Notice of meeting Annual General Shareholders’ Meeting of Technicolor To be held on Thursday, June 17, 2010 at 5:00 p.m.
At the Palais des Congrès de Paris 2, place de la Porte-Maillot - 75017 Paris On first notice*
Contents page
Agenda 2 How to participate in the meeting 3 Technicolor in 2009 5 Organization 5 Review of activities 5 Consolidated results 7 Balance sheet restructuring 10 Strategy and outlook 11 Parent company results 12 Key financial data 13 Explanatory comments on the resolutions 14 Information about the directors Whose ratification of the co-optation, the renewal of the term of office, or the appointement are submitted for approval to the Shareholders’ Meeting 16 Proposed resolutions 19 Financial results of the parent company for the last five fiscal years 21 Request for documents and information 23
* In case of a lack of quorum, the Meeting will be convened on second notice by June 30, 2010. Agenda
To be considered by the Ordinary Shareholders’ Meeting
nnBoard of Directors’ report and statutory auditors’ report on the annual and consolidated accounts for the fiscal year ended December 31, 2009 and special report of the statutory auditors on regulated agreements;
nnReport of the Chairman of the Board of Directors on the preparation and organization of the Board’s activities and on internal control procedures and risk management, and the statutory auditors’ report relating to the report of the Chairman of the Board of Directors;
nnResolution n°1: Approval of the parent company unconsolidated financial statements for the fiscal year ended December 31, 2009;
nnResolution n° 2: Approval of the consolidated financial statements for the fiscal year ended December 31, 2009;
nnResolution n° 3: Allocation of income for the fiscal year ended December 31, 2009;
nnResolution n° 4: Ratification of the co-optation of Mr Denis Ranque as Director;
nnResolution n° 5: Ratification of the co-optation of Ms Catherine Guillouard as Director;
nnResolution n° 6: Ratification of the co-optation of Mr John Roche as Director;
nnResolution n° 7: Ratification of the co-optation of Mr Bruce Hack as Director;
nnResolution n° 8: Renewal of the term of office of Mr Bruce Hack as Director;
nnResolution n°9: Renewal of the term of office of Mr Didier Lombard as Director;
nnResolution n°10: Appointment of Mr Lloyd Carney as Director;
nnResolution n°11: Renewal of the appointment of Mazars as permanent statutory auditor;
nnResolution n°12: Renewal of the appointment of Mr Patrick de Cambourg as substitute statutory auditor;
nnResolution n°13: Powers to carry out all formalities.
2 I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I Translation for information purposes only How to participate in the meeting
You may choose to attend the Shareholders’ Meeting in person, to vote by mail If you own registered shares: or by proxy. You have no formalities to complete; ownership of your shares is evidenced by The attached form allows you to select one of the participation options. Simply fill their entry on the register. it out, date and sign it. If you own bearer shares: Regardless of how you choose to participate, your shares must be recorded (“enregistrement comptable”) on the third trading day preceding the meeting, The financial intermediary managing your share account will provide evidence of i.e. on June 14, 2010 at 00.00 a.m Paris time. As from January 1, 2007, you are no your ownership of the shares directly to Société Générale, the bank organizing the longer required to block your shares to participate in the meeting. After your shares Shareholders’ Meeting, by attaching a certificate of participation (attestation de have been recorded, you can sell all or part of them and nevertheless participate participation) to the form you have sent to it. in the meeting. Important: once you have asked for an admission card, voted by mail, or sent a proxy, you cannot opt to participate in another way.
You wish to attend the Shareholders’ You prefer to vote by mail or by proxy Meeting in person If you are not able to attend the meeting in person, you may exercise your voting You should apply for an admission card by crossing box A on the attached form and right by using the attached form (tick box B). return it duly signed and dated. You have 3 options: If you own registered shares: nnvote by mail; You need only send the attached form in the enclosed prepaid envelope to: nngive your proxy to the Chairman of the Meeting (in this case, the Chairman Société Générale will vote in favor of the adoption of the proposed resolutions presented by the Service des assemblées Board of Directors); 32, rue du Champ-de-Tir nngive your proxy to your spouse or another shareholder who will attend the meeting. BP 81236 44312 Nantes Cedex 03 France If you own registered shares: You need only send the attached form in the enclosed prepaid envelope to: If you own bearer shares: Société Générale You should apply for your admission card directly to the financial intermediary Service des assemblées managing your share account, who will transmit your request to Société Générale 32, rue du Champ-de-Tir who will then send you your admission card. BP 81236 44312 Nantes Cedex 03 You should return your application for an admission card as early as possible in order France to receive the card in due time. If you have not received your admission card on the third day preceeding the meeting, If you own bearer shares: you must ask your financial intermediary to send you a certificate of participation. You should send back the form duly completed to the financial intermediary managing Please feel also free to contact Société Generale dedicated operators at 0.825.315.315 your share account, which will send the form to Société Générale together with a (from France: €0.125/mn excluding VAT) from Monday to Friday, between 8:30 a.m certificate of participation. and 6:00 p.m Paris time.
I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I 3 Translation for information purposes only How to participate in the meeting
How to fill in your voting form?
If you wish to attend the meeting in person: cross here. IMPORTANT : avant d’exercer votre choix, veuillez prendre connaissance des instructions situées au verso / Before selecting, please see instructions on reverse side. QUELLE QUE SOIT L’OPTION CHOISIE, DATER ET SIGNER AU BAS DU FORMULAIRE / WHICHEVER OPTION IS USED, DATE AND SIGN AT THE BOTTOM OF THE FORM If you do not wish to attend A. Je désire assister à cette assemblée et demande une carte d’admission : dater et signer au bas du formulaire / I wish to attend the shareholder’s meeting and request an admission card : date and sign at the bottom of the form. B. J’utilise le formulaire de vote par correspondance ou par procuration ci-dessous, selon l’une des 3 possibilités offertes / I prefer to use the postal voting form or the proxy form as specified below.
the meeting: cross here. CADRE RESERVE / For Company’s use only ASSEMBLÉE GÉNÉRALE ORDINAIRE ANNUELLE Identifiant / Account Convoquée le 17 juin 2010 à 17 H au Palais des Congrès de Paris Nominatif VS / single vote 2, place de la Porte Maillot - 75017 PARIS Registered ANNUAL ORDINARY GENERAL SHAREHOLDER’S MEETING Nombre Number VD / double vote Convened on June 17, 2010 at 5 pm d’actions of shares Porteur / Bearer Société Anonyme at the Palais des Congrès de Paris au capital de 26 989 002,80 € 2, place de la Porte Maillot - 75017 PARIS Nombre de voix / Number of voting rights : porté au maximum à 79 731 593 € *
Siège Social : 1 - 5, rue Jeanne d’Arc ème If you wish to vote by * Montant du capital social après augmentation de capital d’un montant maximum total de 52 742 590,20 euros au titre de la 5 résolution votée par l’Assemblée Générale des actionnaires du 27 janvier 2010 et de la décision du Conseil d’administration du 21 avril 2010. 92130 Issy-les-Moulineaux Ce montant a pu être ajusté à la date de Règlement-livraison conformément à la note d’opération visée par l’AMF le 27 avril 2010. 333 773 174 RCS Nanterre * Amount of the share capital after a share capital increase in a maximum amount of € 52,742,590.20 in accordance with the 5th resolution approved by the General Shareholders’ Meeting held on January 27, 2010 and the decision of the Board of Directors held on April 21, 2010. mail: cross here and follow This amount may have been reduced at the Settlement Date, in accordance with the Securities Note approved by the Autorité des marchés financiers on April 27, 2010. JE VOTE PAR CORRESPONDANCE / I VOTE BY POST JE DONNE POUVOIR AU PRÉSIDENT JE DONNE POUVOIR A : (soit le conjoint, soit un autre instructions. Cf. au verso renvoi (3) - See reverse (3) DE L'ASSEMBLÉE GÉNÉRALE actionnaire - cf. renvoi (2) au verso) pour me représenter à l’assemblée Je vote OUI à tous les projets de résolutions présentés ou agréés Sur les projets de résolutions non agréés par le dater et signer au bas du formulaire, sans rien remplir / I HEREBY APPOINT (you may give your PROXY either to your spouse or to par le Conseil d’Administration à l’EXCEPTION de ceux que je Conseil d’Administration, je vote en noircissant another shareholder - see reverse (2)) to represent me at the above I HEREBY GIVE MY PROXY TO THE CHAIRMAN signale en noircissant comme ceci la case correspondante et pour comme ceci la case correspondant à mon mentioned meeting. lesquels je vote NON ou je m’abstiens. choix. OF THE MEETING elle rs M, Mme ou M / Mr, M or Miss date and sign the bottom of the form without completing it I vote FOR all the draft resolutions approved by the Board of On the draft resolutions not approved by the Adresse / Address Directors EXCEPT those indicated by a shaded box - like this , Board of Directors, I cast my vote by shading cf. au verso renvoi (2) - See reverse (2) for which I vote against or I abstain. the box of my choice - like this .
