6-K 1 w42781e6-k.txt REPORT OF FOREIGN ISSUER 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 6-K Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the period ended September 30, 2000 Xeikon N.V. -------------------------------------------------------- [Translation of registrant's name into English] 72 Vredebaan, 2640 Mortsel, Belgium -------------------------------------------------------- [Address of principal executive offices] [Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.] Form 20-F [x] Form 40-F [ ] [Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.] Yes [x] No [ ] 2 XEIKON N.V. INDEX FORM 6-K

~~Table~~PAGE ---- PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets at December 31, 1999 (Audited) and September 30, 2000 (Unaudited)................................... 3 Condensed Consolidated Statements of ~~Contents~~Operations for the three months ended September 30, 1999 and 2000 (Unaudited)........................... 4 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 1999 and 2000 (Unaudited)........................... 5 Consolidated Statements of Comprehensive Income/(Loss) and Shareholders' Equity for the years ended December 31, 1997, 1998 and 1999 (audited) and for the three months ended September 30, 2000 (unaudited)................................................. 6 Notes to Condensed Consolidated Financial Statements........................... 7-12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................. 13-17 Item 3. Qualitative and Quantitative Disclosures About Market Risk..................... 17 PART II - OTHER INFORMATION Item 1. Legal Proceedings.............................................................. 18 Item 2. Changes in Securities and Use of Proceeds...................................... 18 Item 3. Defaults Upon Senior Securities................................................ 18 Item 4. Submission of Matters to a Vote of Security Holders............................ 18 Item 5. Other Information.............................................................. 18 Item 6. Exhibits and Reports on Form 6-K............................................... 18 SIGNATURES ............................................................................... 19

-2- 3 ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS XEIKON N.V. CONDENSED CONSOLIDATED BALANCE SHEETS (All amounts in thousands of US dollars)

~~SECURITIES~~December 31, September 30, 1999 2000 -------------------------------- (audited) (unaudited) ASSETS Current Assets : -Cash and cash equivalents 9,237 9,133 -Accounts receivable 58,648 51,198 -Accounts receivable from related parties 4,427 1,627 -Inventory 56,044 61,210 -Other current assets 6,128 11,251 -------------------------------- Total current assets 134,484 134,419 -------------------------------- Property and equipment, at cost 30,180 45,072 Less -- accumulated depreciation (9,716) (12,808) -------------------------------- 20,464 32,264 -------------------------------- Other fixed assets, net 2,279 - Other non-current assets 3,017 774 Goodwill, net 7,569 7,075 Acquired technology, net 1,503 4,091 -------------------------------- 169,316 178,623 ================================ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities : -Notes payable to Banks 8,731 16,511 -Accounts payable 30,667 32,063 -Due to related parties 2,733 3,798 -Accrued expenses 17,363 21,129 -Deferred tax liabilities 160 591 -------------------------------- Total current liabilities 59,654 74,092 -------------------------------- Pension obligations 2,373 2,143 Notes payable to related parties 12,419 11,239 Refundable research grants payable, net of current portion 308 278 Minority interest 1,409 - Shareholders' equity : -Common stock 18,160 19,005 -Additional paid-in capital 83,436 102,427 -Capital surplus 6,842 -Retained earnings (deficit) 12,175 (4,078) -Cumulative translation adjustment (20,618) (33,325) -------------------------------- Total shareholders' equity 93,153 90,871 -------------------------------- 169,316 178,623 ================================

-3- 4 XEIKON N.V. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (All amounts in thousands of US dollars, except share and per share amounts)

~~EXCHANGE~~Three ~~COMMISSION~~ Months Nine Months Ended September 30, Ended September 30, ------------------------------------------------------- 1999 2000 1999 2000 ---- ---- ---- ---- (unaudited) (unaudited) (unaudited) (unaudited) Revenues $52,893 $41,524 $139,403 $133,244 Cost of revenues $33,530 $31,389 $87,441 $94,358 ------------------------------------------------------- Gross profit $19,363 $10,135 $51,962 $38,886 ------------------------------------------------------- Operating expenses : -Research and development $5,191 $7,281 $14,401 $19,688 -Acquired in-process research and development $0 $1,500 $471 $1,500 -Selling, general and administrative $9,203 $10,860 $22,569 $31,393 -Nonrecurring charge $5,338 $0 $5,338 ------------------------------------------------------- Total operating expenses $14,394 $24,979 $37,441 $57,919 ------------------------------------------------------- Operating income/(loss) $4,969 ($14,844) $14,521 ($19,033) Other income, net $77 $1,087 $586 $1,885 ------------------------------------------------------- Income/(loss) before provision of income taxes and minority $5,046 ($13,757) $15,107 ($17,148) interest ------------------------------------------------------- Provisions for income taxes ($1,980) $1,407 ($6,325) $895 ------------------------------------------------------- Income / (loss) before minority interest $3,066 ($12,350) $8,782 ($16,253) ------------------------------------------------------- Minority interest $148 $0 $82 $0 Net income / (loss) $3,214 ($12,350) $8,864 ($16,253) ------------------------------------------------------- Shares Shares Shares Shares ------ ------ ------ ------ Weighted average number of common shares 28,851,924 30,619,931 28,690,035 29,460,639 outstanding (basic) Basic earnings per share amount $0.11 ($0.40) $0.31 ($0.55) ------ ------- ------ ------- Impact of : Warrants issued to non employees 0 123,444 0 Warrants issued to employees 92,794 0 110,632 0 Weighted average number of common shares 28,944,718 30,619,931 28,924,111 29,460,639 ---------- ---------- ---------- ---------- outstanding (diluted) Diluted earnings per share amount $0.11 ($0.40) $0.31 ($0.55) ------ ------- ------ -------

-4- 5 XEIKON N.V. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (All amounts in thousands of US dollars)

~~Washington~~Nine Months Ended September 30, DC--------------------------------- ~~20549~~ 1999 2000 ---- ---- (unaudited) (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES : NET INCOME $9,693 ($16,253) ADJUSTMENTS TO RECONCILE CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES : -Deferred tax - (964) -Depreciation and amortization 69 3,342 -Amortization in-process research and development 471 1,509 -Pension obligations 44 (230) -Minority interest - (1,409) -Changes in operating assets and liabilities (751) Accounts receivable - 7,450 Accounts receivable from related parties - 2,800 Inventory - (1,012) Prepaid expenses - (371) Accounts payable - 1,396 Due to related parties - 1,065 Accrued expenses - 3,766 NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES 9,526 1,089 CASH FLOWS FROM INVESTING ACTIVITIES : -Purchase of property and equipment (1,878) (375) -Acquisition of subsidiary, net of cash acquired (15,823) (1,509) -Other investment (5,157) 2,279 NET CASH USED IN INVESTING ACTIVITIES (22,858) 395 CASH FLOWS FROM FINANCING ACTIVITIES : -Proceeds from notes payable to banks 1,249 7,780 -Net borrowings (repayments) under notes payable to related parties 2,045 (1,180) -Advances to affiliates and other - 2,243 -Refundable research grants - (30) -Payments under capital lease obligation - - -Capital surplus - -Proceeds from issuance of common stock 1,354 106 NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES 4,648 8,919 Foreign exchange effect on net equity (9,141) (10,508) --------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (17,825) (105) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 31,823 9,237 --------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD 10,801 9,133 --------------------------------------------------------------------------------------------------------- Interest paid during the period 85 373 Tax paid during the period 4,829 0 ---------------------------------------------------------------------------------------------------------

-5- 6 XEIKON N.V. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) AND SHAREHOLDERS' EQUITY ( All amounts in Thousands of US Dollars, Except Share and Per Share Amounts)

