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2001 annual report
hard facts on software
CONTENTS
hard facts on software 1
Mission statement 3
Board of directors - auditors 3
strong answer to a weak demand 5
Message to our shareholders 6
solid understanding of flexible needs 11
Aces high for carta mundi 12
Arc international. transparency and unbreakable faith 14
Wenner media llc. some rolling stones gather no moss 16
The strength of standardization. enfocus certified pdf 18
Independent 20
Industry-leading 20
Global 20
Pre-production software 21
sharp focus on a blurry future 23
financial statements 25
from left to right:
bart DENOO
GUIDO VAN DER SCHUEREN
peter DENOo
As a “Member of the Graphic Valley”, Artwork Systems is dedicated to its mission as an industry-
leading, global, software pre-production company to service the needs of the label, packaging,
publication, and commercial color printing markets. Artwork Systems will continue to deliver the
“best of all worlds” on all levels, functionality, productivity, profitability, and growth, for our
customers, partners, and shareholders.
board of directors
Guido Van der Schueren – Founding Partner – Chairman of the Board
Peter Denoo – Founding Partner – President and CEO
Bart Denoo – Founding Partner – Chief Software Architect
Marc Ecker – for the account of BBZ NV
Ratio Plus NV – represented by Hubert Ooghe
auditors
Ernst & Young Bedrijfsrevisoren
Represented by Patrick Rottiers
mission statement
3Artwork Systems Group
Annual Report 2001
000 Hard facts on software
Mission statement
001 annual report 2001
strong answer to a weak demand
6 Artwork Systems Group
Annual Report 2001
001
Last year we compared Artwork Systems’ economic situation with
the weather conditions on a tropical island, where the weather is
always bright and sunny. The only imaginable disruption of the pre-
vailing harmony comes from sudden, unexpected tropical storms.
Sometimes you can see them coming, but even then you never really
master such situations. So, being conscious thereof, you thoroughly
prepare. Substantial, solid foundations are conditions sine qua non
for weathering such abrupt storms. Alertness and flexibility are
added trumps. Fiscal 2001 was a year of challenges, but also a year
of record-breaking accomplishments for Artwork Systems, three of
which are particularly noteworthy:
• Artwork Systems generated revenues of more than 47 mio
Euro in fiscal 2001, a 27% increase over fiscal 2000. We shipped
a total of 1115 ArtPro licenses and installed Nexus work-flow
solutions for 318 customers.
• Artwork Systems continued to command the number 1 position
in the market for professional software solutions and dramati-
cally expanded its products solution business.
• Artwork Systems also substantially broadened its solutions
portfolio with scalable, reliable, high-performance products that
accelerated our expansion into the graphic arts market.
After the huge order intake at Drupa in Düsseldorf, Germany and
Graph Expo in Chicago, USA, expectations for fiscal year 2001 were
excessive. If we didn’t completely live up to them, Artwork Systems
continued to show robust revenue streams. Despite a tough economic
environment and business slowdown that also affected the graphic
industry, Artwork Systems further strengthened its position as an in-
dependent, industry-leading, global software pre-production company.
Due to several factors, most notably the disastrous events of
September 11th, the economic growth that North America had
shown for the past few years has ground to a halt. Soon it became
evident that the whole world was being affected. Nonetheless, we
managed to increase our market share in the US. Artwork Systems
also showed considerable increases in revenue in Europe. Only in
Asia have revenues dropped slightly.
Strong answer to a weak demand
Message to our shareholders
7Artwork Systems Group
Annual Report 2001
Given the tough current economic environment, we are being prudent in the way we manage our
business. Artwork Systems is pleased with its financial results. A continued strong focus on the
company’s market niches, product development, and operational excellence provides the build-
ing blocks for our solid performance. We believe that the company is in the right place at the right
time. Artwork Systems has ensured its position in the market by offering strong and innovative
products and attracting continued investment from our customers. Our image and visibility
remains good, and the company continues to invest aggressively in new product development.
Our momentum in topping new markets continues to grow.
Artwork Systems’ flexible organization and its ability to quickly respond to market changes was
proven when the company reduced costs the moment that portents of a slowdown in the US
market became visible. Nonetheless, we continue to invest in new R&D talent. Recently we
expanded our R&D division by 50% and we intend to keep on hiring graphic arts professionals
as well as developers. Proof that we believe more than ever in the future, particularly in
Artwork Systems’ future.
Over the past year we have proven the validity of our strategy of focusing on our market niches.
Moreover, confidence in the Enfocus operation - stepping beyond our traditional market to
become an important player in the e-paper market - was rewarded: the importance of PDF in
both the graphic arts industry as well as the e-paper business increased when compared with
last year.
8 Artwork Systems Group
Annual Report 2001
We maintained our strategic focus on:
• becoming the undisputed leader in professional pre-press software for labels and packaging
• extending our leadership in new markets including publishing and commercial color
• continuing to strengthen our organization in development, marketing, sales, training and cus-
tomer support
• expanding our presence in the United States, in Europe and in emerging markets where there
are great opportunities
• being one of the most admired companies in our industry
• enhancing the value of our stock by managing costs and risks and by continuing to increase
earnings and shareholder returns.
These objectives reflect our ambition to continue serving as a key driver of the graphic arts industry.
We want to thank our 170 employees around the world for their commitment, enthusiasm, intelli-
gence and creativity in fiscal 2001. And, as always, we thank our shareholders, our customers and
our partners. While times are now more trying, especially following the events of September 11th,
we welcome the opportunity to prove that we can manage effectively in both good times and bad.
We look forward to presenting our progress to you again next year.
Sincerely,
Guido Van der Schueren, Peter Denoo & Bart Denoo
001 Strong answer to a weak demand
Message to our shareholders
9Artwork Systems Group
Annual Report 2001
001 Strong answer to a weak demand
A global company
total artwork systems
research & development 25
sales & marketing 46
support 48
general & administrative 24
total staff 143
total enfocus
research & development 6
sales & marketing 16
support 3
general & administrative 2
total staff 27
total group
research & development 31
sales & marketing 62
support 51
general & administrative 26
total staff 170
France
business unit9 staff
UK
business unit & development17 staff
Belgium
head office AWSbusiness unit & development46 staff
ENFOCUSbusiness unit & development18 staff
Singapore
international support2 staff
Germany
business unit19 staff
US
business unit & development40 staff
Brazil
international support2 staff
Australia
international support2 staff
US ENFOCUSbusiness unit & development
9 staff
Ireland
development6 staff
002 annual report 2001
solid understanding of flexible needs
In the following pages we will reveal the truth behind the headlines. From beginning to end, the
Annual Report 2001 is the blow-by-blow account of your Artwork Systems team in action. It gives
the reader a seldom-seen look inside the operation of a highly flexible, strongly focused organization.
The following are client cases attesting to that fact.
Carta Mundi, located in Turnhout, Belgium is a major player in the world of cards.
This market is driven by globalization and specialization, two forces that Carta
Mundi has successfully harnessed. They’re the second biggest on the market.
Their trumps? Experience, focus, vision and well developed technical support.
Playing cards date back to the 14th century. Every reputable printing shop made it a point of honor
to put its own series on what in those days was mainly a local market.
From the 18th century onwards the playing-cards printing activity centered on Turnhout. The mar-
ket grew, became more international and differentiated. Anticipating these trends and dynamics,
Carta Mundi was founded in 1970. The company makes the business of playing cards its mission.
Besides traditional playing cards, the product spectrum these days also comprises game cards and
collectible cards. The latter kind first encountered a gigantic success with the Magic Cards
(Wizards of the Coast). Until recently Pokémon was immensely popular, but already Harry Potter
collectible cards are vying for the consumers’ undivided attention.
The answer as to how the market in this sector will evolve is twofold: Carta Mundi is still growing
in this sector, but on the whole the market for playing cards is rather stable. On the other hand,
the possibilities for the segment of game cards and collectibles are far from exhausted. The pos-
sibilities for marketing support by means of cards are virtually endless.
12 Artwork Systems Group
Annual Report 2001
No mystery is
involved in making
magical harry potter
collectible cards.
002 Solid understanding of flexible needs
Aces high for Carta Mundi
13Artwork Systems Group
Annual Report 2001
An average deck of playing cards might look straightforward enough, but the production process
involved in its manufacture is by no means simple. For one, the printing sheet needs to be filled
economically and optimally to capacity. This is where Carta Mundi appeals to Artwork Systems soft-
ware. The step and repeat functionalities that are standard in ArtPro software have been expanded
especially for Carta Mundi.
The result? In function of the application, the pre-press operator can enter the criteria which the
end result needs to meet.
For example: with collectibles a difference is often made between standard cards, special cards
and rare cards. This might mean that different kinds of cards are printed in different print num-
bers. In function of specific parameters, Artwork Systems software creates the ideal printing
sheet. Speed, control, precision and quality were the decisive arguments leading Carta Mundi to
choose this solution.
After printing, the sheets are cut in two directions and collated. For this, Carta Mundi has developed
its very own concept and design for handling peaks in production (marketing campaigns, end of year
promotions) with the utmost flexibility. For the design and print preparation, again the renowned
ArtPro software from Artwork Systems is used. The trumps here are speed and efficiency.
Clearly, Carta Mundi has yet to deal all its cards, and is holding all the aces it
needs to achieve its growth ambitions.
002 Solid understanding of flexible needs
Aces high for Carta Mundi
14 Artwork Systems Group
Annual Report 2001
001
When the Verrerie Cristallerie d’Arques
was founded in 1825, the works mainly
manufactured demijohns for Bordeaux
winemakers. The next century it remained
little more than a small local glassworks.
Today ARC International is world leader in
all types of glass and crystal tableware,
offering a range of 8,000 items under
seven brand names, destined for different
market segments, in over 100 countries.
The company employs 17,000 people and
with production plants in France, Spain and
the United States manufactures 6,000,000
pieces each day. ARC International is
present on five continents through 27
liaison offices.
All this is due to the vision, industrial dili-
gence and business acumen of one man,
Jacques Durand. When Jacques entered
the family business, the company’s 350
employers still followed the traditional
mouth-blowing craft techniques. In 1930
he went to the USA and visited several
American glassworks, learning about
the latest mass-production techniques.
Jacques proved to be a more than astute
student. He completely automated the
hitherto manual manufacturing process of
glass, all the while preserving the quality
inherent in the ancestral tradition of glass
making. In 1968 he revolutionized the art
of making crystal by producing the first
ever machine-manufactured crystal. Due
to the technical innovations and improved
production processes he implemented,
the company was able to offer these high-
quality products at affordable prices,
which makes it the reference for table-
ware around the world.
Besides a complete mastery of core pro-
duction processes and control of world-
wide commercialization and distribution,
ARC International strives to optimize
every facet of the company’s processes by
keeping them under their wings. That is to
say, all peripheral processes requiring
reactivity to maintain a competitive edge
are kept in-house and are integrated.
From packaging to the graphic chain and
information flow.
Solid understanding of flexible needs
002 Solid understanding of flexible needs
Arc international. Transparency and unbreakable faith
15Artwork Systems Group
Annual Report 2001
crystalline artwork
It should come as no surprise just how much
printing work is involved in the glass manufac-
turing industry. Not merely the graphics that
some glasses are adorned with, which is a
separate process, but packaging, bar codes,
labels, commercial printing (catalogs, techni-
cal sheets). All this is produced in-house, with
Artwork Systems software. According to Jean-
Pierre Lagouge, Technical Director Graphic
Chain, it was love at first sight. “We were
seduced by the bar code functionality in the
ArtPro application,” he admits. “This was back
in 1993. Soon we discovered that as clients we
were able very easily to approach the devel-
opers at Artwork Systems with suggestions
for specific functionalities. It’s a kind of flexi-
bility and openness not characteristic for a
standard product. It’s this transparency, which
convinced us as much as the perfect integra-
tion of ArtPro in our production flow. Besides
ArtPro, ARC Intl. uses Nexus for reliability of
the workflow. On a technical level it’s the spe-
cific functionalities that count and the fact that
the software corresponds to our needs. But
it’s mainly the 10 years of experience with a
product and the contact with the people we
value most.”
16 Artwork Systems Group
Annual Report 2001
001
A 21-year-old University dropout named
Jann Wenner started a rock and roll
newspaper in 1967 in the hopes that it
would help him meet Bob Dylan and John
Lennon. He built his fantasy into a media
empire. These days he oversees three
successful magazines: the one that start-
ed it all, Rolling Stone (circulation about
1.2 million) is published in the USA,
Australia, Europe, and Latin America. Then
there’s US Weekly, a joint venture with the
Walt Disney Company (with a circulation
of about 800,000) and Men's Journal, a
guide to macho living (circulation more
than 550,000).
Rolling Stone magazine, which would
become the voice of a generation, was
born three decades ago. The name
derived from a Muddy Waters song. The
editorial concept was unique for its time:
Rolling Stone would cover rock 'n' roll as a
powerful cultural and political force in a
time of widespread social tumult.
One of the critical elements in the maga-
zine’s success was that it dared take risks
and ran stories no one else was willing to
cover. It was the first to break the inside
story of newspaper heiress Patty Hearst's
kidnapping.
By 1977, the publishing company Straight
Arrow Publishers moved to New York, the
main media stage and more fit to the
scale of a man like Wenner’s ambitions. In
1993 the company officially changed its
name to Wenner Media.