Oui/ Non/No Oui/ Non/No 1 2 3 4 5 6 7 8 9 Yes Abst/Abs Yes Abst/Abs A F Nom, Prénom, Adresse de l’actionnaire (si ces informations figurent déjà, les vérifier et les rectifier éventuellement) 10 11 12 13 14 15 16 17 18 - Surname, first name, address of the shareholder (if this information is already supplied, please verify and correct if necessary) B G Cf. au verso renvoi (1) - See reverse (1)
19 20 21 22 23 24 25 26 27 C H Check your details, 28 29 30 31 32 33 34 35 36 D J and update 37 38 39 40 41 42 43 44 45 E K if necessary.
Si des amendements ou des résolutions nouvelles étaient présentés en assemblée / In case amendments or new resolutions are proposed during the meeting - Je donne pouvoir au Président de l'A.G. de voter en mon nom / I appoint the Chairman of the meeting to vote on my behalf...... - Je m’abstiens (l’abstention équivaut à un vote contre) / I abstain from voting (is equivalent to a vote against) ...... - Je donne procuration (cf. au verso renvoi 2) à M, Mme ou Melle...... pour voter en mon nom / I appoint (see reverse (2)) Mr, Mrs or Miss / to vote on my behalf Pour être prise en considération, toute formule doit parvenir au plus tard : Date & Signature In order to be considered, this completed form must be returned at the latest
Whatever your choice, sur 1ère convocation on 1st notice à la BANQUE / to the Bank 14/06/2010, JUNE 14, 2010 please date and sign here. à la SOCIÉTÉ / to the Company 14/06/2010, JUNE 14, 2010
If you intend to vote by mail: do not If you wish to give your forget to mention your choice in the proxy to the Chairman: If you wish to be represented by another event of amendments of the resolutions follow instructions. shareholder or your spouse who will attend or new resolutions being presented at the the meeting: cross here and provide this meeting. person’s contact details.
4 I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I Translation for information purposes only Technicolor in 2009
Organization
The Group was organized around three operating divisions in 2009 – Entertainment gateways, principally to satellite, cable network and telecom operators – and Software Services (formerly Technicolor), Connect (formerly part of the Thomson Grass Valley Service Platform activities, comprising in particular softswitch solutions for network division) and Technology. All other activities (mainly retail telephony, a business from operators and Internet Service Providers (ISPs). which the Group exited in 2009), and corporate functions (unallocated) are presented within the “Other” segment. Technology (11% of 2009 Consolidated Revenues). Technology comprises Licensing and Corporate Research activities. The Software & Technology Solutions Entertainment Services (48% of 2009 Consolidated Revenues). The Entertainment activity, which was part of the Technology division, was sold in the third quarter of Services business offers video-related content management services for the Media & 2009. The Corporate Research segment includes the Group’s fundamental research Entertainment (M&E) industry. The division offers services related to content activities. The licensing and Intellectual Property activities generate most of the preparation and creation (Creation Services) and content distribution through physical division’s revenues. media (Theatrical Services and DVD Services) or digital media (Digital Content Delivery Services). Other Connect (38% of 2009 Consolidated Revenues). Connect supplies hardware and In 2009, the “Other” segment comprised mainly our retail telephony activities and our software technology to the Media & Entertainment industry in the areas of access and North American after-sales services operations. Technicolor exited these businesses delivery platforms. This division includes Digital Home Products activities – supplying in 2009. access and home networking products, notably set-top boxes and advanced service
Review of activities
% variation (in € millions) 2009 (1) 2008 (1) (current currency) Entertainment Services Sales 1,705 1,845 (7.6)% Profit (2) 4 (655) Connect Sales 1,328 1,579 (15.8)% Profit (2) 17 (47) Technology Sales 390 392 (0.6)% Profit (2) 227 245 Other Sales 106 283 (62.5)% Profit (2) (112) (284) Group – Continuing activities Sales 3,529 4,099 (13.9)% Profit (2) 136 (741)
(1) Results for 2009 and 2008 are presented in accordance with IFRS 5 and therefore exclude activities now treated as discontinued from profit (loss) from continuing operations. Prior period results are adjusted to take into account the current perimeter of discontinued operations. (2) Profit from continuing operations before tax and net finance costs.
I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I 5 Translation for information purposes only Technicolor in 2009
Entertainment Services the impact of provisions for risks, warranties and litigation) for Entertainment Services totaled €223 million in 2009, or 13.1% of revenues, compared with €214 million in Consolidated revenues for Entertainment Services totaled €1,705 million in 2009, 2008, or 11.6% of revenues. This improvement was attributable to the following factors: compared with €1,845 million in 2008, down 7.6% at current currency and down 8.2% at constant currency. The change in revenues was attributable mainly to the nnin Creation Services, despite a decrease in Postproduction Services, operating noticeable decline in the contribution from DVD Services, partially offset by the profitability improved in 2009 compared with 2008, thanks to an increase in visual strong performance of Creation Services in the second half of 2009 and by growth effects for films, the development of animation operations in India and visual effects in Theatrical Services over the full year. for advertising in Los Angeles, as well as efficiency gains; Creation Services (visual effects, animation and digital postproduction) had a slight nnin Theatrical Services, operating profitability improved significantly in 2009, with decline in revenues in 2009: mix improvements in Film and growth in Digital Production, as well as efficiency gains; nnDigital Production was affected in the first half of the year by industry uncertainty over the financing of new film projects and the weakness of the advertising market, nnin Digital Content Delivery Services, operating profitability improved in 2009 which weighed on demand for visual effects for films and commercials. The Group despite lower activity, reflecting tighter control over costs and operating processes; nevertheless managed to secure a number of major contracts in the second quarter nnin DVD Services, operating profitability remained stable in value despite the fall of 2009, which boosted revenues from visual effects for films in the second half in revenues, thanks to cost-cutting measures and efficiency gains, as well as mix of the year, including major projects such as Prince of Persia, Clash of the Titans, improvements compared with 2008, reflecting strong growth in Blu-ray™ volumes Percy Jackson and Robin Hood. In a difficult advertising market, our market and a reduction in kiosk-related volumes. position in the visual effects for commercials business improved in 2009; Restructuring costs totaled €9 million in 2009 (compared with €37 million in 2008). nnPostproduction services saw a decline in revenues over the full year in 2009, particularly in North America, due to the economic environment and tighter financing conditions for independent studios for the promotion of film releases. Despite these difficult market conditions, the Group believes that its overall market Connect share increased in this business in 2009. Consolidated revenues for Connect totaled €1,328 million in 2009, compared with €1,579 million in 2008, down 15.8% at current currency and down 16.7% at constant Theatrical Services (Film and Digital Cinema) had an increase in revenues in 2009. In currency. This change reflects a 15% fall in access-product volumes year-on-year, Film Services, the Group processed 3.8 billion feet of film footage in 2009, compared mainly resulting from: with 3.7 billion feet in 2008. Our operations benefited in 2009 from a strong release slate and an overall improvement in its mix. The Group believes that its market nnthe Group’s reduced ability to win major new access product contracts in 2009 due position remained stable in Film in 2009, while the Digital Cinema segment continued to its overall financial situation; to expand over the year. nnthe weakness of the North American market, with a decline in orders for satellite The Digital Content Delivery Services segment (Media Management, Broadcast set-top boxes due to higher refurbishment levels of previously deployed boxes Services and Electronic Distribution Services) posted a decline in revenues in 2009. caused by an increase in attrition rates among operators’ end-customers. Despite The Media Management business suffered from significant pressure on volumes, the 21% fall in volumes over the year, the Group believes that its market share in particularly in the second half of