~~FORM~~Total Comprehensive Accumulated Accumulated Common Shareholders Income/(Loss) Profit/(Loss) Other Shares Equity Comprehensive Income/(Loss) ------------------------------------------------------------------------------- Balance, December 31, 1997 $68,184 - ($18,889) ($12,623) 28,473,100 Net income 16,201 16,201 16,201 - - Other comprehensive income - foreign currency translation 4,519 4,519 - 4,519 - Comprehensive income - 20,720 - - - Exercise of stock options 440 - - - 54,001 ------------------------------------------------------------------------------- Balance, December 31, 1998 $89,344 - ($2,688) ($8,104) 28,527,101 =============================================================================== Net income 14,863 14,863 14,863 - - Other comprehensive income - foreign currency translation (12,514) (12,514) - (12,514) - Comprehensive income - 2,349 - - - Exercise of stock options 422 - - - 49,097 Exercise of warrants 1,038 - - - 288,800 ------------------------------------------------------------------------------- Balance, December 31, 1999 $93,153 - $12,175 ($20,618) 28,864,998 =============================================================================== (audited) Net income (4,193) (4,193) (4,193) - - Other comprehensive income - foreign currency translation (3,780) (3,780) - (3,780) - Comprehensive income - (7,973) - - - Exercise of stock options - - - - - Exercise of warrants - - - - - ------------------------------------------------------------------------------- Balance, March 31, 2000 $85,180 - $7,982 ($24,398) 28,864,998 =============================================================================== Net income 291 291 291 - - Other comprehensive income - foreign currency translation (534) (534) - (534) - Comprehensive income - (243) - - - Capital increase 19,731 1,751,741 Capital surplus 6,842 Exercise of stock options -K - - - - Exercise of warrants - - - - - ------------------------------------------------------------------------------- Balance, June 30, 2000 $111,510 - $8,273 ($24,932) 30,616,739 =============================================================================== Net income (12,350) (12,350) (12,350) - - Other comprehensive income - foreign currency translation (8,394) (8,394) - (8,394) - Comprehensive income - (20,744) - - - Capital increase 105 16,316 Capital surplus - Exercise of stock options - - - - - Exercise of warrants - - - - - ------------------------------------------------------------------------------- Balance, September 30, 2000 $90,871 - ($4,077) ($33,326) 30,633,055 =============================================================================== Capital Additional Amount Surplus Paid-in Capital ------------------------------------ Balance, December 31, 1997 $17,949 $81,747 Net income - - Other comprehensive income - foreign currency translation - - Comprehensive income - - Exercise of stock options 31 409 ------------------------------------ Balance, December 31, 1998 $17,980 $82,156 ==================================== Net income - - Other comprehensive income - foreign currency translation - - Comprehensive income - - Exercise of stock options 26 396 Exercise of warrants 154 884 ------------------------------------ Balance, December 31, 1999 $18,160 $83,436 ==================================== (audited) Net income - - Other comprehensive income - foreign currency translation - - Comprehensive income - - Exercise of stock options - - Exercise of warrants - - ------------------------------------ Balance, March 31, 2000 $18,160 $83,436 ==================================== Net income - - Other comprehensive income - foreign currency translation - - Comprehensive income - - Capital increase 837 18,894 Capital surplus 6,842 Exercise of stock options - - Exercise of warrants - - ------------------------------------ Balance, June 30, 2000 18,997 6,842 102,330 ==================================== Net income - - Other comprehensive income - foreign currency translation - - Comprehensive income - - Capital increase 8 97 Capital surplus - Exercise of stock options - - Exercise of warrants - - ------------------------------------ Balance, September 30, 2000 19,005 6,842 102,427 ====================================

7 XEIKON N.V. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (ALL AMOUNTS IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS) 1. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Xeikon N.V., a Belgian corporation, (the "Company") was established in 1988 and develops, manufactures and markets an innovative digital color printing system specifically designed to meet the speed, quality, reliability, cost, variable content and on demand requirements of the short run color printing market. The condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and include, in the opinion of management, all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation of interim period results. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The results for the interim periods presented are not necessarily indicative of results to be expected for any future period. These condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1999, filed with the Securities and Exchange Commission on Form 20-F dated June 30, 2000. 2. INVENTORY Inventory is comprised of material, labor and manufacturing overhead, and is stated at the lower of cost (determined on a weighted average basis) or net realizable value. Management performs periodic reviews of inventory and provides reserves for excess and obsolete inventory or disposes of such inventory. Inventory consists of the following:

~~Report~~DECEMBER of31, ~~Foreign~~SEPTEMBER ~~Issuer~~ 30, 1999 2000 -------------------------------------------- (audited) (unaudited) Raw materials................................................ $ 22,880 $ 29,233 Work-in-Process.............................................. 6,378 6,898 Finished Goods............................................... 18,847 18,782 Goods purchased for resale (consumables)..................... 7,939 6,297 -------------------------------------------- $ 56,044 $ 61,210 ============================================

3. EARNINGS PER SHARE Basic net income/(loss) per share is computed by dividing net income/(loss) by the weighted average number of common shares outstanding during the period. Diluted net income/(loss) per share is computed by dividing net income/(loss) by the weighted average number of common and common equivalent shares outstanding during the period. Given the net loss for the 9 months ended September 30, 2000 there is no dilutive effect on the loss per share. 8 4. INVESTMENT On March 4, 1999, Xeikon entered into a Securities Acquisition Agreement with Varis Corporation, a company engaged in the design, development, manufacture and marketing of controllers and systems for use with electronic print engines. Under the terms of the agreement, Xeikon purchased 1,617.25 shares of Series B Preferred Stock of Varis for $2,500,000. Contemporaneously with its purchase of the Series B Preferred Stock, Xeikon provided a $3,000,000 loan to Varis in return for a promissory note, bearing interest at the Prime Rate plus 2.5%, which is due on March 4, 2001. Xeikon may extend the maturity date of the promissory note for one year in exchange for a warrant to acquire an additional 64.69 shares of Series B Preferred Stock. In view of the uncertain future operations of Varis Corporation, the Company elected to register an impairment of the total investment amounting to $5.3 million valuated at the actual exchange rate. This is separately reflected as a non-recurring charge in the Condensed Consolidated Statement of Operations of the Company. On April 21, 1999, the Company acquired from Bull Europe Centrale et Oriental S.A. ("Bull") 80% of the outstanding shares of Nipson International S.A. ("Nipson International"), a limited liability company organized under French law. The purchase price was 96,000,000 French Francs ("FF") (approximately U.S. $15.8 million, or 71.11 per share.) Until April 21, 2001, Xeikon has the right to acquire the remaining 20% of Nipson International (337,500 shares) from Bull or Dai Nippon Printing, a permitted transferee of 10% of the shares, for a price per share equal to 71.11 FF per share plus interest calculated from April 21, 1999 in an amount equal to EURIBOR (three months) plus 1% through the date of acquisition (the "Purchase Price"). If Xeikon does not exercise its option, the holder(s) of the 20% minority interest may require Xeikon, during the period beginning April 22, 2001 and ending October 21, 2001, to purchase all or part of their shares at a per share price equal to the Purchase Price. The acquisition of Nipson International was accounted for as a purchase. Accordingly, the purchase price was allocated to the net assets acquired based upon their estimated fair market values. The excess purchase price over the estimated fair value of net assets acquired amounted to approximately $7.0 million, which has been accounted for as goodwill and is being amortized over 10 years using the straight line method. The accompanying consolidated statements of income reflect the operating results of Nipson since the acquisition. Pro forma unaudited consolidated operating results of the Company and Nipson for the nine months ended September 30, 1999, assuming the acquisition had been made as of January 1, 1999, are summarized below (in thousands of US dollars except per share amounts):

~~Pursuant~~NINE toMONTHS ~~Rule 13a-16~~ENDED orSEPTEMBER ~~15d~~30, 1999 -16----------------- of (unaudited) Net sales............................................ $ 155,678 Net income (loss).................................... $ 6,344 Basic earnings/(loss) per share...................... $ 0.22 Diluted earnings/(loss) per share $.................. $ 0.22

These pro forma results have been prepared for comparative purposes only and include certain adjustments such as additional depreciation expense as a result of a step-up in the basis of fixed assets, additional amortization expense as a result of goodwill and other intangible assets. They do not purport to be indicative of the results of operations which actually would have resulted had the combination been in effect on January 1, 1999 or of future results of operations of the consolidated entities. In connection with the acquisition from Bull, Xeikon assumed two intercompany loans of Nipson International and its wholly owned subsidiary Nipson Printing Systems, Inc. in the amount of 70,000,000 -8- 9 FF and US $2,321,000, respectively. Xeikon has agreed to cause the first such loan to be repaid in six equal semi-annual installments over a three year period beginning April 21, 2002. This loan bears interest at 1% above the EURIBOR (three months). The second loan will be repaid in two equal annual installments over a two-year period beginning April 21, 2005 and does not bear interest. Bull has agreed to indemnify Xeikon until April 21, 2001 for breaches of customary representations and warranties subject to a maximum indemnification amount of 35,000,000 FF. The Company introduced claims for indemnification towards Bull for approximately 35,000,000 FF (approximately $5 million), under the agreement and has recorded such claim as a receivable. The set up of this receivable was registered against goodwill in the second quarter of 2000. 5. SEGMENT AND GEOGRAPHIC INFORMATION The Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information in the fiscal year ended December 31, 1998. SFAS 131 establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. SFAS 131 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions how to allocate resources and assess performance. The Company's chief decision maker, as defined under SFAS 131, is a combination of the Chief Executive Officer, and the Chief Financial Officer. The Company has viewed its operations and manages its business as principally two segments, the sale of printing systems and options and the sale of consumables, spares, tools and others. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. There are no intersegment sales and transfers. The segment revenues and cost of revenues are as follows :

~~the~~CONSOLIDATED ~~Securities~~XEIKON ~~Exchange~~GROUP ~~Act~~Three Months Nine Months ended September 30, ended September 30, -------------------------------------------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- Systems and options Revenues $20,643 $30,245 $69,797 $88,780 Cost of ~~1934~~ revenues $14,817 18,344 $44,198 53,769 Gross Profit 5,826 11,901 25,599 35,011 Gross Margin 28% 39% 37% 39% Consumables, spares, tools and other Revenues $20,881 $22,648 $63,447 $50,623 Cost of revenues 16,572 15,186 50,160 33,672 Gross Profit 4,309 7,462 13,287 16,951 Gross Margin 21% 33% 21% 33% Total Revenues $41,524 $52,893 $133,244 $139,403 Cost of revenues 31,389 33,530 94,358 87,441 Gross Profit 10,135 19,363 38,886 51,962