All three Wenner Media titles, Rolling
Stone, Men’s Journal and US Weekly
are created at company headquarters
located at 1290 Avenue of the Americas,
an office building in midtown Manhattan’s
Rockefeller Center.
John Dragonetti, Director of Prepress,
explains how Artwork Systems’ software
figures in ensuring that the challenge of
getting the magazines to the news stands
on time is met by his department.
“I was hired in late November 1999 as the
Director of Prepress and charged with
eliminating the company’s film-based pre-
press workflow and implementing a digi-
tal one to facilitate the launch of the for-
mer monthly US Magazine as US Weekly,
Solid understanding of flexible needs
002 Solid understanding of flexible needs
Wenner media llc. Some rolling stones gather no moss
17Artwork Systems Group
Annual Report 2001
which was scheduled for late February 2000.
With very little time (90 days) I had to purchase
a prepress system, hire and train a staff to use
it, test it against the editorial software systems
and our printing facilities’ prepress systems.
I chose to purchase four seats of Artwork
System’s ArtFlow / ArtPro for a very simple
reason: I knew it worked well and I knew it was
easy to learn. Although it was purchased to
facilitate a weekly production cycle, the pre-
press system I implemented would also be
used for the prepress of the Wenner Media
biweekly and monthly titles. I wanted this sys-
tem to be true desktop publishing, open ended,
expandable. ArtFlow and ArtPro fit this criteria.
With the weekly production of a celebrity-
news magazine in mind, I knew that I also
needed expediency to meet press deadlines
for the three weekly printings (in five different
printing facilities). Again, ArtFlow, with its
superb automation capabilities provided this
critical aspect.
Artwork Systems software was purchased for
its ease of use, high automation capability, and
its seamless interaction with PostScript files.
Significant areas of savings were attainable in
the training aspects for personnel, and the
service contracts required. In short, Artwork
Systems provides a relatively inexpensive high
quality prepress solution.”
18 Artwork Systems Group
Annual Report 2001
Imagine the creation of any newspaper or
magazine. Next to editorial content – text
and images – provided by journalists and
photographers, space is reserved for
advertisements. It’s the revenue generated
from advertising that keep newspapers and
magazines affordable for their readers. But
did you ever stop to think about how adver-
tisements find their way into the paper?
Different advertising agencies develop the
most creative and effective advertising
campaigns for a diverse clientele. In consul-
tation with customers, media strategies are
laid down. The when and where is decided
concerning which advertisement will appear
in which newspaper or magazine and with
which frequency. Then agreements are made
with those different media,material is pre-
pared and approved by the client and sent
to the medium in question.
Until not very long ago, all of these materi-
als would be produced on film. An assem-
bler then skilfully joined them together with
the newspaper or magazine’s own material.
This was a time-consuming and expensive
operation. Exciting also, up until the very
last moment.
In recent years the digital revolution has
been changing all this. Instead of films, it is
now also possible to send digital files to
publishing houses. This digital material is
assembled with the publisher’s digital con-
tent and – depending on its technical capa-
bilities – immediately exposed as one film
or print-ready plate. This saves time and
money, and is what we call progress.
But is all this so self-evident? Working with
different material providers, each with
their specific working methods, prefer-
ences for graphical solutions, will invari-
ably lead to chaos. While digitization cre-
ates the illusion that everything functions
more smoothly, efficiently and faster, the
reality shows the contrary. Some files are
incomplete, while others come without the
right type fonts. Production coordination in
such a situation becomes a precarious and
extremely difficult occupation. And in the
meantime the clock keeps ticking, and the
presses keep turning.
This is the issue that MEDIBEL+ took upon
itself to resolve. This is the organization
that unites all Belgian companies active in
the world of advertising, such as the media
exchange, advertising agencies, lithogra-
phers, publishers and printers. To that end
002 Solid understanding of flexible needs
The strength of standardization. Enfocus certified pdf
19Artwork Systems Group
Annual Report 2001
they went in search of a standard that would
help the media to more effectively develop their
workflow, on an administrative as well as a
technical level. After careful study, the choice
was made for Enfocus’ Certified PDF.
PDF has, without any doubt, grown to be
accepted as the file format within the graphics
community. The surplus functionalities that
Certified PDF offers its users are phenomenal.
The software runs around 140 checks on a
created document. Two thirds of those are cor-
rected automatically and on-the-fly. At the
same time the application keeps a history of
the document. Each change (who, what,
where, when) is logged automatically. This
coupling of intelligence and reliability made
Enfocus Software stand head and shoulders
above the benchmark MEDIBEL+ had adopted
prior to deciding to introduce Certified PDF as
the standard.
Does the story end there? On the contrary.
Very recently, Febelgra – an association of
Belgian graphics companies – also started
recommending Certified PDF to its members.
On September 4th, the Dutch public press mag-
azines also decided to introduce Certified PDF
as the general standard for ads supplied to
consumer magazines.HAVE YOU heard the news?
certified pdf rules
002
As each of these cases show, in these tur-
bulent times there is a distinctive winner:
Artwork Systems. Throughout fiscal year
2001 we consolidated our position as an
independent, industry-leading, global pre-
production software company.
independent
From its start in 1992, Artwork Systems
always took great pride in its independ-
ence. Enfocus also adopted this strategy.
This approach has not, however, held us
back from building solid partnerships with
important market players such as Agfa,
CreoScitex, Heidelberg, Ingram Micro and
Fujitsu, to name but a few. On the con-
trary, it is exactly our independence, our
open mind and our firm dedication to open
system software that allows these part-
ners to integrate our flexible solutions
into their product offerings.
industry-leading
With Nexus and Nexus Webway, Artwork
Systems set the tone for the graphic arts
industry. The warm welcome these flexible
solutions received at Drupa and Graph
Expo in 2000 and, more recently, Label
Expo, proves our pole position in the revo-
lutions taking place within the industry.
Our ambition to stay ahead of the crowd is
stronger than ever before. Fulfilling that
ambition takes vision, knowledge and
insight concerning the direction in which
the market will evolve. The successes of
our niche strategy, as well as our partner-
ship with Enfocus, are proof of our knowl-
edge and skill. To us they are the first
steps on a well-defined path.
global
Artwork Systems is a Belgian company,
listed on Nasdaq Europe. Headquartered
in Gent, it has subsidiaries in the US,
Germany, the UK, France, and Ireland.
Sales and support offices can be found in
Brazil, Singapore and Australia. We
intend to continue our rapid growth
through geographical expansion, through
the realization of our market potential
and existing products, and through the
launch of new product lines in related
markets. That is one way of expressing
our global view on business.
On another level, Nexus Webway enables
our customers worldwide to organize
their pre-production on a global scale
through the Internet. From now on, files
can be prepared on one end of the globe
while being printed at the opposite side
or at three different locations at the
same time. The flexibility gained by our
customers results in cost efficiency and
quality control. It’s our contribution to
the globalized economy.
pre-production software
Since Drupa 2000, the “integrated work-
flow management system” is the talk of
the graphic arts town. Both Nexus and
Nexus Webway — featuring exciting new
technologies and offering high-end editing
tools — set the trend. In doing so we have
redefined the meaning of “automation” in
pre-press, since from now on every aspect
of job processing can be fully automated.
Solid understanding of flexible needs
20 Artwork Systems Group
Annual Report 2001
21Artwork Systems Group
Annual Report 2001
ArtPro:
Professional pre-press software for labels
and packaging
ArtColor:
ArtPro's image manipulation module
ArtLink:
Database-driven document assembly for
labels, packages, direct mail, etc...
ArtRender:
Create 3D images or movies from 2D artwork
PowerLayout:
A powerfull and flexible Step & Repeat
solution
PowerStepper:
The ultimate Step & Repeat module with
CAD data analysis
PowerOptimizer:
Automatic calculation for the most eco-
nomic Step & Repeat for label applications
PowerLock:
ArtPro's module to apply security screening
to protect packaging against counterfeiting
PowerTrapper:
Fully automatic trapping tool
PowerWarp:
Powerful module for technical deforma-
tions & flexible grid creation
Nexus:
Artwork Systems' professional pre-produc-
tion workflow software
NexusImport:
The Nexus importing mechanism
NexusProcessor:
Content related automatic processing and
automation of operator tasks
NexusEdit:
Sophisticated editing tools to modify or cor-
rect Nexus files straight from the workflow
NexusManager:
Creates and controls workflows
NexusWebway:
Internet communication link between
print buyer and production plant
NexusRIP:
The ripping and screening engine of Nexus
NexusPlatecellPatterning:
Optimizes solid ink transfers for flexo
printing
Nexus Hybrid Screening:
Combines two screens within one image
for flexo printing
Nexus FlexoCal:
Flexo specific imagesetter calibration
Enfocus PitStop Professional:
The number 1 PDF production tool for
Adobe Acrobat
Enfocus PitStop Server:
Automate your PDF workflow!
Enfocus PowerUp PDF:
Easy Editing for PDF documents
Enfocus WebPerfect PDF:
This ingenious plug-in for Adobe Acrobat
makes optimizing PDFs for the Web a snap
Enfocus Certify PDF:
The ultimate tool for expert control over
PDF documents!
003 annual report 2001
sharp focus on a blurry future
24 Artwork Systems Group
Annual Report 2001
003
In our business, we are used to clichés being used to make an impression. Last year we left our
mark as a major player at the big events in the graphic arts industry, Drupa (Düsseldorf, Germany)
and Graph Expo (Chicago, USA). This year we made this impression indelible, solidified our
position as a leading independent pre-press software company servicing the worldwide needs of
the label, packaging, publication, and commercial color printing market.
So what is next for Artwork Systems? At the time of writing this report, our company has surged
to the top of our industry. Nonetheless, we are clearly in a major downturn for the graphic arts and
this is providing a new source of challenge.
At the heart of a changing industry and in the field of digital workflows in pre-press, Artwork
Systems aims to remain a benchmark for the graphic sector. We will continue to embrace the new
and drive changes forward. We shall emphasize innovation and search constantly for better ways
to serve our customers — ways that create the difference. Because we apply a consistent
management strategy of providing maximum value for our customers and shareholders, in combi-
nation with a focused portfolio of the finest pre-press software products, no matter what the
climate, for Artwork Systems it is always fair weather.
Sharp focus on a blurry future
2001 annual report
financial statements
The selected financial data presented below has been extracted and derived from the consolidated financial statements of Artwork systems Group N.V. included
in section 3 of this document.
FY 2001 Euro FY 2000 Euro FY 1999 Euro
Net revenue 47,953,459 37,888,147 28,572,274
Cost of revenues 9,337,196 7,571,989 5,130,401
Gross margin 38,616,263 30,316,158 23,441,873
Operating expenses
Research and development 3,326,541 2,568,931 1,727,515
Sales and marketing 12,687,386 8,780,952 4,892,534
General and administrative 2,639,251 2,551,400 1,956,517
Depreciation 641,072 620,184 467,188
Income from operations (*) 19,322,013 15,794,691 14,398,119
Non-operating expenses 141,658 59,955 604,421
Financial income -260,434 712,194 482,899
Profit before income taxes (*) 18,919,921 16,446,930 14,276,597
Provision for income taxes (*) 6,369,429 5,471,614 4,916,480
Net income (*) 12,550,492 10,975,315 9,360,117
Amortization of goodwill 5,006,282 3,669,188 3,223,632
Net income after goodwill 7,544,211 7,306,127 6,136,485
(*) before amortization of goodwill
FY 2001 Euro FY 2000 Euro FY 1999 Euro
Cash and cash equivalents 4,559,537 3,021,133 6,488,761
Accounts receivable 15,819,290 12,788,893 8,127,009
Goodwill 14,777,033 16,888,069 8,578,136
Total assets 41,649,401 38,056,071 26,452,757
Total current liabilties 11,115,891 11,418,230 6,834,054
Shareholders’ equity 30,533,511 26,637,841 19,618,701
26 Artwork Systems Group
Annual Report 2001
Financial statements ARTWORK SYSTEMS GROUP
1. Selected summary financial data
Income statement
Balance sheet
The selected financial data presented below represent the result of Enfocus software for the year ended September 30, 2001 as included in the consolidated
financial statements of Artwork systems Group N.V. included in section 3 of this document.
FY 2001 Euro FY 2000 Euro(5 months)
Net revenue 4,906,946 1,528,640
Cost of revenues 555,988 156,967
Gross margin 4,350,958 1,371,673
Operating expenses
Research and development 814,958 270,782
Sales and marketing 2,701,995 1,319,249
General and administrative 485,705 326,753
Depreciation 51,294 23,273
Income (loss) from operations 297,007 -568,384
27Artwork Systems Group
Annual Report 2001
Income statement
The following discussion and analysis is based on the audited consolidated financial statements of Artwork Systems Group NV and its subsidiaries
("the Company") for the year ended September 30, 2001.
Artwork Systems develops and markets software for pre-press and provides training and support for these products.
Artwork Systems’ most important products are:
• ArtPro, the interactive editing program for high-end pre-press production with dedicated modules to further optimize the program towards specific markets in
packaging, labels, commercial color and publishing.
• Nexus, the workflow management system for automated production, born from the integration of the former workflow products ArtFlow, PageFlow and PackFlow.
• Nexus WebWay, a new product for internet based communication between print-buyers and production sites through standard internet browsers.
The Company generally sells software only, except for the RIPs (Raster Image Processor) which are sometimes sold together with the hardware they run on.
The Company offers its customers an annual maintenance contract, that includes telephone support and minor software updates.
