Docstoc

2010 ANNUAL REPORT

Document Sample
2010 ANNUAL REPORT Powered By Docstoc
					2010
ANNUAL
REPORT
1   	 Key	InformatIon	and rIsK factors	                          5    6   	 addItIonal	InformatIon	                                   121
     1.1	    Selected	Financial	Data	                            6         6.1	   Share	capital	and	voting	rights	                    122
     1.2	    Exchange	Rate	Information	                          9         6.2	   Memorandum	and	Articles	of	Association	             126
     1.3	    Risk	Factors	                                      10         6.3	   Material	contracts	                                 132
     1.4	    Litigation	                                        18         6.4	   Additional	tax	information	                         132
                                                                           6.5	   Organization	of	the	Group	                          133
                                                                           6.6	   Information	on	minority	interests	                  136
2   	 InformatIon	on the company	                               19
                                                                           6.7	
                                                                           6.8	
                                                                                  Documents	on	display	
                                                                                  Payment	terms	with	suppliers	
                                                                                                                                      136
                                                                                                                                      137
     2.1	    History	and	Strategy	of	the	Company	               20
     2.2	    Business	Overview	                                 24
     2.3	
     2.4	
             Organizational	Structure	
             Property,	Plant	and	Equipment	
                                                                34
                                                                34
                                                                      7   	 Internal	and	external	controls	
     2.5	    Technicolor	Foundation	for	cinema	heritage	        46          and procedures	                                          139
                                                                           7.1	   Internal	control	procedures	                        140
                                                                           7.2	   Statutory	auditors’	report	on	the	Chairman's	
3   	 management’s	dIscussIon	and	                                         7.3	
                                                                                  report	on	corporate	governance	and	internal	control	 145
                                                                                  Information	on	accounting	services	                  146
      analysIs	of	fInancIal	condItIon	                                     7.4	   Accounting	fees	and	services	                        147
      and	results	of	operatIons	                                47
     3.1	    Overview	                                          48
     3.2	
     3.3	
             Trends	in	the	Media	&	Entertainment	Industry	
             Summary	of	results	
                                                                48
                                                                49
                                                                      8   	 persons	responsIble	
     3.4	    Seasonality	                                       50          for the regIstratIon	document	
     3.5	    Effect	of	exchange	rate	fluctuations	              50          and	the	annual	fInancIal	report	                         149
     3.6	    Geographic	breakdown	of	revenues	                  51         8.1	   Declaration	by	the	person	responsible	for the	
     3.7	    Events	subsequent	to	December 31,	2010	            52                Registration	Document	and	the Annual	Financial	
                                                                                  Report	                                             150
     3.8	    Critical	accounting	policies	                      52
                                                                           8.2	   Responsible	for	information	                        150
     3.9	    Changes	in	accounting	principles	                  52
     3.10	   Changes	in	the	scope	of	consolidation	in 2010	     53
     3.11	   Notification	of	interests	acquired	in the	share	
             capital	of	French	companies	in 2010	               54    9   	 fInancIal	statements	                                     151
     3.12	   Changes	in	the	scope	of	consolidation	in 2009	     54
                                                                           9.1	   Technicolor	2010	consolidated	financial	statements	 152
     3.13	   Notification	of	interests	acquired	in the	share	
                                                                           9.2	   Notes	to	the	consolidated	financial	statements	     159
             capital	of	French	companies	in 2009	               54
                                                                           9.3	   Statutory	auditors’	report	on	the consolidated	
     3.14	   Results	of	operations	for	2010	and	2009	           55
                                                                                  financial	statements	                               252
     3.15	   Results	of	operations	for	2009	and	2008	           62
                                                                           9.4	   Technicolor SA	parent	company	financial	statements	255
     3.16	   Liquidity	and	capital	resources	                   67
                                                                           9.5	   Notes	TO	THE	2010	TECHNICOLOR	SA	
     3.17	   Contractual	obligations	and	commercial	                              PARENT	COMPANY	FINANCIAL	STATEMENTS	 59             2
             commitments	including	off-balance	sheet	
                                                                           9.6	   Parent	company	financial	data	over	the	five	last	
             arrangements	                                      75
                                                                                  years	(under	article R.	225-102	of	the	french	
     3.18	   Priorities	and	objectives	for	2011	                78                Commercial	Code)	                                   280
                                                                           9.7	   Statutory	auditors’	report	on	
                                                                                  the financial statements	for	
4   	 corporate	governance	
                                                                           9.8	
                                                                                  the year ended December 31 2010	
                                                                                  Statutory	auditors’	special	report	on	related-
                                                                                                                                      281

      and worKforce	                                            79                party	agreement	and	commitments –	General	
     4.1	    Directors	                                         80                meeting	of	shareholders	to approve	the	financial	
     4.2	    Executive	Committee	                               97                statements	for	the year	ended	December 31,	2010	 283
     4.3	    Employees	and	workforce	                           99


                                                                      10 	 cross	reference	tables		
5   	 shareholders	and lIstIng	InformatIon	109
                                                                                                                                     285

     5.1	    Share	capital	                                     110
     5.2	    Related	party	transactions	                        115
     5.3	    Listing	information	                               115
                                      2010 annual	report




                                                  Société anonyme	with	a	share	capital	of	€174,846,625
                                                         registered	office:	1-5,	rue	Jeanne	d’arc
                                                                92130	Issy-les-moulineaux
                                            nanterre	register	of	commerce	and	companies	no.	333	773	174




   this	registration	document	(Document de Référence)	was	filed	with	the	Autorité des Marchés Financiers	(amf)	on	march	30,	2011,	in	accordance	
   with	article	212-13	of	the	amf	general	regulations.		It	may	be	used	in	connection	with	a	financial	transaction	provided	it	is	accompanied	by	a	
   transaction	note	(note d’opération)	approved	by	the	amf	.	this	document	was	prepared	by	the	issuer	and	is	the	responsibility	of	the	signatories	thereof.




copies	of	this	registration	document	are	available	free	of	charge	from	technicolor.
this	registration	document	can	also	be	consulted	on	the	website	of	the	amf	(french	version	only)	(www.amf-france.org)	and	on	the	website	of	
technicolor	(www.technicolor.com).




                                                                                                   technIcolor	–	2010	annual	report                           1
       |	2010	annual	report



                                                                                  Contents
                                                                         ➜
                                                                                                  ➜



forward-looKIng	statements
In	this	annual	report,	unless	otherwise	stated,	the	“company”	refers	to	              ■■   financing	and	refinancing	conditions,	prevailing	interest	rates	and	
technicolor	sa	and	“technicolor”	and	the	“group”	refer	to	technicolor	                     availability	and	terms	of	financing;
sa	together	with	its	consolidated	affiliates.                                         ■■   changes	in	exchange	rates,	notably	between	the	euro	and	the	u.s.	
this	annual	report	includes:                                                               dollar,	chinese	yuan,	canadian	dollar,	mexican	peso,	polish	zloty	
                                                                                           and	british	pound;
(i)	 the	 annual	 financial	 report	 (Rapport Financier Annuel)	 issued	
                                                                                      ■■   technicolor’s	 potential	 failure	 to	 maintain	 contractual	 arrange-
     pursuant	to	article	l. 451-1-2-I	and	II	of	the	french	monetary	and	
                                                                                           ments	with	its	major	customers	and/or	suppliers	and	renew	existing	
     financial	code	(Code monétaire et financier)	and	referred	to	in	article	
                                                                                           contractual	arrangements	with	them,	or	material	adverse	changes	in	
     222-3	of	the	amf	general	regulation	(règlement général de l’AMF)
                                                                                           the	financial	condition	or	creditworthiness	of	its	key	customers	and	
     (a cross-reference	table	is	set	forth	on	page	291	between	the	docu-
                                                                                           suppliers	over	the	long-term;
     ments	referred	to	in	article	222-3	of	the	amf	general	regulation	
     and	the	relevant	sections	of	this	registration	document);                        ■■   technicolor’s	ability	to	design,	develop	and	sell	innovative	products	
                                                                                           and	 services,	 which	 are	 offered	 in	 highly	 competitive	 markets	
(ii)	 the	management	report	(rapport de gestion)	adopted	by	the	board	                     characterized	by	rapid	technological	changes	and	subjective	and	
      of	directors	of	technicolor sa	pursuant	to	article	l.	225-100	et seq.	               changing	customer	preferences;
      of	the	french	commercial	code	(Code de Commerce)	(the	cross-
                                                                                      ■■   technological	advancements	in	the	media	&	entertainment	(m&e)	
      reference	table	on	page	285	mentions	the	elements	of	this	report);	
                                                                                           industry;
      and
                                                                                      ■■   increased	competition	in	video	and	audio	technologies,	components,	
(iii)	 the	chairman’s	report	on	corporate	governance,	internal	control	                    systems	and	services	and	finished	products	and	services	sold	to	
       procedures	and	risk	management	issued	pursuant	to	article	l.	225-37	                customers	in	the	m&e	industry;
       of	the	french	commercial	code	(the	cross-reference	table	on	page	
                                                                                      ■■   economic	conditions,	including	consumer	spending,	in	countries	
       288	mentions	the	elements	of	this	report).
                                                                                           in	which	technicolor's	services,	systems	and	equipment	are	sold	or	
this	annual	report	contains	certain	forward-looking	statements	with	                       patents	licensed,	particularly	in	the	united	states,	europe	and	asia;
respect	to	technicolor’s	financial	condition,	results	of	operations	and	busi-         ■■   the	success	of	certain	partnerships	and	joint	ventures	that	the	group	
ness	and	certain	plans	and	objectives	of	the	group.	these	statements	are	                  may	not	control,	as	well	as	future	business	acquisitions,	combinations	
based	on	management’s	current	expectations	and	beliefs	in	light	of	the	                    or	disposals;
information	currently	available	and	are	subject	to	a	number	of	factors	and	
                                                                                      ■■   development	of	pending	litigation;
uncertainties	that	could	cause	actual	results	to	differ	materially	from	those	
described	in	the	forward-looking	statements.	In	addition	to	statements	               ■■   technicolor’s	 ability	 to	 protect	 its	 patents	 and	 other	 Intellectual	
that	are	forward-looking	by	reason	of	context,	other	forward-looking	                      property	rights	and	the	outcome	of	any	claims	against	us	for	the	
statements	may	be	identified	by	use	of	the	terms	“may”,	“will”,	“should”,	                 alleged	infringement	of	third	parties’	Intellectual	property	rights;
“expects”,	“plans”,	“intends”,	“anticipates”,	“believes”,	“estimates”,	“projects”,	   ■■   force majeure	risks,	especially	related	to	technicolor’s	just-in-time	
“predicts”	and	“continue”	and	similar	expressions	identify	forward-looking	                inventory,	supply	and	distribution	policy;
statements.	by	their	nature,	forward-looking	statements	involve	risk	and	             ■■   uncertainties	 and	 challenges	 inherent	 in	 technicolor’s	 business	
uncertainty	because	they	relate	to	events	and	depend	on	circumstances	                     strategy;
that	are	anticipated	to	occur	in	the	future.	such	statements	are	also	subject	
                                                                                      ■■   general	economic	trends,	changes	in	raw	materials	and	employee	
to	assumptions	concerning,	among	other	things,	technicolor’s	anticipated	
                                                                                           costs	and	political	and	social	uncertainty	in	markets	where	the	group	
business	strategies;	its	intention	to	introduce	new	products	and	services;	
                                                                                           manufactures	goods,	purchase	components	and	finished	goods	and	
anticipated	trends	in	its	business;	and	technicolor’s	ability	to	continue	
                                                                                           license	patents,	particularly	in	latin	america	and	asia;	and
to	control	costs	and	maintain	quality.	readers	are	cautioned	that	these	
statements	may,	and	often	do,	vary	from	actual	results	and	the	differences	           ■■   warranty	claims,	product	recalls	or	litigation	that	exceed	or	are	not	
between	these	statements	and	actual	results	can	be	material.	some	of	                      covered	by	technicolor’s	available	insurance	coverage.
the	factors	that	could	cause	actual	results	and	events	to	differ	materially	
from	those	expressed	or	implied	in	any	forward-looking	statements	are:
                                                                                      furthermore,	a	review	of	the	reasons	why	actual	results	and	developments	
■■   technicolor’s	ability	to	execute	the	Sauvegarde	plan	adopted	by	the	             may	differ	materially	from	the	expectations	disclosed	or	implied	within	
     nanterre	commercial	court	on	february 17,	2010	(for	a	description	of	            forward-looking	statements	can	be	found	under	chapter 1:	“Key	Informa-
     the	group’s	debt	restructuring,	please	refer	to	chapter 2:	“Information	         tion	and	risk	factors”,	section	1.3:	“risk	factors”	below	in	this	annual	
     on	the	company”,	section	2.1.2:	“historical	background”	of	this	annual	          report.	forward-looking	statements	speak	only	as	of	the	date	they	are	
     report);                                                                         made,	and	technicolor	undertakes	no	obligation	to	publicly	update	any	
■■   technicolor’s	ability	to	respect	its	financial	covenants	and	all	other	          of	them	in	light	of	new	information	or	future	events.
     obligations	under	its	reinstated	debt	agreements;




2         technIcolor	–	2010	annual	report
                                                                                                           |	2010	annual	report



                                                                          Contents
                                                                  ➜
                                                                                         ➜



statements	regardIng	competItIve	posItIon
this	annual	report	contains	statements	regarding	market	trends,	market	       ■■   Parks Associates,	IMS Research and dataxis.com	for	information	on	
share,	market	position	and	products	and	businesses.	unless	otherwise	              set-top	boxes;
noted	herein,	market	estimates	are	based	on	the	following	outside	sources,	   ■■   Dell’Oro Group	and	Infonetics Research	for	information	on	dsl	and	
in	some	cases	in	combination	with	internal	estimates:                              cable	modems,	routers	&	gateways,	and	telephony	markets;
■■   PricewaterhouseCoopers,	 Futuresource Consulting Ltd.,	 IDATE,	          ■■   Generator Research,	Morgan Stanley,	UBS,	CEA	for	information	on	
     IHS,	Adams Media Research,	IMdb,	Hollywood Reporter,	UBS	and	                 tablets	market.
     Display Search	for	overall	market	trends	in	the	media	&	entertainment	
                                                                              statements	contained	in	this	annual	report	that	make	reference	to	“value	
     industries;
                                                                              market	share”	or	market	share	“based	on	value”	mean	that	the	related	
■■   Futuresource Consulting Ltd. for	information	on	dvd	replication	and	     market	estimate	is	based	on	sales,	and	statements	referring	to	“volume	
     distribution	services;                                                   market	share”	or	market	share	“based	on	volume”	mean	that	the	related	
■■   IHS,	CEA (Consumer Electronics Association, Informa)	for	information	    market	estimate	is	based	on	the	number	of	units	sold.
     on	film-related	services,	and	post-production	content;
                                                                              market	share	and	market	position	statements	are	generally	based	on	
■■   IHS for	information	on	broadcast	&	networks	systems	and	services;        sources	published	in	2009,	mid-	to	late	2010	or	early	2011.
■■   MRG (Multimedia Research Group)	for	information	on	Iptv	network	
     software;




                                                                                               technIcolor	–	2010	annual	report                     3
    |	2010	annual	report



                                           Contents
                                       ➜
                                                      ➜




4   technIcolor	–	2010	annual	report
        1
                           Key Information and Risk Factors


1.1	   selected	fInancIal	data	                                                                  6
1.2	   exchange	rate	InformatIon	                                                                9
1.3	   rIsK	factors	                                                                             10
       1.3.1	   Risk	related	to	the	debt	restructuring	                                          10
       1.3.2	   Market	Risk	                                                                     12
       1.3.3	   Risks	related	to	business	disposals	                                             13
       1.3.4	   Risks	related	to the business	                                                   13
       1.3.5	   Other	risks	                                                                     17
1.4	   lItIgatIon	                                                                               18




                                                          technIcolor	–	2010	annual	report   5
           |	Key	Information	and risk factors
1          SELECTED	FINANCIAL	DATA



                                                                                Contents
                                                                        ➜
                                                                                               ➜



    1.1	        selected	fInancIal	data
    the	company	has	derived	the	following	selected	consolidated	financial	          services	revenue	drop	of	the	first	half	of	2010	was	more	than	offset	in	
    data	from	its	consolidated	financial	statements	as	of	and	for	each	of	the	      the	second	half	of	the	year,	driven	by	higher	levels	of	activity	in	creative	
    years	ended	december 31,	2010,	2009,	2008,	2007	and	2006.	these	                services,	due	to	market	share	gains,	increased	digital	production	capacities	
    consolidated	financial	statements	have	been	prepared	in	accordance	             and	improved	market	conditions	in	postproduction,	as	well	as	by	the	increase	
    with	International	financial	reporting	standards	(“Ifrs”)	as	approved	          in	dvd	volumes,	resulting	from	the	warner	bros.	agreement	and	the	overall	
    by	the	european	union,	and	in	accordance	with	Ifrs	as	issued	by	the	            growth	in	blu-ray™	volumes.	theatrical	services	revenues	declined	in	2010	
    International	accounting	standards	board	(“Iasb”).	you	should	read	the	         compared	with	2009	as	the	acceleration	in	digital	cinema	theater	installa-
    following	selected	consolidated	financial	data	together	with	chapter 3:	        tions	in	the	us	and	europe	continued	to	strongly	benefit	the	group’s	digital	
    “management’s	 discussion	 and	 analysis	 of	 financial	 condition	 and	        cinema	distribution	business	but	weighed	significantly	on	photochemical	
    results	of	operations”	in	this	annual	report.	the	basis	of	preparation	         film	volumes.	In	digital	delivery,	the	revenue	drop	of	the	first	half	of	2010	
    of	the	consolidated	financial	statements	and	the	company’s	significant	         was	partly	offset	in	the	second	half	of	the	year,	driven	by	growth	in	digital	
    accounting	policies	are	discussed	in	note 2	to	the	consolidated	financial	      home	products	volumes	and	media	services	activities.
    statements.	these	selected	financial	data	represent	only	a	summary	and	
                                                                                    profit	from	continuing	operations	before	tax	and	net	finance	costs	was	
    therefore	should	be	read	together	with	the	company’s	consolidated	
                                                                                    €38 million	in	2010,	compared	with	a	profit	of	€99	million	in	2009	and	
    financial	statements	and	the	notes	thereto	which	are	included	in	this	
                                                                                    a	loss	of	€774	million	in	2008.	adjusted	ebItda	from	continuing	opera-
    annual	report.	the	changes	in	consolidation	scope	and	discontinued	
                                                                                    tions	(as	detailed	in	chapter	3:	"management's	discussion	and	analysis	of	
    operations	are	presented	in	notes	5	and	12,	respectively,	of	the	company’s	
                                                                                    financial	condition	and	results	of	operations",	section	3.14.9:	“adjusted	
    consolidated	financial	statements.
                                                                                    Indicators”)	reached	€505	million	in	2010,	a	€6	million	growth	compared	
    until	the	end	of	2008,	the	group	was	organized	around	three	principal	          with	2009.	following	the	decrease	in	the	first	half	of	2010,	the	group	showed	
    operating	segments:	technology,	thomson	grass	valley	and	technicolor.	          an	improvement	in	adjusted	ebItda	in	the	second	half,	driven	by	the	
    pursuant	 to	 the	 strategic	 refocus	 announced	 in	 2009,	 the	 operating	    increase	in	revenues	and	tight	cost	control,	notwithstanding	the	decision	to	
    segments	were	reorganized	as	follows:	technology,	connect	(formerly	            maintain	investments	in	r&d	and	sales	to	drive	growth	in	its	key	activities.	
    part	of	the	thomson	grass	valley	segment)	and	entertainment	services	           for	more	information,	see	chapter	3:	"management's	discussion	and	
    (formerly	technicolor).	In	2010,	the	group	decided	to	create	a	new	             analysis	of	financial	condition	and	results	of	operations",	section	3.14.2	
    segment	–	digital	delivery	–	bringing	together	the	connect	buisness	            and	3.15.2:	“profit	(loss)	from	continuing	operations	before	tax	and	net	
    with	the	digital	content	delivery	business,	formerly	part	of	entertainment	     finance	costs”	and	section	3.14.9:	“adjusted	Indicators”.
    services.	all	remaining	continuing	operations	(mainly	retail	telephony,	
                                                                                    net	finance	result	was	an	income	of	€116	million	in	2010,	compared	with	
    residual	non-strategic	activities	and	unallocated	corporate	functions)	are	
                                                                                    a	loss	of	€68	million	in	2009	and	€374	million	in	2008.	the	finance	result	
    grouped	in	the	“other”	segment.
                                                                                    included	a	gain	of	€381	million	in	2010	resulting	from	technicolor’s	debt	
    following	the	decision	in	2009	to	exit	the	grass	valley	and	media	networks	     restructuring	on	may	26,	2010.	for	more	information,	see	chapter	3:	
    (mn,	 comprising	 convergent,	 prn	 and	 screenvision)	 businesses,	            "management's	discussion	and	analysis	of	financial	condition	and	results	
    these	businesses	were	classified	as	discontinued	operations	in	group’s	         of	operations",	sections	3.14.3	and	3.15.3:	“net	finance	costs”	for	further	
    consolidated	financial	statements	since	the	Ifrs 5	criteria	were	met.	          details.
    In	2010,	there	was	no	change	in	the	discontinued	operations	perimeter	
                                                                                    the	income	tax	amounted	to	€2	million	in	2010,	compared	with	a	charge	
    compared	to	2009	with	the	exception	of	premier	retail	networks	(prn).	
                                                                                    of	€35	million	in	2009	and	a	charge	of	€105	million	in	2008.	see	chapter	
    for	prn,	which	was	part	of	the	mn	disposal,	the	group	announced	on	
                                                                                    3:	"management's	discussion	and	analysis	of	financial	condition	and	
    february 23,	2011	its	decision	to	end	the	disposal	process.	accordingly,	
                                                                                    results	of	operations",	sections	3.14.4	and	3.15.4:	“Income	tax”	for	further	
    prn	has	been	reclassified	within	continuing	operations	as	part	of	the	
                                                                                    information.
    entertainment	services	segment.
                                                                                    profit	from	continuing	operations	was	€156	million	in	2010,	compared	with	
    as	a	consequence,	net	income	of	grass	valley,	mn,	the	major	part	of	
                                                                                    a	loss	of	€4	million	in	2009	and	a	loss	of	€1,257	million	in	2008.	for	more	
    the	tube	and	displays	business,	audio-video	and	accessories	(ava)	
                                                                                    information,	see	chapter	3:	"management's	discussion	and	analysis	of	
    businesses	and	silicon	solutions	businesses	are	reclassified	as	discontinued	
                                                                                    financial	condition	and	results	of	operations",	sections	3.14.6	and	3.15.6:	
    operations.	the	total	revenues	of	these	activities	are	therefore	excluded	
                                                                                    “profit	(loss)	from	continuing	operations”.
    from	the	revenues	of	continuing	operations	as	of	december 31,	2010,	2009,	
    2008,	2007	and	2006.	the	impact	of	discontinued	operations	is	presented	        In	2010,	the	total	loss	from	discontinued	operations	was	€225	million	
    in	the	tables	below.                                                            (compared	with	a	loss	of	€338	million	in	2009	and	a	loss	of	€676	million	in	
                                                                                    2008),	mainly	due	to	the	grass	valley	businesses.	for	more	information,	see	
    technicolor’s	revenues	from	continuing	operations	amounted	to	€3,574	
                                                                                    chapter	3:	"management's	discussion	and	analysis	of	financial	condition	
    million	in	2010,	down	1.2%	at	current	currency	compared	with	2009,	and	
                                                                                    and	results	of	operations",		sections	3.14.7	and	3.15.7:	“profit	(loss)	from	
    down	5.4%	at	constant	currency.	excluding	the	retail	telephony	business,	
                                                                                    discontinued	operations”.
    from	which	the	group	exited	at	the	end	of	2009,	revenues	increased	by	
    1.5%	at	current	currency	in	2010	compared	with	2009,	and	decreased	by	          the	group’s	share	of	the	consolidated	net	loss	totaled	€69	million	in	2010,	
    2.8%	at	constant	currency,	with	revenue	growth	in	the	second	half	offsetting	   compared	with	a	loss	of	€342	million	in	2009	and	a	loss	of	€1,930	million	
    the	first	half	revenue	drop.                                                    in	2008.	for	more	information,	see	chapter	3:	"management's	discussion	
                                                                                    and	analysis	of	financial	condition	and	results	of	operations",	sections	
    technology	revenues	recorded	strong	growth	in	2010	compared	with	
                                                                                    3.14.8	and	3.15.8:	“net	Income	(loss)	of	the	group”.
    2009,	reflecting	the	performance	of	the	licensing	business	during	the	
    year,	driven	by	a	strong	increase	in	revenues	from	mpegla	and	by	the	           net	loss	per	non-diluted	share	was	€0.8	in	2010,	compared	with	a	net	loss	
    sustained	performance	of	the	other	licensing	programs.	the	entertainment	       per	non-diluted	share	of	€13.0	and	€74.1	in	2009	and	2008,	respectively.
    6        technIcolor	–	2010	annual	report
                                                                                               |	Key	Information	and risk factors
                                                                                                                    SELECTED	FINANCIAL	DATA                                1
                                                                                Contents
                                                                        ➜
                                                                                                   ➜



                                                                                                       Dec. 31,     Dec.	31,	 Dec.	31,	 Dec.	31,	 Dec.	31,	
                                                                                                       2010 (in    2009	(in    2008	(in    2007 (in    2006	(in
                                                                                                      € millions) € millions) € millions) € millions) € millions)
STATEMENT	OF	OPERATIONS	DATA(1)
revenues	from	continuing	operations                                                                         3,574        3,619         4,192        4,793        4,868
profit	(loss)	from	continuing	operations	before	tax	and	net	finance	costs                                      38           99         (774)          426          502
Income	tax                                                                                                      2         (34)         (104)         (26)            12
net	finance	costs   (2)
                                                                                                              116         (67)         (374)         (74)         (178)
share	of	profit	(loss)	from	associates                                                                          -             -          (4)             1         (86)
profit	(loss)	from	continuing	operations                                                                      156          (4)       (1,257)          326          249
profit	(loss)	from	discontinued	operations                                                                  (225)        (338)         (676)        (349)         (194)
net	income	(loss)                                                                                            (69)        (342)       (1,933)         (23)            55
profit	(loss)	from	discontinued	operations(3)
discontinued	results	related	to	the	grass	valley	and	media	networks	businesses                              (221)        (342)         (552)         (75)            15
discontinued	results	related	to	the	silicon	solutions	business                                                (1)            3          (79)         (33)          (25)
discontinued	results	related	to	the	ava	business                                                              (4)          (2)          (29)        (227)         (127)
discontinued	results	related	to	the	tubes	and	displays	business                                                 1            3          (16)          (14)         (57)
EARNINGS	PER	ORDINARY	SHARE
weighted	average	number	of	shares	outstanding	–	(basic	net	of	treasury	stock)                         104,817,755 26,308,997 26,294,015 26,278,736           26,118,885
earnings	(loss)	(group	share)	per	share	from	continuing	operations
basic                                                                                                         1.3        (0.2)        (48.4)          11.7          8.8
diluted (4)
                                                                                                              1.0         (0.2)       (48.4)         10.2           8.2
total	earnings	(loss)	(group	share)	per	share
basic                                                                                                       (0.8)        (13.0)       (74.1)         (1.6)          1.4
diluted(4)                                                                                                  (0.5)        (13.0)       (74.1)         (1.9)          1.5
BALANCE	SHEET	DATA
total	non-current	assets                                                                                    2,299        2,238        2,907         4,444         4,519
total	current	assets	(excluding	cash,	cash	equivalents	and	marketable	securities)                           1,303         1,513        1,915        1,754         2,288
cash,	cash	equivalents	and	marketable	securities                                                              332          569          769           572          1,311
ToTal asseTs                                                                                             3,934         4,320         5,591        6,770          8,118
total	non-current	liabilities                                                                              2,038           692          803          1,779        2,318
total	current	liabilities                                                                                   1,391        4,081         4,922        2,936         3,681
share	capital                                                                                                 175         1,012        1,012         1,012        1,027
shareholders’	equity	(deficit)                                                                               503         (455)         (135)        2,045         2,112
minority	interests                                                                                              2            2             1           10             7
ToTal shareholDers’ equiTy (DeficiT) anD liabiliTies                                                     3,934         4,320         5,591        6,770          8,118
DIvIDENDS/DISTRIBuTIONS
dividends/distributions	per	share                                                                               -             -            -             -         0.33
(1) Results for 2010, 2009, 2008, 2007 and 2006 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) Comprises “Interest expense” and “Other financial income (expense)”. See note 10 to Group’s consolidated financial statements for more information.
(3) Grass Valley and MN: On January 28, 2009, Technicolor announced its decision to sell the Grass Valley and Media Networks businesses. In 2010, the Group decided
    to end the sale process of PRN business and therefore PRN was consolidated as part of Entertainment Services segment.
	 Silicon Solutions businesses: In 2008, the Board decided to discontinue the Silicon Solutions business. This business included the Remote control activity, the Tuner
    activity and the integrated circuits design and sales activity.
	 Audio-Video and Accessories businesses (AVA): In 2005, Technicolor announced its decision to sell its AVA businesses. Pursuant to the disposals that occurred in
    2007 and 2008, the Group has completely exited the AVA business as of December 31, 2008.
    The originally reported profit (loss) from discontinued operations for previous years are disclosed in the table below. See note 4 to Group’s consolidated financial
    statements for more information.
(4) See note 33 to Group’s consolidated financial statements for more information on the dilutive instruments affecting earnings per share on a diluted basis.