-9- 10 Gross Margin 24% 37% 29% 37% Revenues by geographic area : -United States $9,988 $20,014 $44,343 $51,342 -Rest of Europe 6,374 8,353 17,525 19,631 -Belgium 1,110 3,006 8,672 15,253 -The Netherlands 6,493 9,768 19,242 24,643 -United Kingdom 3,001 3,055 7,752 7,434 -Germany 9,142 4,659 23,731 12,007 -Other 5,416 4,038 11,979 9,093 -------------------------------------------------------------- $41,524 $52,893 $133,244 $139,403 ============================================================== As a percentage of total revenue : -United States 24.05% 37.84% 33.28% 36.83% -Rest of Europe 15.35% 15.79% 13.15% 14.08% -Belgium 2.67% 5.68% 6.51% 10.94% -The Netherlands 15.64% 18.47% 14.44% 17.68% -United Kingdom 7.23% 5.78% 5.82% 5.33% -Germany 22.02% 8.81% 17.81% 8.61% -Other 13.04% 7.63% 8.99% 6.53% -------------------------------------------------------------- 100.00% 100.00% 100.00% 100.00% ==============================================================

-10- 11

~~For~~COLOR ~~the~~Three ~~period~~Months Nine Months ended ~~June~~ September 30, ended September 30, -------------------------------------------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- Systems and options Revenues $14,727 $24,411 $50,970 $77,603 Cost of revenues 11,529 14,857 33,162 47,861 Gross Profit 3,198 9,554 17,808 29,742 Gross Margin 22% 39% 35% 38% Consumables, spares, tools and other Revenues $13,691 $14,513 $40,711 $36,401 Cost of revenues 8,564 9,560 28,060 23,624 Gross Profit 5,127 4,953 12,651 12,777 Gross Margin 37% 34% 31% 35% Total Revenues $28,418 $38,924 $91,681 $114,004 Cost of revenues 20,093 24,417 61,222 71,485 Gross Profit 8,325 14,507 30,459 42,519 Gross Margin 29% 37% 33% 37% Revenues by geographic area : -United States $7,017 $16,350 $33,299 $45,846 -Rest of Europe 2,001 2,940 5,325 10,161 -Belgium 1,126 2,899 7,842 15,045 -The Netherlands 6,435 9,671 18,856 24,206 -United Kingdom 1,805 1,403 3,590 4,267 -Germany 7,645 3,402 18,042 9,087 -Other 2,389 2,259 4,727 5,392 -------------------------------------------------------------- $28,418 $38,924 $91,681 $114,004 ============================================================== As a percentage of total revenue : -United States 24.69% 42.00% 36.32% 40.21% -Rest of Europe 7.04% 7.55% 5.81% 8.91% -Belgium 3.96% 7.45% 8.55% 13.20% -The Netherlands 22.64% 24.85% 20.57% 21.23% -United Kingdom 6.35% 3.60% 3.92% 3.74% -Germany 26.90% 8.74% 19.68% 7.97% -Other 8.42% 5.81% 5.15% 4.74% -------------------------------------------------------------- 100.00% 100.00% 100.00% 100.00% ==============================================================

-11- 12

~~Xeikon~~BLACK NAND WHITE Three Months Nine Months ended September 30, ended September 30, ------------------------------------------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- Systems and options Revenues $5,916 $5,834 $18,827 $11,177 Cost of revenues 3,288 3,487 11,036 5,908 Gross Profit 2,628 2,347 7,791 5,269 Gross Margin 44% 40% 41% 47% Consumables, spares, tools and other Revenues $7,190 $8,135 $22,736 $14,222 Cost of revenues 8,008 5,626 22,100 10,048 Gross Profit -818 2,509 636 4,174 Gross Margin -11% 31% 3% 29% Total Revenues $13,106 $13,969 $41,563 $25,399 Cost of revenues 11,296 9,113 33,136 15,956 Gross Profit 1,810 4,856 8,427 9,443 Gross Margin 14% 35% 20% 37% Revenues by geographic area : -United States $2,971 $3,664 $11,044 $5,496 -Rest of Europe 4,373 5,413 12,200 9,470 -Belgium -16 107 830 208 -The Netherlands 58 97 386 437 -United Kingdom 1,196 1,652 4,162 3,167 -Germany 1,497 1,257 5,689 2,920 -Other 3,027 1,779 7,252 3,701 ------------------------------------------------------------- $13,106 $13,969 $41,563 $25,399 ============================================================= As a percentage of total revenue : -United States 22.V67% 26. 23% 26.57% 21.64% -Rest of Europe 33.37% 38.75% 29.35% 37.28% -Belgium -0.12% 0.77% 2.00% 0.82% -The Netherlands 0.44% 0.69% 0.93% 1.72% -United Kingdom 9.13% 11.83% 10.01% 12.47% -Germany 11.42% 9.00% 13.69% 11.50% -Other 23.09% 12.73% 17.45% 14.57% ------------------------------------------------------------- 100.00% 100.00% 100.00% 100.00% =============================================================