Artwork Systems sells its products directly to end-users in the most important countries and through specialized distributors in the rest of the world. The Company
also sells through OEMs to specific markets. The direct sales area now consists of Belgium, the Netherlands, Germany, Austria, Switzerland, North America,
Canada, the United Kingdom, France, Brazil, Australia and some countries in South-East Asia.
Enfocus Software, a wholly owned subsidiary of Artwork Systems develops software for the PDF market. PDF was developed by Adobe Inc. and continues to evolve
into the standard format in the digital printing and publishing market. The format is also an important standard for the Internet e-paper community. Enfocus
Software publishes the #1 PDF production tools for powerful, rapid and accurate flow of PDF documents in graphic arts, enterprise (electronic paper) and Internet
markets.
Artwork Systems has offices in Gent (Belgium), Freiburg (Germany), Bristol (Pennsylvania, US), Redditch and Cheltenham (UK), Paris (France), Limerick (Ireland)
and San Mateo (California, US). The Company’s headquarters are located in Belgium. Total staff is 170.
28 Artwork Systems Group
Annual Report 2001
ARTWORK SYSTEMS GROUP
Description of business
2. Management’s discussion and analysis of the financial condition and results of operations
The Company reports its consolidated financial statements in accordance with generally accepted accounting principles in the United States (US GAAP).
The reporting currency is the Euro. For subsidiaries outside the Euro-zone, assets and liabilities are translated at exchange rates in effect at the end of the report-
ing period, and revenues and expenses are translated at the exchange rate during the period. Equity is translated at historic exchange rates. Gains and losses
resulting from these translations are reflected in "other comprehensive income", a component of shareholders’ equity in the balance sheets.
Exchange rates (USD/Euro) applied in the financial statements are as follows (rounded to 4 digits):
Period Income Statement Balance Sheet(average rate) (end of period rate)
FY 2001 0.8895 0.9131
FY 2000 0.9672 0.8832
FY 1999 1.0982 1.0665
Amounts not derived from the consolidated financial statements and included in this "Management’s Discussion and Analysis" are translated at historic exchange
rates.
Key figures for the year, expressed as a percentage of net revenue, compare with last year’s figures as follows:
FY 2001 FY 2000 FY 1999
Cost of Revenues 19.5% 20.0% 18.0%
Gross Margin 80.5% 80.0% 82.0%
Research and Development 6.9% 6.8% 6.0%
Sales and Marketing 26.5% 23.2% 17.1%
General and Administrative 5.5% 6.7% 6.8%
Depreciation and Amortization (*) 1.3% 1.6% 1.6%
Operating Margin (*) 40.3% 41.7% 50.4%
Non-operating expenses 0.3% 0.2% 2.1%
After Tax Margin (*) 26.2% 29.0% 32.8%
(*) before amortization of goodwill
29Artwork Systems Group
Annual Report 2001
Financial reporting considerations
Results of operations
The following table compares income statement data with last year:% increase
FY 2001 over FY 2000
Revenue 26.6%
Revenue from products 24.6%
Revenue from services 36.3%
Cost of revenues 23.3%
Gross margin 27.4%
Research and development 29.5%
Sales and marketing 44.5%
General and administrative 3.4%
Depreciation and amortization 3.4%
Income from operations (*) 22.3%
Net income after goodwill 3.3%
(*) before amortization of goodwill
Artwork Systems’ net revenues have increased by 26.6% from financial year 2000 to financial year 2001. This increase is mainly related to a strong position
in the competitive environment, the introduction of Nexus and the continuous strong position of Artpro. Revenue from services consist of maintenance con-
tracts and training. As the amount of seats installed increases, the revenue from maintenance contracts grows and provides the Company with a source of
recurring revenue.
Enfocus’ revenue has increased from Euro 1,528,640 at September 30, 2000 (5 months reported) to Euro 4,906,946 for the year ended September 30, 2001.
Enfocus continues to invest in the OEM market and new contracts with dealers.
The percentages of net revenues for each major regional market were as follows:
FY 2001 FY 2000 FY 1999
Europe 42% 45% 41%
Americas 53% 49% 51%
Asia 4% 5% 6%
Rest 1% 1% 1%
30 Artwork Systems Group
Annual Report 2001
Results of operations
Net revenues
The percentages of net revenues for each sales channel were as folows
FY 2001 FY 2000 FY 1999
Direct Sales 54% 51% 50%
Distributors 42% 44% 45%
O.E.M.s 4% 5% 4%
For software sales, cost of revenues consists of the costs of the software protection keys, printing costs for the user’s manuals and license fees payable to
Pantone and Scitex. For RIP sales, cost of revenues also includes the cost of the computer that runs the RIP software. For services it primarily consists of salaries
and related costs for the product specialists that provide training and telephone support.
The cost of revenues for Enfocus products consists of the costs packaging and royalties. The cost of revenues services consists of salaries and related costs for
the product specialists that provide telephone support.
Research and development expenses consist primarily of compensation and related costs. Sales and marketing expenses consist of salaries, travel, participation
in trade shows and bad debt provision. General and administrative expenses consist of compensation and related expenses, and consulting and professional fees.
The increase in operating expenses is due to the growing emphasis on direct sales in general, the growth of the company and the number of people employed.
As required by US GAAP, operating expenses include a non-cash compensation expense of Euro 52,654 for the Employee Stock Option Plan.
During the year several intra-group dividends have been distributed, resulting in a tax impact of Euro 168,149 affecting the total tax rate on a one time basis.
In the past, procedures have been established to follow-up and collect the outstanding receivables. The company evaluates its accounts receivable periodically
and accounts for provisions for bad debt whenever indications exist that the collection of the receivable is doubtful. This is based on the principle of prudence and
does not necessarily mean that the receivable will not be collected in the future.
31Artwork Systems Group
Annual Report 2001
Net revenues
Cost of revenues
Operating expenses
Tax rate and deferred taxes
Accounts receivable
Goodwill on acquisitions is amortized over 18 months for distribution organizations and over 3 to 5 years for R&D units, in line with software industry practice.
Company Acquired as of Goodwill Amortization period
PCC August 28, 1998 USD 10,347,792 5 years
Competitor in the United States
Enfocus Software April 25, 2000 Euro 13,223,417 5 years
Developer of PDF software technology
The purchase agreement for PCC contains an adjustment mechanism (based on the amount of working capital at the date of the acquisition) as well as an earn-
out mechanism (based on the EBITDA amounts for financial years 1999 and 2000). Goodwill resulting from the acquistion from PCC has increased with USD
2,410,835 at September 30, 1999 and at September 30, 2000 with USD 737,629 as a result of the earn-out mechanism. The additional goodwill is amortized over
the remaining amortization period.
The purchase agreement for Enfocus contains an earn-out mechanism based on the consolidated revenue from both Enfocus Entities. Under this mechanism good-
will resulting from the acquisition could increase with a maximum of Euro 6,000,000 in the third quarter of 2001. The actual earn-out has been determined at Euro
3,075,865. This amount has been added to goodwill in the balance sheet and is amortized over the remaining amortization period starting April 1, 2001.
As of September 30, 2001, the Company had Euro 4,559,537 of cash and cash equivalents. These funds are invested in short-term bank deposits. The Company has
a short term debt from its bank of 2,610,000 Euro.
During the year the Company paid Euro 3,075,865 to the former owners of Enfocus software, Euro 737,629 to the former owners of PCC and Euro 3,237,942 as a
dividend to the shareholders.
Management believes that it will be able to satisfy the Company’s cash requirements for the foreseeable future from cash flow from operations and short term
borrowings.
On March 22, 1999 Artios UK Ltd, ("Artios"), the Company’s former distributor for the United Kingdom, summoned Artwork Systems NV before the Commercial
Court of Gent, claiming a total amount of GBP 547,929 for retroactive discounts and for damages as a result of the termination of the distribution contract. Artwork
Systems had terminated this contract after Artios was acquired by Barco Graphics, a competitor of the Company. Artwork Systems had completely reserved the
receivables on Artios, in the amount of EUR 451,990, as bad debts.
During the third quarter, the Company has settled with Artios and received GBP 100,000. The claims of both parties in this matter have been dropped.
32 Artwork Systems Group
Annual Report 2001
Goodwill
Liquidity and capital resources
Artios
On January 11, 2000 the Company received a tax claim, amounting to EUR 58.1 million, as a result of an inquiry by the special branch of the Belgian tax authori-
ties ("bijzondere belastingsinspectie" or BBI).
In preparation for the Initial Public Offering (IPO) of the Company’s shares in December 1996, all the operations of the group were merged under the holding
company Artwork Systems Group NV. As part of this restructuring, Artwork Systems Group NV acquired all shares of Artwork Systems NV at net asset value.
The BBI claims that the difference between the market value of Artwork Systems Group NV at the IPO and the price paid for Artwork Systems NV, is taxable as
a benefit in kind ("voordeel van alle aard") to Artwork Systems Group NV.
According to the law firm Allen&Overy (formerly Loeff Claeys Verbeke), who is representing the Company in this matter, and according to the law firm De Bandt,
van Hecke, Lagae & Loesch - Linklaters & Alliance, who has been asked to give a second opinion, this tax claim is contrary to the current application of tax rules
in Belgium. These rules specify that benefits received by a company are taxable only if they are reflected in the accounts of that company or had to be reflected
in the accounts according to Belgian accounting law. Belgian accounting law clearly states that shares have to be recorded at acquisition cost and has been con-
sistently applied in this manner. In addition, following the tax authorities' own commentaries, the concept of "fringe benefit" is not to be applied for corporate
income tax purposes.
The dispute concerns Belgian tax principles. No fraud or tax evasion is involved. Accordingly, the tax authorities levied the lowest tax penalty of 10%.
In accordance with the Belgian tax procedure, Artwork Systems Group filed an objection against the tax claim with the regional director of the tax authorities. On
April 2, 2001 the regional director had not yet taken a decision and the Company considered it appropriate to submit the dispute immediately to the tax court of
Gent. (The new Belgian tax procedure provides that objections concerning tax assessments year 1998 or earlier, where no decision is announced by March 31,
2001, can be submitted to the new tax courts of first instance without further delay.) The Company is seeking the cancellation of the tax claim and compensation
for damages incurred. Pleading is scheduled for February 7, 2002.
While the ultimate outcome of the above-mentioned litigation cannot be ascertained at this time, based on current knowledge of the applicable law and facts, and
taking into consideration the opinion of the Company’s legal counsel, management believes that this lawsuit should not have a material adverse effect on the
Company’s financial statements or its business operations.
On December 6, 2001 the Company acquired all the shares of Dimensional CAD/CAM Systems Inc, dba Dimensional Impressions for USD 2,000,000 in cash plus
an earn-out over the following 2 years based on EBITDA. The company develops and sells packaging design software.
33Artwork Systems Group
Annual Report 2001
Tax claim
Subsequent events
34 Artwork Systems Group
Annual Report 2001
ARTWORK SYSTEMS GROUP
3. Detailed financial statements
Report of independent auditors
To the Board of Directors and Shareholders
Artwork Systems Group NV consolidated
We have audited the accompanying consolidated balance sheet of Artwork Systems Group NV as of September 30, 2001, 2000 and 1999 and the related con-
solidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended September 30, 2001. These consolidated
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Artwork Systems Group NV
at September 30, 2001, 2000 and 1999, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September
30, 2001, in conformity with accounting principles generally accepted in the United States.
