Company implemented the 1994 United States
                  Employee Share Purchase Plan enabling employees in the United
                  States to subscribe to Common Shares on certain offering
                  dates. The first exercise date was March 31, 1995. In the
                  second quarter of 1995, the Company expanded its Employee
                  Share Purchase Plan to substantially all the employees of the
                  Company worldwide through the implementation of the 1994
                  Netherlands Employee Share Purchase Plan and the 1994 Israel
                  Employee Share Purchase Plan. The purchase price of each share
                  is the lesser of 85% of its fair market value on the grant
                  date or on the date the share is purchased.


                                      F-28

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 13 - SHAREHOLDERS' EQUITY (continued):


                  The Company reserved 2,400,000 Common Shares for issuance
                  pursuant to the plan, of which 518,180 Common Shares were not
                  yet issued at December 31, 2000.

                  In accordance with Accounting Principles Board Opinion No. 25
                  "Accounting for Stock Issued to Employees" ("APB 25"), no
                  compensation has been recorded for purchases under the plan.

         3)       Accounting treatment

                  As permitted by SFAS 123, the Company accounts for its plans
                  using the treatment prescribed by APB 25. Under APB 25,
                  compensation cost for employee stock option plans is measured
                  using the intrinsic value based method of accounting.

                  Had compensation cost for the Company's stock compensation
                  plans been determined based on the fair market value at the
                  grant dates for awards granted as from 1995, as calculated in
                  accordance with SFAS 123, the Company's net loss and loss per
                  share for the years ended December 31, 2000, 1999 and 1998
                  would have increased to the pro forma amounts below:


                  NET LOSS APPLICABLE TO COMMON SHARES (IN THOUSANDS, EXCEPT
                  LOSS PER SHARE):

<TABLE>
<CAPTION>
                                               YEAR ENDED DECEMBER 31
                                               ----------------------
                                          2000           1999           1998
                                          ----           ----           ----
<S>                                    <C>            <C>            <C>
As reported:
     Before cumulative effect
         of an accounting change       $(77,113)      $(12,470)      $(16,032)
     Cumulative effect of an
         accounting change               (1,935)
                                       --------       --------       --------
     After cumulative effect of
         an accounting change          $(79,048)      $(12,470)      $(16,032)
                                       ========       ========       ========
Pro forma (to reflect the
     Provisions of SFAS 123):
     Before cumulative effect of
         an accounting change          $(82,914)      $(20,440)      $(26,027)
     Cumulative effect of an
         accounting change               (1,935)
                                       --------       --------       --------
     After cumulative effect of
             an accounting change      $(84,849)      $(20,440)      $(26,027)
                                       ========       ========       ========
</TABLE>


                                      F-29

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 13 - SHAREHOLDERS' EQUITY (continued):


<TABLE>
<CAPTION>
                                                        YEAR ENDED DECEMBER 31
                                                        ----------------------
                                                  2000           1999           1998
                                                  ----           ----           ----
<S>                                    <C>            <C>            <C>
BASIC AND DILUTED LOSS PER SHARE:
         As reported:
              Before cumulative effect
                  of an accounting change          (0.90)         (0.16)         (0.22)
              Cumulative effect of an
                  accounting change                (0.03)
                                                --------       --------       --------
              After cumulative effect of
                  an accounting change          $  (0.93)      $  (0.16)      $  (0.22)
                                                ========       ========       ========
         Pro forma (to reflect the
              Provisions of SFAS 123):
              Before cumulative effect of
                  an accounting change             (0.96)         (0.26)         (0.36)
              Cumulative effect of an
                  accounting change                (0.03)
                                                --------       --------       --------
              After cumulative effect of
                  an accounting change          $  (0.99)      $  (0.26)      $  (0.36)
                                                ========       ========       ========
</TABLE>

                  The weighted average fair value of the options at their grant
                  dates was $4.16, $2.15 and $1.76, for 2000, 1999 and 1998,
                  respectively.

                  The fair market value of each grant is estimated on the date
                  of grant, using the Black-Scholes option-pricing model with
                  the following weighted-average assumptions:



<TABLE>
<CAPTION>
                                       2000           1999              1998
                                       ----           ----              ----
<S>                                 <C>             <C>               <C>
Expected life                       5.2 years       5.2 years         5.2 Years
Expected volatility                    85%             80%               80%
Dividend yield                         None           None              None
Risk free interest rate                6.5%           6.0%              4.7%
</TABLE>


                                      F-30

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 14 - RELATED PARTIES

                  A director of the Company is a senior partner in a law firm in
                  Europe, which provided services to the Company. In this
                  connection, the law firm earned approximately $3,000, $26,000
                  and $10,000 in 2000, 1999 and 1998 respectively.