6. ACQUISITION On June 30, 2000, Xeikon N.V. and Agfa signed a transfer agreement to transfer the digital printing systems ("DPS") business of Agfa to Xeikon N.V.. Agfa received 1,751,741 newly issued restricted shares of Xeikon N.V. and any amount in excess of the share component of the purchase price of the transaction was and will be paid in cash. This transaction resulted in a capital increase of $19,731 and a capital surplus of $6,842, representing the difference between the fair market value of the shares and the par value of the assets. The excess purchase price over the estimated fair value of net assets acquired is accounted for as goodwill and is being amortized over 10 years using the straight line method. The transferred business assets of Agfa include toner, developer and digital front end technology, intellectual property and manufacturing operations - including a manufacturing facility in Heultje, Belgium - research and development staff, as well as the Belgium based marketing and support staff and a sales and service organization based mostly in Europe, North America and Japan. -12- 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain of the statements included in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as elsewhere in this report on Form 6-K are forward-looking statements. These statements involve risks and uncertainties that could cause the actual results to differ materially from those expressed in or implied by such statements. These statements should be read in the context of those factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 1999 filed with the Securities and Exchange Commission on June 30, 2000. OVERVIEW On April 21, 1999, the Company acquired from Bull 80% of the outstanding shares of Nipson International. Nipson International is a manufacturer of digital black and white printers. The purchase price consisted of cash equal to 96,000,000 French Francs ("FF") (approximately US $15.8 million), or 71.11 FF per share. Xeikon has the right (which expires April 21, 2001) to acquire the remaining 20% of Nipson International (337,500 shares) for 71.11 FF per share plus interest calculated from April 21, 1999 at a rate equal to EURIBOR (three months) plus 1% through the date of acquisition (the "Purchase Price"). In addition, the holder(s) of the 20% minority interest may require Xeikon to purchase all or part of their shares at a per share price equal to the Purchase Price during the six month period beginning April 22, 2001. In connection with the acquisition, Xeikon assumed two intercompany loans in the aggregate principal amount of approximately $11.6 million. See "-- Liquidity and Capital Resources." On June 30, 2000, Xeikon N.V. and Agfa signed a transfer agreement to transfer the digital printing systems ("DPS") business of Agfa to Xeikon N.V.. Agfa received 1,751,741 newly issued restricted shares of Xeikon N.V. and any amount in excess of the share component of the purchase price of the transaction was and will be paid in cash. This transaction resulted in a capital increase of $19,731 and a capital surplus of $6,842, representing the difference between the fair market value and the net book value of the assets. The transferred business assets of Agfa include toner, developer and digital front end technology, intellectual property and manufacturing operations - including a manufacturing facility in Heultje, Belgium - research and development staff, as well as the Belgium based marketing and support staff and a sales and service organization based mostly in Europe, North America and Japan. BUSINESS SEGMENTS Xeikon has two reportable business segments : - Color (digital color presses and related consumables, parts and service) - B & W (black and white presses and related consumables, parts and service) EFFECTS OF CURRENCY CHANGES Xeikon's functional currency is the Euro. When translated into US dollars, Xeikon's revenues and net income are negatively affected by the appreciation in the value of the US dollar against the Euro between the third quarter of 1999 and the third quarter of 2000. The US dollar was 16% higher against the Euro for the third quarter of 2000 than for the third quarter of 1999. The Nipson functional currency is the French Franc. Since the French Franc and Euro are linked, the impact of the Dollar versus Euro or French Franc is similar. -13- 14 RESULTS OF OPERATIONS THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 COMPARED TO THREE-MONTH PERIOD ENDED SEPTEMBER 30, 1999 Revenues. Revenues decreased 21% from $52.9 million for the three-month period ended September 30, 1999 to $41.5 million for the three-month period ended September 30, 2000. Revenues were principally affected by (1) the slowdown in equipment revenues, (2) the delay in the first commercial shipments of the new CSP, and (3) the decrease of shipments in the OEM channel. Revenues were also affected by currency changes noted above. Revenues from consumables, spare parts and other decreased 8% from $22.6 million during the third quarter of 1999 to $20.9 million for the third quarter of 2000. Cost of Revenues. Cost of revenues decreased 6% from $33.5 million in the third quarter of 1999 to $31.4 million in the third quarter of 2000. The decrease is the net effect of currency changes noted above, and lower equipment shipments. Cost of revenues includes aggregate royalties of $0.1 million for the three-month period ended September 30, 1999 payable to Xerox. Gross Profit. Gross profit decreased 48% from $19.4 million for the third quarter of 1999 to $10.1 million for the third quarter of 2000. Gross margin for printing systems and options decreased from 39% of revenue in the 1999 quarter to 28% of revenue in the 2000 quarter. Gross margin for the segment consumables, spares tools and other decreased from 33% of revenue in the 1999 quarter to 21% of revenue in the 2000 quarter. The decrease in total gross margin is due to the factors affecting revenues noted above. Research and Development. Research and development expenses increased 40% from $5.2 million in the third quarter of 1999 to $7.3 million in the third quarter of 2000. Research and development expenses was 10% of revenues in the third quarter of 1999 and 18% in the third quarter of 2000. The increased ratio for the 2000 quarter is mainly explained by (1) the lower equipment revenues generated during this quarter, and (2) the incorporation of the digital front end research department as a result of the Agfa DPS acquisition. In relation to the Agfa DPS acquisition a one time charge of acquired in-process research and development was registered during the 2000 quarter. This charge is subject to review after the final valuation of the independent appraiser is received. Selling, General and Administrative. Selling, general and administrative expenses increased to $10.9 million in the third quarter of 2000 from $9.2 million in the 1999 quarter. This increase is mainly due to the incorporation of the Agfa DPS division and the result of the Nipson activities. During the 2000 quarter a non-recurring charge of $5.3 million was recorded related to the Varis investment. Other Income (Expense). Other income was $0.1 million for the third quarter of 1999 and $1.1 million for the third quarter of 2000. Other income consists mainly of exchange rate differences. Income Taxes. The Company had a net income before taxes and minorities of $5.0 million for the three-month period ended September 30, 1999 and a net loss before taxes and minorities of $13.8 million for the three-month period ended September 30, 2000. In the 1999 period the Company set up a provision for income tax in the amount of $2.0 million and reversed the tax provision of $ 1.4 million for the 2000 period. -14- 15 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 COMPARED TO NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1999 Revenues. Revenues decreased 4% from $139.4 million for the nine-month period ended September 30, 1999 to $133.2 million for the nine-month period ended September 30, 2000. Lower revenues were the result of (1) the decreased deliveries in the OEM channel, (2) the start-up of MAN Roland as a new OEM partner replacing Agfa Gevaert, and (3) the negative evolution of the Euro versus the US Dollar. Revenues from consumables and spare parts increased 25% from $50.6 million in the 1999 period to $63.4 million in the 2000 period, principally because of higher print activity in the market in combination with marketing programs, the increase in the installed base, and the impact of the Black & White market segment. Based on revenues generated in both the 1999 and 2000 periods ended September 30, 1999 and September 30, 2000, Xerox and Agfa were the Company's largest customers. In the 1999 period Xerox represented 30% of the total revenues and Agfa represented 12%. For the 2000 period Xerox accounted for 16% of the total revenues of the Company and Agfa represented 4%. Cost of Revenues. Cost of revenues increased 8% from $87.4 million in the 1999 period to $94.4 million in the 2000 period. The increase is due to the Nipson acquisition noted above, a change in the product mix and the decrease in the OEM channel. Cost of revenues includes aggregate royalties of $0.2 million payable to Xerox for the nine-month period ended September 30, 1999 payable to Xerox. Gross Profit. Gross profit decreased 25% from $52 million for the 1999 period to $38.9 million for the 2000 period. Gross margin detoriorated from 37% of revenue in the 1999 period to 29% of revenue in the 2000 period. The decrease in gross margin was due to the factors affecting revenues and cost of revenues, noted above, the decrease in gross profit for the black and white segment, and the decrease in consumable market prices. Research and Development. Research and development expenses, excluding acquired in-process research and development, increased 37% from $14.4 million in the 1999 period to $19.7 million in the 2000 period. Research and development expenses were 10% of revenues in the 1999 period and 15% of revenues in the 2000 period. Acquired in-process Research and Development represents the value assigned in a purchase business combination to research and development projects of the acquired business that were commenced but not yet completed at the date of acquisition and which, if unsuccessful, have no alternative future use in research and development activities or otherwise. In accordance with SFAS No. 2 "Accounting for Research and Development Costs" amounts assigned to purchased in-process research and development meeting the above criteria must be charged to expense at the date of consummation of the purchase business combination. As a result, a charge of $0.5 million was recorded for the 1999 period and a charge of $1.5 million was recorded for the 2000 period. This allocation was based on preliminary estimates and may be revised at a later date. This item is reflected separately on the Condensed Consolidated Statements of Operations. Selling, General and Administrative. Selling, general and administrative expenses, excluding the non-recurring charges, increased 39% from $22.6 million in the 1999 period to $31.4 million in the 2000 period. The increase is mainly attributable to sales and marketing expenses, especially advertising and several trade shows, and the impact of the Nipson segment. During the 2000 period a non-recurring charge of $5.3 million was recorded related to the Varis investment. Other Income (Expense). Other income (expense) was $0.6 million in the 1999 period and $1.9 million for the 2000 period. The other income for both periods is mainly attributable to the interest income and exchange rate differences. Income Taxes. The Company had an income before taxes of $15.1 million for the nine-month period of 1999 and a loss of $17.1 million for the nine-month period of 2000. In the 1999 period the -15- 16 Company set up a provision for income tax in the amount of $6.3 million and a reversal of the income tax provision of $0.9 million for the nine-month period of 2000. LIQUIDITY AND CAPITAL RESOURCES The Company's operating activities produced cash of $11 million during the nine-month period ended September 30, 2000. At September 30, 2000, the Company had $9.1 million in cash and cash equivalents. The Company uses its credit line facilities in the event that its liquidity needs are not met by its then available cash. At September 30, 2000, the Company's notes payable to banks amounted to $16.5 million. At the moment of filing the unused creditlines amount up to $17 million up from $7 million at the end of the second quarter of 2000. In April 1999, Xeikon used approximately $15.8 million in cash to fund its acquisition of an 80% interest in Nipson International. Xeikon has the option to acquire the remaining 20% of Nipson International (337,500 shares) for a price per share equal to 71.11 FF plus interest calculated from April 21, 1999 in an amount equal to EURIBOR (three months) plus 1% through the date of acquisition (the "Purchase Price"). If Xeikon does not exercise this option, the holder(s) of the 20% minority interest may require Xeikon, during the period beginning April 22, 2001 and ending October 21, 2001, to purchase all or part of their shares at a per share price equal to the Purchase Price. In connection with the Nipson acquisition, Xeikon assumed two intercompany loans of Nipson International and its wholly owned subsidiary Nipson Printing Systems, Inc. from Bull, in the amount of 70,000,000 FF and US $2,321,000, respectively. Xeikon has agreed to cause the first such loan to be repaid in six equal semi-annual installments over a three year period beginning April 21, 2002. This loan will bear interest at 1% above the EURIBOR (three months). The second loan will be repaid in two equal annual installments over a two-year period beginning April 21, 2005 and will not bear interest. In connection with the acquisition of the land for expansion of its manufacturing facilities, the Company assumed a roll over credit facility of Euro 3 million as of July 1, 1999, bearing interest at the Euribor rate plus 0.20%. On July 27, 2000, the Company signed an off balance lease agreement (reviewed by the Company's auditor) for a new plant building in Lier for an amount of $28 million with quarterly payments (from the completion date foreseen as of March 31, 2002) for a 15 year period with a purchase option. The interest rate is EURIBOR 3 months minus a discount (+5.6%). FOREIGN CURRENCY TRANSLATION The functional currency of the Company is the Euro (EUR) and the French Franc, which is directly linked to the Euro, for Nipson, but the Company has elected to present the financial statements in US dollars. The financial statements of the Company are translated from its functional currency, (the Euro), into the reporting currency, the US dollar, utilizing the current rate method. All cumulative translation gains or losses from the translation into the Company's reporting currency are included as a separate component of shareholders' equity in the accompanying balance sheet. The change in the cumulative translation adjustment reflects the strengthening of the US dollar against the EUR between December 31, 1999 and September 30, 2000. The exchange rate was US $1.00 for EUR 0.995 at December 31, 1999 and US $1.00 for EUR 1.14 at September 30, 2000. -16- 17 ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable -17- 18 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 6-K None. -18- 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. XEIKON N.V. Date : November 15, 2000 By: /s/ Alfons Buts --------------------------------- Alfons Buts, President and Chief Executive Officer -19-

[Translation of registrant’s name into English]

72 Vredebaan, 2640 Mortsel, Belgium

[Address of principal executive offices]

[Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.]

Form 20-F [X] Form 40-F [ ]

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.]

Yes [X] No [ ]

TABLE OF CONTENTS

PART I -- FINANCIAL INFORMATION
	Item 1. Condensed Consolidated Financial Statements
	Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Qualitative and Quantitative Disclosures About Market Risk
PART II -- OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes in Securities and Use of Proceeds
	Item 3. Defaults Upon Senior Securities
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 5. Other Information
	Item 6. Exhibits and Reports on Form 6-K
SIGNATURES
FINANCE CONTRACT FOR PROPERTY LEASING
LEASE AGREEMENT
AGFA-GEVAERT DPS DIVISION TRANSFER AGREEMENT
AGFA-GEVAERT DPS DIVISION TRANSFER AGREEMENT AD #1

XEIKON N.V.