the year, due to lower orders for TV content and the satellite market was stable in 2009; DVD management services from studios and broadcasters. In a broadcasting market hit by a decline in advertising spending, Broadcast Services revenues edged down in nnmarket share loss with one European telecom operator, as reported in the third 2009 compared with 2008. quarter of 2009, due to the phasing out of deployments of an existing product. The Group believes that its market share in telecoms has been stable since the A total of 1.1 billion DVDs were replicated in 2009, down 22% compared with 2008 third quarter of 2009; (1.4 billion units), mainly due to lower SD-DVD (standard-definition DVD) volumes worldwide. This decrease mainly reflected a lower-than-expected performance of new nna significant decline in revenues from Access Products for cable operators (down DVD title releases and catalog titles from major studios, as well as a drop in kiosk- 25% in 2009), due mainly to an unfavorable comparison base, 2008 having related volumes. The decline in revenues was partially offset by an improvement in benefited from a very high level of orders for digital-to-analog adaptors from one the mix, with a strong increase in sales of high-definition discs (Blu-ray™). U.S. cable operator at the end of the year. The Group believes that its market share in the cable market remained stable in 2009. The contribution of physical media (DVD Services and Film Services) to revenues was down slightly in 2009 compared with 2008. Revenues derived from physical Software Service Platform revenues declined sharply in 2009, reflecting sharp cuts to media accounted for approximately three-quarters of total Entertainment Services operators’ capital expenditures in an unfavorable economic environment. revenues in 2009. Profit from continuing operations before tax and net finance costs for Connect of Profit from continuing operations before tax and net finance costs for Entertainment €17 million in 2009, compared with a loss of €47 million in 2008. The 2008 loss was Services was €4 million in 2009, compared with a loss of €655 million in 2008. The largely impacted by impairment charges of €76 million, and with the aim of providing 2008 loss was largely impacted by impairment charges of €641 million, and with the a more comparable view of the changes in its operating performance, the discussion aim of providing a more comparable view of the changes in its operating performance, of variances between 2008 and 2009 below includes adjusted indicators. Adjusted the discussion of the variances between 2008 and 2009 below includes adjusted EBIT (which exclude impairment charges, restructuring charges and other income and indicators. Adjusted EBIT (which exclude impairment charges, restructuring charges expenses) for Connect was €23 million in 2009, or 1.7% of revenues, compared with and other income and expenses) for Entertainment Services was €70 million in 2009, €47 million in 2008, or 3.0% of revenues. Adjusted EBITDA (which include adjusted or 4.1% of revenues, compared with €27 million in 2008, or 1.4% of revenues. The EBIT and amortization charges, as well as the impact of provisions for risks, warranties improvement in adjusted EBIT was partially attributable to lower depreciation and and litigation) for Connect totaled €101 million in 2009, or 7.6% of revenues, amortization, due mainly to the recognition of asset write-offs at the end of 2008. compared with €111 million in 2008, or 7.0% of revenues. The improvement in the Adjusted EBITDA (which include adjusted EBIT and amortization charges, as well as adjusted EBITDA margin shows that the impact of the fall in Digital Home Products
6 I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I Translation for information purposes only Technicolor in 2009
volumes and pricing pressure was largely offset by mix improvements and a material The decline in the profit (loss) from continuing operations before tax and net finance decrease in non-quality costs, resulting from the launch in the third quarter of 2009 costs for Technology was attributable to a €12 million write-down on the brand of a program designed to optimize operating processes and product development. portfolio and costs related to the launch of the Advanced Design Center within Corporate Research, partly offset by the rationalization of research sites and a slight Restructuring costs totaled €1 million in 2009 (compared with €12 million in 2008). increase in patent filing, prosecution and maintenance costs. The Company has taken action to optimize its patent portfolio management costs. Technology Restructuring costs totaled €27 million in 2009 (compared with €3 million in 2008). These costs mainly related to the closure of Villingen’s research center. Consolidated revenues for Technology totaled €390 million in 2009, compared with €392 million in 2008, down 0.6% at current currency. At constant currency, the business grew by 0.2% in 2009 compared with 2008. Technology’s 2009 revenues Other were impacted by the sale of the Software and Technology Solutions business to Civolution in July 2009. Revenues presented in the Other segment are comprised of:
Consolidated revenues for Licensing totaled €386 million in 2009, compared with nncorporate revenues for €4 million in each of 2009 and 2008, mainly related to €380 million in 2008, up 1.5% at current currency and 2.3% at constant currency. In services charged to third parties; 2009, this business benefited from a stable revenue stream from the MPEG-2 program (administrated through the MPEG-LA pool), whose contribution to Licensing nnthe North American TV after-sales services operations and the retail Telephony revenues was stable compared with 2008 (i.e. roughly 40%). Other programs, business totaling €102 million in 2009 compared to €279 million in 2008, mainly including digital television, also made a significant contribution. At the end of 2009, reflecting reduced external revenues from the residential Telephony business, the Group had 1,125 licensing contracts in force, compared with 1,097 at the end of which the Group exited during the course of the year. 2008 and 990 at the end of 2007. Losses from continuing operations before tax and net finance costs for the Group’s Profit from continuing operations before tax and net finance costs for Technology Other segment were €112 million in 2009 (compared with a loss of €284 million in of €227 million in 2009, compared with a profit of €245 million in 2008, or a profit 2008) and are comprised of: margin of 58.2% in 2009 compared with 62.5% en 2008. Adjusted EBIT (which nnlosses from continuing operations before tax and net finance costs of €91 million exclude impairment charges, restructuring charges and other income and expenses) in 2009 (compared with a loss of €106 million in 2008) related to unallocated for Technology was €266 million in 2009, or 68.2% of revenues, compared with Corporate functions; €270 million in 2008, or 68.8% of revenues. Adjusted EBITDA (which include adjusted EBIT and amortization charges, as well as the impact of provisions for risks, warranties nnlosses from continuing operations before tax and net finance costs of €21 million in and litigation) for Technology was €283 million in 2009, or 72.5% of revenues, 2009 (compared with a loss of €178 million in 2008), mainly reflecting a decrease compared with €287 million in 2008, or 73.3% of revenues. of the operating loss on the residential Telephony business (a loss of €4 million in 2009 compared with a loss of €88 million in 2008), which the Group decided to exit in 2008, and which was discontinued in 2009.
Consolidated results
Net sales from continuing activities Entertainment Services suffered from a strong decline in DVD market volumes in 2009, the impact of which was partially offset by growth in Theatrical Services (film In a challenging environment in 2009, Technicolor’s revenues from continuing and digital cinema) and, in the second half, in digital production (visual effects and operations amounted to €3,529 million, down 13.9% at current currency compared animation). Despite a growth in the first half of the year, Connect’s full-year revenues with 2008, and down 14.5% at constant currency. The decline in revenues is primarily were negatively affected by the Group’s financial situation, which reduced the division’s due to lower revenues in the Connect and Entertainment Services business divisions capacity to win major new contracts, and by high replacement levels of previously as well as our exit from the residential Telephony business in 2009. Revenues for deployed set-top boxes in the North American market. With the exception of one Technology activities were almost stable in 2009 compared with 2008. specific European telecom operator, the Group believes that Connect maintained its market share with existing customers in 2009. Despite the disposal of the Software and Technology Solutions business to Civolution in July 2009, Technology revenues remained almost stable in 2009 compared with 2008.