                  The Company incurred remuneration and reimbursement expenses
                  of $375,000 , $345,000 and $371,000 in 2000, 1999 and 1998,
                  respectively, for directors who are not employees of the
                  Company.

                  In 2000, 1999 and 1998, the Company granted 30,000, 171,000,
                  and 67,500 stock options, respectively, to directors who are
                  not employees. The stock options entitle the directors to
                  purchase Common Shares at the fair market value as of the date
                  of the grant. The stock options vest in accordance with the
                  1996 Plan (see Note 13).

                  In 2000, the Company had sales to a major shareholder amounted
                  to $ 1,227,000, which were carried out in the ordinary course
                  of business at terms that do not differ from other customers.
                  In addition the Company received $5 million from the major
                  shareholder as an advance for mutual future research and
                  development projects



                  As to arrangement with largest shareholder of the Company, see
                  note 12d.


NOTE 15 - RESEARCH AND DEVELOPMENT EXPENSE



                  Research and development expense for the years ended December
                  31 consisted of:

<TABLE>
<CAPTION>
                                                   2000         1999          1998
                                                   ----         ----          ----
                                                            (IN THOUSANDS)
<S>                                             <C>          <C>            <C>
Salaries and employee benefits                  $  12,622    $  10,168      $ 10,958
Materials consumed and subcontracted work           5,974        5,838         5,783
General, administrative and other expenses          3,820        2,907         2,502
Depreciation and amortization                       2,025        1,447         1,806
                                                 --------     --------       -------
                                                   24,441       20,360        21,049
Participation grants (Note 10b)                    (4,907)      (6,200)       (4,367)
                                                 --------     --------       -------
                                                $  19,534    $  14,160      $ 16,682
                                                  =======      =======       =======
</TABLE>


                                      F-31

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 16 - SEGMENT INFORMATION

                  The Company has two reportable segments: equipment and
                  post-sales. The equipment segment produces printing presses
                  used in the production of on-demand, short-run color digitally
                  printed products. The post-sales segment includes producing
                  imaging products and service products that are consumed by the
                  equipment sold, and services provided.

                  The accounting policies of the segments are the same as those
                  described in the summary of significant accounting policies.
                  The company does not allocate assets other than inventories to
                  segments. The Company evaluates performance based on gross
                  margin (which include revenues from equipment and revenues
                  from post-sales, less cost of equipment and cost of
                  post-sales).


                  SEGMENT REVENUES, GROSS MARGINS AND ASSETS FOR THE YEAR ENDED
                  DECEMBER 31, 2000:



<TABLE>
<CAPTION>
                                  EQUIPMENT     POST-SALES      TOTAL
                                  ---------     ----------      -----
                                              (IN THOUSANDS)
                                              --------------
<S>                               <C>           <C>           <C>
Revenues                          $ 95,349      $ 69,370      $164,719

Gross margin                        41,662        39,399        81,061

Segment assets - inventories      $ 35,900      $ 11,876      $ 47,776
</TABLE>


                  SEGMENT REVENUES, GROSS MARGINS AND ASSETS FOR THE YEAR ENDED
                  DECEMBER 31, 1999:

<TABLE>
<CAPTION>
                                  EQUIPMENT    POST-SALES      TOTAL
                                  ---------    ----------      -----
                                              (IN THOUSANDS)
                                              --------------
<S>                               <C>           <C>           <C>
Revenues                          $ 78,742      $ 61,962      $140,704

Gross margin                        33,900        32,160        66,060

Segment assets - inventories      $ 19,480      $  9,056      $ 28,536
</TABLE>


                                      F-32

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 16 - SEGMENT INFORMATION (continued):

                  SEGMENT REVENUES AND GROSS MARGINS AND ASSETS FOR THE YEAR
                  ENDED DECEMBER 31, 1998:



<TABLE>
<CAPTION>
                                           EQUIPMENT      POST-SALES          TOTAL
                                           ---------      ----------          -----
                                                        (IN THOUSANDS)
                                                        --------------
<S>                                        <C>            <C>               <C>
Revenues                                    $ 79,027        $58,010          $137,037

Gross margin                                  40,804         25,196            66,000