Gent, December 7, 2001
Ernst & Young Bedrijfsrevisoren B.C.V. (B 160)
Represented by
Patrick Rottiers
Partner
30/09/2001 Euro 30/09/2000 Euro 30/09/1999 Euroaudited audited audited
Current assets
Cash and cash equivalents 4,559,537 3,021,133 6,488,761
Accounts receivable 15,819,290 12,788,893 8,127,009
net of allowances for uncollectible accounts
of Euro 2,084,853, Euro 1,672,728 and Euro 1,306,229
at Sept 30, 2001, 2000 and 1999 respectively
Value added taxes 273,618 60,695 0
Other current assets 385,012 340,131 185,960
Inventory 1,045,502 742,958 263,603
Prepaid license costs (note 4) 461,850 513,167 564,483
Deferred tax asset, net (note 9) 3,231,185 2,529,317 1,360,485
Total current assets 25,775,995 19,996,294 16,990,301
Property and equipment, net 1,096,374 1,171,708 884,320
Goodwill, net (note 2) 14,777,033 16,888,069 8,578,136
Total assets 41,649,401 38,056,071 26,452,757
See the accompanying notes to the audited financial statements
35Artwork Systems Group
Annual Report 2001
Assets
Consolidated balance sheets at september 30, 2001, 2000 and 1999
30/09/2001 Euro 30/09/2000 Euro 30/09/1999 Euroaudited audited audited
Current liabilities
Accounts payable 1,820,585 2,037,092 1,222,228
Note payable to bank (note 6) 2,610,000 3,655,000 0
Accrued payroll and related taxes 1,100,682 632,788 276,689
Accrued license fees 17,340 61,466 98,148
Accrued fees and other expenses 1,865,811 1,506,639 986,288
Value added taxes 0 0 11,328
Income taxes payable 966,873 852,899 71,082
Deferred income 2,570,848 1,883,854 918,527
Deferred tax liability (note 9) 101,319 226,550 208,965
Other amounts payable 62,434 66,439 93,682
Additional purchase price payable 0 495,504 2,947,117
Total current liabilities 11,115,891 11,418,230 6,834,054
Shareholders' equity
Common stock; no par value, 6,868,390 6,865,235 6,861,871
17,041,800, 17,034,950 and 17,026,650 shares
outstanding at Sept 30, 2001, 2000 & 1999 respectively
Additional paid-in capital 548,304 548,062 554,755
Retained earnings, restricted 493,466 371,863 133,375
Retained earnings, unrestricted 23,457,247 18,973,168 14,629,952
Dividend paid out -3,237,942 -2,938,529 -2,724,424
Other comprehensive income 2,417,270 2,883,919 290,252
Unearned compensation expense (note 8) -13,224 -65,878 -127,080
Total shareholders’ equity 30,533,511 26,637,841 19,618,701
Total liabilities and shareholders' equity 41,649,401 38,056,071 26,452,757
See the accompanying notes to the audited financial statements
36 Artwork Systems Group
Annual Report 2001
Liabilities and shareholders’ equity
Consolidated balance sheets at september 30, 2001, 2000 and 1999
30/09/2001 Euro 30/09/2000 Euro 30/09/1999 Euroaudited audited audited
Net revenue
Products 39,309,652 31,544,205 24,676,605
Services 8,643,807 6,343,942 3,895,669
Total revenues 47,953,459 37,888,147 28,572,274
Cost of revenues
Products 5,517,656 4,518,110 2,956,685
Services 3,819,540 3,053,879 2,173,716
Total cost of revenues 9,337,196 7,571,989 5,130,401
Gross margin 38,616,263 30,316,158 23,441,873
Operating expenses
Research and development 3,326,541 2,568,931 1,727,515
Sales and marketing 12,687,386 8,780,952 4,892,534
General and administrative 2,639,251 2,551,400 1,956,517
Depreciation 641,072 620,184 467,188
Amortization 5,006,282 3,669,188 3,223,632
Total operating expenses 24,300,532 18,190,655 12,267,386
Income from operations 14,315,731 12,125,503 11,174,487
Non-operating expenses 141,658 59,955 604,421
Interest income 116,506 210,568 142,535
Interest Expense 146,939 80,884 485
Net exchange gain/(loss) -230,001 582,510 340,849
Profit before income taxes 13,913,639 12,777,742 11,052,965
Provision for income taxes 6,369,429 5,471,614 4,916,480
Net income 7,544,211 7,306,127 6,136,485
Net income excl goodwill 12,550,492 10,975,315 9,360,117
Basic/diluted earnings per share 0.44 0.43 0.36
Basic/diluted earnings per share, before amortization of goodwill 0.74 0.64 0.55
See the accompanying notes to the audited financial statements
37Artwork Systems Group
Annual Report 2001
Consolidated income statements for the years ended september 30, 2001, 2000 and 1999
AccumulatedCommon Common Additional other Total
stock stock paid Retained Comprehensive Shareholders’Shares Amount in Capital earnings Income Equity
September 30, 2001 in Euro
Balances, September 30, 2000 17,034,950 6,865,235 482,185 16,406,501 2,883,921 26,637,841
Exercise of employee stock options 6,850 3,154 242 3,396
Employee stockholders plan net 52,654 52,654
Components of comprehensive income
Foreign currency translation -466,651 -466,651
Net income 0 0 0 7,544,211 7,544,211
Total comprehensive income 0 0 0 7,544,211 -466,651 7,077,560
Dividend paid out -3,237,942 -3,237,942
Balances, September 30, 2001 17,041,800 6,868,390 535,080 20,712,770 2,417,270 30,533,511
AccumulatedCommon Common Additional other Total
stock stock paid Retained Comprehensive Shareholders’Shares Amount in Capital earnings Income Equity
September 30, 2000 in Euro
Balances, September 30, 1999 17,027,650 6,861,871 427,675 12,038,903 290,252 19,618,702
Exercise of employee stock options 7,300 3,364 257 3,621
Employee stockholders plan net 54,252 54,252
Components of comprehensive income
Foreign currency translation 2,593,669 2,593,670
Net income 0 0 0 7,306,127 0 7,306,127
Total comprehensive income 0 0 0 7,306,127 2,593,669 9,899,798
Dividend paid out -2,938,529 -2,938,529
Balances, September 30, 2000 17,034,950 6,865,235 482,185 16,406,501 2,883,921 26,637,841
38 Artwork Systems Group
Annual Report 2001
Consolidated statements of shareholders’ equity for the years ended september 30, 2001, 2000 and 1999
2001
2000
Accumulated other Total
Common stock Common stock Additional Retained Comprehensive Shareholders’Shares Amount paid in Capital earnings Income Equity
September 30, 1999 in Euro
Balances, September 30, 1998 17,002,400 6,850,243 246,170 8,626,842 -70,803 15,652,453
Exercise of employee stock options 25,250 11,628 118,507 130,135
Employee stockholders plan net 62,999 62,999
Components of comprehensive income
Foreign currency translation 361,054 361,054
Net income 0 0 0 6,136,485 0 6,136,485
Total comprehensive income 0 0 0 6,136,485 361,054 6,497,540
Dividend paid out -2,724,424 -2,724,424
Balances, September 30, 1999 17,027,650 6,861,871 427,675 12,038,903 290,252 19,618,702
39Artwork Systems Group
Annual Report 2001
1999
Consolidated statements of shareholders’ equity for the years ended september 30, 2001, 2000 and 1999
30/09/2001 Euro 30/09/2000 Euro 30/09/1999 Euroaudited audited audited
Net Income 7,544,211 7,306,127 6,136,485
Adjustments to reconcile net income to net cash provided by operating activities
Deferred taxes -1,186,817 -919,827 -1,009,708
Depreciation and amortization 5,918,621 4,289,372 3,690,820
(Gain)/Loss on sale of equipment 9,026 15,956 36,799
Provision for losses on accounts receivable 776,850 70,692 402,466
Compensation expense (ESOP) 52,654 54,252 62,999
Changes in operating assets and liabilities
Accounts receivable -4,073,634 -4,393,833 -3,181,898
Prepaid taxes -375,604 227,661 332,463
Prepaid license costs 51,317 51,317 51,317
Value added taxes -206,385 -54,972 113,049
Other current assets -133,546 -245,632 67,115
Inventory -335,406 -408,463 -75,432
Accounts payable -95,918 1,170,245 -586,026
Accrued payroll and related taxes 542,111 228,852 91,745
Accrued license fees -44,126 64,497 75,964
Accrued fees and other expenses 391,566 266,982 497,274
Income taxes payable 392,848 462,648 434,737
Deferred income 666,273 1,127,202 433,858
Other current liabilities 437,621 184,043 14,125
Net cash provided by operating activities 10,331,662 9,497,119 7,588,152
See the accompanying notes to the audited financial statements
40 Artwork Systems Group
Annual Report 2001
Operating activities
Consolidated statements of cash flows for the years ended september 30, 2001, 2000 and 1999
30/09/2001 Euro 30/09/2000 Euro 30/09/1999 Euroaudited audited audited
Purchases of property and equipment -704,801 -766,241 -603,518
Proceeds from sales of equipment 114,537 31,195 23,076
Investment in PCC -829,263 -3,157,647 666,782
Investment in France 0 -13,881 -1,026,408
Investment in Enfocus -3,075,865 -9,982,034 0
Net cash used in investing activities -4,495,392 -13,888,608 -940,068
Exercise of stock options for cash 3,396 3,619 130,135
Dividend payment -3,237,941 -2,938,529 -2,724,424
Short term debt from bank -1,045,000 3,655,000 0
Translation adjustment 0 0 513,299
Net cash used in & provided by financing activities -4,279,545 720,090 -2,080,990
Effect of exchange rate changes on cash -18,320 203,769 109,995
Net increase (decrease) in cash & cash equivalents 1,538,404 -3,467,628 4,677,089
Cash and cash equivalents at beginning of period 3,021,133 6,488,761 1,811,672
Cash and cash equivalents at end of period 4,559,537 3,021,133 6,488,761
Taxes paid 7,065,598
Intrest paid 146,939
See the accompanying notes to the audited financial statements
41Artwork Systems Group
Annual Report 2001
Financing activities
Investing activities
Artwork Systems Group NV was incorporated on November 20, 1996 as a naamloze vennootschap, or limited liability Company, under the laws of the Kingdom of
Belgium to develop software for pre-press applications in the graphic arts industry. The Company’s shares began trading publicly on NASDAQ Europe (formerly
EASDAQ), December 9, 1996. The Company is 73.62% owned by Stichting Administratiekantoor Artwork Systems (the Foundation), a holding company incorporat-
ed under the laws of the Netherlands on November 21, 1996. The Foundation’s role is exclusively to function as a vehicle for holding shares of the Company and
is not entitled to carry out any other activities.
Artwork Systems Group NV and its consolidated subsidiaries are hereafter referred to as ‘the Company’.
Year ended September 30, 2000
On April 25, 2000, the Company acquired Enfocus Software, a leading software provider in the PDF market, for Euro 10,000,000. The Company accounted for the
acquisition under the purchase method of accounting and, accordingly, the results of the operations of the acquired business have been included in the Company’s
consolidated results since the date of acquisition. The excess of purchase price over the estimated fair value of net liabilities acquired of approximately Euro
10,147,551 has been recorded as goodwill and is being amortized using the straight line method over five years.
The purchase agreement for Enfocus contains an earn-out mechanism based on the consolidated revenue from both Enfocus entities. On May 31, 2001 the earn-out
has been determined at Euro 3,075,865. This amount has been added to goodwill in the balance sheet and is amortized over the remaining amortization period starting
April 1, 2001.
The following unaudited pro forma financial information presents a summary of the consolidated results of operations of the Company as if the acquisition of
Enfocus Software had occurred at the beginning of the year ended September 30, 1999, with pro forma adjustments to give effect to amortization of goodwill,
interest expense on acquisition debt together with related tax effects. This pro forma information is not necessarily indicative of the combined results of operations
which would have actually occurred had the transactions been consummated on that date or which may be obtained in the future.
Years ended Years endedSeptember 30, 2000 September 30, 1999
(unaudited) (unaudited)
Revenue 39,186,736 29,763,712
Net income 5,876,078 3,766,288
Earnings per share 0.34 0.22
42 Artwork Systems Group
Annual Report 2001
ARTWORK SYSTEMS GROUP
Notes to the financial statements
1. Organization & description of business
2. Acquisitions
43Artwork Systems Group
Annual Report 2001
Year ended September 30, 1999
On May 18, 1999, Artwork Systems Group NV acquired a portion of the net assets of Elcede, a distributor of the Company in France, for Euro 981,206. The Company
accounted for the acquisition under the purchase method of accounting and, accordingly, the results of the operations of the acquired business have been includ-
ed in the Company’s consolidated results since the date of acquisition. The excess of purchase price over the estimated fair value of net liabilities acquired of Euro
1,040,288 has been recorded as goodwill and is being amortized using the straight line method over 18 months. The acquired entity was incorporated in conjunc-
tion with the acquisition and had not engaged in operations until the acquisition.
Year ended September 30, 1998
Effective August 28, 1998 Artwork Systems Group NV acquired Professional Software Technologies Inc.(PST) and PCC International Ltd., operating under the name
Professional Computer Cooperation (PCC) for USD 8 million (Euro 8,761,362) in cash plus an earn-out over the following two years based on EBITDA. PST and
PCC International Ltd. are software developers and system integrators for the packaging and commercial offset pre-press industries. The Company accounted for
the acquisition under the purchase method of accounting and, accordingly, the results of the operations of the acquired business have been included in the
Company’s consolidated results since the date of acquisition. The goodwill resulting from the acquisition in the amount of USD 7,588,351 (Euro 8,310,537) is being
amortized over 5 years. The purchase price also consisted of an earn-out provision, as defined in the agreement.
In accordance with the purchase agreement, the Company has calculated additional purchase price contingent on the result of the years ended September 30,
1999 and 2000 as USD 2,543,100 (Euro 2,785,128) and USD 737,629 (Euro 807,829), respectively. These amounts have been recorded as increases to goodwill.
In addition, the Company recorded adjustments to decrease goodwill by USD 132,265 (Euro 144,853) and USD 389,024 (Euro 426,048) at September 30, 1999 and
2000, respectively, to reflect certain working capital adjustments provisions of the purchase agreement. As of September 30, 2000, the initial purchase price and
earn-out provisions have been recognized as adjustments to goodwill.
Acquisitions
44 Artwork Systems Group
Annual Report 2001
Goodwill
Goodwill results from the acquisition of PCC, Artwork Systems SA and Enfocus Software can be determined as follows (in Euro):
PCC September 30, 2001 September 30, 2000 September 30, 1999
Goodwill 11,332,594 11,716,250 9,375,703
Amortization -6,527,200 -4,197,907 -1,541,625
Net goodwill 4,805,394 7,518,343 7,834,078
Artwork Systems SA September 30, 2001 September 30, 2000 September 30, 1999
Goodwill 1,040,288 1,040,288 1,026,408
Amortization -1,040,288 -972,485 -282,351
Net goodwill 0 67,803 744,057
Enfocus Software September 30, 2001 September 30, 2000 September 30, 1999
Goodwill 13,223,417 10,147,552 0
Amortization -3,251,776 -845,629 0
Net goodwill 9,971,640 9,301,923 0
Acquisitions
Basis of presentation and principles of consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and
therefore reflect adjustments which are not recorded in the Company’s statutory accounts.