I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I 7 Translation for information purposes only Technicolor in 2009
Profit from continuing operations before Net finance costs tax and finance result Net finance costs, which comprise the total of net interest expenses and other financial Profit from continuing operations before tax and net finance costs was €136 million expenses, were €68 million in 2009, compared with €376 million in 2008. in 2009, compared with a loss of €741 million in 2008. The extent of this increase was attributable mainly to the goodwill and asset impairment, and restructuring charges, Net interest expense which totaled €832 million in 2008, ongoing improvement in the overall business mix Despite a higher level of average debt in 2009 than in 2008, net interest expense for and the revenue mix of Entertainment Services and Connect, as well as efficiency continuing operations totaled €43 million in 2009 compared with €75 million in 2008 gains in most of the Group’s businesses. due mainly to lower interest rates in 2009. See Note 27 to the Group’s consolidated financial statements for further information. Cost of sales Cost of sales amounted to €2,747 million in 2009, compared with €3,355 million in Other financial income (expense) 2008, a decrease of €608 million, due primarily to the decline in revenues, but also Other financial expense for continuing operations totaled €(25) million in 2009, to efficiency gains in most of the Group’s activities. Accordingly, the Group’s gross compared with €(301) million in 2008, including a €151 million expense relating to margin totaled €782 million, or 22.2% of consolidated revenues in 2009 (compared the impairment of the Group’s financial stake in Videocon Industries and a €36 million with €744 million in 2008, or 18.2% of revenues). expense covering the revaluation of U.S. dollar hedge borrowings. In 2009, other financial income (expense) included a €7 million gain on the sale of Videocon Selling and administrative expenses Industries shares and a gain of €36 million relating to the unwinding of interest-rate Selling and marketing expenses amounted to €115 million in 2009, or 3.3% of revenues swaps, as well as expenses relating to the restructuring of the Group’s debt for a total (compared with €164 million in 2008, or 4.0% of revenues), a decrease of €49 million of €42 million. See Note 10 to the Group’s consolidated financial statements for compared with 2008. This decrease was attributable in part to efficiency gains in most further information. of the Group’s activities. General and administrative expenses amounted to €267 million in 2009, or 7.6% of Income tax revenues (compared with €295 million in 2008, or 7.2% of revenues), a decrease of €28 million compared with 2008. The increase as a percentage of revenues was due In 2009, the Group’s total income tax expense (current and deferred) on continuing to the decrease in revenues, which was partly offset by efficiency gains. operations was €35 million, compared with an expense of €104 million in 2008. The current tax charge in 2009 was the result of current taxes due in Brazil, Australia Research and Development expenses and Mexico, as well as withholding taxes on income earned by the Group’s Licensing Research and development expenses for continuing operations amounted to activities, which were only partially credited against taxes payable in France and the €153 million in 2009, or 4.3% of revenues (compared with €169 million in 2008, or United States, and as such represent an additional tax expense. Due to the ratification 4.1% of revenues), a decrease of €16 million compared with 2008. The decrease was with retroactive effect to January 1, 2009 of a new tax treaty between France and the attributable mainly to the closure of the Silicon Solutions and residential Telephony U.S., which removed the withholding tax on Licensing revenues, withholding tax was businesses. Of the total spending on research and development in 2009, €45 million down compared with 2008. The current tax charge was €14 million in France (mainly was spent in the Technology division, which includes the Corporate Research activities. reflecting withholding taxes) and €13 million outside France. In 2009, Technicolor recorded a net deferred tax expense of €8 million due mainly Restructuring costs to the use of French deferred tax assets, partially offset by the benefit of the removal of the United States-France withholding tax. Restructuring costs for continuing operations totaled €41 million in 2009 (compared with €166 million in 2008). In 2009, restructuring costs related mainly to site closures, particularly of the Technology division’s research site in Villingen. In 2008, restructuring Share of profit (loss) from associates costs were mainly related to Entertainment Services and Connect activities. The share of profit (loss) from associates was not material in 2009, compared with a Impairment losses on non-current operating assets loss of €4 million in 2008, which related principally to NuTune, a joint venture between Technicolor and NXP Semiconductors, combining their respective tuner businesses. In 2009, Technicolor recorded net impairment losses on non-current operating assets of €80 million, compared with €666 million in 2008. In 2009, a €44 million impairment charge was made against a contract advance to a North American client in Discontinued operations Entertainment Services, as well as an €8 million net loss on customer relationship, and a €12 million impairment charge on brands and patents in Technology, due to the write- In 2009, the total loss from discontinued operations was €375 million (compared off of the RCA brand. In 2008, impairment losses on goodwill totaled €379 million with a loss of €708 million in 2008). The loss from discontinued operations before and impairment losses on non-current operating assets totaled €287 million. impairment losses on non-current assets was €97 million in 2009 (compared with a loss of €244 million in 2008), including a loss of €109 million (compared with loss of €127 million in 2008) relating to Grass Valley activities. In 2009, the Group also Other income (expense) recorded an impairment loss of €278 million on discontinued operations, relating Other income (expense) represented income totaling €10 million in 2009, compared mainly to the Grass Valley and Media Networks activities (compared with an with an expense of €25 million in 2008. impairment loss of €464 million in 2008).
8 I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I Translation for information purposes only Technicolor in 2009
Net income Discontinued operations The Group’s consolidated net loss was €342 million in 2009 (compared with a loss Net operating cash used in discontinued operations was €81 million in 2009 (compared of €1,933 million in 2008). The net loss attributable to minority shareholders in 2009 with €160 million in 2008 and €170 million in 2007). was nil, compared with €3 million in 2008. Accordingly, the net loss attributable to shareholders of Technicolor SA totaled €342 million (compared with a loss of Net cash used in investing activities €1,930 million in 2008). Net loss per non-diluted share was €1.30 in 2009, compared Net cash used in investing activities was €228 million in 2009 (compared with with a net loss per non-diluted share of €7.41 in 2008. €351 million in 2008 and €139 million in 2007).
Cash flow and net debt Continuing operations Net investing cash used in continuing activities was €193 million in 2009 (compared Net cash generated from /(used in) operating activities with €273 million in 2008 and €94 million in 2007), and included: Net cash generated from operating activities was €98 million in 2009, (compared with nngross tangible and intangible capital expenditures, amounting to €165 million in €(318) million used in operating activities in 2008 and €281 million generated from 2009 (compared with €229 million in 2008 and €197 million in 2007). Net capital operating activities in 2007). This significant increase was principally attributable to expenditures amounted to €148 million in 2009 (compared with €226 million in an improvement in net income and the working capital requirements of continuing 2008 and €88 million in 2007) due to cash expended relating to tangible and operations. intangible capital expenditures of €165 million, net of cash received from tangible and intangible asset disposals, which was €17 million in 2009 (compared with €3 million in 2008 and €109 million in 2007). The largest of these disposals in Continuing operations 2007 was the Camarillo site in California, United States; Net operating cash generated from continuing operations was €179 million in 2009, (compared with €(158) million used in continuing operations in 2008 and €451 million nncash outflow for the acquisition of equity holdings in subsidiaries (net of cash generated from continuing operations in 2007). This variation reflects: acquired), amounting to €4 million in 2009;
nnthe improvement in the net income from continuing operations, with a net profit of nnproceeds received from sales of equity holdings, amounting to €23 million in 2009 €33 million in 2009 compared with a net loss of €1,225 million in 2008; (compared with €5 million in 2008 and €42 million in 2007);
nnthe change in working capital requirements and other assets and liabilities (including nncash collateral put in place to secure the Group’s obligations used a total of contract advances) which had a negative impact of €120 million in 2009 compared €56 million in 2009 compared with €35 million in 2008. with a negative impact of €335 million in 2008 (a positive impact of €36 million in 2007). In 2009, Technicolor finalized the initiatives begun in 2008 by ending Discontinued operations factoring and reducing customer advances and aligning its supplier payment cycle Net investing cash used in discontinued operations was €35 million in 2009 (compared with contractual terms; with €78 million of cash generated in 2008 and €45 million of cash used in 2007). nncash used in the restructuring of continuing operations, which amounted to €67 million in 2009, compared with €50 million in 2008 (€84 million in 2007); Net cash generated from/(used in) financing activities nnnet change in provisions of €(80) million (net balance of the new provisions for Net cash used in financing activities amounted to €75 million in 2009 (compared with the year and the outflows linked to utilizations) compared with a net change in €870 million generated in 2008 and €861 million used in 2007). provisions of €94 million in 2008 (net change of €(129) million in 2007); Continuing operations nnnet interest paid (corresponding to interest paid net of interest received) of €44 million in 2009 (compared with €66 million in 2008 and €65 million in 2007); Continuing operations used €74 million compared with €878 million provided by and continuing operations in 2008 (€849 million used in 2007). The net cash used in 2009 was primarily to repay borrowings, including the drawings on our syndicated credit nntaxes paid of €36 million in 2009 (compared with €30 million in 2008 and facility for €44 million, and the payment of fees relating to the debt restructuring €63 million in 2007). of €27 million. Profit from continuing operations in 2009 was €33 million, compared with a loss of The net amount of €878 million generated in 2008 by financing of continuing €1,225 million in 2008 (profit of €316 million in 2007). In 2009, non-cash elements operations mainly reflects the increase in loans and includes drawings on our included mainly: syndicated credit facility for an amount of €1,610 million offset by the repayment of convertible bonds in the amount of €367 million, the repayment of other debt nnimpairment of assets amounting to €82 million (compared with €711 million in 2008 and €15 million in 2007); for €338 million and the payment of €29 million in distributions to holders of deeply subordinated perpetual notes. nndepreciation and amortization of €270 million (compared with €452 million in 2008 and €300 million in 2007); and The net cash used in financing operations in 2007 was principally due to the repayment of short-term borrowings for an amount of €890 million, the proceeds from new debt, nnthe net change in provisions. primarily from a private placement made in 2007 for an amount of €150 million, and the payment of €117 million in dividends and distributions (including €29 million paid to holders of deeply subordinated perpetual notes).