Segments assets - inventories               $ 23,834        $ 7,637          $ 31,471
</TABLE>

                  RECONCILIATION OF SEGMENT REVENUES, LOSS BEFORE PROVISION FOR
                  INCOME TAXES AND ASSETS TO THE COMPANY'S CONSOLIDATED TOTALS
                  FOR THE YEARS ENDED DECEMBER 31:

<TABLE>
<CAPTION>
                                                  2000           1999            1998
                                                  ----           ----            ----
                                                             (IN THOUSANDS)
                                                             --------------
<S>                                            <C>             <C>             <C>
REVENUES:
   Total revenues for reportable segments      $ 164,719       $ 140,704       $ 137,037
   License fees and royalties                         89           4,328          10,335
                                               ---------       ---------       ---------
      Total consolidated revenues              $ 164,808       $ 145,032       $ 147,372
                                               ---------       ---------       ---------
LOSS BEFORE PROVISION FOR INCOME TAXES:
   Total gross margin of reportable
     segments                                  $  81,061       $  66,060       $  66,000
   License fees and royalties                         89           4,328          10,335
   Research and development, net                 (19,534)        (14,160)        (16,682)
   Selling, general, and administrative          (71,927)        (57,596)        (61,549)
   Restructuring charges                                                          (2,764)
   Litigation settlement                                                           1,200
                                               ---------       ---------       ---------
   Operating loss                                (10,311)         (1,368)         (3,460)
   Interest expense                               (1,240)         (1,671)         (2,641)
   Interest and other income, net                  3,013           2,406           3,458
                                               ---------       ---------       ---------
   Consolidated loss before provision for
     income taxes                              $  (8,538)      $    (633)      $  (2,643)
                                               ---------       ---------       ---------
ASSETS:
   Total inventories for reportable
      Segments                                 $  47,776       $  28,536       $  31,471
   Other assets                                  169,004         112,102         100,796
                                               ---------       ---------       ---------
      Total consolidated assets                $ 216,780       $ 140,638       $ 132,267
                                               =========       =========       =========
</TABLE>


                                      F-33

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 16 - SEGMENT INFORMATION (continued):



                  GEOGRAPHIC INFORMATION

                  Geographic revenues, long-lived assets and major customers as
                  of and for the year ended December 31 consisted of:


<TABLE>
<CAPTION>
                                             2000          1999          1998
                                             ----          ----          ----
                                                      (IN THOUSANDS)
                                                      --------------
<S>                                        <C>           <C>           <C>
REVENUE:
    Equipment and post sales revenue:
       Europe                              $ 75,783      $ 70,807      $ 68,621
       United States                         71,073        48,358        46,872
       Japan                                  9,208        15,520        15,537
       Other                                  8,655         6,019         6,007
    License fees and royalties -
       Japan                                     89         4,328        10,335
                                           --------      --------      --------
                                           $164,808      $145,032      $147,372
                                           ========      ========      ========
</TABLE>

                  Revenue is attributed to geographic areas based on the
                  location of the customers. The sales in The Netherlands, the
                  Company's country of domicile, are immaterial.

<TABLE>
<CAPTION>
                                              2000         1999        1998
                                              ----         ----        ----
                                                      (IN THOUSANDS)
<S>                                         <C>          <C>          <C>
LONG-LIVED ASSETS, NET OF DEPRECIATION
    AND AMORTIZATION:
    The Netherlands                         $ 1,528      $ 1,521      $ 1,500
    Europe                                    2,478        1,467        1,198
    United States                             4,494        2,658        2,650
    Israel                                   14,521       13,864       12,088
                                            -------      -------      -------
                                            $23,021      $19,510      $17,436
                                            =======      =======      =======
</TABLE>


<TABLE>
<CAPTION>
                                        2000       1999        1998
                                        ----       ----        ----
                                              (IN THOUSANDS)
                                              --------------
<S>                                     <C>      <C>          <C>
MAJOR CUSTOMERS:
    Equipment and post sales to
       distributor - see Note 1                  $15,520      $15,377
                                                 =======      =======
</TABLE>


                                      F-34

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 17 - FINANCIAL INSTRUMENTS:

             A.   MONETARY BALANCES IN NON-U.S. DOLLAR CURRENCIES AS OF DECEMBER
                  31, 2000:


<TABLE>
<CAPTION>
                                                                         OTHER
                                                          ISRAELI    NON-U.S. DOLLAR
                                                          CURRENCY     CURRENCIES *
                                                          --------     ------------
                                                              (IN THOUSANDS)
                                                              --------------
<S>                                                       <C>       <C>
CURRENT ASSETS:
  Cash and cash equivalents                                $   321       $ 5,596
  Marketable securities                                    $    68
  Accounts receivable                                      $ 2,919       $25,281
CURRENT LIABILITIES:
  Loans payable, short-term                                $    16       $ 5,326
  Accounts payable, accrued expense and taxes payable      $23,734       $ 5,974
</TABLE>

                  * Primarily in German marks, Euro, Dutch guilders and Pounds
                  Sterling.