The consolidated financial statements comprise the accounts of Artwork Systems Group NV, Artwork Systems NV, Artwork Systems Inc., Artwork Systems GmbH
& Co KG, Artwork Systems Beteiligungs-GmbH, Artwork Systems Verwaltungs-GmbH, Artwork Systems Ltd., Artwork Systems SA, AWSG Ltd., Enfocus Software
NV and Enfocus Software Inc. Artwork Systems Group NV owns directly or indirectly 100 % of all subsidiaries. All significant intercompany balances and trans-
actions have been eliminated in the consolidation.
Cash and cash equivalents
The Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. Cash and cash
equivalents consist primarily of deposits with banks.
Inventory
Inventory primarily consists of finished goods and is stated at the lower of cost or market on a first-in, first-out basis.
Property and equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight line method and depreciated over the
estimated useful lives of the assets. The cost of maintenance and repairs is charged against income as incurred. Estimated useful lives for financial reporting
purposes are as follows:
Computer equipment 3 years
Office equipment 3 - 5 years
Furniture 3 - 5 years
Automobiles 5 years
Goodwill
Goodwill represents the excess of the cost of an acquired business over the fair value of identifiable net assets. Goodwill is amortized by the straight line method
over the period of expected future economic benefit, generally 18 months to five years.
45Artwork Systems Group
Annual Report 2001
Notes to the financial statements
3. Significant accounting policies
Impairment
The Company assesses the impairment of long-lived assets, including goodwill, under SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The carrying value
of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying
value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined
primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved.
Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attribut-
able to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax
credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in future years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date. A valuation allowance is recorded to reduce the deferred tax asset if it is more likely than not that some portion
of the asset will not be realized. Deferred taxes are not provided for the undistributed earnings of foreign subsidiaries if those earnings have been permanently
reinvested in foreign operations.
Fair value of financial instruments
The Company considers cash and cash equivalents, accounts receivable, accounts payable, certain accrued expenses and short term debt to be financial
instruments as defined by FASB Statement No. 107, Disclosures About Fair Value of Financial Instruments. The carrying values of these assets and liabilities
approximated their fair values as of September 30, 2001, 2000 and 1999, based on the short-term maturities of these instruments.
Foreign currency translation
The reporting currency of the Company is the Euro. The financial statements of foreign subsidiaries with differing functional currencies have been converted into
Euro in accordance with FASB Statement No. 52, Foreign Currency Translation. All balance sheet accounts have been translated using the exchange rates in effect
at the balance sheet date. Equity accounts have been translated at historical rates. Income statement amounts have been translated using the average exchange
rate for the year. The gains and losses resulting from the changes in exchange rates from year to year have been reported in other comprehensive income. Foreign
currency transaction gains and losses are included in net income.
Significant accounting policies
46 Artwork Systems Group
Annual Report 2001
The component other comprehensive income included in equity consists of the following translation differences (in Euro):
September 30, 2001 September 30, 2000 September 30, 1999
Intercompany 1,771,204 2,199,546 229,611
Third parties 646,066 684,373 60,641
Total 2,417,270 2,883,919 290,252
Abbreviations used for currencies are as follows:
USD for US Dollar
GBP for Pound Sterling
Software development costs
Software development costs are accounted for in accordance with FASB Statement No. 86, Accounting for the Costs of Computer Software to Be Sold, Leased, or
Otherwise Marketed (FAS 86). Costs incurred in the research and development of new software products are expensed as incurred until technological feasibility
has been established. Costs incurred subsequent to establishment of technological feasibility and prior to general release to customers are capitalized. To date,
the establishment of technological feasibility (as defined by FAS 86) and general release substantially coincide. As a result, the Company has not capitalized any
software development costs, since such costs have not been significant.
Revenue recognition
Revenue is recognized in accordance with the American Institute of Certified Public Accountants Statement of Position 97-2, Software Revenue Recognition, as
amended. Revenue from software sales is recognized upon delivery of the software and the protection key, or, in the case where installation is required, upon
completion of the installation, provided that the fee is fixed and determinable, and that the collection of the receivable is considered probable. Maintenance rev-
enue is recognized on a straight-line basis over the maintenance period. Revenue from training and other services is recognized at the time the actual services
are performed.
In software arrangements that include multiple software products, maintenance and/or other services, the Company allocates the total fee among each element
based on their relative fair values.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Significant accounting policies
47Artwork Systems Group
Annual Report 2001
Concentration of credit risk
The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash equivalents and trade receivables.
The Company maintains cash and cash equivalents with various major financial institutions. The Company limits the amount of credit exposure with any one institution.
The Company’s trade accounts receivables result primarily from its sales of software and hardware to end users, Original Equipment Manufacturers (OEMs) and
independent graphic arts distributors throughout the world. The Company does not require collateral from its customers. The direct sales force offices are located
in Gent (Belgium), Freiburg (Germany), Bristol (Pennsylvania, USA), Redditch (United Kingdom), Paris (France), San Mateo (California, USA). Revenues generated
by independent dealers represent 42% of the Company’s revenue for the year ended September 30, 2001, direct sales 54% and OEMs 4%.
Concentrations of credit risk with respect to end user and OEM trade accounts receivable are limited due to the large number of customers and their dispersion
across many geographic areas. Concentrations of credit risk with respect to independent distributors is mitigated by periodic evaluations of the relative credit
standing of these entities. One major customer, an independent distributor, represents approximately 21% of total net revenue for the year ended September 30,
2001 and approximately 26% of total net revenue for the years ended September 2000 and 1999. The distributor mentioned represents 33%, 35% and 39% of the
total outstanding receivables for the years ended September 30, 2001, 2000 and 1999 respectively.
Earnings per share
Basic and diluted earnings per share is calculated in accordance with FASB Statement No. 128, Earnings per Share. Basic earnings per share excludes dilution
and is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if outstanding options were exercised or converted into common stock. The dilutive effect of outstanding options are reflected
in dilutive earnings per share by application of the treasury stock method. The following represents a reconciliation from basic earnings per share to diluted
earnings per share:
Year ended Year ended Year endedSeptember 30, 2001 September 30, 2000 September 30, 1999
Numerator
Net income 7,544,211 7,306,127 6,136,485
Denominator
Weighted average common shares outstanding 17,039,604 17,032,830 17,017,965
Dilutive stock options 0 18,865 31,906
Weighted average common shares outstanding - assuming dilution 17,039,604 17,051,695 17,049,871
Basic earnings per share 0.44 0.43 0.36
Diluted earnings per share 0.44 0.43 0.36
48 Artwork Systems Group
Annual Report 2001
Significant accounting policies
49Artwork Systems Group
Annual Report 2001
Employee stock options
The Company accounts for stock options granted to employees in accordance with the provisions of Accounting Principles Board Statement No. 25, Accounting for
Stock Issued to Employees (APB 25) because the Company believes the alternative fair value accounting provided for under FASB Statement No. 123, Accounting
for Stock-Based Compensation requires the use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25,
compensation expense is measured when the exercise price of the stock option is less than the market price of the underlying stock at the date of grant. Such
compensation expense is equal to the difference between the exercise price of the stock option and the market price of the underlying stock price on the date of
grant and is recognized over the vesting period of the respective stock option.
Other comprehensive income
Comprehensive income includes net income and "other comprehensive income." Other comprehensive income refers to changes in net assets from transactions
and other events, and circumstances other than transactions with stockholders. These changes are recorded directly as a separate component of Shareholders’
Equity and excluded from net income. The only comprehensive income item for the Company relates to foreign currency translation adjustments pertaining to
those subsidiaries not using the Euro as their functional currency.
Derivative Instruments and Hedging
The Company complies with the Financial Accounting Statements Board Statement No.133, Accounting for Derivative Instruments and Hedging Activities, as
amended. Statement 133, as amended, requires that all derivatives be recognized as either assets or liabilities at fair value. Derivatives that are not hedges must
be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either
be off-set against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognised in other comprehensive income
until the hedged item is recognised in earnings. The ineffective portion of a derivative’s change in fair value will be immediately recognised in earnings. For the
year ended September 30, 2001, 2000, and 1999 the Company did not have any hedging activity.
Recent accounting pronouncements
In June, 2001, the FASB issued Statements of Financial Accounting Standards (SFAS) No. 141, "Business Combinations" and No. 142, "Goodwill and Other
Intangible Assets." Under the new rules, goodwill and indefinite lived intangible assets are no longer amortized but are reviewed annually for impairment.
Separable intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives. The amortization provisions of SFAS
No. 142 apply to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, the
Company will apply the new accounting rules beginning September 30, 2002. The Company is currently assessing the financial impact that SFAS No. 141 and No.
142 will have on its Consolidated Financial Statements.
Significant accounting policies
In March 1997, the Company made a lump sum payment of USD 830,000 (Euro 718,433) to Scitex Corporation Ltd., in connection with a license agreement. This
amount is amortized using the straight-line method over 14 years, the estimated useful life of the license.
Prepaid license cost consists of the following (in Euro):
September 30, 2001 September 30, 2000 September 30, 1999
Prepaid license costs 718,433 718,433 718,433
Accumulated amortization -256,583 -205,266 -153,950
Prepaid license costs, net 461,850 513,167 564,483
Major classes of property and equipment consist of the following (in Euro):
September 30, 2001 September 30, 2000 September 30, 1999
Computer equipment 2,030,430 2,014,045 1,365,281
Office equipment 222,481 208,980 150,289
Furniture 185,026 202,951 207,516
Automobiles 950,987 720,040 388,676
Total property and equipment 3,388,923 3,146,016 2,111,763
Accumulated depreciation -2,292,551 -1,974,309 -1,227,443
Property and equipment, net 1,096,372 1,171,707 884,320
In conjunction with the acquisition of Enfocus Software in April 2000, the Company entered into a three year line of credit for which the total available will decrease
each year. At September 30, 2000, the total available credit line was Euro 10,000,000 with an outstanding balance of Euro 3,655,000 and leaving Euro 6,345,000
available. At September 30, 2001, total available credit line was Euro 6,700,000 with an outstanding balance of Euro 2,610,000 and leaving Euro 4,090,000
available. The interest rates related to the amount outstanding at September 30, 2001 and 2000 were 4.56% and 5.16%. The weighted average interest rates for
the year ended September 30, 2001 and 2000 related to these short term facilities were 5.35% and 5.02%. During the year ended September 30, 2001 and 2000,
the Company incurred and charged to interest expense, Euro 139,253 and Euro 76,026 respectively.
50 Artwork Systems Group
Annual Report 2001
Notes to the financial statements
5. Property and equipment
6. Bank loan
4. Prepaid licence costs
Management services fees and directors’ compensation
Certain commercial, financial and software development services are provided by the companies PowerGraph NV, Ingenieursbureau Peter Denoo BVBA and Bart
Denoo Engineering BVBA which are owned by Directors of the Company, Guido Van der Schueren, Peter Denoo and Bart Denoo, respectively. During the years
ended September 30, 2001, 2000 and 1999, the Company paid these companies a total amount of Euro 672,241, Euro 460,785 and Euro 455,851, respectively. The
amount included in accounts payable to these companies is Euro 74,617, Euro 45,999 and Euro 45,587 at September 30, 2001, 2000 and 1999 respectively.
In December 1996, the Company adopted an employee stock option plan in order to provide long-term incentives and rewards to the Company’s employees. Under
the plan, the Company has issued 161,000 options, each incorporating the right to purchase a share of the Company’s stock at net book value for options grant-
ed before the IPO, and, for options granted after the IPO, at the average closing price of the Company’s shares over the previous 120 days of trading.
In April 1999, the Company adopted a stock option plan for the former owner of Professional Software Technologies. Under the plan the Company has issued
61,788 options, each incorporating the right to purchase a share of the Company’s stock at the value determined at acquisition date.
In connection with the issuance of these options, the Company has recognized compensation expense in the consolidated income statements resulting from the
amortization of unearned compensation for the years ended September 30, 2001, 2000 and 1999 of Euro 52,654, Euro 54,252 and Euro 62,999, respectively.
At September 30, 2001, Euro 13,224 of unearned compensation expense remains unamortized and is recorded as a component of shareholders’ equity.
Stock option transactions for the three years ended September 30, 2001 are summarized below:
2001 2000 1999
Weighted Average Exercise Price Weighted Average Exercise Price Weighted Average Exercise PriceOptions Price Options Price Options Price
Options outstanding beginning of year 151,738 12.02 165,688 11.94 48,150 3.12
Options granted 0 0 0 0 148,788 13.70
Options exercised -6,850 0.50 -7,300 0.50 -25,250 5.22
Options forfeited -2,250 13.19 -6,650 11.03 -6,000 13,19
Options outstanding at end of year 142,638 11.20 151,738 12.02 165,688 11.94
Options exercisable at end of year 135,788 13.05 77,692 13.15 43,096 13,05
51Artwork Systems Group
Annual Report 2001
8. Option plan
Notes to the financial statements
7. Related party transactions
Information related to options outstanding at September 30, 2001 is summarized below:
Stock options Outstanding:
Weighted AverageRemaining Stock
Number Contractual Options Exercise prices of shares Life Exercisable
Euro 0.5 6,850 5.2 0
Euro 7.31 500 6.5 500
Euro 13.19 135,288 6.7 135,288
All options 142,638 6.7 135,788
FASB Statement No. 123, Accounting for Stock Based Compensation (FAS 123) requires the disclosure of pro forma net income and earnings per share informa-
tion computed as if the Company had accounted for its employee stock options under the fair value method set forth in FAS 123. The fair value for these options
was estimated at the date of grant using a Black-Scholes option pricing model assuming no dividends, risk free weighted average interest rate of 4%, volatility
factor of 65%, and a weighted average expected option life of 2.5 and 2.9 years for 1999 and 1998, respectively. There were no stock options granted during the
year ended September 30, 2001 and 2000. The weighted average fair value of stock options granted during the years ended September 30, 1999 and 1998 was
Euro 5.6 and Euro 2.2, respectively.