INDEX

FORM 6-K

			Page
PART I — FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets at December 31, 1999 (Audited) and June 30, 2000 (Unaudited)		3
		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 1999 and 2000 (Unaudited)		4
		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 1999 and 2000 (Unaudited)		5
		Consolidated Statements of Comprehensive Income/(Loss) and Shareholders’ Equity for the years ended December 31, 1997, 1998 and 1999 (audited) and for the six months ended June 30, 2000 (unaudited)		6
		Notes to Condensed Consolidated Financial Statements		7-12
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13-16
	Item 3.	Qualitative and Quantitative Disclosures About Market Risk		16
PART II — OTHER INFORMATION
	Item 1.	Legal Proceedings		17
	Item 2.	Changes in Securities and Use of Proceeds		17
	Item 3.	Defaults Upon Senior Securities		17
	Item 4.	Submission of Matters to a Vote of Security Holders		17
	Item 5.	Other Information		17
	Item 6.	Exhibits and Reports on Form 6-K		17
SIGNATURES				18

PART I — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

XEIKON N.V.

CONDENSED CONSOLIDATED BALANCE SHEETS

(All Amounts in Thousands of US Dollars)

			December 31,		June 30,
			1999		2000
			(audited)		(unaudited)
ASSETS
Current Assets:
	Cash and cash equivalents		$	9,237	$	11,808
	Accounts receivable			58,648		56,408
	Accounts receivable from related parties			4,427		4,065
	Inventory			56,044		71,279
	Other current assets			6,128		15,427
		Total current assets	$	134,484	$	158,987
Property and equipment, at cost				30,180		36,211
Less — accumulated depreciation				-9,716		-12,669
				20,464		23,542
Other fixed assets, net				2,279		2,168
Other non-current assets				3,017		291
Goodwill, net				7,569		15,520
Acquired technology, net				1,503		4,715
			$	169,316	$	205,223
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
	Notes payable to Banks			8,731		16,349
	Accounts payable			30,667		31,736
	Due to related parties			2,733		5,509
	Accrued expenses			17,363		21,227
	Deferred tax liabilities			160		3,027
		Total current liabilities	$	59,654	$	77,848
Pension obligations				2,373		2,286
Notes payable to related parties				12,419		11,952
Refundable research grants payable, net of current portion				308		299
Minority interest				1,409		1,327
Shareholders’ equity:
	Common stock			18,160		18,997
	Additional paid-in capital			83,436		102,329
	Capital surplus			0		6,842
	Retained earnings			12,175		8,273
	Cumulative translation adjustment			-20,618		-24,930
		Total shareholders’ equity	$	93,153	$	111,511
			$	169,316	$	205,223

XEIKON N.V.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All Amounts in Thousands of US Dollars, Except

Share and Per Share Amounts)

				Three Months						Six Months
				Ended June 30,						Ended June 30,
				1999			2000			1999			2000
				(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenues				$	49,807		$	50,153		$	86,510		$	91,720
Cost of revenues				$	30,620		$	32,836		$	53,911		$	62,969
			Gross profit	$	19,187		$	17,317		$	32,599		$	28,751
Operating expenses:
	Research and development			$	4,952		$	6,244		$	9,210		$	12,407
	Acquired in-process research and development			$	471		$	0		$	471		$	0
	Selling, general and administrative			$	8,375		$	10,527		$	13,366		$	20,533
		Total operating expenses		$	13,798		$	16,771		$	23,047		$	32,940
Operating income/(loss)				$	5,389		$	546		$	9,552		$	(4,189	)
Other income, net				$	277		$	256		$	509		$	798
Income/(loss) before provision of income taxes and minority interest				$	5,666		$	802		$	10,061		$	(3,391	)
Provisions for income taxes				$	(2,557	)	$	(511	)	$	(4,345	)	$	(512	)
Income/(loss) before minority interest				$	3,109		$	291		$	5,716		$	(3,903	)
Minority interest				$	(66	)	$	0		$	(66	)	$	0
Net income/(loss)				$	3,043		$	291		$	5,650		$	(3,903	)

			Shares		Shares		Shares		Shares
Weighted average number of common shares outstanding (basic)				28,687,510		28,884,248		28,607,748		28,874,623
		Basic earnings per share amount		$0.11		$0.01		$0.20		$(0.14	)
Impact of:
	Warrants issued to non employees			126,000				188,607		0
	Options issued to employees			113,040		63,596		121,550		0
Weighted average number of common shares outstanding (diluted)				28,926,550		28,947,843		28,917,905		28,874,623
		Diluted earnings per share amount		$0.11		$0.01		$0.20		$(0.14	)

XEIKON N.V.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(All Amounts in Thousands of US Dollars)

				Six Months
				Ended June 30,
				1999			2000
				(unaudited)			(unaudited)
Cash flows from operating activities:
Net income				$	5,650		$	(3,902	)
Adjustments to reconcile cash (used in) provided by operating activities:
	Deferred tax				846			2,867
	Depreciation and amortization				69			2,362
	Amortization in-process research and development				471
	Pension obligations				44			(87	)
	Minority interest				—			(82	)
	Changes in operating assets and liabilities				(751	)
		Accounts receivable			—			2,240
		Accounts receivable from related parties			—			362
		Inventory			—			(7,235	)
		Prepaid expenses			—			(9,299	)
		Accounts payable			—			1,069
		Due to related parties			—			2,776
		Accrued expenses			—			3,864
			Net cash (used in) provided by operating activities		6,329			(5,065	)
Cash flows from investing activities:
	Purchase of property and equipment				(1,878	)		(1,969	)
	Acquisition of subsidiary, net of cash acquired				(15,823	)		—
	Other investment				(5,157	)		111
			Net cash used in investing activities		(22,858	)		(2,080	)
Cash flows from financing activities:
	Proceeds from notes payable to banks				1,249			7,618
	Net borrowings (repayments) under notes payable to related parties				2,045			(467	)
	Advances to affiliates and other				—			2,726
	Refundable research grants				—			(9	)
	Payments under capital lease obligation				—			—
	Capital surplus							—
	Proceeds from issuance of common stock				1,354			—
			Net cash (used in) provided by financing activities		4,648			9,868
Foreign exchange effect on net equity					(9,141	)		(4,312	)
Increase (decrease) in cash and cash equivalents					(21,022	)		2,571
Cash and cash equivalents, beginning of period					31,823			9,237
Cash and cash equivalents, end of period					10,801			11,808

XEIKON N.V.

CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME/(LOSS) AND SHAREHOLDERS’ EQUITY

(All Amounts in Thousands of US Dollars, Except Share and Per Share Amounts)

										Accumulated
	Total									Other
	Shareholders			Comprehensive			Accumulated			Comprehensive			Common
	Equity			Income/(Loss)			Profit/(Loss)			Income/(Loss)			Shares
Balance, December 31, 1996	$	78,634			—		$	(18,314	)	$	(2,748	)		28,473,100
Net income		(575	)		(575	)		(575	)		—			—
Other comprehensive income-foreign currency translation		(9,875	)		(9,875	)		—			(9,875	)		—
Comprehensive income		—			(10,450	)		—			—			—
Exercise of stock options		—			—			—			—			—
Balance, December 31, 1997	$	68,184			—		$	(18,889	)	$	(12,623	)		28,473,100
Net income		16,201			16,201			16,201			—			—
Other comprehensive income-foreign currency translation		4,519			4,519			—			4,519			—
Comprehensive income		—			20,720			—			—			—
Exercise of stock options		440			—			—			—			54,001
Balance, December 31, 1998	$	89,344			—		$	(2,688	)	$	(8,104	)		28,527,101
Net income		14,863			14,863			14,863			—			—
Other comprehensive income-foreign currency translation		(12,514	)		(12,514	)		—			(12,514	)		—
Comprehensive income		—			2,349			—			—			—
Exercise of stock options		422			—			—			—			49,097
Exercise of warrants		1,038			—			—			—			288,800
Balance, December 31, 1999 (audited)	$	93,153			—		$	12,175		$	(20,618	)		28,864,998
Net income		(4,193	)		(4,193	)		(4,193	)		—			—
Other comprehensive income-foreign currency translation		(3,780	)		(3,780	)		—			(3,780	)		—
Comprehensive income		—			(7,973	)		—			—			—
Exercise of stock options		—			—			—			—			—
Exercise of warrants		—			—			—			—			—
Balance, March 31, 2000	$	85,180			—		$	7,982		$	(24,398	)		28,864,998
Net income		291			291			291			—			—
Other comprehensive income-foreign currency translation		(534	)		(534	)		—			(534	)		—
Comprehensive income		—			(243	)		—			—			—
Capital increase		19,731												1,751,741
Capital surplus		6,842
Exercise of stock options		—			—			—			—			—
Exercise of warrants		—			—			—			—			—
Balance, June 30, 2000	$	111,510			—		$	8,273		$	(24,932	)		30,616,739

[Additional columns below]

[Continued from above table, first column(s) repeated]

					Additional
			Capital		Paid-in
	Amount		Surplus		Capital
Balance, December 31, 1996	$	17,949			$	81,747
Net income		—				—
Other comprehensive income-foreign currency translation		—				—
Comprehensive income		—				—
Exercise of stock options		—				—
Balance, December 31, 1997	$	17,949			$	81,747
Net income		—				—
Other comprehensive income-foreign currency translation		—				—
Comprehensive income		—				—
Exercise of stock options		31				409
Balance, December 31, 1998	$	17,980			$	82,156
Net income		—				—
Other comprehensive income-foreign currency translation		—				—
Comprehensive income		—				—
Exercise of stock options		26				396
Exercise of warrants		154				884
Balance, December 31, 1999 (audited)	$	18,160			$	83,436
Net income		—				—
Other comprehensive income-foreign currency translation		—				—
Comprehensive income		—				—
Exercise of stock options		—				—
Exercise of warrants		—				—
Balance, March 31, 2000	$	18,160			$	83,436
Net income		—				—
Other comprehensive income-foreign currency translation		—				—
Comprehensive income		—				—
Capital increase		837				18,894
Capital surplus				6,842
Exercise of stock options		—				—
Exercise of warrants		—				—
Balance, June 30, 2000	$	18,997	$	6,842	$	102,330

XEIKON N.V.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All Amounts in Thousands of US Dollars, Except Share and Per Share Amounts)

1. Summary of Operations and Significant Accounting Policies

Xeikon N.V., a Belgian corporation, (the “Company”) was established in 1988 and develops, manufactures and markets an innovative digital color printing system specifically designed to meet the speed, quality, reliability, cost, variable content and on demand requirements of the short run color printing market.

The condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and include, in the opinion of management, all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation of interim period results. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The results for the interim periods presented are not necessarily indicative of results to be expected for any future period. These condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 1999, filed with the Securities and Exchange Commission on Form 20-F dated June 30, 2000.

2. Inventory

Inventory is comprised of material, labor and manufacturing overhead, and is stated at the lower of cost (determined on a weighted average basis) or net realizable value. Management performs periodic reviews of inventory and provides reserves for excess and obsolete inventory or disposes of such inventory. Inventory consists of the following:

	December 31,		June 30,
	1999		2000
	(audited)		(unaudited)
Raw materials	$	22,880	$	29,679
Work-in-Process		6,378		7,945
Finished Goods		18,847		25,506
Goods purchased for resale (consumables)		7,939		8,149
	$	56,044	$	71,279

3. Earnings per share

Basic net income/(loss) per share is computed by dividing net income/(loss) by the weighted average number of common shares outstanding during the period. Diluted net income/(loss) per share is computed by dividing net income/(loss) by the weighted average number of common and common equivalent shares outstanding during the period. Given the net loss for the 6 months ended June 30, 2000 there is no dilutive effect on the loss per share.

4. Investment

On March 4, 1999, Xeikon entered into a Securities Acquisition Agreement with Varis Corporation, a company engaged in the design, development, manufacture and marketing of controllers and systems for use with electronic print engines. Under the terms of the agreement, Xeikon purchased 1,617.25 shares of Series B Preferred Stock of Varis for $2,500,000. Contemporaneously with its purchase of the Series B Preferred Stock, Xeikon provided a $3,000,000 loan to Varis in return for a promissory note, bearing interest at the Prime Rate plus 2.5%, which is due on March 4, 2001 (the “Note”). The acquisition of the Note was accounted for at cost. Xeikon may extend the maturity date of the Note for one year in exchange for a warrant to acquire an

XEIKON N.V.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(All Amounts in Thousands of US Dollars, Except Share and Per Share Amounts)

additional 64.69 shares of Series B Preferred Stock. Varis is currently unable to meet its debt obligations and is seeking additional financing to meet its working capital needs. If such additional funds are not available, it is unlikely that Varis will be able to repay the Note when due.

On April 21, 1999, the Company acquired from Bull Europe Centrale et Oriental S.A. (“Bull”) 80% of the outstanding shares of Nipson International S.A. (“Nipson International”), a limited liability company organized under French law. The purchase price was 96,000,000 French Francs (“FF”) (approximately U.S. $15.8 million, or 71.11 per share.) The Company intends to make an indemnification claim under this agreement. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation.”

Until April 21, 2001, Xeikon has the right to acquire the remaining 20% of Nipson International (337,500 shares) from Bull or Dai Nippon Printing, a permitted transferee of 10% of the shares, for a price per share equal to 71.11 FF per share plus interest calculated from April 21, 1999 in an amount equal to EURIBOR (three months) plus 1% through the date of acquisition (the “Purchase Price”). If Xeikon does not exercise its option, the holder(s) of the 20% minority interest may require Xeikon, during the period beginning April 22, 2001 and ending October 21, 2001, to purchase all or part of their shares at a per share price equal to the Purchase Price.

The acquisition of Nipson International was accounted for as a purchase. Accordingly, the purchase price was allocated to the net assets acquired based upon their estimated fair market values. The excess purchase price over the estimated fair value of net assets acquired amounted to approximately $7.0 million, which has been accounted for as goodwill and is being amortized over 10 years using the straight line method. During the second quarter of 2000, the goodwill amount was reduced with an amount of approximately $5 million representing the fair value of a claim that the company expects to start against Bull in the framework of the acquisition of Nipson International. The effect on the period ending June 30, 2000 of the restatement of the acquisition goodwill resulting from the claim against Bull was a reduction of the amortization of the goodwill of $0.6 million. The accompanying consolidated statements of income reflect the operating results of Nipson since the acquisition. Pro forma unaudited consolidated operating results of the Company and Nipson for the six months ended June 30, 1999, assuming the acquisition had been made as of January 1, 1999, are summarized below (in thousands of US dollars except per share amounts):

	Six Months
	Ended
	June 30, 1999
	(unaudited)
Net sales	$	102,785
Net income (loss)	$	3,130
Basic earnings/(loss) per share	$	0.11
Diluted earnings/(loss) per share $	$	0.11

In connection with the acquisition from Bull, Xeikon assumed two intercompany loans of Nipson International and its wholly owned subsidiary Nipson Printing Systems, Inc. in the amount of 70,000,000 FF and US $2,321,000, respectively. Xeikon has agreed to cause the first such loan to be repaid in six equal semi-annual installments over a three year period beginning April 21, 2002. This loan bears interest at 1% above the

XEIKON N.V.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(All Amounts in Thousands of US Dollars, Except Share and Per Share Amounts)

EURIBOR (three months). The second loan will be repaid in two equal annual installments over a two-year period beginning April 21, 2005 and does not bear interest.

Bull has agreed to indemnify Xeikon until April 21, 2001 for breaches of customary representations and warranties subject to a maximum indemnification amount of 35,000,000 FF.

5. Segment and Geographic Information

The Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information in the fiscal year ended December 31, 1998. SFAS 131 establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. SFAS 131 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions how to allocate resources and assess performance. The Company’s chief decision maker, as defined under SFAS 131, is a combination of the Chief Executive Officer, and the Chief Financial Officer. The Company has viewed its operations and manages its business as principally two segments, the sale of printing systems and options and the sale of consumables, spares, tools and others. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. There are no intersegment sales and transfers. The segment revenues and cost of revenues are as follows:

Consolidated Xeikon Group

		Three Months				Six Months
		ended June 30,				ended June 30,
		2000		1999		2000		1999
Systems and options
	Revenues	$	29,137	$	32,231	$	49,154	$	58,535
	Cost of revenues	$	16,794		19,517	$	21,721		35,900
	Gross Profit		12,343		10,266		27,433		22,635
	Gross Margin		42%		32%		56%		39%
Consumables, spares, tools and other
	Revenues	$	21,016	$	17,576	$	42,566	$	27,975
	Cost of revenues		16,043		11,103		41,248		18,011
	Gross Profit		4,973		4,335		1,318		9,964
	Gross Margin		24%		25%		3%		36%
Total
	Revenues	$	50,153	$	49,807	$	91,720	$	86,510

XEIKON N.V.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(All Amounts in Thousands of US Dollars, Except Share and Per Share Amounts)

		Three Months						Six Months
		ended June 30,						ended June 30,
		2000			1999			2000			1999
	Cost of revenues		32,837			30,620			62,969			53,911
	Gross Profit		17,316			19,187			28,751			32,599
	Gross Margin		35%			39%			31%			38%
Revenues by geographic area:
	United States	$	16,888		$	17,286		$	34,348		$	31,208
	Rest of Europe		8,296			8,951			11,158			12,336
	Belgium		3,040			6,037			7,561			12,245
	The Netherlands		5,601			7,650			12,748			14,842
	United Kingdom		2,217			2,649			4,750			4,341
	Germany		10,367			4,993			14,591			7,451
	Other		3,744			2,241			6,564			4,087
		$	50,153		$	49,807		$	91,720		$	86,510
As a percentage of total revenue:
	United States		33.67	%		34.71	%		37.45	%		36.08	%
	Rest of Europe		16.54	%		17.97	%		12.17	%		14.26	%
	Belgium		6.06	%		12.12	%		8.24	%		14.15	%
	The Netherlands		11.17	%		15.36	%		13.90	%		17.16	%
	United Kingdom		4.42	%		5.32	%		5.18	%		5.02	%
	Germany		20.67	%		10.02	%		15.91	%		8.61	%
	Other		7.47	%		4.50	%		7.15	%		4.72	%
			100.00	%		100.00	%		100.00	%		100.00	%

Digital Color Printing (excluding Nipson)