                                                                                                          technIcolor	–	2010	annual	report                             7
          |	Key	Information	and risk factors
1         SELECTED	FINANCIAL	DATA



                                                                         Contents
                                                                   ➜
                                                                                      ➜



    Reconciliation	of	discontinued	operations
                                                                           Dec. 31,   Dec.	31,	   Dec.	31,	   Dec.	31,	   Dec.	31,	
    (in € millions)                                                          2010       2009        2008        2007        2006
    rePorT 2010                                                             (225)         (338)    (676)       (349)       (194)
    Grass	valley	&	Media	Networks   Total	loss	disclosed	in	2009                          (379)     (584)        (65)          26
                                    Change	in	perimeter	due	to	PRN                           37         32        (10)        (11)
                                    Total	loss	disclosed	in	2010              (221)       (342)     (552)         (75)          15
    Silicon	Solutions               Total	loss	disclosed	in	2010                (1)           3       (79)        (33)       (25)
    AvA                             Total	loss	disclosed	in	2010                (4)         (2)      (29)       (227)        (127)
    Tubes	&	Displays                Total	loss	disclosed	in	2010                  1           3       (16)        (14)        (57)
    REPORT 2009                                                                           (375)     (708)       (339)       (183)
    Grass	valley	&	Media	Networks   Additional	discontinued	
                                    results	due	to	Grass	valley	&	
                                    Media	Networks	discontinued	
                                    businesses                                            (379)     (584)         (65)         26
    Silicon	Solutions               Total	loss	disclosed	in	2009                              3       (79)        (33)        (25)
    AvA                             Total	loss	disclosed	in	2009                            (2)      (29)       (227)        (127)
    Tubes	&	Displays                Total	loss	disclosed	in	2009                              3       (16)        (14)        (57)
    REPORT 2008                                                                                     (124)       (274)       (209)
    Silicon	Solutions               Total	loss	disclosed	in	2008                                      (79)        (33)        (25)
    AvA                             Total	loss	disclosed	in	2008                                     (29)       (227)        (127)
    Tubes	&	Displays                Total	loss	disclosed	in	2008                                      (16)        (14)        (57)
    REPORT 2007                                                                                                 (241)       (184)
    AvA                             Total	loss	disclosed	in	2007                                                (227)        (127)
    ava                             Including	additional	discontinued	
                                    results	due	to	the	after-sales	
                                    activities                                                                                 (6)
    Tubes	&	Displays                Total	loss	disclosed	in	2007                                                  (14)        (57)
    tubes	&	displays                Including	additional	discontinued	
                                    results	due	to	the	genlis	and	
                                    torreon	activities                                                                        (40)
    REPORT 2006                                                                                                             (138)
    AvA                             Total	loss	disclosed	in	2006                                                             (121)


    Tubes	&	Displays                Total	loss	disclosed	in	2006                                                              (17)




    8       technIcolor	–	2010	annual	report
                                                                                               |	Key	Information	and risk factors
                                                                                                         ExCHANGE	RATE	INFORMATION                                         1
                                                                                 Contents
                                                                        ➜
                                                                                                   ➜



1.2	 exchange	rate	InformatIon
technicolor’s	 shares	 are	 denominated	 in	 euros.	 fluctuations	 in	 the	           the	following	tables	show	the	euro/u.s.	dollar	exchange	rate	for	the	
exchange	rate	between	the	euro	and	the	u.s.	dollar	will	affect	the	u.s.	              periods	 presented	 based	 on	 the	 federal	 reserve	 bank	 of	 new	 york	
dollar	price	of	technicolor’s	american	depositary	shares	(“adss”)	on	the	             noon	buying	rate	until	december 31,	2008.	effective	January 1,	2009	
new	york	stock	exchange(1).	fluctuations	in	the	exchange	rate	between	                and	following	the	decision	of	the	federal	reserve	bank	of	new	york	to	
the	euro	and	the	u.s.	dollar	affect	the	u.s.	dollar	equivalent	of	the	price	          discontinue	the	publication	of	foreign	exchange	rates,	the	table	below	is	
of	the	shares	on	nyse	euronext	paris.                                                 based	on	the	daily	certified	exchange	rates	made	available	by	the	federal	
                                                                                      reserve	board.	the	group	makes	no	representation	that	the	euro	could	
                                                                                      have	been	converted	into	dollars	at	the	rates	shown	or	at	any	other	rate.

                                                                                                Period	End          Average	rate               High              Low
 Month                                                                                                                       €/u.S.$
 february 2011                                                                                        1.3793                1.3656            1.3794            1.3474
 January 2011                                                                                         1.3607                1.3353           1.3688            1.2944
 december 2010                                                                                        1.3269                1.3221            1.3395           1.3089
 november 2010                                                                                        1.3036                1.3654            1.4224           1.3036
 october 2010                                                                                         1.3894                1.3901           1.4066            1.3688




                                                                                                Period	End        Average	rate(1)              High              Low
 Year                                                                                                                        €/u.S.$
 2010                                                                                                    1.33                 1.32              1.45              1.20
 2009                                                                                                    1.43                 1.39              1.51              1.25
 2008                                                                                                    1.39                 1.47              1.60              1.24
 2007                                                                                                   1.46                  1.38              1.49              1.29
 2006                                                                                                    1.32                 1.26              1.33              1.19

 (1) The average of the exchange rates on the last business day of each month during the relevant period.




(1) As announced in its press release dated February 28, 2011, Technicolor applied for the voluntary delisting of its American Depositary Shares (ADSs) from the New
    York Stock Exchange (NYSE) and intends to voluntarily terminate the registration of its securities under the U.S. Securities Exchange Act of 1934. Technicolor filed
    its Form 25 with the NYSE and with the SEC to delist its ADSs on March 11, 2011, and the delisting became effective at the close of trading on March 21, 2011.
    Technicolor’s ADSs began trading in the OTC market on March 22, 2011. Technicolor filed its Form 15-F to deregister with the SEC on March 24, 2011, thereby
    immediately suspending its reporting obligations under the Securities Exchange Act of 1934. Technicolor expects its deregistration to become effective 90 days
    thereafter. Technicolor will continue to publish English language financial reports, financial statements, press releases and shareholder information, which will be
    available on its website (www.technicolor.com) in accordance with Rule 12g3-2(b) under the U.S. Securities Exchange Act of 1934.


                                                                                                          technIcolor	–	2010	annual	report                            9
           |	Key	Information	and risk factors
1          RISk	FACTORS



                                                                               Contents
                                                                       ➜
                                                                                                ➜



    1.3	 rIsK	factors
    this	section	describes	the	main	risks	identified	by	the	group	that	could	affect	its	businesses,	financial	performance	and	sustainability.	additional	risks	
    which	are	either	not	known	or	which	are	perceived	as	immaterial	may	also	have	a	significant	impact	on	the	group’s	performance.
    this	section	should	be	read	in	conjunction	with	notes	1.2,	3.1,	24,	25,	26,	27	and	37	to	the	consolidated	financial	statements.



    1.3.1	 Risk	related	to	the	debt	restructuring
    Risks Relating to the duRation of the                                           the	group	has	a	substantial	amount	of	debt	and	significant	debt	servicing	
                                                                                    obligations.	at	december 31,	2010,	the	group	had	€1.523 billion	of	total	
    Sauvegarde Plan                                                                 nominal	debt	(€1.325	billion	of	balance	sheet	debt	taking	into	account	
    Risk	of	termination	of	the	Sauvegarde	Plan	and	reduced	flexibility	             the	fair	value	adjustment	under	Ifrs)	(on	the	basis	of	the	exchange	rates	
    throughout	the	duration	of	the	Sauvegarde	Plan                                  as	of	december 31,	2010).	the	debt	principally	consists	of	debt	under	a	
                                                                                    credit	agreement,	note	purchase	agreement	and	intercreditor	agreement	
    the	group	is	required	to	comply	with	the	terms	of	the	Sauvegarde	plan	          (the	“Reinstated	Debt”),	under	which	the	group	had	€1.494 billion	of	
    until	february 17,	2017,	including	the	repayment	schedules	and	other	terms	     senior	debt	outstanding	at	december	31,	2010	(€1.296	billion	of	senior	
    of	the	group's	principal	debt	agreements.	for	further	information,	see	         balance	sheet	debt	taking	into	account	the	fair	value	adjustment	under	
    “risks	related	to	indebtedness”	below.                                          Ifrs)	(on	the	basis	of	the	exchange	rates	as	of	december 31,	2010),	
                                                                                    and	two	committed	receivables	facilities	(the	“Committed	Receivables	
    If	the	group	fails	to	comply	with	the	terms	of	the	Sauvegarde plan,	the	
                                                                                    Facilities”)	under	which	the	group	may	borrow	up	to	€194 million	for	
    commercial	court	of	nanterre	could	terminate	the	plan	(on	the	recom-
                                                                                    working	capital	purposes.	for	further	information	on	the	terms	of	these	
    mendation	of	the	public	prosecutor’s	office	and	the	administrator	charged	
                                                                                    debt	facilities	and	instruments,	see	chapter 3:	“management’s	discussion	
    with	execution	of	the	plan).	If	at	such	time	the	group	were	in	cessation
                                                                                    and	analysis	of	financial	condition	and	results	of	operations”,	section	
    des paiements	(insolvency),	the	court	could	institute	bankruptcy	(redres-
                                                                                    3.16.3:	“financial	resources”	in	this	annual	report.
    sement) proceedings	if	a	restructuring	were	determined	to	be	possible,	
    failing	which	the	court	would	order	judicial	liquidation.                       the	substantial	debt	may	have	significant	negative	consequences	for	the	
                                                                                    group	and	its	shareholders.	for	example,	the	substantial	debt:
    In	addition,	changes	in	the	business	or	the	markets	in	which	the	group	
    operates	could	necessitate	certain	modifications	to	the	Sauvegarde	plan	        ■■   requires	the	group	to	dedicate	a	large	portion	of	its	excess	cashflow	
    during	the	course	of	the	next	six	years.                                             towards	repayment	of	outstanding	reinstated	debt,	thereby	reducing	
                                                                                         the	availability	of	cash	flow	to	fund	working	capital	requirements	
    to	the	extent	that	such	modifications	are	not	considered	material	the	
                                                                                         (please	refer	to	the	risk	factor	below	entitled	“the	terms	of	the	
    objectives	or	means	of	the	plan	within	the	meaning	of	article	l. 626-26	of	
                                                                                         reinstated	debt	require	the	group	to	use	a	large	portion	of	its	
    the	french	commercial	code,	the	group	could	make	such	modifications	
                                                                                         excess	cashflow	and	the	proceeds	of	certain	transactions	to	repay	
    subject,	in	the	case	of	the	financing	agreements,	to	obtaining	the	consent	
                                                                                         the	outstanding	reinstated	debt.”).	the	amount	of	reinstated	debt	
    of	the	contractually	required	majority	of	creditors	who	are	party	to	such	
                                                                                         as	well	as	the	covenant	provisions	have	been	determined	on	the	basis	
    agreements.
                                                                                         of	their	compatibility	with	the	operating	and	financial	performance	
    notwithstanding	 the	 foregoing,	 any	 material	 modification	 of	 the	              prospects	of	the	group	at	the	time	of	the	reinstated	debt	negotia-
    Sauvegarde	plan	within	the	meaning	of	article	l. 626-26	of	the	french	               tions;
    commercial	 code	 would	 require	 the	 prior	 consent	 of	 the	 creditors’	     ■■   increases	the	group’s	vulnerability	to	adverse	general	economic	
    committee	and	the	noteholders,	and	the	subsequent	approval	of	the	                   conditions	and	industry	developments;
    french	commercial	court.
                                                                                    ■■   may	limit	the	group’s	flexibility	in	planning	for,	or	reacting	to,	changes	
                                                                                         in	the	business	and	the	industries	in	which	the	group	operates;
    Risks Related to indebtedness of the gRouP                                      ■■   limits	the	group’s	ability	to	raise	additional	debt	or	equity	capital;
    risks	related	to	indebtedness	principally	result	from:                          ■■   may	limit	the	group’s	ability	to	make	strategic	acquisitions	and	take	
                                                                                         advantage	of	business	opportunities;	and
    ■■   the	substantial	level	of	indebtedness	of	the	group;                        ■■   may	place	the	group	at	a	competitive	disadvantage	compared	to	
    ■■   the	financial	and	operational	covenants	set	out	in	the	reinstated	debt	         competitors	with	less	debt.
         agreements;	and
                                                                                    any	of	the	foregoing	could	severely	limit	the	group’s	ability	to	operate	
    ■■   certain	mandatory	prepayment	provisions	in	the	reinstated	debt	            and	grow	the	business.
         agreements,	which	require	the	group	to	use	a	large	portion	of	its	
         excess	cash	flow	to	repay	the	outstanding	reinstated	debt.                 The	Reinstated	Debt	contains	covenants	that	require	the	Group	to	
                                                                                    meet	certain	financial	tests	and	impose	limitations	and	restrictions	on	
    The	Group’s	substantial	debt	could	adversely	affect	its	financial	condi-        its	ability	to	operate	its	business.
    tion	and	prevent	the	Group	from	fulfilling	its	obligations	under the	
    Reinstated	Debt	and	the	Committed	Receivables	Facilities.




    10       technIcolor	–	2010	annual	report
                                                                                         |	Key	Information	and risk factors
                                                                                                                               RISk	FACTORS                      1
                                                                             Contents
                                                                     ➜
                                                                                             ➜


the	 terms	 of	 the	 reinstated	 debt	 require	 compliance	 with	 certain	       debt	and/or	the	committed	receivables	facilities	if	they	were	to	become	
covenants,	including	the	following:                                              payable	following	the	occurrence	of	an	event	of	default	thereunder.
■■   interest cover covenant:	ebItda	(as	defined	in	the	reinstated	debt	         The	terms	of	the	Reinstated	Debt	require	the	Group	to	use	a	large	
     documentation)	is	not	less	than	a	specified	multiple	of	net	total	          portion	of	its	excess	cashflow	and	the	proceeds	of	certain	transactions	
     interest	on	a	trailing	twelve	month	basis	on	June 30	and	december 31	       to	repay	the	outstanding	Reinstated	Debt.
     of	each	financial	year;
                                                                                 under	the	terms	of	the	reinstated	debt	documentation,	the	group	
■■   leverage covenant: total	 net	 debt	 is	 not	 more	 than	 a	 specified	     is	required	to	apply	funds	towards	the	repayment	of	the	outstanding	
     multiple	of	ebItda	on	a	trailing	twelve	month	basis	on	June 30	and	         reinstated	debt	in	certain	circumstances,	including	the	following:
     december 31	of	each	financial	year;	and
                                                                                 ■■   asset disposals:	the	net	proceeds	in	respect	of	the	disposal	of	any	
■■   capital expenditure covenant:	capital	expenditure	is	not	more	than	a	
                                                                                      assets	of	the	group	to	an	unaffiliated	third	party	must	be	applied	
     specified	amount	in	each	financial	year.
                                                                                      to	repay	outstanding	reinstated	debt,	subject	to	certain	exceptions	
each	of	the	interest	cover	covenant	and	leverage	covenant	become	                     including	a	minimum	threshold	and	the	disposal	of	certain	assets	
stricter	over	time.	for	further	information,	see	chapter 3:	“management’s	            where	the	proceeds	thereof	will	be	used	within	a	year	to	fund	capital	
discussion	and	analysis	of	financial	condition	and	results	of	operations”,	           expenditure;
section	3.16.3:	“financial	resources”	and	the	note	26.2(g)	of	consolidated	      ■■   equity issuances:	at	least	80%	of	the	net	proceeds	received	in	respect	
financial	statements	of	this	annual	report.                                           of	any	new	equity	issuances	(subject	to	certain	exceptions	including	in	
a	large	number	of	factors,	many	of	which	are	outside	the	control	of	the	              respect	of	shares	issued	in	redemption	of	the	nrs)	must	be	applied	
company	(including	a	downturn	in	the	industries	in	which	the	group	                   to	repay	outstanding	reinstated	debt.	however,	the	group	may	use	
operates,	a	general	economic	downturn	or	any	of	the	other	risks	identified	           proceeds	received	in	respect	of	any	new	equity	issuances	to	prepay	
in	this	document)	could	cause	the	group	to	fail	to	comply	with	such	                  a	portion	of	the	nrs IIc;
covenants.                                                                       ■■   excess cashflow:	80%	of	the	excess	cashflow	(which	is	defined	as	
                                                                                      the	aggregate	of	net	cash	from	operating	and	investing	activities	
In	addition,	the	terms	of	the	reinstated	debt	and	the	committed	receiv-
                                                                                      subject	to	certain	adjustments)	must	be	applied	to	repay	outstanding	
ables	facilities	include	provisions	which	significantly	limit	the	group’s	
                                                                                      reinstated	debt;	and
flexibility	in	operating	its	business.	In	particular,	the	group	is	subject	to	
restrictions	on	its	ability	to,	among	other	things	and	subject	to	certain	       ■■   other: subject	to	certain	exceptions,	the	net	proceeds	received	from	
exceptions:                                                                           any	payment	or	claim	under	any	insurance	policy	or	issuance	of	
                                                                                      subordinated	debt	in	connection	with	any	refinancing	must,	in	each	
■■   pay	dividends	and	make	other	distributions	on	its	shares;                        case,	be	applied	to	repay	outstanding	reinstated	debt	(in	the	event	
■■   incur	additional	debt;                                                           of	a	refinancing,	a	customary	“make	whole”	amount	must	be	paid	
■■   invest	in	joint	ventures;                                                        in	respect	of	amounts	due	to	the	noteholders	pursuant	to	the	note	
                                                                                      purchase	agreement).
■■   acquire	new	businesses	or	assets;	and
■■   dispose	of	businesses	or	assets.                                            complying	with	these	obligations	will	significantly	reduce	the	amount	of	
                                                                                 funds	the	group	has	available	to	fund	its	working	capital	requirements	
failure	to	comply	with	any	of	the	covenants	described	in	this	risk	factor	       and,	together	with	the	limitations	contained	in	the	covenants	described	
may,	in	certain	cases	following	the	expiry	of	a	grace	period,	constitute	an	     above,	also	limit	the	group’s	investment	capacity.	the	ability	of	the	
event	of	default	under	the	reinstated	debt,	which,	absent	a	waiver	from	         group	to	successfully	maintain	its	market	position	and	grow	its	businesses,	
the	senior	creditors,	would	provide	the	senior	creditors	with	the	right	to	      particularly	in	the	context	of	a	changing	technological	environment	that	
declare	the	reinstated	debt	that	is	outstanding	at	the	time	of	any	default,	     may	require	additional	investment	to	capitalize	on	business	opportunities	
plus	accrued	interest,	fees	and	other	amounts	due	thereunder,	immediately	       (see	“risks	related	to	changes	in	market,	technologies	and	consumer	
due	and	payable.	such	breach	of	covenants	could	also	constitute	a	breach	        demand”)	may	be	severely	limited	while	the	reinstated	debt	remains	
of	the	Sauvegarde	plan,	which	if	substantial	could	trigger	the	termination	      outstanding.	In	addition,	these	requirements	are	expected	to	severely	limit	
of	the	plan	(see	“risk	of	termination	of	the	Sauvegarde	plan	and	reduced	        the	funds	the	group	has	to	pay	dividends,	or	make	other	distributions,	on	
flexibility	throughout	the	duration	of	the	Sauvegarde	plan”).	a	breach	of	       its	shares	or	to	buy	back	its	shares.
the	covenants	in	the	committed	receivables	facilities	may,	in	certain	cases	
following	the	expiry	of	a	grace	period,	constitute	a	default	thereunder.
                                                                                 tss aPPeal (pourvoi en caSSation) against
In	addition,	if	the	senior	creditors	declare	the	outstanding	reinstated	
debt	immediately	due	and	payable	following	the	occurrence	of	an	event	           the Sauvegarde Plan
of	default,	each		holder	of	notes	redeemable	in	shares	(nrs)	would	              The	TSS	appeal	(pourvoi en cassation)	against	the	Sauvegarde Plan	
have	the	right	to	require	the	group	to	redeem	its	nrs	in	ordinary	shares.        could	result	in	the	termination	of	the	Plan.
upon	the	occurrence	of	a	change	of	control	in	the	group	(see	chapter 3:	         on	february 17,	2010,	the	nanterre	commercial	court	approved	the	
“management’s	 discussion	 and	 analysis	 of	 financial	 condition	 and	         Sauvegarde	plan	(described	in	chapter 2:	“Information	on	the	company”,	
results	of	operations”,	section	3.16.3:	“financial	resources	–	Sauvegarde	       section	2.1.2:	“historical	background”	of	this	annual	report)	which	is	
plan	–	change	of	control	provisions”),	any	outstanding	amounts	under	            now	binding	on	all	of	the	creditors.	an	appeal	against	the	decision	of	
the	reinstated	debt	would	become	immediately	due	and	payable	and	                the	nanterre	commercial	court	had	been	brought	by	certain	holders	
the	nrs	would	become	immediately	redeemable	in	ordinary	shares	at	               of	Titres Super Subordonnés	(“tss”)	in	the	versailles	court	of	appeal.	
the	option	of	their	holders.                                                     as	no	temporary	stay	of	the	nanterre	decision	was	filed,	technicolor	
the	group	cannot	assure	that	it	would	have	sufficient	liquidity	to	repay	        implemented	the	Sauvegarde	plan	in	may	2010	(for	further	information	
or	refinance	all	or	any	of	the	amounts	outstanding	under	the	reinstated	         see	chapter	2:	"Information	on	the	company"	,	section	2.1.2:	"historical	


                                                                                                   technIcolor	–	2010	annual	report                       11
           |	Key	Information	and risk factors
1          RISk	FACTORS



                                                                                  Contents
                                                                          ➜
                                                                                                  ➜


    background"	of	this	annual	report).	on	november	18,	2010,	the	versailles	         appeal	and	judges,	on	its	own,	that	the	Sauvegarde	plan	is	invalid	or	(ii) in	
    court	of	appeal	dismissed	the	claims	of	the	tss	holders	and	confirmed	            case	the	Cour de Cassation	remands	the	matter	to	another	court	of	appeal	
    the	validity	of	technicolor’s	Sauvegarde	plan.	however,	the	holders	of	           (Cour d’appel de renvoi),	if	this	court	of	appeal	finds	in	favor	of	the	tss	
    tss	have	appealed	to	the	french	supreme	court	(Cour de cassation)	                holders.	such	termination	could	theoretically	result	in	the	invalidation	of	
    against	the	decision	of	the	versailles	court	of	appeal.	there	is	therefore	       the	capital	markets	transactions	which	implemented	the	Sauvegarde	plan	
    a	risk	that	the	Sauvegarde	plan	will	be	terminated	with	retroactive	effect	       in	may	2010	and	the	issuance	of	the	new	shares	in	december 2010	for	
    (i)	if	the	Cour de Cassation	reverses	the	decision	of	the	versailles	court	of	    the	redemption	of	the	nrs	I	and	the	dpn.