For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period. Because options vest over
several years and additional grants are expected, the effects of these hypothetical calculations are not likely to be representative of similar future calculations.
The Company’s pro forma information for the years ended September 30 is as follows (in thousands of Euro except for the net income and pro forma per share
information) :
2001 2000 1999
Net income as reported 7,544 7,306 6,136
Pro forma expense -273 -140 -423
Pro forma net income 7,271 7,166 5,713
Basic earnings per share as reported 0.44 0.43 0,36
Pro forma basic earnings per share 0.43 0.42 0,34
Diluted earnings per share as reported 0.44 0.43 0,36
Pro forma diluted earnings per share 0.43 0.42 0,34
52 Artwork Systems Group
Annual Report 2001
Option plan
The provision for income taxes consists of the following (in Euro):
September 30, 2001 September 30, 2000 September 30, 1999
Current 6,292,021 6,964,925 5,920,995
Deferred 77,408 -1,493,311 -1,004,514
6,369,429 5,471,614 4,916,481
A reconciliation of income taxes computed at the average local statutory rate (35%) to the provision for income taxes is as follows (in Euro):
September 30, 2001 September 30, 2000 September 30, 1999
Income taxes computed at the local statutory rate 4,869,774 4,961,741 4,531,716
Goodwill amortization 1,062,403 189,748 277,805
Translation difference 66,247 17,920 185,495
Revenue recognition according to Sop 97/2 38,470 -51,536 38,486
Expensed prepaid license costs 20,614 20,614 -75,584
Disallowed expenses 0 0 -161,635
Unearned compensation expense 21,151 21,793 25,307
Taxes on intra group dividend 168,149 42,321 99,579
Loss carry forward 271,269 271,269 0
Accrued expenses -159,882 0 0
Other items, net 11,234 -2,256 -4,687
6,369,429 5,471,614 4,916,481
53Artwork Systems Group
Annual Report 2001
Notes to the financial statements
9. Income taxes
54 Artwork Systems Group
Annual Report 2001
Deferred tax assets and liabilities are comprised of the following (in Euro):
September 30, 2001 September 30, 2000 September 30, 1999
Goodwill amortization 2,026,425 1,484,558 1,086,299
Receivable allowances 620,563 402,202 249,315
Interest expenses 186,041 328,421 0
Loss carry forward 0 271,269 0
Accrued expenses 289,222 0 0
Other items, net 108,933 42,867 24,871
Deferred tax assets 3,231,185 2,529,317 1,360,485
Translation differences -10,669 -76,917 -20,697
Deferred revenue 94,876 56,506 38,486
Expensed prepaid license costs -185,525 -206,139 -226,753
Deferred tax liabilities 101,319 226,550 208,964
Net deferred tax assets 3,129,866 2,302,769 1,151,521
Income Taxes
55Artwork Systems Group
Annual Report 2001
Pantone license
In 1994, Artwork Systems NV entered into a license agreement with Pantone to use the Pantone Color System. The license fee amounts to 1% of net sales of
products integrating the licensed system with an annual minimum of USD 25,000 (Euro 28,106).
During the years ended September 30, 2001, 2000 and 1999 the Company expensed for this license fee Euro 88,845, Euro 93,272 and Euro 81,234 respectively.
Operating lease obligations
The Company leases its facilities, cars and office equipment under operating lease agreements with varying expiry dates. Future minimum lease payments for
the years ending September 30 are as follows (in Euro):
2002 312,220
2003 169,748
2004 130,511
2005 16,655
2006 3,047
Total 632,181
Rental expense for the years ending September 30 were as follows (in Euro):
1999 258,698
2000 314,330
2001 419,275
Notes to the financial statements
10. Commitments
56 Artwork Systems Group
Annual Report 2001
The Company is involved in various legal proceedings arising in the normal course of business. Based on its current knowledge and the advice of counsel, the
Company believes that the ultimate resolution of these matters will not have a material effect on the Company’s financial position, results of operations, or cash
flows.
Artios
On March 22, 1999 Artios UK Ltd, ("Artios"), the Company’s former distributor for the United Kingdom, summoned Artwork Systems NV before the Commercial
Court of Gent, claiming a total amount of GBP 547,929 for retroactive discounts and for damages as a result of the termination of the distribution contract. Artwork
Systems had terminated this contract after Artios was acquired by Barco Graphics, a competitor of the Company. Artwork Systems had completely reserved the
receivables on Artios, in the amount of Euro 451,990, as bad debts.
During the year ended September 30, 2001, the Company has settled with Artios and received GBP 100,000. The claims of both parties in this matter have been
dropped.
Notes to the financial statements
11. Contingencies
57Artwork Systems Group
Annual Report 2001
On January 11, 2000 the Company received a tax claim, amounting to EUR 58.1 million, as a result of an inquiry by the special branch of the Belgian tax authorities
("bijzondere belastingsinspectie" or BBI).
In preparation for the Initial Public Offering (IPO) of the Company’s shares in December 1996, all the operations of the group were merged under the holding
company Artwork Systems Group NV. As part of this restructuring, Artwork Systems Group NV acquired all shares of Artwork Systems NV at net asset value.
The BBI claims that the difference between the market value of Artwork Systems Group NV at the IPO and the price paid for Artwork Systems NV, is taxable as
a benefit in kind ("voordeel van alle aard") to Artwork Systems Group NV.
According to the law firm Allen&Overy (formerly Loeff Claeys Verbeke), who is representing the Company in this matter, and according to the law firm De Bandt,
van Hecke, Lagae & Loesch - Linklaters & Alliance, who has been asked to give a second opinion, this tax claim is contrary to the current application of tax rules
in Belgium. These rules specify that benefits received by a company are taxable only if they are reflected in the accounts of that company or had to be reflected
in the accounts according to Belgian accounting law. Belgian accounting law clearly states that shares have to be recorded at acquisition cost and has been con-
sistently applied in this manner. In addition, following the tax authorities' own commentaries, the concept of "fringe benefit" is not to be applied for corporate
income tax purposes.
The dispute concerns Belgian tax principles. No fraud or tax evasion is involved. Accordingly, the tax authorities levied the lowest tax penalty of 10%.
In accordance with the Belgian tax procedure, Artwork Systems Group filed an objection against the tax claim with the regional director of the tax authorities. On
April 2, 2001 the regional director had not yet taken a decision and the Company considered it appropriate to submit the dispute immediately to the tax court of
Gent. (The new Belgian tax procedure provides that objections concerning tax assessments year 1998 or earlier, where no decision is announced by March 31,
2001, can be submitted to the new tax courts of first instance without further delay.) The Company is seeking the cancellation of the tax claim and compensation
for damages incurred. Pleading is scheduled for February 7, 2002.
While the ultimate outcome of the above-mentioned litigation cannot be ascertained at this time, based on current knowledge of the applicable law and facts, and
taking into consideration the opinion of the Company’s legal counsel, management believes that this lawsuit should not have a material adverse effect on the
Company’s financial statements or its business operations.
12. Tax claim
Notes to the financial statements
The Company has evaluated FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information and has concluded that the Company
operates in one reportable industry segment, the development, marketing, sales and support of pre-press software and related hardware.
The following geographic area data includes net revenues based on customer location, and property and equipment based on physical location.
Net revenue Year Ended Year Ended Year EndedSeptember 30, 2001 September 30, 2000 September 30, 1999
United States 23,531,758 17,734,082 14,272,543
Germany 6,575,882 6,115,318 5,202,137
United Kingdom 2,567,835 3,685,680 1,828,702
France 3,420,835 1,902,413 969,835
Rest of Europe 7,594,300 5,261,240 3,774,149
Rest of world 4,262,849 3,189,414 2,524,908
Total 47,953,459 37,888,147 28,572,274
Property & Equipment, net Year Ended Year Ended Year EndedSeptember 30, 2001 September 30, 2000 September 30, 1999
United States 193,076 368,432 403,383
Belgium 354,476 320,496 226,557
Germany 222,512 169,821 94,509
United Kingdom 206,073 185,995 132,568
France 116,338 126,963 27,303
Ireland 3,898 0 0
Total 1,096,374 1,171,707 884,320
On December 6, 2001 the Company acquired all the shares of Dimensional CAD/CAM Systems Inc, dba Dimensional Impressions for USD 2,000,000 in cash plus
an earn-out over the following 2 years based on EBITDA. The company develops and sells packaging design software.
58 Artwork Systems Group
Annual Report 2001
Notes to the financial statements
13. Operations by industry segment and geographic area
14. Subsequent events
Artwork Systems currently employs 170 people: 70 in Belgium, 19 in Germany, 49 in the United States, 17 in the United Kingdom, 9 in France and 6 in Ireland.
2001 2000 1999
Research & Development 31 26 13
Sales & Marketing and Support 113 105 70
Administration 26 27 19
Total 170 158 102
The Company does not own any real estate. All office space is leased with an option to renew at the expiry date.
The Company is involved in various legal proceedings arising in the normal course of business. Based on its current knowledge and the advice of counsel, the
Company believes that the ultimate resolution of these matters will not have a material effect on the Company’s financial position, results of operations, or cash
flows.
On March 22, 1999 Artios UK Ltd, (''Artios''), the Company’s former distributor for the United Kingdom, summoned Artwork Systems NV before the Commercial
Court of Gent, claiming a total amount of GBP 547,929 for retroactive discounts and for damages as a result of the termination of the distribution contract. Artwork
Systems had terminated this contract after Artios was acquired by Barco Graphics, a competitor of the Company. Artwork Systems had completely reserved the
receivables on Artios, in the amount of Euro 451,990, as bad debts.
During the year ended September 30, 2001, the Company has settled with Artios and received GBP 100,000. The claims of both parties in this matter have been dropped.
60 Artwork Systems Group
Annual Report 2001
Annual report ARTWORK SYSTEMS GROUP
1. Employees
Artios
2. Property
3. Legal proceedings
On January 11, 2000 the Company received a tax claim, amounting to EUR 58.1 million, as a result of an inquiry by the special branch of the Belgian tax authori-
ties ("bijzondere belastingsinspectie" or BBI).
In preparation for the Initial Public Offering (IPO) of the Company’s shares in December 1996, all the operations of the group were merged under the holding
company Artwork Systems Group NV. As part of this restructuring, Artwork Systems Group NV acquired all shares of Artwork Systems NV at net asset value.
The BBI claims that the difference between the market value of Artwork Systems Group NV at the IPO and the price paid for Artwork Systems NV, is taxable as
a benefit in kind ("voordeel van alle aard") to Artwork Systems Group NV.
According to the law firm Allen&Overy (formerly Loeff Claeys Verbeke), who is representing the Company in this matter, and according to the law firm De Bandt,
van Hecke, Lagae & Loesch - Linklaters & Alliance, who has been asked to give a second opinion, this tax claim is contrary to the current application of tax rules
in Belgium. These rules specify that benefits received by a company are taxable only if they are reflected in the accounts of that company or had to be reflected
in the accounts according to Belgian accounting law. Belgian accounting law clearly states that shares have to be recorded at acquisition cost and has been con-
sistently applied in this manner. In addition, following the tax authorities' own commentaries, the concept of "fringe benefit" is not to be applied for corporate
income tax purposes.
The dispute concerns Belgian tax principles. No fraud or tax evasion is involved. Accordingly, the tax authorities levied the lowest tax penalty of 10%.
In accordance with the Belgian tax procedure, Artwork Systems Group filed an objection against the tax claim with the regional director of the tax authorities. On
April 2, 2001 the regional director had not yet taken a decision and the Company considered it appropriate to submit the dispute immediately to the tax court of
Gent. (The new Belgian tax procedure provides that objections concerning tax assessments year 1998 or earlier, where no decision is announced by March 31,
2001, can be submitted to the new tax courts of first instance without further delay.) The Company is seeking the cancellation of the tax claim and compensation
for damages incurred. Pleading is scheduled for February 7, 2002.
While the ultimate outcome of the above-mentioned litigation cannot be ascertained at this time, based on current knowledge of the applicable law and facts, and
taking into consideration the opinion of the Company’s legal counsel, management believes that this lawsuit should not have a material adverse effect on the
Company’s financial statements or its business operations.
61Artwork Systems Group
Annual Report 2001
Tax claim
Purchases of property and equipment amounted to Euro 704,801, Euro 766,241 and Euro 603,518 in the years ended September 30, 2001, 2000 and 1999 respec-
tively.
USD 8,000,000 (Euro 8,761,362) was paid for Professional Computer Corporation International Ltd ("PCCI") and Professional Software Technologies Inc. ("PSTI")
(PCCI and PSTI together named as ''PCC'') as well as the indebtedness on PCC's lines of credit for an amount of USD 1,152,011 (Euro 1,261,648) during Financial
Year 1998.
During Financial Year 1999, the Company acquired a portion of the net assets of Elcede, a distributor of the Company in France, for Euro 981,206.