             B.   FAIR VALUE OF FINANCIAL INSTRUMENTS

                  The Company's financial instruments comprise cash and cash
                  equivalents, restricted cash, short-term deposits, marketable
                  securities, accounts receivable, investments, accounts
                  payable, accrued expenses, loans payable, other liabilities,
                  forward exchange contracts and purchased currency options.

                  In view of their nature, the fair value of the financial
                  instruments included in the working capital of the Company,
                  not including short-term loans payable, is usually identical
                  or close to their carrying value.

                  The estimated fair value and the carrying value of accounts
                  receivable - long-term at December 31, 2000 is $ 1,602,000 and
                  $ 1,848,000 respectively. The estimated fair value is based on
                  the present value of cash flows, based on the Company's
                  current borrowing rates for similar types of arrangements.

                  The investments and the derivatives are carried in the
                  financial statements at their fair value.

                  The fair value of short-term loans payable approximates their
                  carrying amounts, based on their short-term maturity and a
                  comparison with loans of similar terms.

                  In the opinion of management, the carrying amount of other
                  liabilities is not materially different from their fair market
                  value.


                                      F-35

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE 17 - FINANCIAL INSTRUMENTS (continued):

             C.   DERIVATIVES

                  As of December 31, 2000, the Company had two outstanding
                  forward exchange contracts and one purchased option contract
                  to buy Euro and Pounds Sterling equivalent of up to $
                  3,000,000 each, with expiration date of March 31, 2001. These
                  derivative instruments are attributable to foreign currency
                  cash flow exposure hedge on forecasted sales transactions in
                  Euro and Pounds Sterling. The forward contracts are presented
                  among current liabilities at fair value of $ 67,549. The
                  changes in fair value are presented as other comprehensive
                  loss and will be reclassified as earnings at March 31, 2001,
                  when the hedged item effect earning. The purchased option is
                  presented among current assets at fair value of $13,911. The
                  change in fair value of the option in the amount of $31,389
                  was reported in financial expenses, since it represented a
                  change in ineffective component of the derivative (the
                  "time-value"). The effectiveness of these derivatives, as
                  measured by the Company on each contract based on the matching
                  of the hedged amount, period covered, the currency and the
                  exchange rate to the foreign currency cash flow exposure, is
                  assessed as highly effective.

                  As of December 31, 1999, there were no derivative instruments
                  held by the Company.

             D.   CONCENTRATION OF CREDIT RISK

                  Most of the Company's cash and cash equivalents, restricted
                  cash and marketable securities at December 31, 2000 and 1999
                  were deposited with Israeli, European and U.S. banks. The
                  Company is of the opinion that the credit risk in respect of
                  these balances is remote.

                  Most of the Company's sales are made in Europe, the U.S.A. and
                  the Far East, to a large number of customers. Consequently,
                  the exposure to credit risks relating to accounts receivable
                  is limited. The Company performs ongoing credit evaluations of
                  its customers. An appropriate allowance for doubtful accounts
                  is included in the accounts.


                                      F-36

<PAGE>
                          INDIGO N.V. AND SUBSIDIARIES

                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS


<TABLE>
<CAPTION>
           Column A                              Column B                    Column C               Column D         Column E
           --------                              --------                    --------               --------         --------
                                                                       Additions Charged to
                                                Balance at          --------------------------                      Balance at
                                                Beginning           Costs and          Other                          End of
Description                                     of Period           Expenses          Accounts     Deductions         Period
<S>                                             <C>                 <C>               <C>          <C>              <C>
Inventory reserves:

Year ended December 31

1998.....................................        $4,224,000            556,000            -         (1,266,000)      $3,514,000

1999.....................................        $3,514,000            161,000            -         (2,161,000)      $1,514,000

2000.....................................        $1,514,000          2,104,075                          (7,364)      $3,610,711



Allowance for doubtful accounts:

Year ended December 31

1998.....................................        $4,907,000          1,225,000            -         (1,757,000)      $4,375,000

1999.....................................        $4,375,000          2,620,000            -           (674,000)      $6,321,000

2000.....................................        $6,321,000          1,975,406                        (674,752)      $7,621,654
</TABLE>

<PAGE>
ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS

(a)      Index to Consolidated Financial Statements, Financial Statement
         Schedules:

         The following Consolidated Financial Statements, including the notes
thereto, are included in this Form 20-F/A.