    1.3.2	 Market	Risk
    Risk of inteRest Rate fluctuations                                                The	Sauvegarde Plan	does	not	provide	for	lock-up	agreements	with	
                                                                                      respect	to	the	securities	issued	in	the	context	of	the	restructuring	and	
    Interest	rate	fluctuations	may	lead	to	decreases	in the	Group’s financial	        the	resale	of	a	substantial	amount	of	these	securities,	or	the	possibility	
    results.                                                                          thereof,	could	have	an	unfavorable	effect	on	the	share	price.
    technicolor	is	mainly	exposed	to	interest	rate	risk	on	its	deposits	and	          the	 Sauvegarde plan	 discussed	 in	 chapter  2:	 “Information	 on	 the	
    indebtedness.	failure	to	manage	interest	rate	fluctuations	effectively	in	the	    company”,	section	2.1.2:	“historical	background”	of	this	annual	report,	
    future,	or	increases	in	interest	rates,	may	have	a	material	adverse	impact	on	    does	not	provide	for	lock-up	agreements	with	respect	to	the	remaining	
    the	group’s	financial	charges.	see	note	27.2	of	the	consolidated	financial	       shares	to	be	issued	in	redemption	of	the	nrs.	most	of	the	creditors	who	
    statements	to	this	annual	report	for	more	information	about	this	risk.            will	receive	such	shares	in	the	context	of	the	restructuring	do	not	regularly	
                                                                                      invest	in	the	shares	and	a	large	number	of	them	could	look	to	sell	such	
                                                                                      securities.	the	sale	of	these	securities,	or	the	prospect	of	such	sales,	could	
    Risk of exchange Rate fluctuation                                                 lead	to	a	significant	decrease	in	the	share	price.
    Currency	 exchange	 rate	 fluctuations	 may	 lead	 to	 decreases	 in	
    	 echnicolor’s	financial	results.
    T
                                                                                      Risks Related to liquidity
    a	significant	part	of	the	net	revenues	of	the	group,	as	well	as	a	portion	
                                                                                      Liquidity	 risk	 may	 make	 it	 difficult	 for	 the	 Group	 to	 finance	 or	
    of	its	operating	income	are	in	subsidiaries	that	use	the	u.s.	dollar	as	
                                                                                      refinance	its	financial	obligations	coming	due.
    their	 functional	 currency.	as	a	 result,	fluctuations	in	 the	u.s.	dollar/
    euro	exchange	rate	have	a	significant	translation	impact	on	the	group’s	          technicolor’s	access	to	financial	markets	was	significantly	impacted	by	
    revenues	and	to	a	lesser	extent	on	profit	from	continuing	operations	             the	deterioration	of	its	financial	situation,	subsequent	debt	restructuring	
    before	tax	and	net	finance	costs.	to	the	extent	the	group	incurs	costs	in	        negotiations,	and	the	Sauvegarde	proceeding.	the	debt	restructuring	
    one	currency	and	has	sales	in	a	different	currency,	there	is	also	foreign	        allowed	the	group	to	improve	its	financial	structure	and	as	a	result	the	
    currency	transaction	risk	and	the	group’s	profit	margins	may	be	affected	         group	was	able	to	put	in	place	two	committed	receivables	backed	credit	
    by	changes	in	the	exchange	rates	between	the	two	currencies.	see	note	            facilities	in	2010.	nevertheless,	due	to	its	overall	level	of	indebtedness	and	
    27.1	of	the	consolidated	financial	statements	to	this	annual	report	for	          restrictions	in	its	reinstated	debt	documentation,	the	group’s	access	to	
    more	information	about	this	risk.                                                 financial	markets	remains	very	limited.	see	note	27.3	of	the	consolidated	
                                                                                      financial	statements	to	this	annual	report	which	gives	an	overview	of	
                                                                                      risk	related	to	liquidity.
    Risk of adveRse change in shaRe PRice
                                                                                      the	group	uses	the	services	of	rating	agencies	to	help	investors	evaluate	
    Technicolor’s	share	price	has	been	volatile	in	recent	years	and	could	            the	group’s	credit	quality	and	rate	its	debt.	see	chapter 3:	“management’s	
    continue	to	be	negatively	affected	by	the	financial	restructuring.                discussion	and	analysis	of	financial	condition	and	results	of	operations”,	
    the	stock	market	in	recent	years	has	experienced	extreme	price	and	               section	3.16.3:	“financial	resources	-	ratings”	of	this	annual	report.
    volume	fluctuations	which	have	particularly	affected	the	market	prices	           for	additional	discussion	on	the	group’s	liquidity	position	and	certain	
    of	technology	companies	and	other	companies	with	relatively	low	share	            related	risks,	please	refer	to	chapter 3:	“management’s	discussion	and	
    prices.	volatility	in	the	share	price	has	also	been	significant	during	this	      analysis	of	financial	condition	and	results	of	operations”,	section	3.16.3:	
    period.                                                                           “liquidity	and	capital	resources”,	notes	24,	26	and	27	of	the	consolidated	
    beyond	this	general	market	variability,	the	share	price	has	been	nega-            financial	statements	of	the	group,	and	section	1.3.1:	“risks	related	to	the	
    tively	affected	by	the	group’s	financial	situation	and	by	the	Sauvegarde	         debt	restructuring”	of	this	annual	report.
    proceeding.	the	average	share	price	decreased	by	74%	in	2008	and	73%	in	
    2009.	In	2010,	the	average	share	price	was	€6.055	(based	on	the	average	
    of	the	monthly	closing	share	prices).	It	fell	by	34%	compared	to	an	average	
                                                                                      faiR value of financial instRuments
    share	price	(adjusted	for	the	10	for	1	reverse	share	split	in	July	2010)	of	      the	fair	value	of	interest	rate	swap	contracts	is	calculated	by	discounting	
    €9.226	in	2009.	share	price	volatility	can	result	in	losses	for	investors	in	a	   their	future	cash	flows.	however,	for	complex	swaps	and	for	interest	rate	
    relatively	short	period	of	time.                                                  caps	the	marked-to-market	value	determined	by	independent	financial	
                                                                                      institutions	is	used.	the	fair	value	of	forward	exchange	contracts	and	
    the	share	price	could	continue	to	be	negatively	affected	by	the	imple-
                                                                                      currency	swaps	is	computed	by	discounting	the	difference	between	the	
    mentation	of	the	Sauvegarde	plan,	notably	due	to	the	dilutive	effect	of	
                                                                                      contract	and	the	market	forward	rate	and	multiplying	it	by	the	nominal	
    the	transactions	it	contemplates	and	the	absence	of	a	lock-up	for	the	
                                                                                      amount.	the	fair	value	of	currency	options	is	calculated	using	standard	
    securities	issued	in	the	context	of	the	restructuring.


    12       technIcolor	–	2010	annual	report
                                                                                         |	Key	Information	and risk factors
                                                                                                                                 RISk	FACTORS                       1
                                                                             Contents
                                                                     ➜
                                                                                             ➜


option	pricing	software	and	verified	with	independent	financial	institu-         trading	levels	of	the	reinstated	debt	to	determine	the	fair	value	of	this	
tions.	the	fair	value	of	all	current	assets	and	liabilities	(trade	accounts	     debt.	the	fair	value	of	listed	investment	securities	is	calculated	using	their	
receivable	and	payable,	short-term	loans	and	debt,	cash,	bank	overdrafts)	       last	known	market	price	at	year-end.
is	considered	to	be	equivalent	to	the	net	book	value	due	to	their	short-
                                                                                 for	a	tabular	presentation	of	the	fair	value	of	the	derivative	financial	instru-
term	maturities	with	the	exception	of	the	private	placement	notes	and	
                                                                                 ments	as	of	december 31,	2010,	see	note 25	to	the	consolidated	financial	
syndicated	credit	facility	drawings.	In	2008	the	fair	value	of	non-current	
                                                                                 statements.	see	also	note 27.6	to	the	consolidated	financial	statements	
financial	debt	as	well	as	the	private	placement	notes	and	debt	drawn	
                                                                                 for	information	on	the	fair	value	of	the	financial	assets	and	liabilities,	as	
under	the	syndicated	credit	facility	was	determined	by	estimating	future	
                                                                                 well	as	note 17	to	the	consolidated	financial	statements	for	information	on	
cash	flows	to	the	normal	maturity	on	a	borrowing-by-borrowing	basis	and	
                                                                                 the	fair	value	of	the	available-for-sale	assets.	for	other	information	on	the	
discounting	these	future	cash	flows	using	the	assumed	borrowing	cost	for	
                                                                                 borrowings	and	the	financial	instruments	and	market-related	exposures,	
the	period.	the	debt	restructuring	in	2009	and	2010	and	the	Sauvegarde	
                                                                                 see	notes	26	and	27,	respectively,	to	the	consolidated	financial	statements.	
proceeding	made	it	difficult	to	determine	a	meaningful	valuation	of	
                                                                                 for	more	information	about	the	debt	restructuring	and	the	Sauvegarde
the	private	placement	notes	and	the	syndicated	credit	facility	debt	and	
                                                                                 plan	please	refer	to	chapter 2:	“Information	on	the	company”,	section	
therefore,	at	december 31,	2009,	the	group	used	the	value	attributed	to	
                                                                                 2.1.2:	“historical	background”	of	this	annual	report.
this	debt	in	the	Sauvegarde plan.	In	2010	the	group	used	observed	market	



1.3.3	 Risks	related	to	business	disposals
In	2009,	the	group	decided	to	sell	or	close	activities	that	are	considered	      the	sale	or	closure	of	a	business	exposes	us	to	a	range	of	risks	which	
non-strategic,	such	as	grass	valley,	screenvision	and	residential	telephony.	    include	risks	linked	to	asset	sales,	risks	of	delay,	risks	on	funding	working	
as	of	december	31,	2010,	these	disposals	have	been	completed	or	are	in	          capital	requirements	during	the	period	of	sale	and	additional	costs	of	
the	process	of	being	finalized.	the	disposal	of	screenvision	us,	residential	    closure,	especially	labor-related	costs,	clauses	in	supplier	and	customer	
telephony	and	the	broadcast	activities	of	grass	valley	were	completed	           contracts	which	may	lead	to	penalty	claims,	risk	of	losing	customers	of	the	
in	2010.	the	other	planned	disposals	are	in	progress,	namely:	the	grass	         activities	sold	and	possible	decline	of	revenues	and	operating	result	prior	
valley	transmission	activity	(subject	to	binding	offer	as	announced	on	          to	closure.	In	addition,	after	the	disposal	of	a	business,	the	group	may	
december	23,	2010)	and	head-end	activity	(subject	to	binding	offer	              have	to	cope	with	risks	linked	to	remaining	liabilities	as	well	as	guarantees.	
as	announced	on	february	23,	2011).	prn	is	no	longer	classified	as	a	            there	is	also	a	risk	of	being	unable	to	reduce	structural	costs	that	cannot	
discontinued	operation.                                                          be	passed	on	to	the	buyer	or	which	are	the	result	of	the	split	of	businesses	
                                                                                 into	autonomous	segments	of	business.



1.3.4	 Risks	related	to the business
Risks Related to commeRcial activity                                             the	group’s	ten	largest	customers	accounted	for	50%	of	the	2010	consoli-
                                                                                 dated	net	revenues.	If	these	customers	were	to	reduce	or	cease	purchases,	
The	Group’s	businesses	operate	in	concentrated	markets	and	depend	               it	could	adversely	affect	the	group’s	businesses,	results	and	prospects.
on	a	number	of	major	customers	and	the	long-term	maintenance	of	
relationships	and	contractual	arrangements	with	them.	The	Group’s	               although	the	group	has	signed	multi-year	contracts	with	many	customers	
financial	results	may	suffer	if	these	relationships	weaken	or	terminate,	        and	most	of	its	major	customer	relationships	include	multiple	contractual	
if	the	Group	is	unable	to	renew	these	contractual	arrangements	when	             arrangements	with	varying	terms	and	conditions	and	expiration	dates,	
they	expire	or	is	only	able	to	renew	them	on	significantly	less	favorable	       certain	contracts	come	up	frequently	for	renewal	across	each	of	the	
terms,	or	if	certain	of	its	customers	face	financial	difficulties.               business	lines.

the	group’s	businesses	operate	in	the	media	&	entertainment	(“m&e”)	             In	order	to	anticipate	and	prevent	the	deterioration	of	major	customer	
industry,	which	is	a	concentrated	market,	and	where	the	relationships	have	      relationships,	the	group	closely	and	continuously	monitors	its	sales	and	
historically	played	an	important	role.	as	a	result,	several	of	the	businesses	   marketing	process,	and	in	particular,	the	renewal	and	renegotiation	of	key	
depend	on	a	number	of	major	customers	and	the	long-term	relationships	           contracts.	by	working	in	cooperation	with	the	sales	organization,	each	
and	contractual	arrangements	with	them.	for	example,	the	theatrical	             segment	has	devised	sales	and	marketing	strategies	and	formulated	
services	and	dvd	services	activities	depend	on	the	relationships	with	a	         plans	for	existing	and	new	client	development.	all	such	plans,	along	
number	of	major	motion	picture	studios.	the	group	generally	negotiates	          with	the	evolution	of	sales	and	marketing	activity,	are	regularly	reviewed	
exclusive,	long-term	contracts	with	these	studios.	the	top	five	studio	          by	management.	within	the	global	sales	organization,	the	group	has	
customers	accounted	for	approximately	65%	of	the	revenues	of	entertain-          established	 strategic	 account	 managers	 to	 globally	 manage	 large,	
ment	services	and	31%	of	the	group’s	consolidated	net	revenues	in	2010.	         strategic	 major	 studio	 and	 network	 service	 provider	 accounts	 and	
In	digital	delivery,	a	large	proportion	of	revenue	is	derived	from	various	      help	the	group	develop	its	business	relationships	and	revenues	with	
network	operators	under	long-term	contractual	arrangements.	the	top	five	        such	 customers.	 country	 head	 roles	 have	 also	 been	 established	 to	
customers	in	the	digital	delivery	segment	accounted	for	approximately	           transversally	manage	customer	relationships	and	revenue	targets	within	
36%	of	the	reported	2010	revenues	of	the	segment	and	approximately	              select,	strategic	territories	(e.g.	china,	India,	australia,	the	netherlands	
14%	of	the	group’s	2010	consolidated	net	revenues.	In	respect	of	the	            and	the	uK).	finally,	the	group	has	implemented	a	systematic	formal	
licensing	business,	see	“risks	related	to	the	evolution	of	the	licensing	        review	process	for	offers	prior	to	their	submission	to	clients,	according	
business”	below.                                                                 to	strategic	and	financial	criteria	and	tiered	approval	levels.	the	most	


                                                                                                   technIcolor	–	2010	annual	report                          13
           |	Key	Information	and risk factors
1          RISk	FACTORS



                                                                                Contents
                                                                        ➜
                                                                                                ➜


    significant	commercial	proposals	made	to	customers	are	subject	to	prior	        the	group	has	oriented	its	strategy	and	investment	plans	based	on	its	
    approval	by	the	Investment	committee,	chaired	by	the	ceo	(please	               expectations	regarding	the	development	of	its	markets,	such	as	(1)	the	
    refer	to	chapter	7:	”Internal	and	external	controls	procedures”	of	this	        speed	of	development	and	commercialization	of	blu-ray™	technology	in	
    annual	report).	among	the	financial	criteria,	the	analysis	of	the	impact	       the	dvd	sector	as	compared	with	standard	dvd	technology,	(2)	the	
    of	each	project	on	cash	flow	and	the	demand	for	working	capital	receives	       digital	switchover	in	films,	(3)	development	of	3d	technology,	and	(4)	the	
    particular	attention,	as	does	the	return	on	investment.                         rate	at	which	electronic	distribution	will	replace	sales	of	physical	products.	
                                                                                    these	trends	will	determine	the	rate	of	transition	from	certain	mature	
                                                                                    activities	toward	new	activities.	these	expectations	and	predictions	may	
    Risks Related to the caPacity to develoP                                        not	be	accurate,	which	may	require	adjustments	in	the	group’s	strategy	
    PRoducts and seRvices that ResPond                                              and	investment	policy.	If	new	technologies	were	to	develop	more	quickly	
                                                                                    than	anticipated,	the	group	may	be	required	to	increase	its	investments,	
    to customeRs’ technological choices                                             which	may	be	incompatible	with	the	covenants	under	its	reinstated	debt	
    The	sources	and	timing	of	the	Group’s	revenues	and	the	results	depend	          agreements	(please	see	“risks	related	to	indebtedness	of	the	group”).	
    in	large	part	on	its	customers’	business	plans	and	investment	decisions	        similarly,	if	mature	technology	on	which	a	significant	portion	of	the	
    for	certain	technologies,	products	and	services,	which	in	turn	may	             activities	relies	were	to	decline	more	quickly	than	anticipated,	cash	flows	
    depend	on	the	preferences	of	the	public.	If	the	customers	do	not	               generated	by	these	activities	could	be	negatively	affected.	the	growth	
    commit	resources	to	technologies,	products	and	services	supplied	by	            and	success	of	the	group’s	strategy	depends	to	a	great	extent	on	its	ability	
    Technicolor	or	if	the	Group’s	technologies,	products	or	services	do	            to	develop	and	deliver	innovative	products,	services	and	technologies	
    not	adequately	respond	to	customer	demand,	revenues	may	fluctuate	              that	are	widely	adopted	by	the	customers	in	response	to	changes	in	the	
    significantly	from	year	to	year	and	the	Group’s	financial	results	may	          m&e	industry	and	that	are	compatible	with	the	products,	services	or	
    suffer.                                                                         technologies	introduced	by	other	entertainment	industry	participants.

    for	 example,	 in	 the	 digital	 delivery	 segment,	 the	 customers	 of	 the	
    digital	home	products	business	(such	as	set-top	boxes	or	dual/triple	play	      Risks Related to the evolution of the
    gateways)	may	choose	to	deploy	a	particular	or	proprietary	technology	
    that	the	group	has	not	anticipated	or	chosen	to	support	and	thus	may	buy	
                                                                                    media & enteRtainment (m&e) industRy
    products	from	competitors.	In	the	dvd	and	film	markets,	new	distribution	       The	success	of	the	Group’s	strategy	depends	in	large	part	on	events,	
    formats	and	their	deployment	may	reduce	revenues	of	the	entertainment	          conditions	and	trends	in	the	M&E	industry.
    services	segment.	another	example	of	a	group	technological	choice	
                                                                                    economic	conditions	have	an	impact	on	funding	mechanisms	for	movie	
    concerns	3d	technology	and	its	acceptance	by	customers.	the	group	
                                                                                    making.	with	reduced	upfront	funds,	studios	are	likely	to	be	more	cautious	
    develops	products	and	uses	technologies	for	the	production	and	distribu-
                                                                                    with	investment	in	film	production.	a	consolidation	of	players	could	take	
    tion	of	3d	content	that	may	not	be	deployed	as	broadly	as	the	group’s	
                                                                                    place,	resulting	in	reduction	of	their	overall	spending.	unless	an	alternate	
    forecasts.	these	types	of	situations	occur	primarily	because	the	group	
                                                                                    funding	mechanism	is	adopted,	the	lack	of	deployments	may	hamper	
    has	no	control	over	its	customers’	business	plans	and	investment	decisions,	
                                                                                    3d	productions.
    which	in	turn	depend	largely	on	the	public’s	fast	changing	preferences.	
    furthermore,	the	content	market	is	highly	competitive	and	competing	            the	current	business	is	centred	around	well	known	large	m&e	companies,	
    technologies	and	products	are	often	released	into	the	marketplace	at	           whose	results	may	be	impacted	by:
    the	same	time.
                                                                                    ■■   the	type	of	public	demand	for	large	international	productions	or	small	
    In	an	effort	to	manage	this	risk	and	keep	up	to	date	on	market	trends	and	           local	productions	or	even	content	developed	by	users;	and
    influence	the	industry,	the	group	invests	and	participates	in	organizations	    ■■   the	 introduction	 of	 copyright	 protection.	 In	 the	 event	 of	 non-
    that	set	technology	standards.	the	group	also	emphasizes	customer	                   compliance	 with	 Intellectual	 property	 legislation	 and	 copyright,	
    relationship	management	as	a	means	to	mitigate	this	risk.                            the	budgets	for	new	content	may	suffer	due	to	a	lower	return	on	
                                                                                         investment	caused	by	piracy	and	distribution	of	unlicensed	content.
    Risks Related to changes in maRket,                                             digital	distribution	of	premium	content	to	homes	is	a	significant	strategic	
    technologies and consumeR demand                                                growth	area	for	technicolor.	this	strategy	will	be	affected	by	many	external	
                                                                                    factors,	including	the	following:
    The	markets	for	the	Group’s	products,	services	and	technologies	are	
    characterized	by	rapid	change	and	technological	evolution.	The	Group	           ■■   consumer	adoption	will	depend	on	the availability	of	broad	and	
    will	need	to	expend	significant	resources	on	research	and	development	               recent	content	from	studios;	the	quality	of	the	viewing	experience;	
    in	order	to	continue	to	design	and	deliver	innovative	products,	services	            the user-friendly	home	device;	and	 attractive	pricing;
    and	technologies	for	the	M&E	industry,	including	technologies	that	             ■■   in	order	to	satisfy	the	end	users,	studios	will	need	to	be	more	aggres-
    the	Group	may	license	to	manufacturers	and	other	third	parties.	                     sive	with	new	release	windows,	and	are	likely	to	create	channel	conflict	
    The	Group	may	not	be	able	to	develop	and	effectively	market	new	                     with	their	physical	distribution	channels;
    products,	services	and	technologies	that	adequately	or	competitively	           ■■   one	of	the	key	enablers	of	viewing	experience	is	the	speed	and	quality	
    address	the	needs	of	the	changing	marketplace.                                       of	the	broadband	connection	at	home.	although	broadband	speeds	
    new	products,	services	and	technologies	can	be	subject	to	delays	in	                 are	increasing,	the	emergence	of	over-the-top	models	is	impacting	
    development	and	may	fail	to	operate	as	intended.	there	may	be	no	or	                 network	service	providers’	(nsps)	appetite	to	invest.	regulatory	
    limited	market	acceptance	of	new	products,	services	or	technologies	                 frameworks,	which	differ	from	country	to	country	and	may	vary	within	
    which	the	group	offers,	and	significant	competitive	products,	services	or	           a	country,	also	play	a	key	role	in	convincing	nsps	to	invest;
    technologies	may	be	successfully	developed	by	the	competitors.                  ■■   to	date,	the	connected	home	is	made	of	disparate	product	families	
                                                                                         from	different	vendors,	each	with	their	own	networks	and	protocols.	

    14       technIcolor	–	2010	annual	report
                                                                                          |	Key	Information	and risk factors
                                                                                                                                  RISk	FACTORS                        1
                                                                              Contents
                                                                      ➜
                                                                                              ➜


     connectivity	across	devices	is	still	immature	and	in-home	integration	       ability	to	prevent	products	from	incorporating	defective	technology	or	
     is	complex;                                                                  components.	the	group	could	also	be	exposed	to	the	effects	of	produc-
■■   finally,	market	place	consolidation	will	also	impact	the	overall	spend	      tion	delays	or	other	performance	failures	of	such	suppliers.	any	defects	
     of	the	industry.                                                             in	the	production,	quantity	or	delivery	of	these	products	could	adversely	
                                                                                  affect	the	group’s	performance.	reliance	on	external	suppliers	may	also	
the	consumer	electronics	industry	is	also	a	key	part	of	technicolor’s	cash	       expose	technicolor	to	the	effects	of	suppliers’	non-compliance	with	
generation.	a	slower	than	expected	consumer	adoption	of	digital	media-            applicable	regulations	or	third-party	Intellectual	property	rights.
enabled	devices	may	have	an	impact	on	the	economic	rent	technicolor	
collects	through	its	patent	licensing	business.                                   the	group	manages	its	inventory	on	a	just-in-time	basis,	which	exposes	it	
                                                                                  to	performance	risks	by	its	suppliers	as	well	as	certain	force majeure	risks.	as	
If	the	m&e,	pay-tv	and	consumer	electronics	industries	fail	to	grow	at	           a	result,	in	addition	to	delays	or	other	performance	failures	of	its	suppliers,	
the	pace	the	group	anticipates	or	are	affected	by	other	events,	conditions	       the	group’s	operations	may	be	disrupted	by	external	factors	beyond	its	
or	trends	(including	those	described	above),	the	group’s	growth	and	              control.	depending	on	the	severity	and	duration	of	the	disruption,	the	
financial	results	could	suffer.                                                   group’s	results	of	operations	could	be	adversely	affected.
                                                                                  the	development	of	action	plans	to	reduce	the	potential	impact	of	these	
comPetition                                                                       supplier	risks	is	the	responsibility	of	the	sourcing	department.	these	
                                                                                  plans	include	the	nearly	systematic	use	of	two	or	more	supply	sources	
The	 Group	 faces	 strong	 competition	 in	 many	 of	 its	 businesses,	           for	key	components	or	by	outsourcing	raw	materials.	as	regards	financial	
including	from	groups	that	are	significantly	larger	than	Technicolor	             risk,	the	group	closely	oversees	suppliers	that	could	be	sources	of	risk,	
and	from	existing	customers	that	may	develop	in-house	capabilities.	              tracking	their	cash	flow	positions	and	calling	in	other	suppliers	if	necessary.	
Competition	may	cause	prices	to	decline	to	unprofitable	levels.                   suppliers	are	also	subject	to	audits	of	their	services	and	supplies,	and	of	
the	products	and	services	the	group	supplies	are	subject	to	intense	price	        key	performance	indicators,	resulting	in	regular	evaluations	of	the	quality	
competition	and,	although	the	group	has	leading	positions	in	many	of	             of	products	or	services	supplied.
the	market	segments,	competing	businesses	are	sometimes	part	of	groups	           the	sourcing	department	has	also	established	very	detailed	procedures	
which	are	significantly	larger	than	technicolor.	these	groups	may	include	        for	operational	and	contractual	monitoring	of	principal	suppliers,	including	
customers	who	may	already	have,	or	may	develop,	in-house	capabilities	to	         electronics	sub-contractors	in	eastern	europe,	mexico	and	asia,	and	
supply	the	products	or	services	which	technicolor,	such	as	studio	customers	      suppliers	of	key	components	such	as	integrated	circuits,	memory	chips	
who	have	content	services	capabilities	in-house	or	broadcasters	who	              or	hard	disks,	as	well	as	suppliers	of	raw	materials	used	in	the	production	
have	equipment	design	and	sourcing	capabilities	in-house.	If	the	group’s	         of	dvds.
competitors	or	customers	use	their	size	and	resources	to	put	additional	
competitive	pressure	on	technicolor,	its	operations	could	be	materially	
and	adversely	affected.                                                           Risk Related to PRoduct defects
furthermore,	due	to	technological	innovation	and	changing	business	               oR PRoduct oR seRvice quality defects
models,	new	operators	may	take	advantage	of	changing	market	conditions	
by	offering	alternative	solutions,	thereby	taking	away	market	share	from	         The	 Group	 is	 sometimes	 exposed	 to	 warranty	 claims	 relating	 to	
current	market	participants.	the	group	seeks	to	innovate	and	differentiate	       product	or	service	performance	issues.	Furthermore,	customers	may	
its	products	and	services,	as	well	as	to	design,	build	and	source	its	products	   limit	or	halt	purchases	from	the	Group	in	the	event	of	quality	issues	or	
and	their	components	in	such	a	way	as	to	minimize	the	effects	of	these	           if	the	Group	is	not	able	to	supply	the	products	and	services	requested.
risks.                                                                            there	can	be	no	assurance	that	the	group	will	not	experience	(i) liability	
In	order	to	identify	changing	market	conditions	and	minimize	the	exposure	        resulting	from	problems	with	products	or	services,	(ii) large-scale	product	
to	related	risks,	the	group	develops	models	to	identify	trends	and	key	           recalls	or	(iii) a	reduction	or	cessation	of	purchases	by	a	major	customer	
factors,	summarize	trends	and	risks,	map	the	industry	and	technicolor’s	          following	quality	issues	or	defective	performance,	and	that	these	will	not	
position	therein,	create	options	for	each	scenario	and	generate	a	series	of	      have	a	negative	impact	on	its	reputation	and	sales.	the	group	generally	
indicators	to	manage	and	adapt	the	strategy	and	priorities.                       maintains	insurance	against	many	product	and	service	liability	risks	and	
                                                                                  records	warranty	and	other	provisions	in	the	accounts	based	on	historical	
                                                                                  or	expected	defect	rates;	however	there	can	be	no	assurance	that	this	
Risks of being dePendent on suPPlieRs                                             coverage	or	these	warranty	provisions	will	be	adequate	for	liabilities	
                                                                                  ultimately	incurred.	In	addition,	there	can	be	no	assurance	that	insurance	
oR PaRtneRs                                                                       will	continue	to	be	available	on	terms	acceptable	to	the	group.
The	Group	relies	on	third-party	suppliers	and	partners	to	manufacture	            centers	for	product	development	or	implementation	of	services	include	
a	substantial	number	of	its	products	or	sub-components,	develop	or	               quality	assurance	functions	that	are	responsible	for	establishing	and	
co-develop	new	products	or	solutions	and	manage	inventory	on	a	just-              measuring	suitable	quality	indicators	and	developing	action	plans	to	
in-time	basis.	These	practices	entail	financial	risks,	risks	of	suppliers	        improve	the	quality	of	the	products	and	services.	these	quality	programs	
failing	to	perform,	and	reputational	and	other	risks	to	Technicolor.              include	short-	and	medium-term	improvement	plans	developed	from	
the	group	purchases	around	77%	of	raw	materials,	components	and	                  quality	studies	with	customers.	these	programs	are	also	developed	with	
finished	 products	 from	 its	 top	 25	 suppliers.	 In	 addition,	 the	 group	    the	group’s	main	solutions	and	component	suppliers	and	their	effective-
outsources	 to	 its	 external	 suppliers	 extensive	 operational	 activities	     ness	is	assessed	through	quality	audits.
including	procurement,	manufacturing,	logistics	and	other	services	such	
as	research	and	development.	reliance	on	outside	suppliers	reduces	the	