During financial year 2000, Euro 10,000,000 was paid for the acquisition of Enfocus Software. In conjunction with the acquisition, the Company entered into a three
year line of credit for which the total available will decrease each year. At September 30, 2000, the total available credit line was Euro 10,000,000 with an out-
standing balance of Euro 3,655,000 and leaving Euro 6,345,000 available. At September 30, 2001, total available credit line was Euro 6,700,000 with an outstanding
balance of Euro 2,610,000 and leaving Euro 4,090,000 available. The interest rates related to the amount outstanding at September 30, 2001 and 2000 were 4.56%
and 5.16%. The weighted average interest rates for the year ended September 30, 2001 and 2000 related to these short term facilities were 5.35% and 5.02%.
During the year ended September 30, 2001 and 2000, the Company incurred and charged to interest expense, Euro 139,253 and Euro 76,026 respectively.
Additionally, during financial year 2000 the Company paid an earn-out to the previous owner of PCC of USD 2,543,100 (Euro 2,785,128). A final earn-out of USD
737,629 (Euro 807,829) was paid in financial year 2001.
In financial year 2001, the Company paid an earn-out of Euro 3,075,865 to the former owners of Enfocus Software.
62 Artwork Systems Group
Annual Report 2001
ARTWORK SYSTEMS GROUP
4. Investment Policy
The Company reports its consolidated financial statements in accordance with generally accepted accounting principles in the United States (US GAAP).
In December 1996, the Company completed an initial public offering, when a total of 16,978,000 shares of the Company ("Shares") were admitted to EASDAQ
under the symbol “AWSG”. The shares are quoted in Euro. The following table sets forth the high and low mid closing price for the fiscal periods indicated.
Period Low High
First quarter 2001 (ended December 31, 2000) 10.15 13.80
Second quarter 2001 (ended March 31, 2001) 9.50 11.95
Third quarter 2001 (ended June 30, 2001) 7.13 10.93
Fourth quarter 2001 (ended September 30, 2001) 6.48 7.48
Period Low High
First quarter 2000 (ended December 31, 1999) 12.90 16.10
Second quarter 2000 (ended March 31, 2000) 12.20 17.80
Third quarter 2000 (ended June 30, 2000) 12.80 15.75
Fourth quarter 2000 (ended September 30, 2000) 12.00 15.25
Period Low High
First quarter 1999 (ended December 31, 1998) 9.97 14.90
Second quarter 1999(ended March 31, 1999) 12.90 18.35
Third quarter 1999 (ended June 30, 1999) 14.44 19.15
Fourth quarter 1999 (ended September 30, 1999) 13.85 15.98
63Artwork Systems Group
Annual Report 2001
ARTWORK SYSTEMS GROUP
5. Information concerning the nature and extent of the trading market
Stichting Administratiekantoor Artwork Systems (hereafter ''the Foundation''), holds an aggregate of 12,546,825 Shares, representing 73.62% of the Company's Shares.
The Company has ensured, by including a provision in its articles of association, that any natural or legal person who acquires or disposes of Shares of the
Company, is obliged to notify the Company in accordance with the provisions of the Belgian Act of March 2, 1989 (on the notification of a substantial interest in
listed companies and the regulation of public take-over bids), of the total number of Shares held by such person following such acquisition or disposal, in all cases
where the proportion of Shares held by such person following the transaction exceeds or falls below the threshold of three percent, and subsequently of five per-
cent of the total share capital and any multiple thereof.
Beside the Foundation, the Company has not received any notification by shareholders owning at least three percent of the Company's total share capital.
The Foundation was incorporated by Guido Van der Schueren, Peter Denoo and Bart Denoo (the ''Founders'') under the laws of the Netherlands on November 21,
1996. The Foundation’s role is exclusively to function as a vehicle for holding Shares of the Company. It is not entitled to carry out any commercial or financial
activities other than relating to the administration of Shares in the Company acquired by it.
The Foundation is controlled and duly represented by its board of directors which is composed of Guido Van der Schueren, Peter Denoo and Bart Denoo. Each of
the directors has been appointed upon incorporation of the Foundation for an undetermined period of time. The decision to resign as a director of the Foundation
and to provide for replacement is taken by each of the existing directors separately. The beneficial holders have no authority as to replacement of the existing
directors or the appointment of additional directors. A change of control over the Foundation through replacement of its directors and, therefore, a change of con-
trol over the Company, is the exclusive authority of the Founders.
64 Artwork Systems Group
Annual Report 2001
ARTWORK SYSTEMS GROUP
6. Control of the Company
The following table sets forth the dividends paid during the years ended September 30, 2001, 2000 and 1999.
Financial year Per share Total dividend
2001 0.19 3,237,942
2000 0.1725 2,938,528
1999 0.16 2,724,424
For Belgian income tax purposes, the gross amount of all distributions made by the Company to its shareholders (other than the repayment of paid-up capital carried
out in accordance with Belgian Company Law) are generally taxed as dividends. The gross amount paid by the Company to redeem the Shares owned by a share-
holder and the distributions made by the Company to its shareholders as a result of the Company’s complete liquidation, are also taxed as dividends so far as the
payment exceeds the fully paid-up capital of the Company. In principle, however, no Belgian withholding tax is levied on such redemption and liquidation distributions.
In general, a Belgian withholding tax of (currently) 25% is levied on dividends. The 25% rate can be reduced to 15% for dividends from shares ("VVPR shares")
provided (1) that they have been publicly issued after January 1, 1994 or (2) if they have been privately issued after January 1, 1994, that they represent share
capital contributed in cash and that they are, from the date of issue, registered or given in open custody in Belgium to a credit institution, to a stockbroker com-
pany or to a savings bank submitted to the supervision of the CBF in Belgium (Article 269, paragraph 3,b° of the Income Tax Code ("ITC").
For private investors who are tax resident in Belgium and for Belgian legal entities subject to the "rechtspersonenbelasting / impôt des personnes morales", the
Belgian withholding tax constitutes, in general, the final tax in Belgium on their dividend income.
For Belgian resident companies and for companies with their tax residence outside Belgium holding the Shares through a permanent establishment or fixed base
in Belgium, the gross dividend income must be added to their taxable income, which is, in principle, taxed at the income tax rate of (currently) 40.17% (under cer-
tain conditions, reduced rates apply). For this purpose, the gross dividend income includes the actually levied dividend withholding tax. If such a company holds
an equity participation of at least 5% or with an acquisition value of at least BEF 50,000,000 at the time of the dividend distribution, 95% of the gross dividend
received can in principle be deducted from the taxable income ("participation exemption"). The participation exemption also applies, even if the quantitative crite-
ria are not fulfilled, if the corporate investor is identified as a credit institution mentioned in Article 56, §1 of the Belgian Income Tax Code (1992), as an insurance
company mentioned in Article 56, §2, 2°, h of the Belgian Income Tax Code (1992), as a stockbroker company mentioned in Article 47 of the Law of April 6, 1995
or as an investment company as defined in Article 2, §2, 6° of the Belgian Income Tax Code (1992).
65Artwork Systems Group
Annual Report 2001
Dividends paid
Taxation of dividends
ARTWORK SYSTEMS GROUP
7. Dividends
Belgian resident companies and companies with their tax residence outside Belgium holding the Shares through a permanent establishment or a fixed base in
Belgium are, under certain conditions, entitled to credit the dividend withholding tax against their corporate income tax liability and to claim the reimbursement
of the withholding tax that exceeds this liability.
A non-resident shareholder who does not hold the Shares through a permanent establishment or fixed base in Belgium, will not be subject to any Belgian income
tax other than the dividend withholding tax, which constitutes the final Belgian income tax. Belgian tax law provides for certain exemptions from withholding tax
on Belgian source dividends distributed to non-resident investors. No Belgian withholding tax is due on dividends attributed to a non-resident investor identified
as a "non-resident saver" not carrying on a business profit-making activity and exempt from income tax in his country of residence. If no exemption applies, the
Belgian withholding tax may be reduced for non-Belgian investors pursuant to double taxation treaties concluded by Belgium and their State of residence. Under
the Belgium-Germany income tax treaty, the withholding tax rate on dividends can be reduced to 15%.
The Company's auditors are Ernst & Young Bedrijfsrevisoren B.C.V, Moutstraat 54, B-9000 Gent, Belgium, represented by Patrick Rottiers, Partner, who was
appointed for a three year term at the extraordinary General Shareholders' Meeting held on January 28, 2000.
The above financial statements of the Company up to September 30, 2001 have been audited by the statutory auditor of the Company.
66 Artwork Systems Group
Annual Report 2001
Taxation of dividends
8. Auditors
In accordance with Belgian Company Law and the Articles of Association of the Company, the Company is administered by its Board of Directors, which is grant-
ed the broadest powers. The Board is authorized to take any action not expressly reserved to the shareholders by law or by the Articles of Association.
The members of the Company's Board of Directors are as follows:
Name Age Position
Guido Van der Schueren 49 Chairman of the Board
Peter Denoo (1)(2)* 41 President and CEO
Bart Denoo * 37 Chief Software Architect
Marc Ecker, acting for the account of BBZ NV (1)(2) 43 Director
Ratio Plus, represented by Hubert Ooghe (1)(2)** 54 Director
(1) Member of the Audit Committee.
(2) Member of the Remuneration Committee.
* Peter Denoo and Bart Denoo are brothers.
** Elected on October 17, 2001
Mr. Marc Ecker and Mr. Hubert Ooghe act as Independent Directors, in accordance with the NASDAQ Europe Rule Book. The members of the Board of Directors
can be reached at the Company's address. Mrs. Guido Van der Schueren, Peter Denoo and Bart Denoo have been named as subject of an investigation relating to
the tax claim described in section 3.
Guido Van der Schueren, a co-founder of the Company, has served as a Managing Director of Artwork Systems Group NV and its subsidiaries since their incor-
poration or their acquisition. Mr. Guido Van der Schueren presently is Chairman of the Board. From 1982 to April 1992, Mr. Van der Schueren served in various
positions, including Sales and Marketing Director, with DISC NV (now Barco Graphics NV), a company that develops and markets pre-press systems. From 1974
to 1982, Mr. Van der Schueren was Sales Manager ''Compugraphic'' with Bonte NV, a distributor of graphic arts equipment. Mr. Van der Schueren received degrees
in Graphic Arts, Education and Marketing.
Ir. Peter Denoo, a co-founder of the Company, has served as a Managing Director of Artwork Systems Group NV and its subsidiaries since their incorporation
or their acquisition. Mr Peter Denoo presently is President and CEO. From 1983 to January 1992, Mr. Peter Denoo served in various engineering positions, includ-
ing R&D manager ''Digi'' products, with DISC NV Mr. Peter Denoo received a degree in Electrical Engineering (Burgerlijk Ingenieur Electrotechniek richting
Zwakstroom RUG) and a degree in Computer Science (Licentiaat Informatica RUG) from the State University of Gent.
67Artwork Systems Group
Annual Report 2001
Directors
ARTWORK SYSTEMS GROUP
9. Directors, executive officers and key personnel
Ir. Bart Denoo, a co-founder of the Company, has served as a Managing Director of Artwork Systems Group NV and several subsidiaries since their incorpora-
tion or their acquisition. Mr. Bart Denoo is presently Chief Software Architect. From 1987 to January 1992, Mr. Bart Denoo served in various engineering positions
with DISC NV Mr. Bart Denoo received a degree in Electrical Engineering (Burgerlijk Ingenieur Electrotechniek richting Zwakstroom RUG) and a degree in Computer
Science ("Licentiaat Informatica RUG") from the State University of Gent.
Marc Ecker has served as a director of Artwork Systems Group NV since its incorporation in November 1996. Mr. Ecker's main position outside the Company is
the one of managing director of Capital & Finance NV, a privately held company engaged in corporate finance advisory work and asset management. From 1992
to 1996, Mr. Ecker was a managing director of Lessius NV, a privately held company engaged in corporate finance advisory work and managing a development
capital fund. From 1987 to 1992, Mr. Ecker was a partner of the law firm Loeff Claeys Verbeke. From 1980 to 1987, Mr. Ecker was associate at the law firm Braun
Claeys Evrard Sorel, and from 1983 to 1984 at the New York law firm White & Case. Mr. Ecker obtained degrees in Law, Economics and Philosophy at the Catholic
University of Leuven.
Prof. dr. Hubert Ooghe has served as a director of Artwork Systems Group NV since October 17, 2001. Mr. Ooghe is a professor at the Vlerick Leuven Gent
Management School (Ernst & Young Chair of Growth Management and Gerling-Graydon-IFB Institue of Credit Management) and at the Gent University (Department
of Corporate Finance, Faculty of Economics and Business), Belgium. Mr. Ooghe is the author and co-author of many books and articles and is active as board mem-
ber or Chairman in several organizations and companies. Mr. Ooghe received the degree of Doctor in applied economic sciences of the Gent University in 1972.
Terms of office. The directors' term of office will end immediately after the annual General Shareholders' Meeting of January 2007.
The commercial, financial and software development services of Guido Van der Schueren, Peter Denoo and Bart Denoo are provided through three service com-
panies, i.e. Powergraph NV, Ingenieursbureau Peter Denoo BVBA and Bart Denoo Engineering BVBA respectively. The agreements between the Company and these
service companies provide that they cannot be terminated before December 2001.