		Three Months				Six Months
		ended June 30,				ended June 30,
		2000		1999		2000		1999
Systems and options
	Revenues	$	20,945	$	26,888	$	36,243	$	53,193
	Cost of revenues		11,476		16,622		21,633		33,005
	Gross Profit		9,469		10,266		14,610		20,188
	Gross Margin		45%		38%		40%		38%
Consumables, spares, tools and other
	Revenues	$	13,098	$	11,489	$	27,020	$	21,888
	Cost of revenues		9,188		7,154		19,495		14,063
	Gross Profit		3,910		4,335		7,525		7,825
	Gross Margin		30%		38%		28%		36%
Total
	Revenues	$	34,043	$	38,377	$	63,263	$	75,081
	Cost of revenues		20,664		23,776		41,128		47,068
	Gross Profit		13,379		14,601		22,135		28,013
	Gross Margin		39%		38%		35%		37%

XEIKON N.V.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(All Amounts in Thousands of US Dollars, Except Share and Per Share Amounts)

		Three Months						Six Months
		ended June 30,						ended June 30,
		2000			1999			2000			1999
Revenues by geographic area:
	United States	$	13,075		$	15,573		$	26,276		$	29,496
	Rest of Europe		3,313			3,836			3,330			7,221
	Belgium		2,304			5,938			6,716			12,146
	The Netherlands		5,351			7,344			12,421			14,536
	United Kingdom		764			1,172			1,784			2,864
	Germany		8,138			3,227			10,398			5,685
	Other		1,098			1,287			2,338			3,133
		$	34,043		$	38,377		$	63,263		$	75,081
As a percentage of total revenue:
	United States		38.41	%		40.58	%		41.53	%		39.29	%
	Rest of Europe		9.73	%		10.00	%		5.26	%		9.62	%
	Belgium		6.77	%		15.47	%		10.62	%		16.18	%
	The Netherlands		15.72	%		19.14	%		19.63	%		19.36	%
	United Kingdom		2.24	%		3.05	%		2.82	%		3.81	%
	Germany		23.91	%		8.41	%		16.44	%		7.57	%
	Other		3.22	%		3.35	%		3.70	%		4.17	%
			100.00	%		100.00	%		100.00	%		100.00	%

Nipson only

		Three Months				Six Months
		ended June 30,				ended June 30,
		2000		1999		2000		1999
Systems and options
	Revenues	$	8,192	$	5,343	$	12,911	$	5,342
	Cost of revenues		5,318		2,895		7,748		2,895
	Gross Profit		2,874		2,448		5,163		2,447
	Gross Margin		35%		46%		40%		46%
Consumables, spares, tools and other
	Revenues	$	7,918	$	6,087	$	15,546	$	6,087
	Cost of revenues		6,855		3,949		14,093		3,948
	Gross Profit		1,063		2,138		1,453		2,139
	Gross Margin		13%		35%		9%		35%
Total
	Revenues	$	16,110	$	11,430	$	28,457	$	11,429
	Cost of revenues		12,173		6,844		21,841		6,843
	Gross Profit		3,937		4,586		6,616		4,586
	Gross Margin		24%		40%		23%		40%

XEIKON N.V.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(All Amounts in Thousands of US Dollars, Except Share and Per Share Amounts)

		Three Months						Six Months
		ended June 30,						ended June 30,
		2000			1999			2000			1999
Revenues by geographic area:
	United States	$	3,813		$	1,713		$	8,072		$	1,712
	Rest of Europe		4,983			5,115			7,828			5,115
	Belgium		736			99			845			99
	The Netherlands		250			306			327			306
	United Kingdom		1,453			1,477			2,966			1,477
	Germany		2,229			1,766			4,193			1,766
	Other		2,646			954			4,226			954
		$	16,110		$	11,430		$	28,457		$	11,429
As a percentage of total revenue:
	United States		23.67	%		14.99	%		28.37	%		14.99	%
	Rest of Europe		30.93	%		44.75	%		27.51	%		44.75	%
	Belgium		4.57	%		0.87	%		2.97	%		0.87	%
	The Netherlands		1.55	%		2.68	%		1.15	%		2.68	%
	United Kingdom		9.02	%		12.92	%		10.42	%		12.92	%
	Germany		13.84	%		15.45	%		14.73	%		15.45	%
	Other		16.42	%		8.34	%		14.85	%		8.34	%
			100.00	%		100.00	%		100.00	%		100.00	%

6. Acquisition

On June 30, 2000 Xeikon N.V. and Agfa signed a transfer agreement for the transfer of the digital printing systems (“DPS”) business of Agfa to Xeikon N.V. Agfa received 1,751,741 newly issued restricted shares of Xeikon N.V. An additional amount, currently estimated to be approximately $3 million, will be paid in cash. This transaction resulted in a capital increase of $19,731 and a capital surplus of $6,842 representing the difference between the par value and the net book value of the assets. The transferred business assets of Agfa include toner, developer and digital front end technology, intellectual property and manufacturing operations – including a manufacturing facility in Heultje, Belgium – research and development staff, as well as the Belgium based marketing and support staff and a sales and service organization based mostly in Europe, North America and Japan.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain of the statements included in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as elsewhere in this report on Form 6-K are forward-looking statements. These statements involve risks and uncertainties that could cause the actual results to differ materially from those expressed in or implied by such statements. These statements should be read in the context of those factors discussed under the heading “Risk Factors” in the Company’s Registration Statement on Form F-1 (File No. 333-1278) declared effective by the Securities and Exchange Commission on March 18, 1996.

Overview

On April 21, 1999, the Company acquired from Bull 80% of the outstanding shares of Nipson International. Nipson International is a manufacturer of digital black and white printers. The purchase price consisted of cash equal to 96,000,000 French Francs (“FF”) (approximately US $15.8 million), or 71.11 FF per share. Xeikon has the right (which expires April 21, 2001) to acquire the remaining 20% of Nipson International (337,500 shares) for 71.11 FF per share plus interest calculated from April 21, 1999 at a rate equal to EURIBOR (three months) plus 1% through the date of acquisition (the “Purchase Price”). In addition, the holder(s) of the 20% minority interest may require Xeikon to purchase all or part of their shares at a per share price equal to the Purchase Price during the six month period beginning April 22, 2001. In connection with the acquisition, Xeikon assumed two intercompany loans in the aggregate principal amount of approximately $11.6 million. The Company intends to make a claim for indemnification from Bull for approximately FF 35 million, or $5 million U.S., under the agreement.

See “— Liquidity and Capital Resources.”

On June 30, 2000 Xeikon N.V. and Agfa signed a transfer agreement of the digital printing systems (“DPS”) business of Agfa to Xeikon N.V. Agfa received 1,751,741 newly issued restricted shares of Xeikon N.V. An additional amount, currently estimated to be approximately $3 million, will be paid in cash. This transaction resulted in a capital increase of $19,731 and a capital surplus of $6,842 representing the difference between the par value of the new shares issued and their fair value determined according to EITF 95-19. The transferred business assets of Agfa include toner, developer and digital front end technology, intellectual property and manufacturing operations – including a manufacturing facility in Heultje, Belgium – research and development staff, as well as the Belgium based marketing and support staff and a sales and service organization based mostly in Europe, North America and Japan.

On March 4, 1999, Xeikon entered into a Securities Acquisition Agreement with Varis Corporation, a company engaged in the design, development, manufacture and marketing of controllers and systems for use with electronic print engines. Under the terms of the agreement, Xeikon purchased 1,617.25 shares of Series B Preferred Stock of Varis for $2,500,000. Contemporaneously with its purchase of the Series B Preferred Stock, Xeikon provided a $3,000,000 loan to Varis in return for a promissory note, bearing interest at the Prime Rate plus 2.5%, which is due on March 4, 2001 (the “Note”). Xeikon may extend the maturity date of the Note for one year in exchange for a warrant to acquire an additional 64.69 shares of Series B Preferred Stock. The acquisition of the Note was accounted for at cost. Varis is currently unable to meet its debt obligations and is seeking additional financing to meet its working capital needs. If such additional funds are not available, it is unlikely that Varis will be able to repay the Note when due.

Business Segments

Xeikon has two reportable business segments:

• Xeikon (digital color presses and related consumables, parts and service) • Nipson (black and white presses and related consumables, parts and service)

Effects of Currency Changes

Xeikon’s functional currency is the Euro. When translated into US dollars, Xeikon’s revenues and net income are negatively affected by the appreciation in the value of the US dollar against the Euro between the second quarter of 1999 and the second quarter of 2000. The US dollar was 13% higher against the Euro for the second quarter of 2000 than for the second quarter of 1999. The Nipson functional currency is the French Franc. Since the French Franc and Euro are linked, the impact of the Dollar versus Euro or French Franc is similar.

Results of Operations

Three-Month Period Ended June 30, 2000 Compared to Three-Month Period Ended June 30, 1999

Revenues. Revenues increased 1% from $49.8 million for the three-month period ended June 30, 1999 to $50.2 million for the three-month period ended June 30, 2000. Revenues were principally affected by (1) the consolidation resulting from the Nipson acquisition, (2) the slowdown in equipment revenues in anticipation of Xeikon’s introduction of its new generation of web fed digital color presses, the DCP 320D and the DCP 500D,(3) the decrease of shipments in the OEM channel and (4) the increase in non-equipment shipments. Revenues were also affected by currency changes noted above. Revenues from consumables, spare parts and other increased 20% from $17.6 million during the second quarter of 1999 to $21.0 million for the second quarter of 2000.