I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I 9 Translation for information purposes only Technicolor in 2009
Discontinued operations Net debt Cash used by discontinued operations in 2009 was €1 million compared with Gross financial debt totaled €2,743 million at the end of 2009, compared with €8 million used in 2008 (and €12 million used in 2007). €2,884 million at the end of 2008. At December 31, 2009, financial debt comprised primarily notes placed privately with financial institutions for the equivalent Cash and cash equivalents of €1,021 million (compared with €1,036 million at December 31, 2008) and €1,674 million drawn under the syndicated credit facility, compared with €1,733 million There was a net decrease of cash and cash equivalents of €205 million before the at December 31, 2008. Financial debt due within one year amounted to €2,727 million impact of exchange rates in 2009 compared with an increase of €201 million in 2008 at the end of 2009, compared with €2,862 million at the end of 2008. (and a decrease of €719 million in 2007). Cash and cash equivalents amounted to €569 million at December 31, 2009 compared with €769 million at December 31, 2008 (and €572 million at December 31, 2007).
Balance sheet restructuring
On January 28 and March 9, 2009, the Company announced that when the 2008 its shareholders and its stakeholders (employees, suppliers and customers), the audited consolidated financial statements were available, it would be in breach of Company requested on November 30, 2009 the Nanterre Commercial Court to certain covenants contained in financial agreements under which the Company had open a Sauvegarde proceeding for the benefit of the Company. borrowed substantially all of its outstanding senior debt, i.e. around €2.8 billion (the senior debt). In accordance with French law, the proposed Sauvegarde Plan was submitted to the vote of the Committees of the creditors meeting on December 21 and 22, 2009. To prevent the risk of the acceleration of the debt due to this situation, beginning In addition, on January 27, 2010, the Combined General Shareholders’ Meeting in February 2009, the Company entered into discussions with its principal senior approved the resolutions required to implement the plan, thereby authorizing the creditors to present its strategic framework and to engage in a dialogue regarding completion, prior to September 30, 2010, of the equity issuances outlined therein. the restructuring of its debt. Finally, on February 17, 2010, the Nanterre Commercial Court approved the proposed Sauvegarde Plan (the “Sauvegarde Plan”) after ensuring it was protecting the interests To ensure a sufficiently long period of stability for the negotiations to be successful, of all creditors and offered a “viable solution” (“une possibilité sérieuse pour l’entreprise the Company obtained waivers from its senior creditors pursuant to which the senior d’être sauvegardée”). creditors agreed to suspend their rights to call for the acceleration of the senior debt until June 16, 2009 and then July 24, 2009. Following the decision taken by the Board on 21 April 2010 and the visa delivered by the AMF (Autorité des marchés financiers) on 27 April 2010, Technicolor announced On July 24, 2009 the Company signed a restructuring agreement with the majority on 28 April 2010 the launch of a rights issue in an amount of up to approximately of its senior creditors, which set out the terms and conditions for the restructuring of €348 million and an issuance of Notes Redeemable in Shares (Obligations its senior debt and new governance of the Company, as well as the extension of the Remboursables en Actions, “NRS”) in an amount of approximately €638 million waivers until November 30, 2009. reserved to the Group’s senior creditors (existing shareholders may purchase up to In the period after July 24, 2009, the Company attempted to reach an agreement with approximately €75 million of the aggregate €638 million NRS pursuant to warrants those creditors who had not signed the restructuring agreement. These negotiations (Bons d’Acquisition d’Obligations Remboursables en Actions, “NRS Warrants”)). For were unsuccessful, with certain creditors arguing that they could not accede to the more information, a prospectus approved by the AMF under No. 10-107 on April 27, restructuring agreement due to the hedging protection to which they had subscribed 2010 and consisting of (i) the 2009 Document de Référence filed with the AMF under Credit Default Swaps or CDS. on March 30, 2010 under D.10-0193, (ii) an update of the Document de Référence (Annual Report) filed with the AMF on April 27, 2010 under No D.10-0193-A01, and At the termination of the CDS auction process organized by the International Swaps (iii) a Note d’Opération (Securities Note), (including a summary), is available free of and Derivatives Association (ISDA) at the end of October 2009, the identity of the charge at the head office of Technicolor as well as on the websites of Technicolor new creditors had not been definitively established and the debt instruments continued (www.technicolor.com/opfin) and the AMF (www.amf-france.org). to be sold on the market and were the subject of new CDS contracts. This transaction is the final stage of the Group’s balance sheet restructuring and will The Company therefore was not able to identify and obtain the unanimous approval of allow Technicolor to strengthen its capital structure while reducing its outstanding all its senior creditors to the restructuring agreement, which expired on November 30, financial debt by 45% (from approximately €2.9 billion to €1.5 billion) in accordance 2009. In this context, in order to end the uncertainty which was damaging to itself, with its Sauvegarde plan.
10 I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I Translation for information purposes only Technicolor in 2009
Strategy and outlook
Strategy 3. Digital Distribution; 4. Digital Home. Following the change of leadership in September 2008 and detailed analysis of the financial and operational state of each business unit, fundamental choices were made Digital Production – Technicolor has a recent history in expanding into the Visual in terms of: Effects (VFX) and animation markets. With the expansion of digital technologies, high budget and blockbuster movies are either animation or VFX-driven films. In capturing i) Refocusing the Company on its core customer base, i.e. content creators and these growth opportunities, Technicolor enjoys a competitive advantage due to its distributors, while continuing to leverage the Group’s strong research and high-quality reputation, global footprint, and low-cost locations in Bangalore and technology licensing capabilities; Beijing. In addition, Technicolor will explore new business models to create additional ii) Exiting businesses outside of the Group’s new strategic framework (divestments revenue upside. and closures). Digital Studio – With the proliferation of formats and the need to increase the The Company also initiated the restructuring of its financial debt in 2009 and launched returns of their existing assets, content creators are seeking opportunities to not only an extensive operational improvement program in order to strengthen the Group’s digitize their archives, but to also shift to an “all digital” process in order to fully exploit balance sheet and improve its profitability and cash generation. their assets and maximize meta-data monetization. To address these opportunities, Simultaneously Technicolor aims at laying the foundations for: Technicolor is creating a “digital studio” offering, which will provide integrated services attractive to creators for enhanced reliability, security and speed. i) Maximizing the operating benefit from its maturing physical media businesses; Digital Distribution – The non-linear digital content distribution market has not ii) Seizing opportunities stemming from the digital transition; reached its full potential. Technicolor can play an important role in this area and iii) Increasing its focus on Technology innovation. develop digital delivery platforms in order to:
Maximizing the Operating benefit from mature activities nncreate a secure digital platform for studios to directly deliver their content to consumers with a unique and rich experience; Technicolor has a leading position in physical media (Film and DVD). With emerging digital delivery solutions, these markets are now considered to be mature. nnprovide NSPs a means of defending against new digital delivery competitors; Film Processing and Replication – Theatrical releases remain a key source of studio nnleverage strong relationships with content owners and NSPs. revenues. Film labs continue to act as an entry point to the moviemaking process, while Digital Home – The digital home is not a new phenomenon but is certainly one that is digital cinema deployment rates, although on the rise, remain uncertain for the next rapidly gaining momentum with the proliferation of connected devices and maturing few years. The fortification of the film business will be a key anchor to enable steady network technologies. Technological improvements are creating not only new devices support in transitioning to digital media and seize the opportunity to extend the life of with advanced search, navigation and user interface capabilities, but also new business physical media and generate immediate returns. This transition is also possible thanks models including device-tie-in with content-distribution models. Three key initiatives to the incremental migration of physical distribution to digital distribution services. will strengthen Technicolor’s position in the high-end digital home market: Technicolor believes that despite the DVD DVD Replication and Distribution – nnrefocus innovation on software and the user experience; volume decline, the DVD replication market will not disappear altogether over the next few years. Technicolor remains positioned in this market thanks to its strong nnintegrate new technologies (e.g., 3D) into high-end set-top boxes; market position, resilient cost structure and large range of services to customers. n integrate hardware, software and services. Four key initiatives are underway: n 1. invest selectively in Blu-ray™ expansion to match demand growth; Focusing on Technology innovation and continued 2. continue the optimization of cost structure and operations; monetization of IP 3. develop packaged media-related technologies with potential for industry-wide Technology is at the heart of Technicolor’s video-related services. A renewed focus application; on R&D is aimed at aligning the Group’s business strategy with market needs. Three 4. continue expansion/diversification of supply-chain services. key initiatives are underway to achieve this alignment: nndeployment of an Advanced Development Center (ADC), which mainly aims to Seize opportunities offered by digital migration accelerate the conversion of technical innovations into commercial offers. ADC Digitization is the major upheaval facing the Media & Entertainment industry. The also supports business units with centers of excellence in key technological areas shift to digital provides both opportunities (direct access to consumers, increased for the future; convenience, improved cost structure of delivering content) and challenges (decrease of physical media revenue, new capital expenditure, fragmentation of channels) to all nnreinforcement of product development capabilities; participants in the video creation, management and distribution value chain. Although nncreation of partnerships for skills renewal and growth. the digital revolution is already underway, some of the key trends have not as yet reached their full potential. Four digital shifts will have a major impact on the industry Technicolor has the assets to capture 3D market opportunities leveraging on and Technicolor’s future: existing and innovating operations in Creation and Cinema Services (Technicolor 3D), technology and know-how in content creation and services, brand recognition, 1. Digital Production; advanced technologies for new-generation 3D format. 2. Digital Studio;