                                                                                                     technIcolor	–	2010	annual	report                          15
           |	Key	Information	and risk factors
1          RISk	FACTORS



                                                                                 Contents
                                                                         ➜
                                                                                                 ➜



    Risks Related to acquisitions and                                                effectively	 in	 many	 important	 markets	 as	 a	 result	 of	 the	 limited	
                                                                                     recognition	and	enforcement	of	Intellectual	Property	rights	in	many	
    PaRtneRshiPs                                                                     jurisdictions	outside	the European	union	and	North	America,	such	
    The	Group	may	seek	to	expand	its	product	and	services	offering,	                 as	China.
    technologies	 portfolio	 and	 geographic	 coverage,	 and	 hence	 its	            effective	Intellectual	property	rights	protection	may	not	be	available	under	
    customer	base,	through	acquisitions	and	partnerships.	These	decisions	           the	laws	of	the	countries	where	the	products	of	the	group’s	licensees	are	
    give	rise	to	corresponding	risks	and	uncertainties	that	are	typical	for	         located.	any	significant	impairment	of	the	group’s	Intellectual	property	
    such	transactions.                                                               rights	could	harm	the	business	or	group’s	ability	to	compete.	the	group	
    such	acquisitions	and	partnerships	may	give	rise	to	many	risks	including	        has	taken	steps	to	enforce	its	Intellectual	property	rights	and	expects	
    risks	of	execution,	integration	and	funding.	In	addition,	the	group	must	        to	continue	to	do	so	in	the	future.	however,	it	may	not	be	practicable,	
    pay	particular	attention	to	risks	in	connection	with	the	protection	of	          effective	or	cost-efficient	for	the	group	to	enforce	its	Intellectual	property	
    its	Intellectual	property	rights.	risks	inherent	in	partnerships	and	joint	      rights	fully,	particularly	in	certain	countries	outside	the	european	union	and	
    ventures	may	adversely	affect	the	group’s	results	or	financial	condition.	       north	america	or	where	the	initiation	of	a	claim	might	harm	the	business	
    with	respect	to	acquisitions,	the	group	is	limited	by	restrictions	in	its	       relationships.	for	example,	the	group	has	experienced,	and	expects	to	
    reinstated	debt	agreements	which	severely	restrict	the	group’s	ability	to	       continue	to	experience,	problems	with	asian	and	other	product	manufac-
    invest	in	new	joint	ventures	and	make	acquisitions.	to	the	extent	the	group	     turers	using	the	group’s	patents	in	their	products	without	a	license.	If	the	
    makes	acquisitions	or	invests	in	new	joint-ventures	within	these	limits,	the	    group	is	unable	to	successfully	stop	unauthorized	use	of	its	Intellectual	
    group	faces	risks	in	relation	to	execution,	integration	and	funding	which	       property,	the	group	could	experience	increased	enforcement	costs	in	
    may	compromise	the	success	of	the	acquisitions	or	partnerships.                  important	manufacturing	markets,	such	as	china,	and	suffer	substantial	
                                                                                     loss	of	licensing	revenues.
                                                                                     the	group	generally	seeks	patent	protection	for	its	innovations.	It	is	
    Risks Related to changes in the licensing                                        however	possible	that	some	of	these	innovations	may	not	be	protectable.	
    business                                                                         In	addition,	given	the	costs	of	obtaining	patent	protection,	the	group	
                                                                                     may	choose	not	to	protect	certain	innovations	that	later	turn	out	to	be	
    Patent	licensing	constitutes	a	significant	source	of	revenue	and	profits	        important.	the	group	has	limited	or	no	patent	protection	in	certain	
    for	the	Group.	If	sales	by	the	licensees	of	products	incorporating	the	          foreign	jurisdictions	and	there	is	always	the	possibility,	despite	its	efforts,	
    Group’s	technologies	or	the	licensing	fees	declines	or	if	the	Group	             that	an	issued	patent	may	later	be	found	to	be	invalid	or	unenforceable.	
    is	unable	to	replace	expiring	patents	with	new	patents,	the	Group’s	             moreover,	the	group	seeks	to	maintain	certain	inventions	as	trade	secrets.	
    financial	results	could	suffer.                                                  these	trade	secrets	could	be	compromised	by	third	parties,	or	intentionally	
    the	group	derives	significant	profit	from	the	licensing	of	the	various	          or	accidentally	by	its	employees,	which	would	cause	the	group	to	lose	the	
    technologies	to	product	manufacturers.	the	top	ten	licensees	accounted	          competitive	advantage	resulting	from	such	trade	secrets.
    for	approximately	77%	of	total	licensing	revenues	in	2010,	and	revenues	
    from	the	mpeg la	licensing	pool	(in	respect	of	mpeg	2	technology)	
    accounted	for	approximately	50%	of	technology’s	revenues	in	2010.	               Risks Related to the secuRity of assets
    licensing	revenue	is	dependent	on	sales	by	the	licensees	of	products	            Failure	by	Technicolor	to	adequately	protect	its	tangible	and	intangible	
    that	use	the	group’s	patents.	the	group	cannot	control	these	and	other	          assets,	as	well	as	those	of	third	parties,	could	materially	adversely	
    manufacturers’	product	development	or	marketing	efforts	or	predict	their	        affect	the	Group.
    success.	If	these	licensees	were	to	sell	fewer	products	incorporating	the	
    group’s	patents,	or	otherwise	face	significant	economic	difficulties,	the	       technicolor	is	entrusted	with	the	creation	and	distribution	of	highly	sensitive	
    group’s	licensing	revenue	and	profits	could	be	adversely	affected.               images	and	content	on	behalf	of	its	clients.	In	addition,	technicolor	must	
                                                                                     adequately	protect	its	intellectual	property	or	risk	an	adverse	effect	on	its	
    licensing	revenue	is	tied	to	the	remaining	life	of	the	licensed	patents.	        business	(see	“risks	related	to	the	protection	of	Intellectual	property”).
    the	right	to	receive	royalties	related	to	the	patents	terminates	with	the	
    expiration	of	the	last	patent	covering	the	relevant	technologies.	for	further	   as	a	provider	to	the	movie,	television	and	digital	industry,	technicolor	
    information	on	the	licensing	business	see	chapter	2:	"Information	on	the	        is	entrusted	with	highly	valuable	contents	which	may	be	unreleased	or	
    company,	section	2.2.1	“technology”	of	this	annual	report.                       otherwise	non-public.	therefore,	technicolor	must	provide	its	clients	
                                                                                     with	a	secure	working	environment	to	ensure	they	are	not	at	risk	of	a	
    In	addition,	standards-setting	bodies	may	require	the	use	of	so-called	          breach	of	confidentially	or	leak	of	information.	any	failure	by	technicolor	
    “open	 standards,”	 meaning	 that	 the	 technologies	 necessary	 to	 meet	       to	adequately	ensure	the	security	of	the	contents	entrusted	to	it	by	its	
    those	standards	are	freely	available	without	payment	of	a	licensing	fee	or	      clients	could	adversely	affect	its	reputation	and	lead	to	the	group	incur-
    royalty.	the	use	of	open	standards	may	therefore	reduce	the	opportunity	         ring	liability,	which	could	have	an	adverse	effect	on	the	group’s	financial	
    to	generate	licensing	revenue.                                                   position	and	results	of	operations.
                                                                                     mitigation	of	this	risk	is	achieved	through	a	security	risk	assessment	and	
    Risks Related to the PRotection                                                  global	approach	relying	on	local	capacities.	In	2010,	technicolor	focused	
                                                                                     on	sites	security,	country	risks	and	business	continuity,	with	priority	given	
    of intellectual PRoPeRty                                                         to	security	of	intangible	assets.	In	liaison	with	the	chief	security	officer	
    If	the	Group	is	unable	to	protect	effectively	its	Intellectual	Property	         (cso),	the	Information	technology	(It)	security	team	ensures	that	these	
    rights	in	the	technologies,	brands	and	know-how	the	Group	uses	or	               aspects	are	timely	addressed	by	a	security	team.	finally,	a	business	Incident	
    licenses	to	its	customers,	its	business	could	be	adversely	affected.	            crisis	 network	 was	 redesigned	 and	 implemented	 in	 2010	 to	 address	
    The	Group	may	have	difficulty	enforcing	Intellectual	Property	rights	            security	and	safety	incidents	in	a	timely	and	efficient	manner.



    16       technIcolor	–	2010	annual	report
                                                                                         |	Key	Information	and risk factors
                                                                                                                                 RISk	FACTORS                        1
                                                                             Contents
                                                                     ➜
                                                                                             ➜



1.3.5	 Other	risks
Risks Related to economic and social                                             extent	on	the	skills	of	capable	engineers	and	other	key	personnel.	ongoing	
                                                                                 training	of	personnel	is	also	necessary	to	maintain	a	superior	level	of	
conditions                                                                       innovation	and	adapt	to	technological	changes.	the	ability	to	recruit,	
The	Group	sources	a	large	number	of	goods	from	emerging	markets	                 retain	and	develop	quality	staff	is	a	critical	success	factor	for	the	group.
and	is	subject	to	risks	inherent	in	these	markets,	including	currency	           In	order	to	limit	the	impact	that	these	risks	might	have,	the	group	has	
fluctuations,	political	and	social	uncertainty,	exchange	controls	and	           established	a	set	of	human	resource	management	programs	such	as	
expropriation	of	assets.                                                         succession	planning	for	key	people	in	each	segment	or	development	
these	risks	could	disrupt	production	in	such	countries	and	the	ability	to	       programs	 for	 high	 potential	 profiles.	 these	 different	 programs	 are	
produce	and	procure	goods	for	sale	in	the	principal	north	american	and	          regularly	monitored	by	the	executive	committee.
european	markets.
risks	concerning	the	economic	and	social	environment	are	managed	by	             Risks Related to the enviRonment
each	business,	either	in	decentralized	form	for	risks	specific	to	a	given	
                                                                                 A	certain	number	of	the	Group’s	manufacturing	sites	have	been	used	
activity,	or	through	group	support	functions.	they	are	regularly	reviewed	
                                                                                 for	industrial	purposes	for	many	years.	Contamination	of	the	soil	or	
in	detail	by	group	management	as	part	of	the	monthly	or	quarterly	activity	
                                                                                 the	subterranean	groundwater,	which	has	already	occurred	at	some	
review	meetings.
                                                                                 sites,	could	occur	again	or	be	discovered	on	other	sites	in	the	future.
                                                                                 the	industrial	waste	from	any	sites	that	the	group	built	or	acquired	
Risks Related to antitRust PRoceduRes                                            may	expose	the	group	to	clean-up	or	remediation	costs.	the	group	
Claims	and	investigations	relating	to	competition	law	could	materially	          has	identified	certain	sites	whose	contamination	required	or	will	require	
adversely	affect	the	Group’s	performance.                                        remedial	actions.	the	group	believes	that	the	provisions	it	has	set	aside	
                                                                                 and	contractual	guarantees	from	which	it	benefits	(contained	in	the	
the	group	is	subject	to	certain	claims	and	investigations	relating	to	alleged	   acquisition	agreements	for	certain	industrial	assets)	provide	reasonable	
anti-competitive	conduct	by	technicolor	and	certain	of	its	subsidiaries	in	      coverage	for	its	environmental	health	and	safety	obligations.	however,	
connection	with	the	former	cathode	ray	tubes	business.	see	note 37	to	           potential	problems	cannot	be	foreseen	with	certainty	and	provisioned	
the	consolidated	financial	statements	for	more	information.                      amounts	may	not	be	adequate	in	all	cases.	moreover,	future	events,	such	
                                                                                 as	changes	in	government	or	changes	in	laws	on	safety,	the	environment,	
should	the	group	or	any	of	the	subsidiaries	ultimately	become	subject	
                                                                                 or	health,	or	the	discovery	of	new	risks,	could	create	additional	costs	
to	fines	or	penalties	in	respect	of	any	such	alleged	conduct,	or	be	held	
                                                                                 that	could	have	unfavourable	effects	on	the	group’s	business,	results	of	
liable	therefore	towards	any	third	parties,	or	settle	any	related	claims	or	
                                                                                 operations	or	financial	condition.
proceedings,	it	is	possible	that	the	amounts	of	any	such	fines	or	penalties,	
liability	or	settlement	could	be	substantial.	at	the	present	time,	there	are	    In	 addition,	 some	 products	 the	 group	 sells,	 or	 has	 sold	 in	 the	 past,	
too	many	uncertainties	to	assess	the	extent	of	any	liability	that	technicolor	   are	subject	to	electronics	recycling	legislation	in	certain	jurisdictions	
may	incur	in	consequence	of	these	investigations.                                or	other	legislation	regulating	certain	aspects	of	the	materials	used	in	
                                                                                 and	the	manufacturing	or	design	of	the	product.	many	jurisdictions	are	
the	group	continues	to	take	all	appropriate	measures	to	meet	requests	for	
                                                                                 also	considering	similar	legislation	that	may	impact	products	the	group	
information	from	the	administrations	concerned.	furthermore,	in	order	to	
                                                                                 sells	or	sold.	for	further	details	of	environmental	actions	conducted	by	
prevent	other	procedures	or	events	of	this	nature,	it	is	important	to	ensure	
                                                                                 technicolor	see	chapter 2:	“Information	on	the	company”,	section	2.4.2:	
that	the	group’s	management	and	sales	force	are	appropriately	sensitive	
                                                                                 “environmental	matters”	of	this	annual	report.	see	also	note	37	to	the	
to	competition	regulations	and	to	build	up	their	knowledge	on	the	subject.	
                                                                                 consolidated	financial	statements.
the	group	has	developed	and	implemented	training	programs	on	the	
subject,	in	particular	using	on-line	training	methods.
                                                                                 Risks Related to the imPaiRment of ceRtain
Risks Related to human ResouRces                                                 tangible and intangible assets including
The	Group’s	success	depends	upon	retaining	key	personnel	and	hiring	             goodwill
qualified	personnel.
                                                                                 changes	in	assumptions	underlying	the	use	or	the	profitability	of	certain	
the	group’s	success	depends	to	a	significant	degree	upon	the	continued	          tangible	and	intangible	assets,	or	a	change	in	market	conditions	or	tech-
involvement	of	the	management	team.	a	limited	number	of	individuals	             nological	environment,	could	result	in	an	indication	that	an	impairment	
have	primary	responsibility	for	managing	the	business,	including	the	            test	of	such	assets,	including	goodwill,	should	be	conducted.	goodwill	
relationships	with	key	customers	and	licensees.	If	the	group	were	to	lose	       and	intangible	assets	with	indefinite	useful	lives	are	reviewed	annually	
a	key	member	of	the	team,	whether	from	retirement,	competing	offers	             for	impairment.
or	other	causes,	the	group	may	be	prevented	from	executing	its	business	
                                                                                 tangible	and	intangible	assets	with	finite	useful	lives	are	reviewed	using	
strategy,	lose	key	customer	or	licensee	relationships,	or	otherwise	suffer	
                                                                                 the	future	cash	flow	generated	from	the	assets	(or	the	cash	generating	
an	adverse	effect	on	its	operations.
                                                                                 unit).	to	determine	the	recoverable	amounts	of	the	cash	generating	units,	
the	group’s	performance	also	depends	upon	the	talents	and	efforts	of	            the	group	depends	on	certain	key	assumptions,	including	assumptions	
highly	skilled	individuals.	the	group’s	products,	services	and	technologies	     regarding	budget	and	cash	flow	projections,	growth	rate	projections	and	
are	complex,	and	the	future	growth	and	success	depend	to	a	significant	          post-tax	discount	rates.	for	additional	information	on	the	impairment	


                                                                                                    technIcolor	–	2010	annual	report                          17
           |	Key	Information	and risk factors
1          LITIGATION



                                                                                Contents
                                                                        ➜
                                                                                               ➜


    tests,	see	notes 3.3,	13	and	14	to	the	consolidated	financial	statements.	If	   €603 million	out	of	a	total	goodwill	of	€644 million	for	the	group	at	
    management’s	estimates	change	or	market	conditions	evolve	adversely,	           december	31,	2010.	the	main	goodwill	considered	as	sensitive	relates	to	
    the	estimate	of	the	fair	value	of	tangible	and	intangible	assets	could	         dvd	services	for	€348 million,	digital	content	delivery	for	€60 million	
    decrease	significantly	and	result	in	an	impairment.	while	impairment	of	        and	connect	for	€180 million.	the	discounted	cash	flows	(recoverable	
    tangible	and	intangible	assets,	including	goodwill,	does	not	affect	cash	       value)	for	these	businesses	were	equal	or	close	to	their	book	values	as	of	
    flows,	it	does	result	in	a	non-cash	charge	in	the	consolidated	statements	      december 31,	2010.	consequently,	worse	than	anticipated	market	condi-
    of	operations,	which	could	have	a	material	adverse	effect	on	the	group’s	       tions	could	result	in	additional	impairment	charges	for	the	group.	no	
    results	of	operations	or	financial	position.	at	december 31,	2010,	the	         assurance	can	be	given	as	to	the	absence	of	significant	further	impairment	
    group	had	€644 million	of	goodwill,	€430 million	of	tangible	assets	and	        charges	in	future	periods,	particularly	if	market	conditions	deteriorate	
    €512 million	of	intangible	assets.	based	on	the	2010	impairment	review	         further.
    the	group	booked	a	€161 million	impairment	on	goodwill,	a	€10 million	
    net	impairment	reversal	on	intangible	assets	and	a	€35 million	impairment	
    on	tangible	assets.	please	refer	to	the	section	“sensitivity	of	recoverable	    insuRance
    values”	in	note 14	to	the	consolidated	financial	statements	for	a	discussion	   for	further	details	on	risk	coverage	by	the	insurance	policies,	please	see	
    of	changes	to	certain	parameters	that	could	reduce	the	recoverable	value	       section	2.4.3	“Insurance”	in	chapter 2	“Information	on	the	company”	of	
    of	certain	cash	generating	units	below	their	book	value	and	therefore	result	   this	annual	report.
    in	the	recording	of	a	loss.
    cumulative	 goodwill	 located	 in	 activities	 for	 which	 any	 change	 in	
    assumptions	would	have	an	immediate	impact	on	impairment	represented	




    1.4	 lItIgatIon
    In	the	normal	course	of	its	business	activities,	the	group	is	involved	in	      and	risk	factors”	and	in	note 37	to	the	group’s	consolidated	financial	
    legal	proceedings	and	is	subject	to	tax,	customs	and	administrative	audits.	    statements	in	this	annual	report.
    the	group	generally	records	a	provision	whenever	a	risk	represents	a	
                                                                                    except	for	the	litigation	described	in	chapter 1:	“Key	Information	and	risk	
    contingent	liability	towards	a	third	party	and	when	the	possible	loss	that	
                                                                                    factors”	and	in	note 37	to	the	consolidated	financial	statements	in	this	
    may	result	can	be	estimated	with	sufficient	accuracy.
                                                                                    annual	report,	there	are	no	other	governmental,	judicial	or	arbitration	
    the	 principal	 legal	 proceedings	 and	 governmental	 investigations	 in	      proceedings,	including	any	proceedings	of	which	the	group	is	aware,	
    progress	or	envisaged,	including	certain	claims	and	investigations	relating	    that	are	currently	pending	or	threatened,	which	could	have,	or	have	had	
    to	alleged	anti-competitive	conduct	in	connection	with	the	group’s	former	      over	the	past	12 months,	a	material	effect	on	the	financial	situation	or	
    cathode	ray	tube	business,	are	described	in	chapter 1:	“Key	Information	        profitability	of	the	group.




    18       technIcolor	–	2010	annual	report
        2
                          Information on the Company


2.1	   hIstory	and	strategy	of	the	company	   20   2.3	   organIzatIonal	structure	                         34
       2.1.1	   Company	Profile	              20
                                                   2.4	   property,	plant	and	equIpment	                    34
       2.1.2	   Historical	Background	        20
                                                          2.4.1	 Operating	Facilities	and	Locations	        34
       2.1.3	   Organization	                 22
                                                          2.4.2	 Environmental	matters	                     36
       2.1.4	   Strategy	                     23
                                                          2.4.3	 Insurance	                                 45
2.2	   busIness	overvIew	                     24
                                                   2.5	   technIcolor	foundatIon	for	cInema	
       2.2.1	   Technology	                   24          herItage	                                         46
       2.2.2	   Entertainment	Services	       27
       2.2.3	   Digital	Delivery	             30
       2.2.4	   Other	                        32
       2.2.5	   Discontinued	operations	      33




                                                                  technIcolor	–	2010	annual	report     19
           |	Information	on the company
2          HISTORY	AND	STRATEGY	OF	THE	COMPANY



                                                                                 Contents
                                                                         ➜
                                                                                                 ➜



    2.1	 hIstory	and	strategy	of	the	company

    2.1.1	 Company	Profile
    Legal and commercial name:                                                       business	 and	 activities,	 is	 6420z,	 corresponding	 to	 the	 business	 of	
                                                                                     corporate	administration.
    technIcolor
                                                                                     Date of incorporation and length of life of the Company: technicolor	
    Registered office address:
                                                                                     (formerly	thomson)	was	formed	on	august 24,	1985.	It	was	registered	on	
    1-5,	rue	Jeanne	d’arc                                                            november 7,	1985	for	a	term	of	99 years,	expiring	on	november 6,	2084.
    92130	Issy-les-moulineaux	france
                                                                                     Fiscal year: January 1	to	december 31.
    tel.:	+33	(0)1	41	86	50	00
    fax:	+33	(0)1	41	86	58	59                                                        technicolor	 provides	 a	 wide	 range	 of	 video	 technologies,	 systems,	
    e-mail:	webmaster@technicolor.com                                                finished	products	and	services	to	the	media	&	entertainment	(“m&e”)	
                                                                                     industry.	 In	 2010,	 technicolor’s	 activities	 were	 organized	 into	 three	
    Domicile, legal form and applicable legislation: technicolor	is	a	french	
                                                                                     operating	segments,	namely	technology,	entertainment	services	and	
    corporation	(société anonyme)	with	a	board	of	directors,	governed	by	
                                                                                     digital	delivery	(a	new	segment	bringing	together	the	connect	business	
    title	II	of	the	french	commercial	code	pertaining	to	corporations,	by	all	
                                                                                     and	the	digital	content	delivery	services	business,	which	was	formerly	
    laws	and	regulations	pertaining	to	corporations,	and	its	bylaws.
                                                                                     part	 of	 entertainment	 services).	 all	 other	 activities	 and	 corporate	
    the	company	is	registered	in	the	register	of	commerce	and	compa-                 functions	(unallocated)	are	presented	within	the	“other”	segment.	In	
    nies	(Registre du Commerce et des Sociétés)	of	nanterre	under	no.	               fiscal	year 2010,	technicolor	generated	€3,574 million	of	consolidated	
    333 773 174	and	its	ape	code,	which	identifies	a	company’s	type	of	              revenues.	on	december 31,	2010,	the	group	had	17,858 employees	in	
                                                                                     29	countries	(including	those	in	operations	treated	as	discontinued).