Cost of Revenues. Cost of revenues increased 7% from $30.6 million in the second quarter of 1999 to $32.8 million in the second quarter of 2000. The increase is the net effect of currency changes noted above, lower raw material costs, lower fixed costs absorption and the impact resulting from the acquisition of Nipson. Cost of revenues includes aggregate royalties of $0.1 million for both three-month periods ended June 30, 1999 and 2000, respectively, payable to Xerox.

Gross Profit. Gross profit decreased 10% from $19.2 million for the second quarter of 1999 to $17.3 million for the second quarter of 2000. Gross margin for printing systems and options improved from 32% of revenue in the 1999 quarter to 42% of revenue in the 2000 quarter. Gross margin for the segment Consumables, spares tools and other decreased from 25% of revenue in the 1999 quarter to 24% of revenue in the 2000 quarter. The decrease in total gross margin is due to the factors affecting revenues, its mix and cost of revenues, noted above.

Research and Development. Research and development expenses increased 26% from $4.9 million in the second quarter of 1999 to $6.2 million in the second quarter of 2000. Research and development expenses was 10% of revenues in the second quarter of 1999 and 12% in the second quarter of 2000. The increased ratio for the 2000 quarter is mainly explained by the lower equipment revenues generated during this quarter.

Selling, General and Administrative. Selling, general and administrative expenses increased to $10.5 million in the second quarter of 2000 from $8.4 million in the 1999 quarter. This increase is mainly due to a trade show (Drupa) in Germany and the result of the Nipson activities.

Other Income (Expense). Other income was $0.3 million for both quarters of 1999 and 2000. Other income consists mainly of exchange rate differences.

Income Taxes. The Company had a net income before taxes and minorities of $5.7 million for the three-month period ended June 30, 1999 and a net profit before taxes and minorities of $0.8 million for the three-month period ended June 30, 2000. In the 1999 period the Company set up a provision for income tax in the amount of $2.6 million and $0.5 million for the 2000 period.

Six-Month Period Ended June 30, 2000 Compared to Six-Month Period Ended June 30, 1999

Revenues. Revenues increased 6% from $86.5 million for the six-month period ended June 30, 1999 to $91.7 million for the six-month period ended June 30, 2000. Increased revenues were the result of (1) the inclusion of 6 months of results of Nipson following the acquisition in 1999, (2) improved sales mix of systems, and (3) increase of non-equipment sales resulting from the increased installed base. Revenues from

consumables and spare parts increased 52% from $28 million in the 1999 period to $42.6 million in the 2000 period, principally because of higher print activity in the market in combination with marketing programs, the increase in the installed base, and the impact of the Nipson market segment.

Cost of Revenues. Cost of revenues increased 17% from $53.9 million in the 1999 period to $63 million in the 2000 period. The increase is due to the Nipson acquisition noted above, lower raw material costs, increased production efficiencies and improved fixed costs absorption. Cost of revenues includes aggregate royalties of $0.2 for the six-month period ended June 30, 1999 and 2000, respectively, payable to Xerox.

Gross Profit. Gross profit decreased 12% from $32.6 million for the 1999 period to $28.8 million for the 2000 period. Gross margin deteriorated from 38% of revenue in the 1999 period to 31% of revenue in the 2000 period. The decrease in gross margin is due to the factors affecting revenues and cost of revenues, noted above and the decrease in gross profit for the black and white segment and the decrease in consumable market prices.

Research and Development. Research and development expenses, excluding acquired in-process research and development, increased 35% from $9.2 million in the 1999 period to $12.4 million in the 2000 period. Research and development expenses were 11% of revenues in the 1999 period and 14% of revenues in the 2000 period. Acquired in-process Research and Development represents the value assigned in a purchase business combination to research and development projects of the acquired business that were commenced but not yet completed at the date of acquisition and which, if unsuccessful, have no alternative future use in research and development activities or otherwise. In accordance with SFAS No. 2 “Accounting for Research and Development Costs” amounts assigned to purchased in-process research and development meeting the above criteria must be charged to expense at the date of consummation of the purchase business combination. As a result, a charge of $0.5 million was recorded for the 1999 period. This item is reflected separately on the Condensed Consolidated Statements of Operations.

Selling, General and Administrative. Selling, general and administrative expenses increased 54% from $13.4 million in the 1999 period to $20.5 million in the 2000 period. The increase is mainly attributable to sales and marketing expenses, especially advertising and several trade shows and the impact of the Nipson segment.

Other Income (Expense). Other income (expense) was $0.5 million in the 1999 and $0.8 for the 2000 period. The other income for both periods is mainly attributable to the interest income and exchange rate differences.

Income Taxes. The Company had an income before taxes of $10.1 million for the six-month period of 1999 and a loss of $3.4 million for the six-month period of 2000. In the 1999 period the Company set up a provision for income tax in the amount of $4.3 million and $0.5 million related to the result generated in the Belgian entity.

Minority Interest. The Company acquired 80% of the total shares of Nipson. Until the Company acquires the remaining 20% of the outstanding shares the Company is obliged to reflect a charge for the 20% minority interest. For the six-month period of 1999 this reflects an unfavorable amount of $66,000. The Company did not allocate a proportional share of the period losses to the minority interest in view of the put and call option on the minority held shares as explained above.

Liquidity and Capital Resources

The Company’s operating activities produced negative cash of $5.1 million during the six-month period ended June 30, 2000. This is principally due to the acquisition of assets from the Agfa DPS division as explained above.

At June 30, 2000, the Company had $11.8 million in cash and cash equivalents. The Company uses its credit line facilities in the event that its liquidity needs are not met by its then available cash. At June 30, 2000 the Company’s notes payable to banks amounted to $16.3 million.

In April 1999, Xeikon used approximately $15.8 million in cash to fund its acquisition of an 80% interest in Nipson International. Xeikon has the option to acquire the remaining 20% of Nipson International (337,500 shares) for a price per share equal to 71.11 FF plus interest calculated from April 21, 1999 in an amount equal to EURIBOR (three months) plus 1% through the date of acquisition (the “Purchase Price”). If Xeikon does not exercise this option, the holder(s) of the 20% minority interest may require Xeikon, during the period beginning April 22, 2001 and ending October 21, 2001, to purchase all or part of their shares at a per share price equal to the Purchase Price.

In connection with the Nipson acquisition, Xeikon assumed two intercompany loans of Nipson International and its wholly owned subsidiary Nipson Printing Systems, Inc. from Bull in the amount of 70,000,000 FF and US $2,321,000, respectively. Xeikon has agreed to cause the first such loan to be repaid in six equal semi-annual installments over a three year period beginning April 21, 2002. This loan will bear interest at 1% above the EURIBOR (three months). The second loan will be repaid in two equal annual installments over a two-year period beginning April 21, 2005 and will not bear interest.

In connection with the acquisition of the land for expansion of its manufacturing facilities, the Company assumed a roll over credit facility of Euro 3 million as from July 1, 1999, bearing interest at the Euribor rate plus 0.20%.

On July 27, 2000, the Company signed an off balance lease agreement for the new plant building in Lier for $28 million with quarterly payments (from the completion date foreseen to be 31 March 2002) for a 15 year period with a purchase option. The interest rate is EURIBOR 3 months minus a discount (+5.6%). The quarterly rental cost is approximately $203.000 (Euro 212.000). This amount is in line with the Company’s current rental charge in Belgium.

Foreign Currency Translation

The functional currency of the Company is the Euro (EUR) and the French Franc, which is directly linked to the Euro, for Nipson, but the Company has elected to present the financial statements in US dollars. The financial statements of the Company are translated from its functional currency, (the Euro), into the reporting currency, the US dollar, utilizing the current rate method. All cumulative translation gains or losses from the translation into the Company’s reporting currency are included as a separate component of shareholders’ equity in the accompanying balance sheet. The change in the cumulative translation adjustment reflects the strengthening of the US dollar against the EUR between December 31, 1999 and June 30, 2000. The exchange rate was US $1.00 for EUR 0.995 at December 31, 1999 and US $1.00 for EUR 1.05 at June 30, 2000.

Item 3. Qualitative and Quantitative Disclosures About Market Risk

Not applicable

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 2. Changes in Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

The Company held its annual meeting of security holders on February 28, 2000. At this meeting, the Company presented the following proposals to the security holders: (i) to add an Article to the Articles of Association of the Company to increase the capital of the Company and its subsidiaries, through the issuance of up to 500,000 ordinary shares or through the issuance of warrants or options which entitle the holders thereof to acquire the same amount of ordinary shares, (ii) to elect directors and to adapt the remuneration of the Company’s non-executive directors, (iii) to authorize the board to repurchase up to 285,000 ordinary shares or any certificates representing them, and to amend the Company’s Articles of Association to allow for the resale of the repurchased shares, and (iv) to change the date of the Company’s annual shareholder meeting to the last Friday of April.

The security holders of the Company approved each of the above matters.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 6-K

Exhibit 10.16		Finance Contract for Property Leasing No. 8386
Exhibit 10.17		Lease Agreement No. E8386
Exhibit 10.18		Agfa-Gevaert DPS Division Transfer Agreement
Exhibit 10.19		Agfa-Gevaert DPS Division Transfer Agreement Addendum No. 1

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

XEIKON N.V.

Date: August 11, 2000

By: /s/ FREDERIC CONVENT

Frederic Convent, Chief Financial Officer (Principal Accounting Officer)

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