<TABLE>
<CAPTION>
                                                                      Pages in
                                                                     Form 20-F/A
<S>                                                                  <C>
Report of Independent Accountants on Consolidated Financial
Statements of Indigo N.V. and Subsidiaries......................             F-1

Consolidated Statements of Operations of Indigo N.V. and
Subsidiaries for each of the last three years in the period
ended December 31, 2000.........................................             F-2

Consolidated Balance Sheets of Indigo N.V. and Subsidiaries
as of December 31, 2000 and 1999................................             F-3

Consolidated Statements of Changes in Shareholders' Equity
(Deficiency) of Indigo N.V. and Subsidiaries for each of the
last three years in the period ended December 31, 2000..........      F-4 to F-6

Consolidated Statements of Cash Flows of Indigo N.V. and
Subsidiaries for each of the last three years in the period
ended December 31, 2000.........................................      F-7 to F-8

Notes to Consolidated Financial Statements of Indigo N.V.
and Subsidiaries................................................     F-9 to F-36
</TABLE>

Schedule II - Valuation and Qualifying Accounts for the years ended December 31,
2000, 1999 and 1998

<PAGE>
(b)    Exhibits:

1              Articles of Association of Indigo N.V.

2              Rights of Holders of Securities / Options

2.1**          Stock Purchase Agreement, dated as of December 28, 1995, by and
               among Indigo N.V. and certain Investors listed on Schedule I
               thereto.

2.2*           Form of Series A Subscription Agreement

2.3*           Form of Series A Preferred Shareholder Registration Rights
               Agreement.

2.4*           Form of Warrant Certificate.

2.5*           Statement of Voting Power Designations, Rights and Preferences of
               Series A Preferred Shares.

2.6*           Form of Series B Subscription Agreement.

2.7*           Form of Series B Preferred Shareholder Registration Rights
               Agreement.

2.8*           Statement of Voting Power Designations, Rights and Preferences of
               Series B Preferred Shares.

2.9***         Form of Series C Subscription Agreement.

2.10***        Form of Series C Preferred Shareholder Registration Rights
               Agreement.

2.11***        Form of Series C Warrant Certificate.

2.12***        Statement of Voting Power Designations, Rights and Preferences of
               Series C Preferred Shares.

2.13*****      Form of Series D Subscription Agreement.

2.14*****      Form of Series D Preferred Shareholder Registration Rights
               Agreement.

2(a)-15*****   Form of Series D Warrant Certificate.

<PAGE>
2.16*****      Statement of Voting Power Designations, Rights and Preferences of
               Series D Preferred Shares.

2.17*****      Form of Warrant Agreement between the Company and The Bank of New
               York.

2(a)-18*****   Specimen of Warrant Certificate.

2.19*********  Stock Purchase Agreement, dated as of September 13, 2000, between
               Hewlett-Packard Europe B.V. and Indigo N.V.

2.20*********  Shareholders' Agreement, dated as of September 13, 2000, by and
               among Gemini Systems Corporation N.V., Toscal N.V., OZF Ltd.,
               Visionvest Corporation N.V., Walthroup Corporation N.V., Deering
               Corporation N.V., S-C Indigo CV, Hewlett-Packard Europe B.V.,
               Hewlett-Packard Company and Indigo N.V.

4              Material Contracts / Compensatory Plans

4.1*           Agreement dated August 2, 1995 between Indigo N.V. and Toyo Ink
               Mfg. Co., Ltd.

4.2*******+    PostScript Software Development and International OEM
               Distribution License Agreement, dated December 16, 1998, between
               Adobe Systems Incorporated and Indigo Electronic Printing Systems
               Ltd.

4.3********+   Asset Purchase Agreement, dated June 30, 1999, between Indigo
               Electronic Printing Systems Ltd. and Ferber & Hanusa GmbH Systeme
               Digital Reprografie.

4.4********+   OEM Agreement, dated as of June 30, 1999, between Indigo N.V. and
               A.B. Dick Company.