    2.1.2	 Historical	Background
    technicolor	has	been	contributing	to	the	development	of	video	tech-              change in businesses
    nologies	and	services	for	more	than	95 years.	technicolor	now	occupies	
    leading	positions	worldwide	in	the	supply	of	production,	postproduction	         over	the	last	ten	years,	the	company’s	scope	of	activities	shifted	towards	
    and	distribution	services	for	content	creators,	broadcasters	and	network	        the	media	&	entertainment	industry	through	a	series	of	acquisitions	and	
    operators.                                                                       disposals.
    the	group	was	listed	on	nyse	euronext	paris,	where	it	remains	listed,	           In	2009,	the	group	decided	to	refocus	on	technologies,	products	and	
    and	the	new	york	stock	exchange	in	november 1999,	when	the	french	               services	 related	 to	 content	 creation	 and	 delivery,	 and	 to	 dispose	 of	
    state,	which	owned	100%	of	share	capital	until	the	entry	of	a	group	of	          businesses	outside	its	new	strategic	framework,	namely	its	professional	
    reference	shareholders	in	december 1998,	reduced	its	holding	from	70.0%	         broadcast	&	networks	business	(grass	valley	activities	including	broadcast	
    to	51.7%.	the	french	state	gradually	reduced	its	interest	until	2004,	and	       equipment,	head-end	and	transmission)	and	its	media	networks	business.	
    now	owns	less	than	0.3%	of	technicolor’s	share	capital.	                         the	group	also	completed	the	exit	of	its	retail	telephony	activity.
    technicolor	 has	 applied	 for	 the	 voluntary	 delisting	 of	 its	 american	    In	2010,	the	group	implemented	a	large	part	of	its	disposal	program	and	
    depositary	shares	(adss)	from	the	new	york	stock	exchange	(nyse)	                finalized	the	following	transactions:
    and	the	voluntary	termination	of	the	registration	of	its	securities	under	the	
                                                                                     ■■   the	disposal	of	a	majority	of	its	participation	in	screenvision	us	to	
    u.s.	securities	exchange	act	of	1934.	technicolor	filed	its	form	25	with	the	
                                                                                          shamrock	capital	growth	fund	(for	more	information,	please	refer	
    nyse	and	with	the	sec	to	delist	its	adss	on	march	11,	2011.	the	delisting	
                                                                                          to	section	2.2.5:	“discontinued	operations”);
    has	become	effective	at	the	close	of	trading	on	march	21,	2011,	and	the	
    adss	now	trade	in	the	otc	market	since	march	22,	2011.	technicolor	              ■■   the	disposal	of	the	grass	valley	broadcast	business	to	francisco	
    filed	its	form	15-f	to	deregister	with	the	sec	on	march	24,	2011,	and	its	            partners	(for	more	information,	please	refer	to	section	2.2.5:	“discon-
    deregistration	is	expected	to	become	effective	90	days	thereafter.                    tinued	operations”);

    technicolor	will	continue	to	publish	english	language	financial	reports,	        on	 december	 23,	 2010,	 technicolor	 announced	 that	 it	 received	 a	
    financial	statements,	press	releases	and	shareholder	information,	which	         fully-documented	binding	offer	from	parter	capital	group	for	the	
    will	be	available	on	its	website	(www.technicolor.com)	in	accordance	with	       acquisition	of	the	grass	valley	transmission	business,	operating	under	
    rule	12g3-2(b)	under	the	u.s.	securities	exchange	act	of	1934.                   the	thomson	broadcast	brand.

    for	more	information	about	technicolor's	rationale	for	delisting	and	            on	february	23,	2011,	technicolor	announced	that	it	received	a	fully	
    deregistration,	please	refer	to	chapter	5:	"shareholders	and	listings	           documented	binding	offer	from	the	fcde	for	the	acquisition	of	the	
    lnformation",	section	5.3.1:	"market	for	the	company's	securities"	of	this	      grass	valley	head-end	business,	operating	under	the	thomson	video	
    annual	report.                                                                   networks	brand.




    20       technIcolor	–	2010	annual	report
                                                                                                      |	Information	on the company
                                                                                    HISTORY	AND	STRATEGY	OF	THE	COMPANY                                                   2
                                                                                Contents
                                                                        ➜
                                                                                                  ➜


the	 offers	 received	 from	 potential	 buyers	 of	 prn	 (premier	 retail	          an	 appeal	 against	 the	 february	 17,	 2010	 decision	 of	 the	 nanterre	
networks)	did	not	provide	satisfactory	conditions	for	the	group.	taking	            commercial	court	was	brought	by	certain	holders	of	tss	(Titres Super
into	consideration	a	number	of	factors,	including	prn’s	business	achieve-           Subordonnés)	or	deeply	subordinated	perpetual	notes,	in	the	versailles	
ments	in	2010,	the	improvement	in	the	advertising	market	in	general,	and	           court	of	appeal	on	february	23,	2010.	the	appeal	requested	the	nullifica-
the	place-based	media	market	specifically,	as	seen	over	the	past	several	           tion	of	the	general	meeting	of	noteholders	held	on	december 22, 2009	
quarters,	the	group	believes	greater	value	can	be	created	by	developing	            and	the	re-opening	of	the	Sauvegarde proceeding	or,	alternatively,	a	
the	prn	business. as	a	consequence,	the	group	has	decided	to	defini-                modification	of	the	Sauvegarde plan	in	a	manner	more	favorable	to	the	
tively	end	the	disposal	process	for	prn,	which	will	be	consolidated	as	part	        tss	holders,	or	ultimately,	the	treatment	of	the	tss	holders	outside	of	
of	its	entertainment	services	segment.                                              the	Sauvegarde plan.	on	november	18,	2010,	the	versailles	court	of	
                                                                                    appeal	dismissed	the	claims	of	the	tss	holders	and	confirmed	the	validity	
In	the	second	quarter	of	2010,	the	group	established	a	new	segment,	
                                                                                    of	technicolor’s	Sauvegarde plan.	however,	certain	tss	holders	have	
digital	delivery,	to	increase	its	capability	to	capture	the	growth	resulting	
                                                                                    appealed	to	the	french	supreme	court	(Cour de cassation)	through	a	
from	the	shift	to	digital	distribution.	digital	delivery	brings	together	the	
                                                                                    pourvoi en cassation	procedure	against	the	decision	of	the	versailles	court	
connect	and	the	digital	content	delivery	(dcd)	businesses	(which	
                                                                                    of	appeal	on	february	14,	2011	(see	note	37	to	the	group’s	consolidated	
were	formerly	part	of	entertainment	services)	to	enable	the	group	to	
                                                                                    financial	statements	for	more	information).
adapt	to	the	changing	needs	of	its	network	services	operator	customer	
base,	which	is	increasingly	expanding	its	focus	from	delivery	platforms	to	         as	no	temporary	stay	of	the	nanterre	decision	was	filed,	technicolor	
electronic	media	distribution.                                                      implemented	the	Sauvegarde plan	on	may	26,	2010,	as	described	below	
                                                                                    under	description	of	the	restructuring	of	the	group’s	Indebtedness.
In	keeping	with	this	strategic	refocus,	technicolor’s	scope	of	activity	now	
covers:
                                                                                    Recognition	of	the	Effects	of	the	Sauvegarde Plan	in	the	
■■   research	&	Innovation,	and	licensing	(technology);
                                                                                    united	States	(Chapter 15	of	the	Federal	Bankruptcy	
     services	to	content	creators	(entertainment	services);	and
                                                                                    Code)
■■
■■   devices,	software	and	services	for	network	operators	and	broadcasters	
     (digital	delivery).                                                            on	december 16,	2009,	the	company	filed	a	request	for	recognition	of	
                                                                                    the	effects	of	the	Sauvegarde plan	in	the	united	states	with	the	united	
                                                                                    states	bankruptcy	court	for	the	southern	district	of	new	york,	pursuant	
debt RestRuctuRing                                                                  to	chapter 15	of	the	federal	bankruptcy	code.	the	purpose	of	this	
                                                                                    proceeding	was	to	protect	the	assets	of	the	company	located	in	the	
Sauvegarde Proceeding	Opened	in	Respect	of	                                         united	states	and	to	stay	any	proceedings	of	creditors	in	the	united	states	
the Company                                                                         that	would	be	inconsistent	with	the	principles	of	the	Sauvegarde plan.	the	
                                                                                    chapter 15	proceeding	was	therefore	only	an	ancillary	proceeding	for	the	
on	november	30,	2009,	the	company	filed	a	Sauvegarde plan	based	
                                                                                    purpose	of	recognition	in	the	united	states	of	the	Sauvegarde plan	opened	
on	the	restructuring	agreement	reached	with	its	senior	creditors	on	
                                                                                    in	france	for	the	benefit	of	the	company.	the	chapter	15	proceeding	
July 24,	2009,	following	the	announcement	on	January 28	and	march 9,	
                                                                                    was	officially	closed	on	June	28,	2010.
2009	of	the	breach	of	certain	covenants	contained	in	financial	agree-
ments	under	which	the	company	had	borrowed	substantially	all	of	
its	outstanding	senior	debt,	i.e.	around	€2.8 billion.	the	Sauvegarde               Description	of	the	Restructuring	of	the	Group’s	
plan	was	filed	after	the	company	failed	to	identify	and	obtain	the	                 Indebtedness
unanimous	approval	of	all	its	senior	creditors	on	the	restructuring	
agreement	due	principally	to	the	cds	auction	process	organized	by	                  the	principal	characteristics	of	the	Sauvegarde plan	as	implemented	on	
the	International	swaps	and	derivatives	association	(Isda)	at	the	                  may	26,	2010,	were	as	follows:
end	of	october 2009	with	respect	to	the	company’s	senior	debt,	and	                 ■■   the	conversion	of	an	aggregate	principal	amount	of	€1,325 million	(as	
due	to	the	fact	that	the	identity	of	the	new	creditors	had	not	been	                     of	may	26,	2010	exchange	rate	including	foreign	exchange	impact	of	
definitively	established	and	the	debt	instruments	continued	to	be	sold	                  30 million)	of	the	senior	debt	into	securities	by	way	of:
on	the	market	and	were	the	subject	of	new	cds	contracts.
                                                                                         •■   a	 share	 capital	 increase	 in	 cash	 through	 the	 issuance	 of	 new	
In	 accordance	 with	 french	 law,	 the	 proposed	 Sauvegarde plan	 was	                      shares,	 while	 maintaining	 the	 preferential	 subscription	 rights	
submitted	to	the	vote	of	the	committees	of	the	creditors	meetings	on	                         (droits préférentiels de souscription)	of	shareholders	(subject	to	
december 21	and	22,	2009.	In	addition,	on	January 27,	2010,	the	combined	                     securities	law	provisions	that	restrict	participation	by	investors	in	
general	shareholders’	meeting	approved	the	resolutions	required	to	                           certain	countries	including	the	united	states)	in	the	amount	of	
implement	the	Sauvegarde plan,	thereby	authorizing	the	completion	of	                         €348 million	(including	share	premium),
the	equity	issuances	contemplated	thereby.	finally,	on	february 17,	2010,	               •■   the	issuance	of	notes	redeemable	in	shares	of	the	company	
the	nanterre	commercial	court	approved	the	proposed	Sauvegarde plan	                          (the	nrs),	reserved	for	the	senior	creditors,	for	an	aggregate	
after	ensuring	it	protected	the	interests	of	all	creditors	and	offered	a	“viable	             principal	amount	of	€638 million,	with	the	company’s	existing	
solution”	(“une possibilité sérieuse pour l’entreprise d’être sauvegardée”).	                 shareholders	receiving	warrants	to	purchase	such	nrs	up	to	an	
the	Sauvegarde plan,	which	was	implemented	on	may	26,	2010,	is	binding	                       amount	of	approximately	€75 million	(subject	to	securities	law	
upon	all	creditors	of	technicolor sa	(see	chapter 1:	“Key	Information	and	                    provisions	that	restrict	participation	by	investors	in	certain	countries	
risk	factors”,	section	1.3.1:	“risk	related	to	the	debt	restructuring”	and	note	              including	the	united	states),
37	to	the	group’s	consolidated	financial	statements).




                                                                                                         technIcolor	–	2010	annual	report                          21
              |	Information	on the company
2             HISTORY	AND	STRATEGY	OF	THE	COMPANY



                                                                                   Contents
                                                                           ➜
                                                                                                       ➜


         •■   the	issuance	of	notes	redeemable	in	cash	or	shares	of	the	company	                      of	€1.00	(Euro NRS II),	1.30	us	dollars	(U.S.$ NRS II),	or	0.91	
              (disposal	 proceeds	 notes,	 or	 “dpn”),	 linked	 to	 the	 disposal	                    pounds	sterling	(£ NRS II),
              proceeds	of	certain	non-core	assets	of	the	company,	reserved	for	                  -■   119,150,196	 nrs	 IIc,	 redeemable	 in	 ordinary	 shares	 of	 the	
              the	senior	creditors	in	an	amount	of	€309 million	at	may 26, 2010	                      company	on	december	31,	2011,	or	in	cash	at	the	option	of	
              rate	and	out	of	which	€48 million	were	reimbursed	in	cash	by	the	                       the	company	with	a	nominal	value	per	nrs	of	€1.00	(Euro NRS
              company	to	the	creditors	on	may	26,	2010,                                               IIC),	1.30	us	dollars	(U.S.$ NRS IIC),	or	0.91	pounds	sterling	
    ■■   the	execution	of	a	new	term	loan	facility	and	the	issuance	of	new	notes	                     (£ NRS IIC),
         which	allowed	the	repayment	of	an	aggregate	principal	amount	of	                   •■   a	total	of	2,902,074	dpn;
         €1,593	 million	(as	of	may	26,	2010	exchange	rate	)	of	senior	debt	
                                                                                       ■■   the	company	also	effected	a	10-for-1	reverse	share	split	on	July 15,	
         (on	the	basis	of	the	exchange	rate	set	out	in	the	Sauvegarde plan,	i.e.
                                                                                            2010,	as	contemplated	by	the	15th	resolution	of	its	combined	general	
         u.s.$1.30/€1.00	and	€1.10/£1.00).	for	additional	information	relating	
                                                                                            shareholders’	meeting	held	on	January	27,	2010;
         to	the	term	loan	facility	and	the	new	notes,	refer	to	note	26	to	the	
         group’s	consolidated	financial	statements;                                    ■■   on	december	31,	2010,	in	accordance	with	the	terms	and	conditions	
                                                                                            of	the	nrs,	the	company	redeemed	a	total	of	313,890,656	nrs	
    ■■   the	payment	of	the	interest	claims	of	the	tss	holders	against	the	
                                                                                            I,	through	the	issuance	of	45,196,744	new	shares	of	the	company.	
         company	in	cash	in	an	amount	of	€25 million	(definitively	extin-
                                                                                            holders	of	5,328,181	nrs	I	requested	the	deferral	of	the	redemption	
         guishing	these	interest	claims).	please	refer	to	note	37	to	the	group’s	
                                                                                            of	their	notes	until	december	31,	2011,	in	accordance	with	the	terms	
         consolidated	financial	statements	for	a	description	of	the	appeal	of	
                                                                                            and	conditions	thereof;
         the	tss	holders	with	respect	to	the	validity	of	the	Sauvegarde plan.
                                                                                       ■■   also	on	december	31,	2010,	pursuant	to	the	terms	and	conditions	of	
    ■■   pursuant	to	the	terms	of	the	Sauvegarde plan,	the	company	issued	
                                                                                            the	dpn,	the	company	redeemed	the	entirety	of	the	dpn	through	
         the	following	securities	in	may	2010:
                                                                                            payment	 of	 €52,303,696	 in	 cash	 and	 the	 issuance	 of	 50  million	
         •■   a	rights	offering	in	the	amount	of	approximately	€348 million,	               new	shares	of	the	company;	this	security	therefore	is	no	longer	in	
              which	was	fully	backstopped	by	the	senior	creditors,	resulting	in	            circulation;
              the	issuance	of	52,660,878	new	ordinary	shares	of	the	company,
                                                                                       ■■   pursuant	 to	 these	 redemptions,	 the	 company	 issued	 95,196,744	
         •■   a	total	of	638,438,133	nrs	allocated	to	its	senior	creditors	for	a	           new	shares,	bringing	the	total	number	of	shares	of	the	company	to	
              total	amount	of	€638,447,918.26.	the	nrs	were	divided	into	three	             174,846,625	shares	as	of	december	31,	2010.
              tranches:
                                                                                       the	principal	characteristics	of	the	new	shares,	the	nrs,	the	dpn	and	the	
              -■   319,218,837	 nrs	 I,	 redeemable	 in	 ordinary	 shares	 of	 the	
                                                                                       reinstated	debt	are	described	in	chapter 3:	“management’s	discussion	
                   company	on	december	31,	2010,	with	a	nominal	value	per	nrs	
                                                                                       and	analysis	of	financial	condition	and	results	of	operations”,	section	
                   of	€1.00	(Euro NRS I),	1.30	us	dollars	(U.S.$ NRS I),	or	0.91	
                                                                                       3.16.3:	“financial	resources”	of	this	annual	report.
                   pounds	sterling	(£ NRS I),
              -■   200,069,100	 nrs	 II,	 redeemable	 in	 ordinary	 shares	 of	 the	
                   company	on	december	31,	2011,	with	a	nominal	value	per	nrs	



    2.1.3	 Organization
    as	discussed	below,	the	group	was	organized	around	three	operating	                monetizing	the	group’s	Intellectual	property	portfolio	and	generates	
    segments	in	2010	–	technology,	entertainment	services	and	digital	                 most	of	the	technology	revenues.	the	medianavi	business	was	created	
    delivery.	all	other	activities	and	corporate	functions	(unallocated)	are	          at	the	end	of	2010	and	includes	the	group’s	newly	launched	platforms	and	
    presented	within	the	“other”	segment.                                              applications	aiming	at	simplifying	and	enriching	the	end-user	experience	
                                                                                       for	consuming	dematerialized	premium	content.

    technology (13% of 2010 consolidated                                               for	more	information	about	the	technology	segment,	see	section	2.2.1	
                                                                                       "technology".
    Revenues)
    technology,	which	generated	consolidated	revenues	of	€450	million	in	
    2010	(13%	of	the	group's	consolidated	revenues),	is	organized	around	
                                                                                       enteRtainment seRvices (47% of 2010
    the	following	businesses:                                                          consolidated Revenues)
    ■■   research	&	Innovation;                                                        entertainment	services	develops	and	offers	video-related	technologies	
    ■■   licensing;                                                                    and	services	for	the	media	&	entertainment	(m&e)	industry.	this	segment	
                                                                                       offers	services	related	to	content	production	and	preparation	and	creation	
    ■■   medianavi.
                                                                                       (creation	services)	and	content	distribution	through	both	physical	media	
    research	 &	 Innovation	 includes	 the	 group’s	 fundamental	 research	            (film	services	and	dvd	services)	and	digital	media	(digital	cinema).
    activities.	 the	 licensing	 business	 is	 responsible	 for	 protecting	 and	




    22             technIcolor	–	2010	annual	report
                                                                                                 |	Information	on the company
                                                                                 HISTORY	AND	STRATEGY	OF	THE	COMPANY                                                  2
                                                                             Contents
                                                                     ➜
                                                                                             ➜


the	 offers	 received	 from	 potential	 buyers	 of	 prn	 (premier	 retail	       ness	(which	was	formerly	part	of	entertainment	services)	to	enable	the	
networks)	did	not	provide	satisfactory	conditions	for	the	group.	as	a	           group	to	adapt	to	the	changing	needs	of	its	network	services	operator	
consequence,	the	group	has	decided	to	end	the	disposal	process	for	prn,	         customer	base,	which	is	increasingly	expanding	its	focus	from	delivery	
which	is	now	consolidated	as	part	of	entertainment	services.                     platforms	to	electronic	media	distribution.	digital	delivery	develops	and	
                                                                                 supplies	hardware	and	software	technologies	to	the	media	&	entertain-
entertainment	 services,	 which	 generated	 consolidated	 revenues	 of	
                                                                                 ment	industry	in	the	areas	of	access	and	delivery	platforms,	as	well	as	
€1,697 million	in	2010	(47%	of	the	group’s	consolidated	revenues),	is	
                                                                                 content	preparation	and	management	services,	enabling	its	customers	to	
organized	around	the	following	businesses:
                                                                                 deliver	an	improved	end-user	entertainment	experience.	digital	delivery,	
■■   creation	services	 (visual	effects,	animation	and	postproduction	           which	generated	consolidated	revenues	of	€1,423 million	in	2010	(40%	of	
     services)	and	theatrical	services	(photochemical	film	and	digital	          the	group’s	consolidated	revenues),	and	shipped	a	total	of	24.9 million	
     cinema	distribution);                                                       access	products	in	2010	(2009:	24.8 million	units),	is	organized	around	
■■   dvd	services;                                                               the	following	businesses:

■■   prn.                                                                        ■■   connect	;

In	2010,	the	digital	content	delivery	business,	which	was	formerly	part	         ■■   digital	content	delivery,	formerly	part	of	the	entertainment	services	
of	entertainment	services,	was	transferred	to	the	newly	formed	digital	               segment.
delivery	segment.                                                                for	more	information	about	the	digital	delivery	segment,	see	section	
                                                                                 2.2.3	"digital	delivery".
for	more	information	about	the	entertainment	services	segment,	see	
section	2.2.2	"entertainment	services".
                                                                                 otheR
digital deliveRy (40% of 2010                                                    the	 “other”	 segment	 comprises	 all	 other	 continuing	 activities	 and	
                                                                                 corporate	functions	(unallocated).
consolidated Revenues)
                                                                                 for	more	information,	please	refer	to	section	2.2.4:	“other”.
In	the	second	quarter	of	2010,	technicolor	established	a	new	segment,	
digital	delivery,	to	increase	its	capability	to	capture	the	growth	resulting	
from	the	shift	to	digital	distribution.	digital	delivery	brings	together	
the	connect	business	and	the	digital	content	delivery	(dcd)	busi-



2.1.4	 Strategy
technicolor	is	a	technology	company	servicing	the	media	&	entertainment	         enabling	the	digital	shift,	namely,	digital	workflows,	digital	production,	
industry,	and	benefiting	from	market	leading	positions	across	its	segments:      digital	distribution	and	digital	home.
1.	 technology,	with	recognized	research	capabilities	in	video-related	
    technologies,	a	large	portfolio	of	patents	in	the	growing	digital	markets	   exPand licensing models
    and	a	recognised	expertise	in	protecting	and	monetizing	intellectual	        technicolor	intends	to	grow	and	diversify	its	licensing	business	through:
    property	(Ip);
                                                                                 1.	 expansion	in	new	programs	targeted	at	new	mass-market	consumer	
2.	 entertainment	 services,	 with	 leading	 market	 positions	 in	 physical	        devices	or	new	technologies	such	as	gateways,	mobile	devices	and	3d;
    media	(#1	worldwide	in	dvd/blu-ray™	services	and	in	digital	media	
    (#1	worldwide	in	digital	cinema	distribution	and	in	the	top-5	providers	     2.	 licensing	of	3rd	party	intellectual	property,	as	already	initiated	with	xerox	
    of	visual	effects,	animation	and	postproduction	services);	and                   omsd	and	the	time	warner	Ip	pool;	and
3.	 digital	delivery,	with	the	leading	market	position	in	digital	home	(#1	      3.	 development	of	technology	licensing	activities.
    worldwide	in	gateways	and	#3	worldwide	in	set-top	boxes)	and	a	leader	
    in	media	services	and	broadcast	services.                                    focus on gRowing digital seRvices
In	the	next	three	to	five	years,	technicolor	expects	to	continue	to	experi-      the	shift	to	digital	is	reshaping	the	market	environment	and	business	
ence	a	shift	in	its	business	mix	driven	by	market	dynamics	and	changes	          models	of	the	media,	entertainment,	communication	and	technology	
in	the	competitive	landscape.	the	group	intends	to	focus	on	four	key	            industries.	technicolor	will	continue	to	focus	on	four	main	digital	shifts:
strategic	directions,	as	detailed	below,	in	order	to	maximize	cash	flow	
                                                                                 ■■ Digital	Production	–	technicolor	intends	to	continue	to	achieve	
generation	while	expanding	into	new	growing	businesses.
                                                                                      market	leadership	and	differentiation	through	technology	innovation,	
                                                                                      creative	talent,	and	via	the	trust	gained	with	the	creative	community.	
continue investment in ReseaRch                                                       technicolor	digital	production	is	in	a	position	to	outgrow	the	market	
                                                                                      by	gaining	additional	market	share	in	film	visual	effects	(vfx)	and	
& innovation                                                                          expanding	into	new	regions	for	commercial	vfx.
technology	will	remain	at	the	heart	of	technicolor’s	products	and	services.	     ■■ Digital	Studio	–	technicolor	will	continue	to	enable	content	creators	
In	addition	to	beijing,	hannover	and	the	rennes/paris	research	centers,	              not	only	to	digitize	their	archives	but	also	to	shift	to	an	‘all	digital’	
technicolor	is	expanding	its	capabilities	through	a	new	center	in	palo	alto,	         process	in	order	to	fully	exploit	their	assets	and	maximize	meta-data	
california.	technicolor’s	research	&	Innovation	is	focused	on	technologies	           monetization.



                                                                                                    technIcolor	–	2010	annual	report                           23
           |	Information	on the company
2          BuSINESS	OvERvIEw



                                                                                 Contents
                                                                         ➜
                                                                                                  ➜


    ■■ Digital	Cinema	Distribution	–	technicolor	is	continuing	its	focus	                3.	 value	added	services,	enabling	managed	content	delivery	and	lower	
         on	expanding	its	digital	cinema	footprint,	building	on	its	early	entry	             cost	of	ownership	for	network	service	providers	(nsps).
         into	the	market	and	its	strong	capabilities	in	digital	cinema	mastering,	
         foreign	language	versioning	and	distribution	of	theatre	advertising.
                                                                                     leveRage dvd / blu-Ray™ leading Position
    ■■ Digital	Home	–	technicolor	believes	that	the	market	for	home	
         devices	and	platforms	will	be	essentially	driven	by	improvements	in	        despite	a	decline	observed	since	2007,	the	dvd/blu-ray™	market	has	
         end-user	experience	over	the	next	3-5	years.	the	group	intends	to	          experienced	resilient	consumer	demand	in	2010	and	is	benefiting	from	
         participate	in	this	fundamental	development	by	focusing	its	innovation	     continued	support	by	content	creators	given	the	large	contribution	of	
         on	software,	user	interface	capabilities,	advanced	access/network	          packaged	media	to	their	revenue	and	profitability.
         technologies	and	any	content/any	device	solutions.	the	digital	home	        technicolor	is	the	dvd/blu-ray™	market	leader	with	long-term	contracts	
         business	is	pursuing	three	key	initiatives	supporting	this	approach:        with	major	studios	including	warner	bros.,	the	walt	disney	company,	
         1.	 converged	media	platform,	integrating	hardware,	software	and	           universal	and	paramount.	the	group	intends	to	continue	to	focus	on	
             services	into	a	single	home	media	device	with	multi-room,	place-        blu-ray™	expansion	and	maintain	a	competitive	cost	structure	to	support	its	
             shifting	and	multi-screen	experience;                                   client	needs	and	its	cash	flow	generation,	based	on	an	optimized	industrial	
         2.	 core	software	suite,	providing	a	unified	digital	home	experience	       base,	variable	cost	structure,	and	controlled	capital	expenditures	and	
             for	the	end-user	based	on	a	single,	scalable	and	secure	platform;	      working	capital	requirements.
             and




    2.2	 busIness	overvIew
    the	table	below	sets	forth	the	contribution	to	the	group’s	consolidated	         the	substantial	majority	of	the	revenues	shown	in	“other”	are	revenues	
    revenues	of	its	segments	for	2010,	2009	and	2008.	In	accordance	with	            of	the	group’s	residual	retail	telephony	activity,	from	which	the	group	
    Ifrs,	revenues	from	continuing	operations	exclude	the	contribution	              exited	in	2009.
    of	discontinued	operations,	comprising	grass	valley,	media	networks	
    (mainly	screenvision),	audio-video	&	accessories	(ava)	and	silicon	
    solutions	businesses.