68 Artwork Systems Group
Annual Report 2001
Directors
Certain key employees of the Company who are not also directors, are as follows:
at the Belgian headquarters Age Position
Petra Tant 34 Product Manager Labels & Packaging
Patrick Coussement 36 Software Development Engineer
Jan Ruysschaert 43 Associate Director of Sales
Igor Vandromme 30 Product Support Manager
Filip Carrein 37 Product Manager Commercial Color
Dirk Peerlinck 38 Software Development Engineer
Hildegard Verhoeven 32 Chief Financial Officer
Luc Buttiens 55 Associate Director of International Sales
at the German subsidiary
Peter Ganz 52 Managing Director
Christopher Graf 34 Managing Director
at the French subsidiary
Olivier Moeyersoms 37 Managing Director
at the US subsidiary
Dennis Mehta 50 President and CEO
Daniel Lacey 43 Vice President of Sales and Channel Marketing
Mark Samworth 39 Vice President of Technology
Michael Rottenborn 35 Vice President of Customer Service
at the UK subsidiary
David Harris 45 Software Development Engineer
at the Enfocus subsidiary
Peter Camps 46 Chief Executive Officer
Marc Goldchstein 42 VP Strategic Marketing
David van Driessche 29 Director of Software Development and Support
Patrick Van Dam 39 Director of International Sales and Marketing
Catherine McCarthy 34 Area Director, North America
69Artwork Systems Group
Annual Report 2001
Key personnel
Petra Tant joined the Company in April 1993 as Product Specialist and serves as Product Manager Labels & Packaging since August 1997. From 1990 to 1993,
Ms. Tant served as Pre-Press Production Manager for Imprimerie Bultez SA, a print shop specialized in forms, labels and pharmaceutical packaging. From 1989
to 1990, Ms. Tant was Instructor with Barco Graphics NV. Ms. Tant received a degree in Graphic Arts Production Management from the Higher Institute for Graphic
Education of Gent (Graduaat Grafische Bedrijfsleiding HIGRO).
Patrick Coussement has served the Company as Software Development Engineer since May 1993. Before, Mr. Coussement co-founded Computron, a company
that assembles and sells personal computer hard- and software, and served as its Managing Director from 1991 to 1993. From 1989 to 1991, Mr. Coussement
served as R&D Engineer with DISC NV. Mr. Coussement received a degree in Computer Science from the State University of Gent (Licentiaat Informatica RUG).
Jan Ruysschaert joined the Company in August 1994 as Sales Manager Benelux and serves today as Associate Director of Sales and managing director for
Artwork Systems Ltd. From 1991 to 1994, Mr. Ruysschaert was Sales Manager with PPC NV, a pre-press shop. From 1979 to 1991, Mr. Ruysschaert served in various
positions with DISC NV, including Customer Support Coordinator, Sales Manager Add-ons, Area Sales Manager Northern Europe and Product Manager Forms and
Labels. Mr. Ruysschaert received a degree in Graphic Arts.
Igor Vandromme joined the Company in September 1995 as Product Specialist. He served as Product Support Manager North America during 1997 and 1998
and is Product Support Manager since then. Mr. Vandromme received a degree in Graphic Arts Production Management from the Higher Institute for Graphic
Education of Gent (Graduaat Grafische Bedrijfsleiding HIGRO).
Filip Carrein joined the Company in August 1996 as Marketing Researcher and serves as Product Manager Commercial Color since August 1997. From 1995 to
1996, Mr. Carrein was a systems integration consultant with CompuVision NV, a personal computer supplier. From 1993 to 1995, Mr. Carrein served as Technical
Director with Publiwest NV, a publishing and printing company. From 1991 to 1993, Mr. Carrein was Director Europe “Alias Eclipse” with Alias France SA,
the French division of Alias Research Inc, a design and pre-press software developer. From 1987 to 1991, Mr. Carrein served in various positions with Barco
Creative Systems NV (now Barco Graphics NV), including Sales Account Manager Scandinavia and UK, Sales Manager Pacific Rim and Product Manager ''Creator''.
Mr. Carrein obtained a degree in Electronics from the Catholic Academy of Engineering of Oostende (Industrieel Ingenieur Electronica KIH).
Ir. Dirk Peerlinck joined the company in January 1997 as Software Development Engineer. From 1986 to 1997, Mr. Peerlinck served in various engineering
positions with DISC NV, including R&D project manager and software quality assurance manager. Mr. Peerlinck received a degree in Electrical Engineering from
the State University of Gent (Burgerlijk Ingenieur Elektrotechniek richting Zwakstroom RUG).
Hildegard Verhoeven joined the Company in February 1998 as Financial Controller. Since January 2001, Ms. Verhoeven serves as Chief Financial Officer. From
1993 to 1998, Ms. Verhoeven served as an auditor with KPMG Bedrijfsrevisoren, an international accounting firm. Ms. Verhoeven received a degree in Commercial
and Financial Sciences from the St. Aloysius College of Brussel (Licenciaat Handels- en Financiële Wetenschappen EHSAL).
Luc Buttiens has served the Company since June 1998 as International Sales Manager and serves today as Associate Director International Sales. From
1985 to 1998, Mr. Buttiens was Marketing Manager and International Sales Manager at DISC NV. From 1981 to 1985, he worked at Scitex NV Brussel. Before
that, Luc Buttiens had various management positions in the editing and printing industry and was Production Manager at Van Hees/Vlessing NV (VVL/BBDO)
a marketing and communication company. Mr. Buttiens received a degree in Graphic Arts Production Management from the Higher Institute of Graphic
Education of Gent (HIGRO).
70 Artwork Systems Group
Annual Report 2001
Key personnel
Christopher Graf is a managing director for Artwork Systems GmbH & Co. KG. Mr. Graf is in charge of finance & administration, demonstrations, support and
training. Christopher Graf is co-founder of PIC GmbH, which was acquired by the Company in 1998. Before he founded PIC, Mr. Graf was partner and manager at
Easy GmbH, a system integrator specialized in computer graphics and printing.
Peter Ganz is managing director of Artwork Systems GmbH & Co. KG. Mr. Ganz is responsible for Sales and Marketing. Mr. Ganz is co-founder of PIC GmbH.
Before joining PIC, Mr. Ganz was managing director Germany with DISC NV. Mr. Ganz received a degree in Economic Science ( Diplom-Wirtschaftingenieur) at the
HDM, Stuttgart (High School for printing and media).
Olivier Moeyersoms is managing director of Artwork Systems SA. He joined the Company in May 1999. From 1992 till 1999, Mr. Moeyersoms was sales and
marketing responsible of Elcede France, the former distributor of the Company. Before joining Elcede, Mr. Moeyersoms was sales manager for France with Barco
Graphics. Mr. Moeyersoms received a degree in Economic Science from the Université Catholique de Louvain-La-Neuve.
Dennis Mehta is the President and CEO of Artwork Systems Inc. Mr. Mehta is in charge of the US operations of Artwork Systems. Mr. Mehta is the founder of PCC,
which was acquired by Artwork Systems in 1998. Prior to founding PCC in 1980, Mr. Mehta served in various management and engineering positions with Control
Data, NCR and Digital Equipment Company. Mr. Mehta received a Master’s Degree in Electrical Engineering and in Business Administration from Boston University.
Daniel Lacey is the Vice President of Sales and Channel Marketing of Artwork Systems Inc. Mr. Lacey was regional sales manager with Gerber Systems, a manu-
facturer of platesetters. Before, Mr. Lacey was employed by DuPont Printing and Publishing, in roles ranging from dealer distribution to sales and product man-
agement. Mr. Lacey has a Bachelor’s Degree from the University of Delaware.
Mark Samworth is Vice President of Technology of Artwork Systems Inc. Before Artwork Systems, Mr. Samworth was with DuPont in flexographic plates and elec-
tronic imaging. Mr. Samworth holds several patents in the area of digital imaging technology. He received a Bachelor’s Degree in Printing Science from Rochester
Institute of Technology and a Master’s in Business Administration from the University of Delaware.
Michael Rottenborn is Vice President of Customer Service for Artwork Systems Inc. Before, he has served as a Vice President of Product Marketing, where
he was responsible for the introduction of PCC's commercial offset products. From 1989 to 1996, Mr. Rottenborn was employed by DuPont Printing and Publishing
in various roles including electronic design, software development, technical marketing, and product management for the Crosfield product line. Prior to 1989 Mr.
Rottenborn was with IBM Corporation and Litton Industries. Mr. Rottenborn holds a Master's Degree in Computer Science from Villanova University and a Bachelor
of Science degree in Electrical Engineering from Virginia Polytechnic Institute and State University.
David Harris serves the Company as Software Development Engineer, having previously worked on the PackFlow products for PCC. Mr. Harris has over 21 years
experience in software development in the graphic arts: he worked for Linotype in the early 1980’s and was a key member of the development team at Chelgraph.
Ir. Peter Camps, co-founder of Enfocus Software, has served as Chief Executive Officer of the company since 1993 (then called FirstClass NV). Mr. Camps has
over 15 years of experience in the international graphic arts business. From 1984 to 1990, he served in various positions, including Operations Manager and Vice
President Operations for Disc NV (Now Barco Graphics NV), a company that develops and markets pre-press systems. From 1990 to 1992, Mr. Camps served as
General Manager for Barco Graphics Inc, the North American subsidiary of Barco Graphics in Dayton, Ohio. Peter Camps holds a degree in Electrical Engineering
(Burgerlijk Ingenieur Electrotechniek, richting zwakstroom, optie informatica) from the State University of Gent.
71Artwork Systems Group
Annual Report 2001
Key personnel
Marc Goldchstein joined Enfocus Software in July 1999 as Sales Manager. Since September 1999, he serves as Vice-President Sales and Marketing of the com-
pany. Before joining Enfocus, Mr. Goldchstein held a number of positions in other companies: from 1998 to 1999 he worked as Marketing Director for AES Prodata,
a supplier of Ticketing Systems for Public Transport. From 1994 to 1998, he held various positions, including Business Unit Manager and Director for RAM Mobile
Data. This company is a telecom company that operates a public network for wireless data communications. In 1987, Mr. Goldchstein co-founded SoftCore, a com-
pany specialized in developing and commercializing software for Electronic Document Management. From 1983 to 1987, Mr. Goldchstein worked at Vrije
Universiteit Brussel as academic assistant. Mr. Goldchstein has a degree in Commercial Engineering, obtained at the VUB (Handelsingenieur, Solvay School).
David van Driessche serves Enfocus Software as Director of Software Development & Support. Mr. van Driessche joined Enfocus Software in 1996 and served
as software development engineer. Mr. van Driessche has a degree in science, option computerscience, from the State University of Gent (Licenciaat in de weten-
schappen, natuurkundige richting).
Patrick Van Dam joined Enfocus Software in June 2000 as Sales Account Manager. Since April 2001, he serves as Director International Sales and Marketing.
Mr. Van Dam is the co-founder of Visual Communication Solutions, a multimedia company where he has been acting as General Manager from 1990 till 2000. Prior
to founding Visual Communication Systems, Mr. Van Dam served in various positions with Screen, Aesthedes and Philips. Mr. Van Dam obtained a degree in
Electronics at the Higher Institute Mechelen (Industrieel Ingenieur Electronica – Chip Design).
Catherine McCarthy serves Enfocus as Area Director, North America. Ms. McCarthy joined Enfocus Software in May 1998 as Business Development Manager,
then Director of Sales, North America. Before joining Enfocus Software, Ms. McCarthy worked for Pantone Inc. as the Western Regional Sales Manager where
she was responsible for Channel Marketing and Sales. From 1994 to 1995 she served as Director of Sales and Marketing for Ion, a music CD-ROM company. From
1991 to 1994, Ms. McCarthy worked as a Marketing Programs Manager for Light Source. Ms. McCarthy has a Bachelor of Science degree in marketing from Bentley
College, Waltham, Massachussets.
During Financial Year 2001, the Company accrued an aggregate compensation of Euro 37,184 for its directors. In addition, the managing directors have compa-
ny cars at their disposal. No bonuses, stock options, pension plan or other benefits were granted to the managing directors.
During Financial Year 2001 an aggregate amount of Euro 672,241 was paid to the service companies mentioned above for the commercial, financial and soft-
ware development services of Guido Van der Schueren, Peter Denoo and Bart Denoo.
No related party transactions occurred during financial year 2001.
72 Artwork Systems Group
Annual Report 2001
Key personnel
10. Executive remuneration
11. Certain transactions
Artwork Systems Group NVStapelplein 70/300B-9000 GentBelgiumTel.: +32 9 265 84 11Fax: +32 9 265 84 [email protected]
Artwork Systems Ltd.The Business CentreEdward Street - Redditch,Worcestershire B97 6HAUnited KingdomTel.: +44 1527-592550Fax: +44 [email protected]
Artwork Systems GmbH & Co. KGBurkheimer Straße 3D-79111 Freiburg GermanyTel.: +49 761 452 98 0Fax: +49 761 452 98 [email protected]
Artwork Systems SAParis Nord II47, Allée des ImpressionnistesBP 50335 VillepinteF-95941 Roissy CDG CedexFranceTel.: +33 148 17 00 90Fax: +33 149 38 09 [email protected]
Artwork Systems Inc.219A Rittenhouse CircleBristol, PA 19007USATel.: +1 215 826 4500Fax: +1 215 826 [email protected]
Enfocus Software NVKleindokkaai 3-5B-9000 GentBelgiumTel.: +32 9 269 16 90Fax: +32 9 269 16 [email protected]
Enfocus Software Inc.3 Water Park DriveSuite 210, San MateoCA 94403USATel.: +1 650 358 1210Fax: +1 650 358 [email protected]
2001 annual report
hard facts on software