4.5********+   Joint Venture Agreement, dated July 28, 1999, between Indigo N.V.
               and Datacard Corporation.

4.6********+   Purchase Agreement, dated December 1, 1999, between Indigo
               Electronic Printing Systems Ltd., and Reeves Brothers, Inc.

4.7            OEM Agreement, dated September 13, 2000, between Hewlett-Packard
               Company and Indigo N.V. including the addendum dated December 17,
               2001.

4.8            Jericho Co-Development Agreement, dated September 13, 2000,
               between Hewlett-Packard Company and Indigo N.V.

<PAGE>
4.9*           Indigo N.V. 1996 International Flexible Stock Incentive Plan

4.10*          Indigo N.V. 1996 Israel Stock Option Plan

4.11*          Indigo N.V. 1996 Netherlands Stock Option Plan.

4.12*          Indigo N.V. 1996 U.S. Stock Option Plan.

6              Earnings/Loss Per Share Computation

6.1*           Statement regarding computation of Loss Per Common Share

6.2****        Statement Regarding Computation of Per Share Losses.

8              List of Subsidiaries of Indigo N.V.

10             Others (Consent of Independent Auditors)

10.1*          Consent of independent auditors (1995)

10.2****       Consent of Coopers & Lybrand L.L.P. (1996)

10.3******     Consent of Coopers & Lybrand L.L.P. (1997)

10.4*******    Consent of Kesselman & Kesselman. (1998)

10.5********   Consent of Kesselman & Kesselman (1999)

10.6           Consent of Kesselman & Kesselman (2000)

*              Incorporated by reference from Annual Report on Form 20-F for the
               fiscal year ended December 31, 1995 filed with the Securities and
               Exchange Commission on June 13, 1996, Commission File Number
               2-3860.

**             Incorporated by reference from Schedule 13-D filed with the
               Securities and Exchange Commission on January 8, 1996 by certain
               shareholders of Indigo N.V.

***            Incorporated by reference to the Registrant's Registration
               Statement on Form F-3, originally filed with the Securities and
               Exchange Commission on April 3, 1997, and incorporated by
               reference herein.

****           Incorporated by reference from Annual Report on Form 20-F for the
               fiscal year ended December 31, 1996 filed with the Securities and
               Exchange Commission on June 10, 1997, Commission File Number
               2-3860.

<PAGE>
*****          Incorporated by reference to the Registrant's Registration
               Statement on Form F-3 (Reg. No. 333-8520), originally filed with
               the Securities and Exchange Commission on March 27, 1998.

******         Incorporated by reference from Annual Report on Form 20-F for the
               fiscal year ended December 31, 1997 filed with the Securities and
               Exchange Commission on April 14, 1998, Commission File Number
               2-3860.

*******        Incorporated by reference from Annual Report on Form 20-F for the
               fiscal year ended December 31, 1998 filed with the Securities and
               Exchange Commission on June 15, 1999, Commission File Number
               2-3860.

********       Incorporated by reference from Annual Report on Form 20-F for the
               fiscal year ended December 31, 1999 filed with the Securities and
               Exchange Commission on April 17, 2000, Commission File Number
               2-3860.

*********      Incorporated by reference from Annual Report on Form 20-F for the
               fiscal year ended December 31, 2000 filed with the Securities and
               Exchange Commission on June 28, 2001, Commission File Number
               2-3860.

+              Confidentiality treatment was requested with respect to portions
               of the agreement.

<PAGE>
SIGNATURES


     Pursuant to the requirements of Section 12 of the Exchange Act, the
Registrant certifies that it meets all of the requirements for filing on Form
20-F/A and has duly caused this annual report to be signed on its behalf by the
undersigned, thereunto duly authorized.




                                                  INDIGO N.V.
                                                  (Registrant)


Date:    February 14, 2002                    By: /s/ Benzion Landa
                                                  ------------------------------
                                                  Benzion Landa
                                                  Chairman of the Board,
                                                  Chief Executive Officer

<PAGE>
                                  EXHIBIT INDEX


(b)      Exhibits:

4.7      OEM Agreement, dated September 13, 2000, between Hewlett-Packard
         Company and Indigo N.V. including the addendum dated December 17, 2001.

4.8      Jericho Co-Development Agreement, dated September 13, 2000, between
         Hewlett-Packard Company and Indigo N.V.

10.6     Consent of Kesselman & Kesselman