     (in € millions, except percentages)                                     2010    % of total           2009       %	of	total          2008       %	of	total
     REvENuES	FROM	CONTINuING	OPERATIONS
     technology                                                               450           13%             391             11%            394              9%
     entertainment	services                                                  1,697          47%            1,593           44%            1,723            41%
     digital	delivery                                                        1,423          40%            1,529           42%            1,792           43%
     other                                                                       4           0%             106             3%             283              7%
     ToTal                                                                 3,574           100           3,619            100           4,192             100


    see	chapter 3:	“management’s	discussion	and	analysis	of	financial	               see	chapter 3:	“management’s	discussion	and	analysis	of	financial	
    condition	and	results	of	operations”,	section 3.6:	“geographic	break-            condition	and	results	of	operations”,	section 3.4:	“seasonality”	of	this	
    down	of	revenues”	of	this	annual	report,	for	a	breakdown	of	the	group’s	         annual	report,	for	a	description	of	seasonal	trends	in	the	group’s	business.
    revenues	by	geographic	markets.
                                                                                     for	information	on	capital	expenditure	by	business	segment,	see	note 6.1	
                                                                                     to	the	group’s	consolidated	financial	statements.



    2.2.1	 Technology
    technology	generated	consolidated	revenues	of	€450 million	in	2010	(13%	         and	costs	accounted	for	in	that	segment.	total	group	research	and	
    of	the	group’s	consolidated	revenues).	technology	comprises	research	            development	expenses	are	disclosed	in	note 8	to	the	group’s	consolidated	
    &	Innovation	(previously	named	corporate	research),	licensing	and	               financial	statements.
    medianavi,	a	business	created	at	the	end	of	2010.
                                                                                     technology	 protects	 and	 monetizes	 technology	 principally	 through	
    research	 &	 Innovation	 business	 is	 treated	 as	 a	 cost	 center	 within	     licensing	technicolor’s	Intellectual	property,	which	represents	most	of	
    technology.	this	business	interacts	closely	with	activities	in	the	other	        the	segment’s	consolidated	revenues	(€447 million	in	2010).
    segments,	with	further	applied	research	and	product	development	being	
    undertaken	within	the	relevant	segment	(particularly	digital	delivery)	


    24       technIcolor	–	2010	annual	report
                                                                                                 |	Information	on the company
                                                                                                                       BuSINESS	OvERvIEw                              2
                                                                              Contents
                                                                      ➜
                                                                                              ➜


the	following	diagram	reconciles	the	current	nomenclature	of	the	technology	segment	with	the	nomenclature	presented	in	the	2009	annual	report :


       2009                                                                                 2010
       Technology                                                                           Technology

       Licensing                                                                            Licensing

                                                                                            Research & Innovation
       Corporate Research
                                                                                            (ex Corporate Research)

                                                                                            MediaNavi
                                                                                            (created end-2010)




ReseaRch & innovation                                                             automated	semantic	metadata	generation,	annotation	and	indexing	for	
                                                                                  efficient	content	preparation,	restoration,	structuring	and	repurposing.	this	
the	main	objective	of	research	&	Innovation	is	to	develop	and	transfer	           program	will	also	create	new	techniques	for	content	search	and	access.	In	
innovative	technology	to	support	the	services,	software	and	solutions	the	        2010,	one	of	the	key	technology	transfers	was	the	implementation	of	a	
group	provides	to	the	media	&	entertainment	industry.	a	key	goal	is	to	           new	cloud	rendering	algorithm	within	the	group’s	visual	effects	activities,	
create	competitive	advantages	in	technology	to	support	current	market	            allowing	both	faster	image	generation	as	well	as	greater	experience	for	
positions	and	develop	new	business	opportunities.	research	&	Innovation	          the	consumer	through	novel	visual	effects.
has	a	proven	capacity	for	invention,	which	results	in	the	generation	of	
patents	that	ensure	a	continuous	flow	of	licensing	revenues.                      the	media	delivery	program	(home	networking)	focuses	on	delivery	of	
                                                                                  content	and	media	services	in	an	innovative,	reliable,	high-performance	
long-term	research	is	managed	centrally	through	research	&	Innovation,	           environment	focusing	on	inside	the	home,	home	networks	and	consumer	
which	employed	an	average	of	362 	people	based	in	five	research	centers	          devices,	and	ensuring	connectivity	outside	the	home	via multiple	devices.	
for	the	year	ended	december	31,	2010.	the	largest	center	is	located	in	           content	and	services	management	and	quality-of-experience	are	two	
rennes,	france.	the	other	centers	are	located	in	paris	(france),	hanover	         central	research	topics.	In	2010,	the	transfer	of	multi-screen	technologies	
(germany),	palo	alto	(united	states)	and	beijing	(china).	In	2010,	as	part	       to	the	digital	delivery	segment	was	crucial	in	terms	of	end	user	experience,	
of	a	strategic	refocus,	technicolor	closed	its	research	center	in	princeton	      allowing	more	interactivity	between	the	consumer	and	the	content.
(united	states)	and	opened	a	new	research	lab	dedicated	to	personaliza-
tion	of	digital	delivered	content	and	services	in	palo	alto,	california.          as	part	of	the	above	strategic	programs,	research	expertise	is	focused	
                                                                                  primarily	on	multi-year	projects:	content	for	3d,	Immersive	experience,	
to	develop	and	respond	to	customer	needs,	research	focuses	on	key	drivers	        mixed	reality,	content	production	workflow,	media	content	acquisition	
of	the	m&e	industry	evolution.	these	are	addressed	in	three	strategic	            &	adaptation	and	connected	home.
programs:	the	enhanced	media	program	(3d	&	content	coding),	the	
media	production	program	(workflow	&	content	access)	and	the	media	
delivery	program	(home	networking).                                               licensing
the	enhanced	media	program	(3d	&	content	coding)	aims	at	delivering	              technicolor’s	licensing	business	generated	consolidated	revenues	of	
new	3d	technology	and	improving	audio/video	content	quality	in	order	to	          €447 million	in	2010	(approximately	13%	of	the	group’s	consolidated	
facilitate	the	delivery	of	the	content	of	the	group’s	creative	partners	and	to	   revenues).	as	of	december 31,	2010,	this	business	employed	215	people	
better	respond	to	expectations.	research	includes	rendering	(generating	          based	in	13	locations,	principally	in	france,	the	united	states,	germany,	
an	image	from	a	model,	by	means	of	computer	programs),	animation	                 switzerland,	Japan,	south	Korea,	china	and	taiwan.	technicolor’s	strong	
and	specifically	targets	3d	and	compression	technologies.	In	2010,	many	          patent	portfolio	in	video	technologies,	combined	with	its	licensing	exper-
technologies	centered	around	3d	content	creation	and	management	                  tise,	constitute	significant	competitive	advantages.	technicolor’s	licensing	
(3d	subtitling	tool,	specific	3d	encoder)	were	transferred	to	the	group’s	        activities	require	relatively	little	infrastructure	and	have	a	limited	cost	base.
creation	 services	 activities	 and	 digital	 delivery	 segment,	 allowing	
                                                                                  the	licensing	activities	were	brought	together	in	early	1999	with	the	
technicolor	to	be	the	first	company	to	implement	and	offer	customers	
                                                                                  integration	into	technicolor’s	existing	licensing	organization	of	the	rca	
the	full	chain	of	3d	content	production,	through	a	joint	agreement	with	
                                                                                  tl	patent	and	license	management	business	(transferred	from	general	
dreamworks	and	samsung.
                                                                                  electric	co.	to	the	group	on	January 1,	1999).	since	2005,	trademark	
the	media	production	program	(workflow	&	content	access)	will	enable	             licensing	activities	have	also	been	part	of	the	licensing	business,	with	
customers	to	efficiently	shift	to	digital	production	tools	by	delivering	         several	contracts	relating	to	the	thomson™	and	rca™	brands.




                                                                                                    technIcolor	–	2010	annual	report                           25
           |	Information	on the company
2          BuSINESS	OvERvIEw



                                                                                 Contents
                                                                         ➜
                                                                                                 ➜


    the	 licensing	 team	 works	 closely	 with	 technicolor’s	 research	 and	        technologies	continue	to	coexist	for	the	same	products.	technicolor	
    development	centers	to	identify	inventions	that	may	be	potential	patent	         believes	this	will	continue	over	the	coming	years.	In	addition,	technicolor	
    candidates,	to	select	inventions	for	patenting,	build	and	manage	the	            has	launched	and	is	active	in	advanced	standards	such	as	hevc	and	dvb-
    patent	portfolio,	detect	uses	of	the	group’s	patents	by	third	parties	and	       3dtv	which	will	be	implemented	in	future	products,	thereby	providing	
    conduct	licensing	negotiations.	as	of	december 31,	2010,	technicolor	            for	additional	revenues	from	licensing	such	products	or	technologies	as	
    held	more	than	40,000	patents	and	applications	worldwide,	derived	               the	case	may	be.
    from	approximately	6,200	inventions	in	the	fields	of	compression,	video	
                                                                                     In	addition	to	its	patent	licensing	activities,	the	group	is	re-enforcing	its	
    processing,	networking,	user	Interfaces,	displays,	security,	Interactivity,	
                                                                                     investment	in	technology	licensing	as	an	additive	revenue	stream	to	
    storage,	broadcast,	transmission	and	optical	technologies.	at	the	end	
                                                                                     existing	patent	licensing	revenue.	early	adoption	of	patented	technologies	
    of	2010,	over	70%	of	technicolor’s	patents	had	a	lifetime	greater	than	10	
                                                                                     by	industrial	partners	will	contribute	to	building	market	acceptance	of	
    years	(excluding	any	future	patent	to	be	granted).
                                                                                     these	technologies,	and	broaden	usage	of	technicolor’s	patents.	seeding	
    among	the	patented	technologies,	the	group	has	significant	positions	in	         technology	early	in	the	market	will	develop	potential	opportunities	in	the	
    the	areas	of	digital	decoders,	hd	and	digital	television	sets,	optical	module	   future	for	patent	licensing	for	products	and	services	embedding	these	
    patents	for	dvd	and	blu-ray™	disc	players,	mpeg	video	compression,	              technologies.
    mp3	audio	compression	format,	interactive	tv	technologies,	storage	
                                                                                     the	licensing	organization	manages	not	only	patents,	but	all	of	the	
    technologies	and	flat	screen	technologies	such	as	liquid	crystal	display	
                                                                                     group’s	Ip	assets	and	enjoys	a	profitable	business	of	trademark	licensing,	
    (“lcd”)	and	plasma.
                                                                                     monetizing	valuable	brands	(such	as	rca™	and	thomson™)	which	were	
    technicolor	is	constantly	managing	its	patent	portfolio	by	systematic	           operated	in	the	past	when	the	group	was	active	in	the	retail	business.	
    review	of	patents,	with	the	objective	of	identifying	patents	of	interest	for	    these	brands	have	a	strong	historical	heritage	and	foothold	in	their	
    its	licensing	programs	as	well	as	eliminating	patents	relating	to	obsolete	      respective	zones,	which	allow	continuation	of	the	recurrent	revenue	models	
    technologies	before	their	expiration	(cost	control	and	improvement	of	           beyond	their	traditional	relevance	and	transition	to	the	digital	world.
    the	portfolio	quality).	In	2010,	technicolor	launched	five	worldwide	
                                                                                     finally,	technicolor	is	leveraging	its	expertise	in	licensing	through	portfolio	
    patent	committees	to	focus	on	the	quality	of	selection	of	inventions	for	
                                                                                     licensing	services	to	third-party	patent	holders.	the	licensing	organization	
    patenting	disclosures	in	five	areas:	content	coding,	Image	processing,	
                                                                                     has	offered	its	expertise	and	know-how	to	other	patent	holders	(such	as	
    security,	networking,	and	content	search	&	ergonomics,	reflecting	the	
                                                                                     xerox-parc	for	laser	diodes),	and	it	has	all	of	the	necessary	assets	to	
    evolving	scope	of	research	and	development	activities	to	support	future	
                                                                                     develop	this	model,	beyond	the	traditional	legacy	programs,	whether	
    business.	In	2010,	technicolor	filed	460	priority	applications	in	respect	
                                                                                     patents	or	brands	related.
    of	new	inventions.
                                                                                     for	 information	 on	 certain	 risks	 to	 which	 the	 licensing	 business	 is	
    technicolor	develops	licensing	programs	rather	than	licensing	individual	
                                                                                     subject,	please	refer	to	chapter 1:	“Key	Information	and	risk	factors”,	
    patents.	under	technicolor’s	licensing	programs,	a	licensor	can	obtain	a	
                                                                                     section	1.3.4:	“risks	related	to	the	business”	of	this	annual	report.
    license	to	use	all	technicolor’s	patents	and	applications	as	it	relates	to	a	
    particular	application	(including	patents	which	may	be	filed	subsequent	
    to	the	granting	of	the	license).                                                 medianavi
    technicolor’s	patent	licensing	approach	mainly	consists	in	granting	licenses	    technicolor	presented	at	the	consumer	electronics	show	in	las	vegas	in	
    for	a	given	application	after	market	adoption	of	the	corresponding	family	       early	January	2011	a	new	service	platform	named	medianavi,	simplifying	
    of	products	and	services.	technicolor	currently	has	around	1,100	licensing	      and	enhancing	the	media	consumption	experience,	while	aggregating	
    agreements	across	15	licensing	programs	relating	to	a	diversified	mix	of	        operator,	web	and	each	customer’s	personal	media.	medianavi	has	been	
    video	products	and	services.	technicolor	has	licensing	agreements	with	          designed	to	run	as	an	application	for	tablets	and	smartphones,	supporting	
    a	high	proportion	of	consumer	electronics	companies	in	the	americas,	            android,	webos,	windows7,	meego	and	ios	operating	systems.	It	
    europe	and	asia.	the	licensing	agreements	are	typically	renewable	and	           operates	a	set	of	web	services	in	connection	with	not	just	technicolor	
    have	an	average	duration	of	five	years;	royalties	are	primarily	based	on	        set-top	boxes,	but	also	third	party	set-top	boxes	and	connected	tvs.	It	
    sales	volumes.                                                                   is	also	underpinned	by	several	patent	families	developed	by	technicolor	
    In	recent	years,	technicolor	has	successfully	migrated	the	majority	of	          in	these	domains.	the	medianavi	platform	commercialization	is	therefore	
    licensing	income	to	digital	technology-based	programs	as	opposed	to	             based	on	a	technology	licensing	model.
    analog-based	programs,	as	the	underlying	product	markets	have	evolved.           due	to	the	close	link	with	the	digital	home/set-top	box	and	media	
    In	2010,	the	program	generating	the	most	revenue	was	mpeg-2,	which	              services	activities	of	the	digital	delivery	group,	medianavi	was	initially	
    is	licensed	through	the	mpeg	la	pool	of	which	technicolor	is	part.	              developed	 within	 that	 segment.	 given	 the	 chosen	 business	 model,	
    this	program	contributed	almost	50%	of	licensing	revenues	in	2010.	              validated	by	the	first	feedback	provided	by	potential	clients	and	partners,	
    the	group	expects	this	program	to	remain	a	significant	contributor	to	           and	the	group’s	initiative	in	the	later	part	of	2010	to	set-up	a	technology	
    its	licensing	revenues	for	several	years.	licensing	agreements	with	the	         licensing	practice	within	the	technology	segment,	medianavi	was	trans-
    group’s	top	ten	licensees	accounted	for	77%	of	total	licensing	revenues	         ferred	accordingly	from	the	digital	delivery	segment	to	the	technology	
    in	2010	(including	mpeg	la	as	a	single	licensee,	although	it	represents	         segment.
    a	large	number	of	underlying	licensees).	today,	mpeg-2	and	mpeg-4	




    26       technIcolor	–	2010	annual	report
                                                                                              |	Information	on the company
                                                                                                                 BuSINESS	OvERvIEw                            2
                                                                          Contents
                                                                  ➜
                                                                                          ➜



2.2.2	Entertainment	Services
the	entertainment	services	segment,	which	generated	consolidated	             In	2010,	physical	media	activities	(photochemical	film	and	dvd/blu-ray™)	
revenues	of	€1,697 million	in	2010	(47%	of	the	group’s	consolidated	          represented	81%	of	entertainment	services’	revenues,	compared	with	
revenues),	offers	services	related	to	content	production	and	preparation	     82%	in	2009.	although	the	group	expects	physical	media	activities	to	
(creation	services)	and	content	distribution	through	physical	and	digital	    remain	a	significant	contributor	to	entertainment	services	revenues	over	
media	(theatrical	services	and	dvd	services)	for	the	global	media	&	          the	next	several	years,	it	continues	to	support	and	guide	clients	through	
entertainment	industry.	In	addition,	through	its	prn	business,	which	         the	industry-wide	transition	to	digital	formats	and	services.	based	on	its	
was	previously	part	of	the	discontinued	operations	perimeter,	the	group	      current	and	targeted	client	base,	the	group	believes	this	transition	offers	
offers	digital	place-based	media	services	that	enable	retailers,	marketers	   opportunities,	in	particular	in	the	areas	of	high-end	digital	production	
and	in-venue	owners	to	engage,	inform	and	motivate	consumers	where	           (visual	effects	and	animation),	digital	cinema	distribution,	digital	postpro-
they	shop.                                                                    duction	and	blu-ray™	services	in	both	its	existing	markets	(principally	the	
                                                                              united	states,	europe	and	asia)	and	in	new	regions.	as	such,	technicolor	is	
technicolor	is	a	global	leader	in	production	and	postproduction	services,	
                                                                              seeking	to	extend	the	range	and	depth	of	its	product	and	service	offerings,	
and	 one	 of	 the	 main	 worldwide	 providers	 for	 film,	 digital	 cinema	
                                                                              while	developing	new	solutions	to	support	the	transition	of	its	customers	
and	dvd	services	for	content	producers/owners	(source:	technicolor	
                                                                              to	digital	technology.	this	strategy	builds	on	the	group’s	leading	existing	
estimates	and	futuresource	consulting,	2010).
                                                                              market	positions	in	this	segment,	very	close	relationships	with	m&e	clients	
some	segments	of	the	m&e	industry	are	geographically	concentrated,	           and	strong	capabilities	in	research	and	innovation.
resulting	in	a	number	of	key	studio	clients,	based	primarily	on	the	west	
coast	of	the	united	states,	accounting	for	a	substantial	proportion	of	the	
businesses	and	revenues	of	entertainment	services.

the	following	diagram	reconciles	the	current	nomenclature	of	the	entertainment	services	segment	with	the	nomenclature	presented	in	the	2009	
annual	report :


       2009                                                                         2010
       Entertainment Services                                                       Entertainment Services

       Creation Services                                                            Creation Services
       and Theatrical Services                                                      and Theatrical Services
       Creation Services                                                            Creation Services

       Theatrical Services                                                          Theatrical Services



       DVD Services                                                                 DVD Services



                                                   Discontinued
                                                                                    PRN
                                                 operations in 2009
       Digital Content Delivery Services



                                                                                    2010
                                                                                    Digital Delivery

                                                                                    Connect




                                                                                    Digital Content Delivery




                                                                                                technIcolor	–	2010	annual	report                       27
           |	Information	on the company
2          BuSINESS	OvERvIEw



                                                                                 Contents
                                                                         ➜
                                                                                                 ➜



    cReation seRvices and theatRical seRvices                                        Animation

    through	 its	 creation	 services	 and	 theatrical	 services	 business,	          technicolor	helps	customers	turn	their	ideas	into	reality	thanks	to	the	
    t
    	 echnicolor	offers	a	full	set	of	leading	services,	including	digital	content	   talents	of	its	experienced	teams	in	burbank,	california	and	bangalore,	
    production,	content	preparation,	as	well	as	film	processing	and	distribution	    India.	technicolor	provides	a	unique	solution	for	the	creation	of	high-
    in	both	physical	and	digital	formats	to	major	and	independent	film	studios,	     quality	cgI	(computer-generated	imagery)	animation.	technicolor	is	
    broadcasters,	advertisers	and	video	game	companies.                              benefiting	from	a	growing	consumer	demand	for	computer-generated	
                                                                                     animation	worldwide.

    Creation	Services                                                                major	customers	include	dreamworks	animation,	nickelodeon,	electronic	
                                                                                     arts,	and	mattel.	main	competitors	include	reel	fx,	prana	studios,	dq	
    technicolor	offers	a	comprehensive	set	of	content	creation	and	content	          entertainment	and	cgcg	in	south	Korea.	customer	agreements	are	
    completion	services	to	m&e	clients,	in	the	theatrical,	television,	direct-       typically	project-specific,	with	longer-term	contracts	where	possible.
    to-video,	commercial/advertising,	and	interactive	gaming	segments.	the	
    range	of	services	provided	includes	visual	effects	(“vfx”),	animation,	          In	2010,	key	achievements	include	the	continued	work	for	nickelodeon	
    digital	dailies,	digital	Intermediate	(“dI”)	postproduction,	the	creation	       on	The Penguins of Madagascar,	Kung Fu Panda	and	Fanboy and Chum
    of	final	masters	for	theatrical	films,	broadcast	masters,	packaged	media	        Chum	television	series.
    release	(e.g. dvd	and	blu-ray™)	and	for	other	forms	of	video	distribution	
    (e.g.	for	digital	download	services).
                                                                                     Postproduction services
                                                                                     technicolor	continues	to	support	its	clients	in	the	shift	from	photochemical	
    creation	services	include	the	following	activities:                              film	to	digital,	from	the	image	capture	on	the	production	set	through	
    ■■   digital	productions,	a	leading	provider	of	digital	production	services	     creation	of	final	distribution	masters.	the	demand	for	postproduction	
         (vfx	and	animation)	to	major	studios,	animation	studios,	game	              services	is	principally	driven	by	theatrical,	television	and	commercials	
         studios,	Ip	holders,	commercial	agencies	and	commercial	production	         production.
         companies;                                                                  technicolor’s	key	customers	in	this	activity	include	major	studios	such	
    ■■   postproduction	 services,	 including	 negative	 developing,	 image	         as	warner	bros.,	nbc	universal,	and	the	walt	disney	company,	mini-
         transfer	from	film	to	digital	dailies,	and	digital	Intermediate	color	      major	studios	including	lionsgate	and	relativity	media,	and	independent	
         correction	to	attain	the	final	look	and	vision	of	the	director.             producers	of	movies,	scripted	television	series	and	commercials.	customer	
                                                                                     agreements	are	typically	project-specific,	with	longer-term	contracts	where	
    Digital Productions                                                              possible.
    the	digital	productions	activity	was	created	in	2009	to	consolidate	             In	2009,	technicolor	opened	a	new	facility	in	the	heart	of	hollywood	and	
    technicolor’s	existing	content	creation	activities	and	oversee	the	growth	       rolled	out	its	industry	leading	digital	workflows	which	benefited	the	group’s	
    and	production	of	visual	effects	and	animation.                                  television	post	production	business	in	2010.	construction	is	underway	for	
    Visual Effects                                                                   a	new	sound	postproduction	facility	on	the	paramount	pictures	studio	
                                                                                     lot	near	the	new	hollywood	facility,	which	is	expected	to	open	in	2011.
    technicolor	offers	under	the	mpc	brand	a	team	of	visual	effect	supervisors	
    and	artists,	working	with	state-of-the-art	technology	and	creative	tools.	       technicolor’s	main	competitors	in	this	activity	are	deluxe	(including	its	
    Its	facilities	offer	pre-visualization,	asset	building,	texturing,	animation,	   acquisition	of	ascent	media),	and	numerous	boutique	vendors,	which	
    rigging,	rotoscoping,	lighting,	match	move	and	compositing.                      vary	depending	on	market	segment	and	geography.	technicolor	is	among	
                                                                                     the	top-2	worldwide	vendors	in	postproduction	(source:	technicolor	
    It	is	based	in	london,	los	angeles,	vancouver	and	bangalore	and	closely	         estimates)	with	operations	in	11	key	markets	around	the	globe.
    collaborates	with	the	group's	centers	in	beijing,	china.
    historically	technicolor’s	key	customers	on	the	motion	picture	side	of	the	      Theatrical	Services
    business	include	all	major	hollywood	studios.	for	the	advertising	business,	
    key	clients	include	global	ad	networks	such	as	publicis,	wpp,	bbdo/              film services
    omnicom	and	ogilvy	and	smaller	boutique	agencies	such	as	mother	and	             technicolor	offers	a	full	range	of	services	including	photochemical	film	
    fallon.	client	agreements	are	typically	project	specific.                        processing	(during	the	film	making	process),	film	release	printing	and	
    In	2010,	vfx	releases	included	Percy Jackson and the Lightning Thief,	           physical	distribution	services	to	cinemas	for	theatrical	releases.	technicolor	
    Robin Hood,	Clash of the Titans,	A-Team,	Tangshan (aka Aftershock),              is	the	only	provider	of	large	format	(65/70mm)	film	processing	and	release	
    Sucker Punch,	Narnia:	Voyage of the Dawn Treader,	and	Harry Potter               printing	for	the	major	us	studios.	with	its	physical	distribution	services,	
    and the Deathly Hallows Part 1.	technicolor’s	vfx	team	also	provided	            technicolor	provides	logistical	support	in	north	america,	delivering	print	
    production	services	for	Fast Five,	Harry Potter and the Deathly Hallows          and	studio	marketing	materials	to	theaters.	a	major	studio	worldwide	
    Part 2,	and	Pirates of the Caribbean: On Stranger Tides.	mpc	also	worked	        release	today	can	require	in	excess	of	10,000	copies	of	a	film	to	be	printed	
    on	award	winning	tv	ads	and	digital	campaigns	for	cadbury’s	(Spots vs            and	delivered	to	cinemas	for	simultaneous	release	worldwide.
    Stripes),	drench	(Cubehead),	travelers	(Watering Hole)	skoda	(Made of            through	 facilities	 in	 north	 america,	 europe	 and	 asia,	 the	 group	
    Meaner Stuff)	and	dIrectv	(Ice Cream).                                           processed	close	to	3.8	and	3.2 billion	feet	of	film	in	2009	and	2010,	respec-
    technicolor’s	 main	 competitors	 in	 this	 area	 are	 Ilm,	 sony	 pictures	     tively.	technicolor	release	printing	film	labs	employed	approximately	
    Imageworks,	digital	domain,	weta,	framestore,	double	negative	and	               1,090 people	based	in	six	labs	as	of	december 31,	2010.	these	labs	are	
    the	mill.                                                                        located	in	los	angeles	(united	states),	mirabel	(canada),	thailand,	