I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I 11 Translation for information purposes only Technicolor in 2009
A renewed focus on Technology will not only provide Technicolor’s products and Outlook services with a competitive advantage, but will also extend the Group’s acknowledged capabilities in the monetization of Intellectual Property. In this specific area, new On February 17, 2010, in conjunction with the release of its unaudited 2009 results, business models will be explored over the coming years in order to capture further the Group set out its priorities for 2010: opportunities. nnwhile visibility on the overall market environment remains low, the Group is focusing Finally, Technicolor will continue to develop its customer base across its activities on winning new clients to deliver revenue growth in the second half of 2010. The as part of its three strategic priorities. A significant share of Technicolor’s services Group expects first-half 2010 revenue trends to be in line with second-half of 2009 revenues comes from three Hollywood majors – The Walt Disney Company, trends. In the second half of 2009, Group revenues from continuing operations Paramount/DreamWorks and Universal Studios. There is room for growth with other decreased by 23.7% at current currency and 21.8% at constant currency compared majors and mini-majors in the US for existing services without significant investment to the second half of 2008; in capabilities other than in sales resources. The opportunities are with DVD/Blu-ray™ nnthe Group will continue to strongly focus on operational efficiencies and cash replication, film services and content preparation. In addition, Technicolor has the generation in order to finance the capital expenditure and working capital opportunity to extend its reach to main players in Western Europe, leveraging its requirements necessary for expected increased business activity in second half current strong position in North America. The Group can expand in this region with of 2010; minimal investment, mainly in sales resources, and through potential partnerships. nnthe Group intends to progress its divestment and closure program already underway, and stem the cash losses related to some of the activities it is seeking to divest.
Parent company results
The results of the Group parent company, Technicolor SA show an operating loss of A net income tax gain of €54 million has been recognized in 2009 (net profit of €56 million in 2009 (loss of €61 million in 2008). €45 million in 2008). The Net Financial Loss amounts to a charge of €608 million in 2009, compared with The net loss accordingly amounted to €572 million in 2009, compared to a net loss €2,239 million in 2008. This is due in particular to the recording of provisions against of €2,327 million in 2008. investments in subsidiaries and current accounts held on subsidiaries for an amount of €999 million in 2009 compared to a charge of €2,527 million in 2008. Due to the losses of the period, Technicolor’s statutory shareholder’s equity is negative and amounts to €(1,214) million as of December 31, 2009. Exceptional items amounted to a €38 million gain in 2009, compared with a €72 million loss in 2008 mainly due to the reversal of provisions linked to the disposal of investments in subsidiaries or liquidation (in 2008, it was mainly linked to the disposal of a decoder plant in Burgundy (France)).
12 I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I Translation for information purposes only Technicolor in 2009
Key financial data
The figures mentioned in the table below are extracted from the Group’s Consolidated Financial Statements for the years ended 2009 and 2008, which have been prepared in accordance with IFRS.
(in € millions) 2009 2008 Consolidated statements of operations Revenues 3,529 4,099 Profit from continuing operations, before tax and net finance costs 136 (741) Net loss from discontinued operations (375) (708) Net income before minority interests (342) (1,933) Net income (342) (1,930) Cash flows (consolidated) Net cash generated from/(used by) operating activities 98 (318) Net cash used by investing activities (228) (351) Net financing cost generated from/(used by) financing activities (75) 870 Net increase (decrease) in cash and cash equivalent (205) 201 Balance sheet items (consolidated) Shareholders’ equity (453) (134) Net debt (1) 2,176 2,116 Net debt/Shareholders’ equity N/A N/A Per share data Outstanding shares at December 31 269,890,028 269,890,028 Average number of shares (2) 263,089,971 262,940,152 Net earning per share (basic) in € (on average number of shares, restated) (1.30) (7.41)
(1) Including acquisition-related payables. (2) Net of treasury stock.
I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I 13 Translation for information purposes only Explanatory comments on the resolutions
We have called you to attend this Annual Ordinary General Shareholders’ Meeting for the purpose of asking you to vote on the following resolutions:
To be considered by the Ordinary Shareholders’ Meeting
Approval of the financial statements and allocation of income Ms Catherine Guillouard, Messrs. Denis Ranque, Bruce Hack and John Roche are qualified as independent directors pursuant to criteria established by the Association The purpose of the first and second resolutions is to approve, respectively, the Française des Enterprises Privées (AFEP) and the Mouvement des Entreprises de annual and consolidated financial statements for the fiscal year ended December 31, France (MEDEF). 2009. The activity and the results for this fiscal year are presented and explained in this brochure and in the 2009 Annual Report available on the Company’s web site. In accordance with French Law, we submit these appointments for your ratification in the fourth, fifth, sixth and seventh resolutions. In the third resolution, you are asked to take notice of the net accounting result of the Company for the fiscal year ended December 31, 2009 of €(571,982,207.41) and For a complete description of the Company’s corporate governance, please refer to to charge that amount to the carry forward account, which would accordingly show Chapter 4 “Corporate governance and employees” of the Company’s 2009 Annual a negative balance of €(1,341,424,711.70). Report available on its website.
Ratification of the cooptation of four directors Renewal of the term of office of two directors The Company’s corporate governance was one of the elements of the debt The terms of office of Mr Didier Lombard and Bruce Hack are expiring at the closing restructuring process undertaken by the Company in the beginning of 2009. of this Shareholders’ Meeting. At the Combined General Shareholders’ Meeting held on January 27, 2010, the We remind you that the term of office of Mr Didier Lombard was renewed by the Company announced the changes to its Board of Directors and its corporate Shareholders’ Meeting held on May 22, 2009 for a two-year term (which Shareholders’ governance structure. First, the Board of Directors held on February 17, 2010 accepted Meeting also decided to stagger the terms of these mandates in order to ensure the resignations of Messrs Eric Bourdais de Charbonnière, François de Carbonnel, better rotation of directors). Mr Bruce Hack was appointed in replacement of Mr Paul Pierre Lescure and Paul Murray and appointed, subject to ratification by the General Murray, for Mr Murray’s remaining term of office, which is expiring at the closing of Shareholders’ Meeting, Ms Catherine Guillouard, Messrs Denis Ranque, Bruce Hack this Shareholders’ Meeting. and John Roche as directors. Mr Lloyd Carney was appointed observer (censeur). In the eighth and ninth resolutions, you are asked to renew the term of office of Second, with the completion of the restructuring process following the decision of Messrs Didier Lombard and Bruce Hack as Director for a three-year term expiring at the Nanterre Commercial Court on February 17, 2010 to approve the Company’s the closing of the General Shareholders’ Meeting to be held in 2013 to approve the Sauvegarde Plan, the Board of Directors, in its meeting of the same date, decided, financial statements for the fiscal year ended December 31, 2012. upon the proposal of Mr Frederic Rose, and as recommended by the Governance A summary of Messrs’ Didier Lombard’s and Bruce Hack’s biographies is set forth in and Nominations Committee, to separate the functions of Chairman of the Board section “Information about Directors” below, and complete biographies are set forth and Chief Executive Officer. Mr Denis Ranque has been appointed Chairman of in paragraph 4.1.3.1 of the Company’s 2009 Annual Report available on its website. the Board. The Governance and Nominations Committee, in its renewal of a portion of the Board of Directors, paid particular attention to the abilities and the expertise of its Appointment of a director members in key areas of the Group’s business. To this end, Messrs. Denis Ranque and As mentioned above, the Board of Directors held on February 17, 2010 appointed Lloyd Carney have acquired, through their professional experience in high technology Mr Lloyd Carney as observer (censeur) and decided to propose his appointment as companies, a high degree of experience in technology and research. Mr Bruce Hack director to the next General Shareholders’ Meeting. has strong knowledge of the media and entertainment sector. Finally, Ms Catherine Guillouard and Mr John Roche have significant financial experience in international In the tenth resolution, the Board of Directors is asking you to appoint Mr Lloyd groups. A summary of their biographies is set forth in section “Information about Carney as director of the Company, for a three-year term expiring at the closing of Directors” below, and complete biographies are set forth in paragraph 4.1.3.1 of the the General Shareholders’ Meeting called in 2013 to approve the financial statements Company’s 2009 Annual Report available on its website. for the fiscal year ending December 31, 2012.
