With all of the divisions and business units within Barco (Kortrijk, Belgium)(www.barco.com), we have always had a hard time figuring out this company. At the USDC Conference, we finally gained some clarity about the company's operations, thanks to a well-done presentation. Overall, it looks like most divisions and business units within Barco did well in 2004 and expect to continue good growth in 2005.

Barco is divided into five divisions: BarcoView (33% of sales); Barco Media and Entertainment (24%); Barco Presentation and Simulation (16%); BarcoControl (16%); and BarcoVision (9%). There are multiple business units that service different industry segments under these five divisions. The big advantage of Barco's broad products and market presence is the synergy it can get from product development across these segments.

BarcoView, for example, is subdivided into four business units: Medical, Avionics, Traffic Control, and Defense & Security.

· The Medical unit contributed 11% to company sales and is experiencing a 24% growth rate, serving the needs of digital x-ray displays, 3D imaging and custom imaging. Margins average 11%.

· The Traffic Control unit had 9% of sales with an 8% growth rate last year. Products here serve the air traffic control market for aviation and the vessel control market. Barco recently entered the en route (higher than 10 feet) aviation segment and received FAA approval for a >5 megapixel LCD display. Barco holds an 80% market share in the air traffic control segment.

· Defense & Security was 10% of sales, but saw a negative 15% revenue decline in 2004, with margins of 15%. Most sales (55%) are to the US armed forces, with the Navy being the biggest customer. Other sales are to larger defense contractors, such as Lockheed Martin and Honeywell.

The Media and Entertainment division is composed of the Events, Media and Digital Cinema segments.

· The Events business unit contributed 14% of sales, had 20% margins, and had a 29% growth rate in 2004. Products here include sales of projection systems and LED walls to rental companies and event organizers. Overall, Barco claims to have a 40% share of this market and a whopping 80% share of the pop concert sub-segment.

· The Media business unit contributed 7% of sales, but saw a decline of 33% in 2004. It was one of the few groups that saw a loss in 2004. This unit sells installed LED walls for indoor and outdoor applications. Despite the loss, Barco claims it gained some market share though acquisitions in the US and China. But to lower costs, it will now move production from Belgium to China. Its main competitor is Daktronics.

· Digital Cinema is only a 2% contributor to sales, but saw a growth rate of 164% last year (from a small base, of course). Sales were $12M in 2004, and Barco claims to have a 41% share of the 481 installs made worldwide so far. This segment could grow to $50 to $150M, but the conversion to digital projection remains stalled as NATO (North Atlantic Theater Owners) waits for the studios to come up with a financing plan. NEC and Christie are Barco's rivals in this segment. (See related story on Barco in digital cinema this issue.)

The Presentation/Simulation group serves the needs of the simulation, virtual reality, entertainment and presentations markets.

· The Simulation business unit contributed 10% of sales and is experiencing 10% growth. Apparently, growth is not coming from commercial flight simulators, but from military flight simulators. Barco sells projection systems to system integrators like CAE and Saab.

· The Virtual Reality segment is composed mostly of 3D systems to support the oil and gas industry, automotive design and scientific imaging, particularly for pharmaceuticals.

· The Entertainment unit sells display systems to amusement centers, museums, etc.

· The Presentations unit contributes 6% of sales and saw a negative 6% decline in sales in 2004. These are projection products aimed at the corporate boardroom, auditoriums and videoconferencing. No explanation for the decline was given.
BarcoControl serves the various markets for control room display systems. Primary industries are utilities, broadcast, surveillance and traffic control. The conversion to HDTV is a big driver in the broadcast market, naturally. This group contributed 16% of sales and experienced a 32% growth spurt in 2004.

Finally, BarcoVision contributed 9% of sales in 2004, but saw an 11% decline. This unit is a bit out of place with the others within Barco as it sells sensors, and spinning and weaving equipment. Executives have debated selling the group, but it is contributing 13% of profits, so the company will likely hold onto the group for a while yet.