    28       technIcolor	–	2010	annual	report
                                                                                                 |	Information	on the company
                                                                                                                       BuSINESS	OvERvIEw                             2
                                                                              Contents
                                                                      ➜
                                                                                              ➜


rome	(Italy),	madrid	(spain)	and	london	(united	Kingdom).	technicolor	            In	 2010,	 technicolor	 sold	 approximately	 1.3  billion	 units	 of	 dvd	
distribution	centers	are	based	in	ontario	(california)	and	wilmington	            and	blu-ray™,	compared	with	approximately	1.1 billion	units	in	2009.	
(ohio)	in	the	united	states	and	also	support	technicolor’s	digital	cinema	        technicolor’s	replication	activities	are	concentrated	in	two	primary	facilities	
distribution	business.	technicolor	also	maintains	film	processing	labs	to	        in	guadalajara,	mexico	and	piaseczno,	poland,	having	been	consolidated	
support	film	making	in	montreal	and	vancouver,	and	via joint	ventures	in	         from	six	replication	facilities	in	2007.	packaging	and	distribution	in	the	
new	york	and	vancouver.                                                           united	states	and	europe	is	supported	by	a	multi-region/multi-site	facility	
                                                                                  platform,	with	a	concentration	of	such	activities	in	the	united	states	in	the	
In	2010,	photochemical	film	accounted	for	approximately	10%	of	tech-
                                                                                  group’s	memphis,	tennessee	and	livonia,	michigan	facilities.
nicolor’s	revenues,	compared	with	11%	in	2009.	the	largest	cost	in	activity	is	
the	cost	of	purchasing	raw	film	stock,	for	which	Kodak	is	the	major	supplier.     as	of	december 31,	2010,	technicolor	had	annual	capacity	to	produce	
                                                                                  approximately	2 billion	dvd	and	blu-ray™	discs,	allowing	it	to	respond	
most	major	customers	are	covered	by	long-term	contracts.	the	contracts	
                                                                                  to	the	increasingly	seasonal	demand	for	packaged	media.	operations	
usually	have	terms	of	three	to	five	years	and	typically	provide	for	volume	
                                                                                  are	 supported	 by	 approximately	 8  million	 square	 feet	 of	 dedicated	
and	time	commitments,	as	well	as	pricing	and	regions	served.	In	any	given	
                                                                                  manufacturing	and	distribution	space.	see	chapter 1:	“Key	information	
year	certain	contracts	come	up	for	renewal.	technicolor’s	key	customers	
                                                                                  and	risk	factors”,	section	1.3.5	“risks	related	to	the	impairment	of	certain	
include	warner	bros.,	the	walt	disney	company,	relativity	media,	Imax,	
                                                                                  tangible	and	intangible	assets	such	as	goodwill”	of	this	annual	report.
and	the	weinstein	company.	technicolor’s	main	competitor	in	this	activity	
is	deluxe,	which	operates	with	a	very	similar	geographic	footprint	around	        technicolor	made	continued	investments	in	blu-ray™	in	2010,	expanding	
the	world.	technicolor	ranks	as	number	two	in	photochemical	film	printing	        annual	production	capacity	to	approximately	130 million	units.	the	blu-ray™	
and	distribution	(source:	technicolor	estimates).                                 market	continued	to	grow	strongly	in	2010,	expanding	by	approximately	
                                                                                  60%	over	2009	(source:	futuresource	consulting,	2010),	with	ongoing	
with	north	american	digital	penetration	now	exceeding	30%,	film	print	
                                                                                  growth	driven	by	multiple	factors,	including	increasing	hdtv	and	blu-ray™	
volumes	no	longer	require	the	operational	capacity	afforded	by	technicolor’s	
                                                                                  player	penetration,	expanding	selection	of	available	titles,	and	ongoing	
two	north	american	facilities,	north	hollywood	and	mirabel	(canada).	
                                                                                  extensive	marketing	activities	of	the	studios	and	consumer	electronics	
technicolor	has	decided	to	shut	down	its	north	hollywood	lab	at	the	end	
                                                                                  companies.	technicolor	intends	to	continue	to	invest	in	additional	blu-ray™	
of	its	lease	in	2011,	and	focus	north	america	release	printing	in	mirabel	
                                                                                  capacity	as	required	to	meet	the	needs	of	its	customers	in	this	growing	
(canada).	technicolor	will	maintain,	however,	a	los	angeles	film	lab	pres-
                                                                                  segment	of	the	market.
ence	to	provide	required	front-end,	pre-release	and	limited	release	printing	
capabilities	to	continue	to	provide	support	for	the	creative	and	filmmaking	      technicolor’s	customers	include	major	film	studios	such	as	warner	bros.,	
community	in	los	angeles.	the	group	also	expects	to	downsize	its	european	        the	walt	disney	company,	paramount/dreamworks	and	universal	
film	lab	operations	in	accordance	with	the	decline	in	photochemical	film.         studios,	 as	 well	 as	 independent	 studios	 and	 software	 and	 games	
                                                                                  publishers.	most	major	customers	are	covered	by	multi-year	contracts	
Digital cinema                                                                    (generally	two	to	four	years),	which	typically	contain	volume	and/or	time	
technicolor	digital	cinema	activities	offer	content	owners	and	distribu-          commitments.	major	client	relationships	typically	consist	of	multiple	
tors	a	set	of	digital	cinema	services	including	mastering,	hard	drive	and	        contractual	arrangements	for	specific	types	of	services	within	particular	
satellite	distribution,	digital	key	management,	and	fulfilment	services	for	      geographical	areas.	In	2010,	technicolor	and	warner	bros.	entered	into	a	
accessories	such	as	3d	glasses	–	all	supported	by	24/7	customer	service.          long	term	worldwide	contractual	agreement	covering	a	broad	number	of	
                                                                                  areas,	including	replication	and	distribution	services	for	dvd	and	blu-ray™	
acceleration	 in	 digital	 cinema	 conversion	 is	 mainly	 driven	 by	 3d	        discs,	as	well	as	other	aspects	relating	to	strategic	technology	initiatives.
and	dcIp	(consortium	of	the	top-3	us	exhibitors:	regal,	amc,	and	
cinemark)	and	similar	european	funding	programs	on	a	local	basis.                 technicolor	is	the	market	leader	worldwide	in	dvd	production	and	
                                                                                  number	two	in	worldwide	blu-ray™	production	based	on	manufacturing	
technicolor’s	key	customers	in	this	activity	include	major	studios	and	           volume	output	(source;	futuresource	consulting,	2010).	technicolor’s	
independents	 including	 the	 walt	 disney	 company,	 dreamworks	                 largest	competitors	are	sony,	dadc	and	cinram.
animation,	 lionsgate,	 overture,	 paramount,	 warner	 bros.	 and	 the	
weinstein	company.	technicolor’s	main	competitors	in	this	activity	are	           Information	on	restrictions	regarding	investments	for	technicolor	are	
deluxe	and	cinedigm.	technicolor	has	a	leading	market	share	in	digital	           included	in	the	chapter 1:	“Key	Information	and	risk	factors,”	section	
cinema	with	an	estimated	60%	share	of	north	american	distribution	                1.3.1:	“risks	related	to	the	debt	restructuring”	of	this	annual report.
(source:	technicolor	estimates),	and	operates	the	largest	theater	satellite	
network	in	north	america	(c.700	sites	as	of	december	31,	2010).
                                                                                  PRemieR Retail netwoRks
most	major	customers	are	covered	by	long-term	contracts.	the	contracts	
usually	have	terms	of	one	to	three	years	and	typically	provide	for	volume	        premier	 retail	 networks	 (prn)	 provides	 digital	 place-based	 media	
and	time	commitments,	as	well	as	pricing	and	regions	served.	In	any	given	        services	that	enable	retailers,	marketers	and	in-venue	owners	to	reach	
year,	certain	contracts	come	up	for	renewal.                                      consumers	in	more	than	8,500	locations	in	the	united	states	and	mexico.	
                                                                                  prn	works	with	leading	retailers,	advertisers,	content	and	technology	
                                                                                  companies	to	create	and	deliver	place-based	media	that	engages,	informs	
dvd seRvices                                                                      and	motivates	consumers	where	they	shop.

technicolor	manufactures	and	distributes	video	and	game	dvds	and	                 prn’s	 customers	 include	 supervalu,	 sam’s	 club/walmart,	 costco	
blu-ray™	discs	for	leading	global	content	producers.	technicolor	provides	        and	target	retail	locations.	prn’s	competitors	include	cbs	outernet,	
turnkey	integrated	supply-chain	solutions	that	encompass	mastering,	              captivate	and	reach	media	group.
replication,	packaging,	direct-to-retail	distribution	of	new	release	and	
catalog	products,	returns	handling	and	freight	management,	as	well	as	
procurement	and	retail	inventory	management	services.


                                                                                                    technIcolor	–	2010	annual	report                          29
              |	Information	on the company
2             BuSINESS	OvERvIEw



                                                                                  Contents
                                                                          ➜
                                                                                                    ➜



    2.2.3	Digital	Delivery
    In	the	second	quarter	of	2010,	technicolor	established	a	new	segment	       	          •■   Iptv	&	voIp,	which	includes	the	cirpack	softswitch	(voice-over-Ip)	
    —digital	 delivery—	 to	 increase	 its	 capability	 to	 capture	 the	 growth	               and	smartvision	software	(television-over-Ip)	operations.
    resulting	from	the	shift	to	digital	distribution.	digital	delivery	brings	        ■■   digital	content	delivery,	formerly	part	of	the	entertainment	services	
    together	the	connect	business	and	the	digital	content	delivery	(dcd)	                  segment,	encompassing	the	following	activities:
    business	(which	was	formerly	part	of	entertainment	services)	to	enable	the	
                                                                                           •■   media	services,	which	provides	services	related	to	content	prepara-
    group	to	adapt	to	the	changing	needs	of	its	network	services	operator	
                                                                                                tion	and	distribution;	and
    customer	base,	which	is	increasingly	expanding	its	focus	from	delivery	
    platforms	to	electronic	media	distribution.	digital	delivery	develops	and	             •■   broadcast	services,	which	offers	broadcast	play-out	services,	live	
    supplies	hardware	and	software	technologies	to	the	media	&	entertainment	                   production	support,	as	well	as	media	asset	management	services.
    industry	in	the	areas	of	access	and	delivery	platforms,	as	well	as	content	
    preparation	and	management	services,	enabling	its	customers	to	deliver	
    an	 improved	 end-user	 entertainment	 experience.	 digital	 delivery,	
                                                                                      connect
    which	generated	consolidated	revenues	of	€1,423 million	in	2010	(40%	             the	connect	business	offers	a	wide	range	of	devices	and	software	solu-
    of	the	group’s	reported	consolidated	revenues)	and	shipped	a	total	of	            tions	to	broadband	network	and	pay-tv	operators	for	the	delivery	of	
    24.9 million	products	in	2010	(2009:	24.8 million	units)	is	organized	around	     digital	entertainment,	data	and	voice,	as	well	as	advanced	services	to	
    the	following	businesses:                                                         subscribers.
    ■■   connect,	which	includes	the	following	activities:                            the	connect	business	is	organized	around	the	following	activities:
         •■   digital	 home,	 which	 encompasses	 modems	 and	 gateways,	             ■■   digital	home;
              hybrid	and	Ip	set-top	boxes,	as	well	as	wireless	tablets,	which	
                                                                                      ■■   set-top	box;	and
              are	developed	using	technicolor’s	digital	home	software	suite;
                                                                                      ■■   Iptv	&	voIp.
         •■   set-top	box,	which	delivers	set-top	box	products	developed	with	
              third-party	middleware	for	all	types	of	pay-tv	providers	(satellite,	
              cable,	terrestrial);	and

    the	following	diagram	reconciles	the	current	nomenclature	of	the	digital	delivery	segment	with	the	nomenclature	presented	in	the	2009	annual	report:


              2009                                                                          2010
              Connect                                                                       Digital Delivery

                                                                                            Connect
              Digital Home Products
                                                                                            Digital Home

                                                                                            Set-Top Box

              Software Service Platform                                                     IPTV & VoIP



                                                                                            Digital Content Delivery

              2009                                                                          Broadcast Services

              Entertainment Services                                                        Media Services

              Digital Content Delivery
              Services


              DVD Services


              Creation Services and
              Theatrical Services




    30         technIcolor	–	2010	annual	report
                                                                                                 |	Information	on the company
                                                                                                                      BuSINESS	OvERvIEw                              2
                                                                             Contents
                                                                     ➜
                                                                                             ➜


Digital	Home                                                                     technicolor's	main	customers	include	bouygues	telecom	and	telenor.	
                                                                                 main	competitors	are	samsung,	pace	and	cisco.
technicolor	 designs	 and	 supplies	 modems	 and	 advanced	 gateways,	
set-top	boxes,	as	well	as	wireless	tablets	and	other	connected	devices,	
which	are	developed	upon	a	common	software	suite	focused	on	the	                 Set-Top	Box
digital	home	ecosystem.	this	portfolio	provides	a	consistent	offering	
                                                                                 technicolor	designs	and	supplies	set-top	box	platforms	to	satellite,	cable	
for	services	providers	who	want	to	monetize	the	digital	home	opportunity	
                                                                                 and	telecom	operators,	who	leverage	their	internally	developed	software	
by	developing	and	deploying	their	own	services	across	interconnected	
                                                                                 or	subcontract	legacy	middleware	vendors	for	building	their	software.
devices	within	the	home.
                                                                                 ■■   In	 satellite,	 technicolor	 offers	 a	 wide	 range	 of	 set-top	 boxes	 in	
the	digital	home	portfolio’s	key	advantage	comes	from	its	software	
                                                                                      standard	and	high-definition,	which	may	include	hard-disk	recording	
suite,	with	half	of	the	engineers	dedicated	to	software	activities.	In	2010,	
                                                                                      capability.	main	customers	include	dIrectv,	sogecable,	viasat,	
technicolor	began	an	initiative	to	organize	and	streamline	the	overall	
                                                                                      India’s	tatasky,	malaysia’s	astro	and	australia’s	austar.	dIrectv	
software	development	effort	across	the	digital	home	portfolio,	building	
                                                                                      has	been	a	technicolor	customer	since	1994.	In	July 2008,	the	group	
a	common	software	framework	across	the	various	product	lines.
                                                                                      amended	its	agreement	with	dIrectv,	which	agreed	to	grant	tech-
                                                                                      nicolor	a	significant	portion	of	all	set-top	boxes	purchased	through	
Gateways and Modems
                                                                                      the	end	of	the	contract.	as	part	of	the	amendment,	the	contract	was	
technicolor	designs	and	supplies	access	devices	(gateways	and	modems)	                extended	until	June 2010.	In	July 2010,	technicolor	announced	the	
deployed	by	telecom	and	cable	operators	as	well	as	Isps	(Internet	service	            signing	of	a	three-year	contract	extension	to	provide	a	wide	range	
providers)	 to	 deliver	 multiple-play	 services	 (video,	 voice,	 data	 and	         of	standard	and	high	definition	set-top	boxes	to	dIrectv.	capi-
mobility)	to	their	subscribers.	software	platforms	for	gateways	are	sold	             talizing	on	its	expertise	in	media	services,	the	group	also	became	
either	together	with	gateway	devices	or	on	a	standalone	basis.                        dIrectv’s	preferred	provider	of	3d	services,	enabling	the	launch	
■■   In	telecoms,	the	product	range	includes	service	gateways,	high-end	              of	dIrectv’s	first	3d	vod	service.	main	competitors	are	pace,	
     triple-play	gateways	capable	of	running	rich	applications,	business	             humax	and	samsung.
     gateways	for	the	small	and	mid-size	market,	integrated	access	devices,	     ■■   In	cable,	technicolor	designs	and	sells	a	wide	range	of	standard	and	
     double-play	gateways	with	voIp	and	data,	wifi	gateways,	as	well	as	              high-definition	set-top	boxes	to	pay-tv	network	operators.	main	
     modems.	technicolor’s	main	customers	include	major	operators	like	               customers	include	comcast,	upc	(liberty	global),	net	brazil	
     bt	group,	verizon,	bouygues	telecom,	telecom	Italia,	telefonica,	                (telmex)	and	hot.	main	competitors	are	motorola,	cisco,	arris	
     Kpn,	telmex	(america	móvil),	teliasonera,	telekom	austria	and	                   and	pace.
     tele2.	main	competitors	include	pace/2wire,	d-link,	sagem,	zte,	
                                                                                 technicolor	has	a	long	track	record	of	industry	firsts.	among	these	are	the	
     huawei	and	zyxel.
                                                                                 design	of	the	first	hybrid	dvb-s/dvb-t	receiver	(allowing	a	consumer	
■■   In	cable,	the	product	range	covers	modems,	integrated	voice	and	            to	watch	both	conventional	terrestrial	television	and	satellite	broadcasting	
     data	products	(emta)	up	to	advanced	services	platforms	for	fully	           through	the	same	set-top	box);	the	first	mpeg-4	high	definition	personal	
     customizable	multiple-play	services	including	an	expanded	set	of	Ip	        video	recorder	(“pvr”	set-top	box	with	integrated	digital	recording	capa-
     services	accessible	on	the	ecosystem	of	voice	and	video-connected	          bilities);	the	first	high	definition	pvr	for	the	second	generation	dvb-s2	
     products	in	the	home.	technicolor’s	key	customers	include	comcast,	         satellite	broadcast	standard	and	the	first	hd	mpeg-4	set-top	box	with	
     upc	(liberty	global),	Kabel	deutschland	and	time	warner	cable.	             triple	play	(video,	voice	and	data)	and	pvr.
     technicolor’s	main	competitors	include	arris,	motorola	and	cisco.
                                                                                 technicolor	is	the	world’s	third	largest	supplier	of	digital	pay-tv	set-top	
technicolor	is	the	leading	provider	of	advanced	gateways	worldwide	              boxes	based	on	volume	(source:	Ims-research,	2010).	In	february 2010,	
based	on	volume	(source:	Infonetics,	2010).	In	october 2010,	technicolor	        technicolor	announced	it	had	delivered	100 million	digital	set-top	boxes	
reached	the	milestone	of	100 million	gateways	delivered	worldwide,	with	         over	multiple	networks	since	it	entered	the	market	in	1994.
a	#1	market	position	maintained	over	the	last	10	years.

Digital home set-Top box                                                         IPTv	&	voIP
technicolor	develops	and	markets	combined	broadcast	and	broadband	               the	Iptv	&	voIp	activities	group	the	cirpack	softswitch	(voice-over-Ip)	
set-top	 boxes	 that	 enable	 operators	 to	 deploy	 video	 entertainment	       and	smartvision	software	(television-over-Ip)	operations.
services	over	broadband	Ip	networks.
                                                                                 ■■   technicolor	develops	next-generation	voice	switching	platforms	
the	product	range	includes	low-end	media	adapters	and	decoders	up	to	                 marketed	under	the	cirpack	brand	that	allow	network	operators	
high-end	platforms	with	video	recording	capabilities	able	to	serve	personal	          (cable,	telecoms)	and	Isps	to	deliver	unified	communication,	fixed-
and	premium	content	across	the	home.	It	relies	on	modular	and	flexible	               mobile	convergence	and	advanced	business	application	support.	
system	architecture	to	cover	a	variety	of	network	access	(cable,	terrestrial,	        main	customers	include	free,	sfr,	bouygues	telecom,	numericable,	
satellite,	Ip)	and	content	media	formats	(sd,	hd,	mpeg-2,	h264,	etc.).                t-online,	and	telecom	Italia.	main	competitors	are	alcatel-lucent,	
the	digital	home	set-top	box	business	is	also	working	on	developing	a	                ericsson,	huawei,	microsoft	and	nokia	siemens	networks.
next	generation	converged	media	gateway	that	combines	broadband	and	             ■■   the	smartvision	service	platform	supports	content	delivery	over	
broadcast	content	access	to	deliver	a	seamless	multi-room,	multi-screen	              managed	 broadband	 networks.	 the	 platform	 is	 maintained	 and	
video	experience.                                                                     exclusively	 supported	 for	 existing	 customers	 such	 as	 bouygues	
                                                                                      telecom	and	telenor.
In	the	uK,	technicolor	has	become	an	innovation	partner	in	the	youview	
initiative,	proposing	its	hybrid	set-top	box	portfolio	to	network	services	
providers.



                                                                                                    technIcolor	–	2010	annual	report                          31
           |	Information	on the company
2          BuSINESS	OvERvIEw



                                                                                  Contents
                                                                          ➜
                                                                                                  ➜



    digital content deliveRy                                                          Broadcast	Services
    the	digital	content	delivery	business,	formerly	part	of	entertainment	            the	 broadcast	 services	 activity	 assembles	 programming,	 both	 for	
    services,	provides	a	full	range	of	broadcast	and	media	management	                pre-recorded	and	live	content,	and	manages	the	production,	playout,	
    services	to	content	creators,	aggregators	and	distributors.                       postproduction	and	media	management	of	video	content	for	broadcasters	
                                                                                      through	playout	facilities	in	a	number	of	locations	worldwide.	technicolor	
    the	digital	content	delivery	business	is	organized	around	the	following	          also	offers	services	around	catch-up	tv	and	mobile	content	delivery,	as	
    activities:                                                                       well	as	the	full	management	of	all	technical	operations	for	tv	channels	in	
    ■■   media	services;	and                                                          a	demanding	environment	(i.e.	live	news	and	sport	channels).
    ■■   broadcast	services.                                                          the	demand	for	broadcast	services	is	principally	driven	by	the	trend	
                                                                                      towards	outsourcing	broadcast	services,	as	well	as	by	the	continued	migra-
                                                                                      tion	of	channels	to	high	definition.	customer	agreements	are	typically	
    Media	Services                                                                    long-term	contracts.
    the	 media	 services	 activity	 provides	 tape	 and	 digital	 media	 asset	       through	its	u.K.-based	broadcast	facilities,	technicolor	handles	the	
    management	solutions	allowing	secure	storage,	management	and	retrieval	           playout	 of	 disney’s	 channels	 to	 many	 of	 the	 european	 and	 middle	
    of	content	for	easy	distribution	to	multiple	distribution	channels.               eastern	markets	and	also	manages	the	transmission	operations	of	Itv	
    demand	for	media	services	is	principally	driven	by	the	number	of	new	film	        plc.	In	france,	technicolor	provides	playout	services	to	many	broadcasters	
    and	episodic	title	releases	and	the	exploitation	of	a	content	owner’s	catalog	    including	canal+	multithématiques,	france	24	and	tv5,	based	in	customer	
    in	new	territories	or	via	new	technologies/different	delivery	formats	(i.e.	      facilities	in	paris.	In	the	netherlands,	the	group	provides	playout	services	
    electronic	sell-through,	vod,	Iptv,	mobile,	3d,	blu-ray™,	etc.).	customer	        to	public	broadcasters	nederlandse	publieke	omroep	and	nederlandse	
    agreements	are	typically	project-specific,	with	longer-term	contracts	where	      omroep	stichting,	through	its	subsidiary	nederlands	omroepproduktie	
    possible.                                                                         bedrijf.

    Key	customers	include	major	studios,	such	as	the	walt	disney	company,	            technicolor’s	main	competitors	are	redbee	media	(owned	by	macquarie)	
    sony,	paramount	and	dreamworks	animation,	as	well	as	independent	                 and	encompass	digital	media.	technicolor	is	among	the	top	two	worldwide	
    studios,	broadcasters	and	networks	operators.                                     players	in	the	broadcast	services	market	(source:	technicolor	estimates).

    technicolor’s	main	competitors	are	deluxe,	as	well	as	the	in-house	facilities	    In	2010,	technicolor	continued	to	support	its	broadcast	customers	in	
    of	certain	major	studios.	technicolor	ranks	as	number	two	in	the	media	           deploying	new	channels	and	in	migrating	tv	channels	to	high	definition.	
    services	market	(source:	technicolor	estimates).                                  the	group	currently	serves	320	broadcast	networks	globally,	including	
                                                                                      30	channels	in	high	definition.	technicolor	also	launched	the	first	inde-
    In	2010,	technicolor	launched	its	mediaffinity™	digital	library	management	       pendent	broadcast	services	platform	ready	to	broadcast	3d	channels	for	
    service,	with	the	weinstein	company	as	its	first	customer.	mediaffinity™	         its	network	service	provider	customers	out	of	its	u.K.-based	facility.	the	
    is	a	fully	automated	workflow	solution	enabling	content	owners	to	manage,	        group	notably	provided	3d	broadcast	playout	services	for	canal+	during	
    access	and	monetize	their	content	library,	as	well	as	to	preserve	and	digitize	   the	fIfa	world	cup.
    deteriorating	physical	assets,	in	a	secure,	automated	environment.	with	
    the	support	of	its	research	&	Innovation	team,	the	group	also	developed	
    3d	blu-ray™compression,	authoring	and	subtitling	services,	resulting	
    in	 authoring	 the	 first	 feature	 3d	 blu-ray™	 ever	 made	 (dreamworks	
    animation’s	Monsters vs. Aliens).