14 I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I Translation for information purposes only Explanatory comments on the resolutions
Mr Lloyd Carney is CEO of Xsigo Systems and as such will bring to the Board of In the eleventh resolution and the twelfth resolution respectively, the Board of Directors his significant expertise in the technology field. A summary of his biography Directors, upon the Audit Committee’s recommendation, is asking you to renew is set forth in section “Information about Directors” below, and a complete biography the appointments of Mazars as permanent statutory auditor and of Mr Patrick de is set forth in paragraph 4.1.3.1 of the Company’s 2009 Annual Report available on Cambourg as substitute statutory auditor. its website. The appointments of Mazars as permanent statutory auditor and of Mr Patrick de Please note also that Mr Lloyd Carney is considered as an independent director Cambourg as substitute statutory auditor shall expire at the closing of the General pursuant to criteria established by the AFEP and the MEDEF. Shareholoders’ Meeting called in 2016 to approve the financial statements for the fiscal year ending December 31, 2015. Should this resolution be approved, at the closing of this Shareholders’ Meeting, the Board of Directors will be composed of nine directors, including seven independent directors. We remind you that Mr Frederic Rose, director of the Company and CEO, and Mr Loïc Desmouceaux, employee of the Group and director representing Powers to be conferred for fulfilling legal formalities employee shareholders, are not considered as independent directors pursuant to Resolution thirteen asks that you grant full authority to the bearer of a copy or extract criteria established by the AFEP and the MEDEF. of the minutes of these proceedings for the purpose of registration or filing formalities required by applicable law and regulations.
Renewal of the statutory auditors’ mandate We inform you that the respective term of Mazars as permanent statutory auditor, and of Mr Patrick de Cambourg as substitute statutory auditor is expiring at the closing of this Shareholders’ Meeting.
These are the main points of the resolutions we propose that you approve.
I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I 15 Translation for information purposes only Information about the directors Whose ratification of the co-optation, renewal of the term of office, or the appointement are submitted for approval to the Shareholders’ Meeting
In the fourth resolution In the fifth resolution
Denis Ranque Catherine Guillouard
58 years old 45 years old Mr Denis Ranque holds French nationality. He has been Ms Catherine Guillouard holds French nationality. a Director and Chairman of the Board of Directors since She has been a Director of the Company since February 17, 2010. February 17, 2010.
Current functions Current functions Chairman of Technicolor’s Board of Directors since February 17, 2010 CFO and member of the Executive Committee of Eutelsat since September 2007
Main previous functions Main previous functions Chairman and CEO of Thomson-CSF (1998-2009) CFO of Air France (2005-2007) CEO of Thomson Marconi Sonar (1994-1998) Senior Vice-President Human Resources, Senior Vice-President Flight Operations, and Deputy Vice-President Corporate Control of Air France (1997-2005) Chairman and CEO of Thomson Sintra Activités Sous-marines (1992-1994) Missions at the Treasury of the Ministry of Finance in the CFA Zone in Africa CEO of Thomson Tubes Électroniques (1989-1992) Department and in the Banking Affairs Department (1993-1997)
Other mandates Other mandates Director of Saint-Gobain, CMA-CGM and CGG-Veritas -
16 I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I Translation for information purposes only Information about the directors
In the sixth resolution In the seventh and eighth resolution
John Roche Bruce Hack
63 years old 61 years old Mr John Roche holds French and American Mr Bruce Hack holds American nationality. nationality. He has been a Director He has been a Director of the Company since of the Company since February 17, 2010. February 17, 2010.
Current functions Main previous functions Chairman of the Audit Committee of Adeo, and of the bank Accord Vice Chairman of the Board of Directors of Activision Blizzard (2008-2009) Secretary of the Audit Committee of Auchan Group Chairmand and CEO of Vivendi Games (2004-2008) Advisor of the President of Adeo Executive Vice-President, Development and Strategy at Vivendi Universal (2001‑2003) Main previous functions Other mandates General Secretary of Auchan Group, Advisor of the President (1990-2005) Director of iSuppli Corporation and MiMedx Group, Inc. CEO of CIMOVAM (1988-1990) Country Manager (France, Philippines, Taïwan) within CITIBANK Consumer Services Group (CSG) (1974-1988)
Other mandates Director of the bank Accord and Adeo Group Manager of ETIMA
I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I 17 Translation for information purposes only Information about the directors
In the ninth resolution In the tenth resolution
Didier Lombard Lloyd Carney
68 years old 48 years old Mr Didier Lombard holds French nationality. He Mr Lloyd Carney holds American nationality. has been director of the Company since May 2004. He has been an observer on the Board of Directors since February 17, 2010.
Current functions Current functions Chairman of the Board of France Telecom since 2005 CEO of Xsigo since 2007
Main previous functions Main previous functions CEO of France Telecom (2005-2010) CEO of the Netcool division within IBM (2006-2007) Vice-President in charge of “Technologies, Partnerships and New Services” at France Chairman and CEO of Micromuse (2003-2006 Telecom (2003-2005) COO of Juniper Networks (2002-2003) Ambassador in charge of foreign investments and President of the French Agency for international investments (1999-2003) Head of three divisions at Nortel Networks (Core IP Division, Wireless Internet Division, et Enterprise Data Division) (1997-2001)
Other mandates Other mandates Member of the Supervisory Board of Radiall and STMicroelectronics Director of Xsigo Systems and of Cypress Semiconductor Director of Thalès
18 I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I Translation for information purposes only Proposed resolutions
Ordinary Shareholders’ Meeting
First resolution Pursuant to Article 243 bis of the French Tax Code, the per share amounts of dividend or distribution, and the corresponding amounts eligible and non-eligible for the rebate The Shareholders’ Meeting, having satisfied the quorum and majority conditions for (réfaction) mentioned in subsection 2 of section 3 of Article 158 of the French Tax Ordinary Shareholders’ Meetings, and having considered the Board of Directors’ Code, that were distributed during the last three fiscal years were as follows: management report, to which is attached the report of the Chairman of the Board of Directors, and the statutory auditors’ reports on the fiscal year ended December 31, 2009, approved the unconsolidated financial statements for the fiscal Distribution Income eligible for Income not eligible year ended December 31, 2009, as they were presented, as well as all the transactions Fiscal year per share rebate (réfaction) for rebate that were reflected in such financial statements and were summarized in such reports. 2008 - - - In addition, pursuant to article 223 quarter of the French General Tax Code (Code 2007 - - - Général des Impôts), the Shareholders’ Meeting, having satisfied the quorum and majority conditions for Ordinary Shareholders’ Meetings, approved the expenses and 2006 €0.33 - - charges referred to in article 39.4 of the French General Tax Code corresponding to non deductible rental fees for tourism cars and which amounted to €193,148.48. Fourth resolution Second resolution The Shareholders’ Meeting, having satisfied the quorum and majority conditions for Ordinary Shareholders’ Meetings, and having considered the Board of Directors’ The Shareholders’ Meeting, having satisfied the quorum and majority conditions for management report, ratified the provisional appointment by the Board of Directors Ordinary Shareholders’ Meetings, and having considered the Board of Directors’ at its meeting of February 17, 2010 of Mr Denis Ranque as a Director, replacing management report, to which is attached the report of the Chairman of the Mr François de Carbonnel for the remainder of his predecessor’s term of office, which Board of Directors, and the statutory auditors’ reports on the fiscal year ended expires at the closing of the Shareholders’ Meeting called to approve the financial December 31, 2009, approved the consolidated financial statements for the fiscal statements for the fiscal year ending December 31, 2011. year ended December 31, 2009, as they were presented, as well as all the transactions that were reflected in such financial statements and were summarized in such reports. Fifth resolution Third resolution The Shareholders’ Meeting, having satisfied the quorum and majority conditions for Ordinary Shareholders’ Meetings, and having considered the Board of Directors’ The Shareholders’ Meeting, having satisfied the quorum and majority conditions management report, ratified the provisional appointment by the Board of Directors at for Ordinary Shareholders’ Meetings, noted that the Company’s fiscal year ended its meeting of February 17, 2010 of Ms Catherine Guillouard as a Director, replacing December 31, 2009 closed with a net loss of €(571,982,207.41). Mr Eric Bourdais de Charbonnière for the remainder of her predecessor’s term of The Shareholders’ Meeting, having satisfied the quorum and majority conditions for office, which expires at the closing of the Shareholders’ Meeting called to approve Ordinary Shareholders’ Meetings, decided to allocate the net loss of the fiscal year the financial statements for the fiscal year ending December 31, 2010. ended amounting to €(571,982,207.41) to the carry forward account, which, given the carried forward loss of €(769,442,504.29), amounted to €(1,341,424,711.70) after this allocation.
I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I 19 Translation for information purposes only Proposed resolutions
Sixth resolution Tenth resolution The Shareholders’ Meeting, having satisfied the quorum and majority conditions for The Shareholders’ Meeting, having satisfied the quorum and majority conditions for Ordinary Shareholders’ Meetings, and having considered the Board of Directors’ Ordinary Shareholders’ Meetings, and having considered the Board of Directors’ management report, ratified the provisional appointment by the Board of Directors at management report, decided to appoint Mr Lloyd Carney as Director for a term of its meeting of February 17, 2010 of Mr John Roche as a Director, replacing Mr Pierre three (3) years. Mr Lloyd Carney’s term of office as director will end at the closing of Lescure for the remainder of his predecessor’s term of office, which expires at the the Shareholders’ Meeting to be held in 2013 to approve the financial statements for closing of the Shareholders’ Meeting called to approve the financial statements for the fiscal year ending December 31, 2012. the fiscal year ending December 31, 2011.
Eleventh resolution Seventh resolution The Shareholders’ Meeting, having satisfied the quorum and majority conditions for The Shareholders’ Meeting, having satisfied the quorum and majority conditions for Ordinary Shareholders’ Meetings and having noted that the appointment of Mazars Ordinary Shareholders’ Meetings, and having considered the Board of Directors’ as permanent statutory auditor expires at the closing of this Shareholders’ Meeting, management report, ratified the provisional appointment by the Board of Directors decided to renew the appointment of Mazars, 61, rue Henri Régnault – Tour Exaltis, at its meeting of February 17, 2010 of Mr Bruce Hack as a Director, replacing Mr Paul 92400 Courbevoie, as permanent statutory auditor for a duration of six fiscal years. Murray for the remainder of his predecessor’s term of office, which expires at the closing of the Shareholders’ Meeting called to approve the financial statements for The appointment of Mazars as permanent statutory auditor will end at the closing of the fiscal year ended December 31, 2009. the Shareholders’ Meeting to be held in 2016 to approve the financial statements for the fiscal year ending December 31, 2015.
Eighth resolution Twelfth resolution The Shareholders’ Meeting, having satisfied the quorum and majority conditions for Ordinary Shareholders’ Meetings, and having considered the Board of Directors’ The Shareholders’ Meeting, having satisfied the quorum and majority conditions management report, having noted that the term of office as Director of Mr Bruce for Ordinary Shareholders’ Meetings and having noted that the appointment of Hack expires at the closing of this Shareholders’ Meeting, decided to renew the term Mr Patrick de Cambourg as substitute statutory auditor expires at the closing of of office of Mr Bruce Hack as Director for a three-year term expiring at the closing this Shareholders’ Meeting, decided to renew the appointment of Mr Patrick de of the Shareholders’ Meeting to be held in 2013 to approve the financial statements Cambourg, 1, rue André Colledeboeuf, 75016 Paris, as substitute statutory auditor for the fiscal year ending December 31, 2012. for a duration of six fiscal years. The appointment of Mr Patrick de Cambourg as substitute statutory auditor will end at the closing of the Shareholders’ Meeting to be held in 2016 to approve the financial Ninth resolution statements for the fiscal year ending December 31, 2015. The Shareholders’ Meeting, having satisfied the quorum and majority conditions for Ordinary Shareholders’ Meetings, and having considered the Board of Directors’ management report, having noted that the term of office as Director of Mr Didier Thirteenth resolution Lombard expires at the closing of this Shareholders’ Meeting, decided to renew the The Shareholders’ Meeting granted all powers to the bearer of copies or extracts from term of office of Mr Didier Lombard as Director for a three-year term expiring at the minutes documenting its deliberations to carry out all legal formalities provided the closing of the Shareholders’ Meeting to be held in 2013 to approve the financial for under the laws and regulations currently in force. statements for the fiscal year ending December 31, 2012.
20 I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I Translation for information purposes only Financial results of the parent company for the last five fiscal years
Financial results of the parent company for the last five fiscal years (Art. R.225-102 of the French Commercial Code)
(In € millions, except the number of shares, income on a share basis and average number of employee) 2009 2008 2007 2006 2005 Financial position at year-end a) Share capital 1,012 1,012 1,012 1,027 1,025 b) number of shares issued 269,890,028 269,890,028 269,890,028 273,871,296 273,308,032 c) Maximum number of future shares to be created: OCEANE - - - 321,491 321,491 CONVERTIBLE SILVER LAKE - - 24,558,929 23,977,097 23,417,495 BASA - - - - 12,471,369 STOCK-OPTIONS 7,389,930 9,544,340 9,575,510 9,421,750 7,321,440 FREE SHARE PLAN 174,460 368,000 440,000 - - Total income from operations a) Sales excluding taxes 114 146 134 146 180 b) Profit (Loss) before taxes, amortization and provisions 152 240 11 (35) (586) c) income tax 53 45 50 41 81 d) Profit (Loss) after taxes, amortization and provisions (572) (2,327) (409) (201) (823) e) earnings distributed - - - 90 82 Income from operations on a share basis a) Profit (Loss) after taxes, before amortization and provisions 0.76 1.05 0.23 0.02 (1.85) b) Profit (Loss) after taxes, amortization and provisions (2.12) (8.62) (1.52) (0.73) (3.01) c) dividend/Distribution per share - - - 0,33 0,30 Workforce a) Average number of employees 542 630 650 654 705 b) Payroll 54 71 67 63 69 c) Amount paid for social benefits (Social Security, etc.) 21 24 25 27 28
I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I 21 Translation for information purposes only 22 I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I Translation for information purposes only Request for documents and information
Return to: Société Générale Service des assemblées 32, rue du Champ-de-Tir BP 81236 44312 Nantes Cedex 03 France
Annual General Shareholders’ Meeting of Technicolor: convened on Tuesday, June 17, 2010 at 5:00 p.m. on first notice
At the Palais des Congrès de Paris 2, place de la Porte-Maillot, 75017 Paris
I, the undersigned: ...... Residing at: ...... request, pursuant to Article R.225-88 of the French Commercial Code, the documents and information mentioned in Article R.225-83 of the same code, in connection with the Annual General Shareholders’ Meeting of June 17, 2010.
At ...... on ......
Signature
Note: Pursuant to the Article R.225-88 of the French Commercial Code, shareholders who hold registered shares may obtain from the Company, upon a single request, the documents mentioned in Article R.225-83 of the same code at the time of each of the subsequent Shareholders’ Meetings. You may use the prepaid envelope to reply.
I Annual Shareholders’ Meeting 2010 I GROUP Technicolor Annual Shareholders’ Meeting 2010 I GROUP Technicolor I 23 Translation for information purposes only