    2.2.4	Other
    other	operations	are	as	follows:                                                       of	these	functions	are	allocated	to	the	group’s	segments	where	costs	
                                                                                           can	be	clearly	identified	as	relating	to	a	particular	business	within	that	
    ■■   unallocated	corporate	functions,	which	comprise	the	operation	and	
                                                                                           segment.	residual	costs	are	reflected	in	the	results	of	the	segment	
         management	of	the	group’s	head	office,	together	with	various	
                                                                                           entitled	other	in	the	group’s	segment	reporting;	and
         group	functions	that	are	controlled	centrally,	principally	sourcing,	
         human	resources,	It,	finance,	marketing	and	communication,	                  ■■   the	north	american	tv	legacy	and	after-sales	service	operations	
         corporate	legal	operations	and	premises	management.	the	costs	                    and	the	retail	telephony	business	from	which	the	group	concluded	
                                                                                           its	exit	at	the	end	of	2009.




    32       technIcolor	–	2010	annual	report
                                                                                                |	Information	on the company
                                                                                                                      BuSINESS	OvERvIEw                             2
                                                                             Contents
                                                                     ➜
                                                                                             ➜



2.2.5	Discontinued	operations
technicolor	has	exited	a	number	of	non-strategic	businesses	over	the	last	       owned	by	regal,	cinemark	and	amc,	three	major	theater	operators,	and	
few	years,	the	results	of	which	are	reported	as	discontinued	operations	         mediavision	in	europe.
under	Ifrs,	principally	displays,	audio-video	&	accessories	operations	
                                                                                 the	group	announced	on	october	14,	2010	the	completion	of	the	sale	of	
(ava),	 silicon	 solutions	 business,	 grass	 valley	 business	 and	 media	
                                                                                 a	majority	of	its	50%	stake	in	screenvision	us	to	shamrock	capital	growth	
networks	 business	 (mainly	 screenvision)	 summarized	 below.	 for	 a	
                                                                                 fund	II,	in	return	for	$60 million	(€43 million	at	october 14, 2010	exchange	
description	of	the	financial	implications	resulting	from	the	exit	from	these	
                                                                                 rate)	in	cash	that	was	applied	to	the	payment	of	disposal	proceeds	notes	
businesses,	see	chapter 3:	“management’s	discussion	and	analysis	of	
                                                                                 issued	as	part	of	the	financial	restructuring	closed	in	the	first	half	of	2010.	
financial	condition	and	results	of	operations”,	section	3.14.7:	“results	of	
                                                                                 the	group	retains	an	18.8%	interest	in	a	newly-formed	screenvision	
operations	for	2010	and	2009	–	profit	(loss)	from	discontinued	operations”	
                                                                                 holding	 company,	 which	 is	 now	 consolidated	 under	 the	 equity-basis	
and	section	3.15.7:	“results	of	operations	for	2009	and	2008	–	profit	(loss)	
                                                                                 method	in	continuing	operations.
from	discontinued	operations”	of	this	annual	report.
as	indicated	in	section	2.1.2	“historical	background”,	the	prn	(premier	
retail	networks)	business,	previously	accounted	as	part	of	discontinued	         gRass valley
operations,	is	now	consolidated	as	part	of	continuing	operations.                In	January 2009,	technicolor	announced	its	decision	to	exit	the	grass	
                                                                                 valley	business.
disPlays                                                                         to	facilitate	the	grass	valley	disposal	process,	technicolor	announced	in	
                                                                                 march	2010	the	reorganization	of	grass	valley	into	three	distinct	activities:	
In	2005,	technicolor	exited	from	its	displays	activity	through	the	disposal	
                                                                                 broadcast,	head-end	and	transmission.
of	its	tubes	manufacturing	activities	and	related	glass	manufacturing	
business,	which	it	completed	in	a	sale	to	eagle	corporation,	an	entity	          ■■   grass	valley	broadcast	business	supplies	content	creators,	production	
owned	 by	 the	 videocon	 group	 in	 two	 transactions	 (february	 and	               facilities	and	distributors	with	video-focused	systems	and	equipment	
september	2005).	as	part	of	the	transaction,	technicolor	acquired	shares	             such	 as	 hd	 digital	 studio	 cameras	 and	 field	 camcorders,	 visual	
in	videocon	(approximately	13.1%	of	the	share	capital	of	videocon),	which	            processing	equipment,	broadcast	media	servers,	routing	switchers,	
were	progressively	sold	by	technicolor	thereafter.	at	the	end	of	2010,	               production	switchers/vision	mixers,	automated	production	systems,	
technicolor	sold	all	its	remaining	shares	of	videocon.                                and	postproduction/editing	systems	–	all	to	support	hd	broadcast	
                                                                                      solutions	in	news,	live	and	studio	production,	play-to-air	facilities	
                                                                                      and	content	distribution	applications.	broadcast’s	main	competitors	
audio-video and accessoRies                                                           are	sony,	Ikegami,	panasonic	and	avid.	technicolor	completed	the	
In	2005,	technicolor	decided	to	sell	its	audio-video,	accessories	and	                sale	of	its	grass	valley	broadcast	business	to	francisco	partners	on	
consumer	marketing	and	sales	activities	(referred	to	as	“ava	business”	               december	31,	2010.
hereafter).	pursuant	to	the	disposals	which	occurred	in	2007	and	2008,	          ■■   head-end provides	a	portfolio	of	innovative	video	compression	
the	group	has	completely	exited	the	ava	business.                                     and	content	processing	solutions	at	the	digital	head-end	to	network	
                                                                                      operators	and	broadcasters.	head-end	develops	state-of-the-art	
                                                                                      hybrid	and	multiformat	compression	systems	for	direct	to	home	
silicon solutions                                                                     (dth),	terrestrial	and	mobile	tv,	Iptv,	as	well	as	web	tv	networks	
                                                                                      based	around	the	key	vibe	product	family.	the	business	also	provides	
In	the	first	half	of	2008,	the	board	decided	to	discontinue	the	silicon	solu-
                                                                                      exemplary	strategies	for	migration	to	Ip-based	video	transport,	break-
tions	business	(named	thomson	silicon	solutions).	this	business	included	
                                                                                      through	video	server	technologies,	and	comprehensive	redundancy	
the	group’s	remote	control	activity	which	was	stopped	in	the	course	of	
                                                                                      and	monitoring	systems.	head-end’s	main	competitors	are	harmonic,	
the	first	half	of	2008;	the	tuner	activity	which	was	sold	on	september	1,	
                                                                                      cisco	and	tandberg.	as	announced	on	february	23,	2011,	technicolor	
2008	to	a	joint	venture,	nutune,	over	which	technicolor	has	no	control	
                                                                                      has	received	a	fully	documented	binding	offer	from	the	fcde	for	the	
and	holds	45%	interest	and	the	integrated	circuits	design	and	sales	activity,	
                                                                                      acquisition	of	the	head-end	business,	operating	under	the	thomson	
which	has	ceased	activity	as	of	June	30,	2008.	the	45%	interest	in	the	
                                                                                      video	networks	brand.
nutune	joint-venture	was	consolidated	under	the	equity-basis	method	in	
continuing	operations.	It	was	sold	in	the	second	half	of	2010.                   ■■   the	transmission business	provides	advanced	services,	technologies	
                                                                                      and	 products	 for	 terrestrial	 television	 and	 radio	 transmission,	
                                                                                      comprising	a	comprehensive	range	of	antennae	and	digital	radio	
cinema adveRtising (scReenvision)                                                     mondiale	 systems,	 as	 well	 as	 scientific	 applications.	 drawing	 on	
                                                                                      extensive	experience	in	analog	and	digital	broadcasting	and	close	
screenvision	operates	screen-advertising	activities	across	the	united	
                                                                                      relationships	 with	 leading	 broadcasters	 around	 the	 world,	 the	
states	and	in	parts	of	continental	europe.	In	return	for	granting	exclusive	
                                                                                      transmission	activity	rests	at	the	forefront	of	technological	innovation.	
rights	to	technicolor’s	screen-advertising	operations	through	contracts	
                                                                                      the	transmission	business	also	boasts	a	range	of	efficient	and	flexible	
which	vary	in	length	from	approximately	three	to	10 years,	the	cinema	
                                                                                      digital	solid-state	and	tube-based	transmitters	for	hd,	3d,	and	mobile	
owner	or	operator	receives	a	share	of	the	revenues	from	screenvision,	
                                                                                      television	transmission.	the	main	competitor	is	harris	broadcast	(part	
which	in	certain	cases	may	be	supported	by	a	minimum	guarantee.	
                                                                                      of	harris	corporation).	as	announced	in	december	2010,	technicolor	
technicolor’s	 main	 customers	 include	 exhibitors	 such	 as	 national	              has	received	a	fully	documented	binding	offer	from	parter	capital	
amusements	and	carmike	as	well	as	advertising	agencies	and	advertisers.	              group	for	the	acquisition	of	the	transmission	business,	operating	
competitors	include	national	cinemedia	in	the	u.s.,	a	company	majority-               under	the	thomson	broadcast	brand.	the	disposal	is	expected	to	
                                                                                      be	completed	during	the	first	half	of	2011.

                                                                                                   technIcolor	–	2010	annual	report                          33
           |	Information	on the company
2          ORGANIzATIONAL	STRuCTuRE



                                                                                   Contents
                                                                          ➜
                                                                                                     ➜



    2.3	 organIzatIonal	structure
    please	refer	to	chapter 6:	“additional	Information,”	section	6.7:	“organization	of	the	group	–	legal	organization	chart	as	of	december 31,	2010”	of	
    this	annual	report,	for	an	organizational	chart	and	a	list	of	technicolor’s	main	subsidiaries.




    2.4	 property,	plant	and	equIpment

    2.4.1	 Operating	Facilities	and	Locations
    technicolor	occupies,	as	owner	or	tenant,	a	number	of	office	buildings,	            technicolor	took	a	number	of	key	actions	to	optimize	its	global	real	estate	
    manufacturing	plants,	and	distribution	and	warehousing	sites	around	the	            footprint.	these	actions	have	resulted	in	a	reduced	global	real	estate	
    world.	technicolor	is	constantly	reviewing	its	real	estate	needs	in	order	          footprint	from	14.4 million	square	feet	at	end-2009,	to	13.5 million	square	
    to	improve	efficiency	and	minimize	costs.	during	the	2010	financial	year,	          feet	at	end-2010,	or	a	reduction	of	6%.

    the	key	actions	taken	to	reduce	the	group’s	real	estate	footprint	in	2010	included:

     Operating	Facilities                                                                                              Primary	Activity           Type	of	Action
     beijing,	china                                                                                                               office          consolidation(2)
     vancouver,	canada                                                                                                    film	services(3)           transferred(1)
     calgary,	canada                                                                                                      film	services(3)           transferred(1)
     toronto,	canada                                                                                                      film	services   (3)
                                                                                                                                                     transferred(1)
     la	salle,	canada                                                                                                     film	services(3)           transferred(1)
     st.	John,	canada                                                                                                     film	services(3)           transferred(1)
     winnipeg,	canada                                                                                                     film	services   (3)
                                                                                                                                                     transferred(1)
     milan,	Italy                                                                                                          distribution(4)                closure
     detroit,	mI	(united	states)                                                                                           distribution (4)
                                                                                                                                                  consolidation(2)
     redford,	mI	(united	states)                                                                                           distribution(4)                closure
     oxnard,	ca	(united	states)                                                                                            distribution(4)                closure
     new	york,	ny	(united	states)                                                                                                 office                  closure
     bangalore,	India	(featherlite	tech	park)                                                                                     office                  closure
     singapore                                                                                                                    office          consolidation(2)

     (1) Site transferred to CCDI (Canadian Cinema Distribution Inc); Technicolor still has 50% ownership, but not lease responsibility.
     (2) Optimization of surface utilization with, in most cases, a significant reduction of surface.
     (3) Activities housed in Theatrical Services.
     (4) Activities housed in DVD Services.

    the	group	operates	various	manufacturing,	replication,	film	processing	             technicolor’s	objective	is	to	optimize	the	location	and	the	organization	
    and	distribution	facilities	in	order	to	deliver	products	and	services	to	           of	its	operations,	to	reduce	its	production	costs	and	working	capital	
    customers.	In	addition,	technicolor	relies	on	external	partners	for	manu-           requirements,	maximize	the	quality,	flexibility	and	responsiveness	of	its	
    facturing	some	of	its	finished	products,	particularly	for	connect.                  products	and	services,	while	minimizing	negative	impacts	that	could	affect	
                                                                                        the	environment,	or	the	health	and	safety	of	its	employees	and	contractors.




    34       technIcolor	–	2010	annual	report
                                                                                                      |	Information	on the company
                                                                                                PROPERTY,	PLANT	AND	EquIPMENT                            2
                                                                              Contents
                                                                      ➜
                                                                                               ➜


at	the	end	of	2010,	technicolor	occupied	the	following	key	facilities:

 Principal	Operating	Facilities                                                                           Primary	Activity    Own/Lease   Square	Feet
 memphis	(tn,	united	states)                                                                                   distribution       lease     4,300,877
 livonia	(mI,	united	states)                                                                                   distribution       lease       788,174
 guadalajara	(mexico)                                                                                          replication         own        272,850
 brampton	(on,	canada)                                                                                         distribution       lease       651,377
 detroit	(mI,	united	states)                                                                                   distribution       lease      320,000
 piaseczno	(poland)                                                                                            replication         own        324,327
 ontario	(ca,	united	states)                                                                                   distribution       lease       241,170
 bangalore	(India)                                                                                                  office        lease       143,895
 tultitlan	(mexico)                                                                                            distribution       lease       239,292
 north	hollywood	(ca,	united	states)                                                                         film	services        lease       161,740
 rugby	(united	Kingdom)                                                                                        distribution       lease       282,675
 burbank	(ca,	united	states)                                                                                        office        lease       159,059
 camarillo	(ca,	united	states)                                                                                 distribution       lease       158,256
 hilversum	(the	netherlands)                                                                                        office        lease       148,821
 chiswick	(united	Kingdom)                                                                                          office        lease       132,010
 mirabel	(qc,	canada)                                                                                        film	services         own        130,152
 mississauga	(on,	canada)                                                                                    film	services        lease       149,629
 wilmington	(oh,	united	states)                                                                                distribution       lease       102,400
 rome	(Italy)                                                                                                film	services         own         197,119
 hollywood	(ca,	united	states)                                                                                      office        lease       135,681
 montreal	(qc,	canada)                                                                                       film	services        lease       100,023
 sydney	(nsw,	australia)                                                                                       distribution       lease        92,812
 coventry	(united	Kingdom)                                                                                     distribution        own         87,556
 toronto	(on,	canada)                                                                                               office        lease        82,123
 mexicali	(mexico)                                                                                             distribution       lease       287,459
 new	york	(ny,	united	states)                                                                                       office        lease        91,512
 glendale	(ca,	united	states)                                                                                       office        lease        71,270
 bangkok	(thailand)                                                                                          film	services         own         65,994
 london	(united	Kingdom)                                                                                            office        lease        64,357
 saint-cloud	(france)                                                                                               office        lease        57,703
 melbourne	(vIc,	australia)                                                                                    replication        lease        55,768
 perivale	(united	Kingdom)                                                                                          office        lease        50,952
 angers	(france)                                                                                            manufacturing          own        818,176
 Indianapolis	(In,	united	states)                                                                                   office        lease      570,000
 rennes-cesson	(france)                                                                                             office        lease       284,164
 beijing	(china)                                                                                                    office        lease       117,306
 manaus	(am,	brazil)                                                                                        manufacturing          own         50,001
 turgi	(switzerland)                                                                                        manufacturing         lease        67,785
 conflans-sainte-honorine	(france)                                                                          manufacturing         lease       198,693
 Issy-les-moulineaux(1)	(france)                                                                                    office        lease       195,410

 (1) Corporate headquarters were transferred to Issy-les-Moulineaux, France, as of January 1, 2010.




                                                                                                       technIcolor	–	2010	annual	report             35
           |	Information	on the company
2          PROPERTY,	PLANT	AND	EquIPMENT



                                                                                   Contents
                                                                           ➜
                                                                                                     ➜



     Summary	of	Operating	Facilities                                                                                        Square	Feet        Percentage	of	Surface
     office                                                                                                                     3,391,686                            25%
     lab                                                                                                                        1,004,104                             7%
     manufacturing                                                                                                              2,007,106                            15%
     warehouse/distribution                                                                                                      7,171,867                           53%
     all in-scoPe * ProPerTies
                       ( )
                                                                                                                            13,574,763                           100%

     (*) In-Scope does not include any properties that are 100% Grass Valley, Screenvision, Convergent, or transferred Victoria Films sites.


    manufactuRing, RePlication, film                                                     distributed	100%	in-house,	in	europe	about	45%	in-house	and	about	55%	
                                                                                         by	3pl's	and	in	australia	technicolor	outsources	100%.
    PRocessing and distRibution
    technicolor’s	manufacturing,	replication,	film	processing	and	distribution	
    facilities	accounted	for	68%	of	its	facilities	space	at	the	end	of	2010.	the	
                                                                                         film seRvices
    location	of	each	facility	can	be	found	in	the	table	above.                           bulk-printing	services	are	offered	to	customers	for	the	release	of	film	to	
                                                                                         cinemas	for	theatrical	release.	all	film	processing	is	performed	in-house.	
    technicolor’s	respective	business	segments	have	varying	approaches	to	
                                                                                         for	 more	 information,	 please	 refer	 to	 section	 2.2.2:	 “entertainment	
    performing	these	activities;	each	is	discussed	in	turn	below.
                                                                                         services”.

    dvd RePlication and distRibution                                                     set-toP boxes, gateways
    global	distribution	and	supply	chain	activities	are	provided	in-house	and	           and connected devices
    through	a	network	of	contracted	third-party	logistic	providers	(3pls).	
    In	markets	where	distributed	unit	volumes	are	sufficient,	technicolor	               In	2010,	technicolor	delivered	a	total	of	about	27 million	gateways,	set-top	
    completes	all	distribution	and	logistics	activities	in-house.	In	smaller	            boxes,	and	connected	devices.	overall,	around	11%	of	the	group’s	total	
    markets,	 or	 where	 other	 considerations	 prevail,	 these	 activities	 are	        volume	is	manufactured	in-house	with	the	rest	of	its	volumes	 being	
    completed	by	3pl’s	on	technicolor’s	behalf.	In	north	america,	the	group	             outsourced	to	partners	in	asia	and	mexico.

    the	total	in-house	manufacturing	and	replication	output	for	the	group	can	be	found	in	the	table	below	for	2010.

     In-house	Manufacturing	and	Replication                                                                                                          Number	of	units
     ENTERTAINMENT	SERvICES
     dvd	replication                                                                                                                                   1.3 billion	dvds
     blu-ray™	replication                                                                                                                      94 million	blu-ray™	discs
     film	processing                                                                                                                              3.2 billion	feet	of	film
     DIGITAL	DELIvERY
     gateways,	set-top	boxes	and	connected	devices                                                                                                      3.0 million	units




    2.4.2	Environmental	matters
    summaRy                                                                              there	were	many	notable	eh&s	achievements	during	2010	and	several	
                                                                                         of	them	are	summarized	below:
    this	report	provides	an	overview	of	the	activities	that	technicolor	is	taking	
    to	fulfill	its	responsibilities	as	a	global	corporate	citizen	with	respect	to	       ■■   control	systems	and	sensing	devices	were	put	in	place	at	the	angers	
    environment,	 health,	 and	 safety	 (eh&s).	 as	 such,	 technicolor	 is	                  france	set-top	box	factory	so	that	power	is	systematically	minimized	
    reporting	on	what	it	has	determined	to	be	the	most	significant	aspects	                   by	switching	off	unused	areas	and	equipments.
    and	impacts,	both	globally	and	by	business	unit,	for	the	fiscal	year	2010.           ■■   an	improved	resin	tower	was	installed	at	the	bangkok	thailand	film	
                                                                                              lab,	reducing	silver	content	in	the	wastewater	effluent.
    In	 alignment	 with	 the	 principles	 stated	 within	 the	 eh&s	 charter,	
    technicolor	continually	assesses	the	eh&s	performance	of	its	facilities	             ■■   outdoor	lighting	energy	requirements	were	reduced	18%	at	the	
    to	identify	opportunities	and	implement	measures	to	reduce	adverse	                       brampton	 canada	 dvd	 distribution	 facility	 while	 maintaining	
    environmental	 impacts	 and	 to	 improve	 the	 health	 and	 safety	 of	 its	              required	illumination	levels.
    workplaces	and	their	surrounding	communities.	for	the	2010	management	               ■■   guadalajara	mexico	dvd	operations	consolidated	dvd	bonding	
    report	a	total	of	49	reporting	locations	are	included.                                    resin	use	into	larger	600	kg	containers,	greatly	reducing	the	number	
                                                                                              and	frequency	of	20	kg	containers.


    36        technIcolor	–	2010	annual	report
                                                                                                  |	Information	on the company
                                                                                               PROPERTY,	PLANT	AND	EquIPMENT                                         2
                                                                               Contents
                                                                       ➜
                                                                                               ➜


■■   a	rainwater	harvesting	and	re-use	tank	at	the	melbourne	australia	            technicolor	understands	the	importance	of	establishing	consistent	and	
     dvd	factory	provided	approximately	400,000	liters	of	rainwater	               universally	applied	standards.	such	standards	not	only	assist	each	of	
     since	installation.	the	melbourne	site	also	installed	idle	sensors	in	a	      its	locations	to	meet	the	requirements	of	the	country	in	which	they	are	
     variety	of	machine	belts	which	save	energy	by	switching	to	stand-by	          located,	but	also	provide	an	added	benefit	of	encouraging	each	location	
     mode	when	not	in	use.                                                         to	develop	programs	that	go	beyond	local	regulatory	requirements.	to	
■■   memphis	usa	dvd	packaging	and	distribution	invested	in	nine	                  formalize	this	critical	philosophy,	technicolor	has	developed	a	corporate	
     additional	balers	for	cardboard	and	plastics,	improving	recycling,	and	       environment,	health	and	safety	(eh&s)	charter.	the	eh&s	charter	
     eliminating	landfill.	the	ehs	team	also	implemented	an	improved	              supports	the	technicolor	ethics	charter	and	the	corporate	social	respon-
     contractor	management	program	due	to	expansion	construction	                  sibility	charter,	and	is	the	cornerstone	of	the	group’s	eh&s	program.	It	
     projects	at	the	site,	providing	specialized	training	and	inspection	to	       defines	key	management	principles	designed	to	protect	human	health	
     over	500	construction	contractors	resulting	in	an	injury-and	incident-        and	the	environment,	helps	technicolor	meet	its	legal	and	corporate	
     free	site	expansion.                                                          responsibilities,	and	provides	direction	for	each	technicolor	location’s	
                                                                                   activities	and	operations.
■■   at	the	north	hollywood	usa	film	operation,	water	consumption	
     was	reduced	an	annualized	10%	by	substituting	recirculating	cooling	          the	eh&s	charter	has	been	translated	into	four	languages	and	is	available	
     tower	water	for	flow-through	single-use	municipal	water	in	affected	          on	the	group’s	intranet,	and	is	displayed	at	each	industrial	site.
     equipment.
■■   the	pinewood	england	film	lab	installed	improved	controls	in	the	             Environmental	Risk	Profile
     wet	chemical	solutions	area	as	part	of	a	spill	control	and	counter	
     measures	program.	additionally,	a	liquid	waste	concentrating	system	          during	2010,	the	group	operated	49	main	locations,	most	of	which	are	
     was	implemented	to	eliminate	effluent	flow	to	the	local	community	by	         industrial	but	some	sites	reporting	only	injury	information	beginning	in	
     diversion	of	concentrated	waste	to	a	waste	treatment	center.                  2007	as	described	in	the	data	collection	method	and	rationale	section.	
                                                                                   new	for	2010,	many	non-industrial	locations	began	reporting	water	and	
■■   as	part	of	a	project	to	improve	commuting,	the	rennes	france	
                                                                                   energy	use.	by	technicolor’s	definition	an	industrial	location	is	a	facility	
     r&d	center	updated	bicycle	parking	areas	with	covered	parking	
                                                                                   where	dvds	are	produced,	packaged	or	distributed,	where	motion	picture	
     and	electrical	charging	facilities	for	cycling	lights	and	batteries,	while	
                                                                                   film	is	processed	or	distributed,	where	broadcast	or	network	systems	are	
     also	providing	on-site	mechanical	services	one	day	per	week.
                                                                                   manufactured,	or	where	any	digital	delivery	product	is	made.
■■   the	rome	Italy	film	operation	improved	controls	on	rinse	waster,	
     achieving	a	30%	reduction	in	rinse	water	consumption.	new	exhaust	            to	provide	finished	products	and	services,	technicolor	utilizes	purchased	
     hoods	were	placed	in	negative	assembly	areas	to	further	reduce	               materials,	chemicals,	components,	energy,	and	water.	as	a	result	of	the	
     vapors	from	film	cement,	further	limiting	occupational	exposure	of	           products	and	services	it	provides,	there	are	a	number	of	potential	activities	
     the	workforce.                                                                that	may	result	in	adverse	impacts	to	the	environment.
■■   dvd	packaging	and	distribution	in	rugby,	england	reduced	waste	               environmental	aspects	reviewed	in	this	report	include	waste	management	
     by	converting	internal	handling	from	cardboard	to	reusable	totes.             (total	waste	generated,	landfilled,	and	recycled),	energy	consumption	
■■   cinema	distribution	operations	in	wilmington,	ohio	and	ontario,	              (electricity	and	fossil	fuels),	water	consumption,	air	emissions	(greenhouse	
     california,	usa	reduced	the	potential	for	cuts	and	lacerations	by	            gas	emissions),	main	materials	used,	and	processing	wastewater	effluents.	
     changing	over	the	entire	business	from	metal	film	cans	to	corrugated	         the	49	sites	included	in	this	report	may	be	reviewed	in	the	subsection	
     plastic	boxes	which	also	incorporated	a	more	stable	and	stackable	            “data	collection	method	and	rationale”	herein.
     design.
newly	acquired	businesses	are	reviewed	by	technicolor	to	identify	eh&s	            Organization
aspects	of	their	operations,	to	evaluate	the	status	and	effectiveness	of	          eh&s	is	managed	transversally	within	technicolor	and	by	extension	
existing	management	and	control	systems,	to	determine	compliance	with	             becomes	the	duty	of	each	executive	committee	member,	technicolor	
technicolor	eh&s	policies	and	guidelines,	to	communicate	technicolor’s	            business	manager	and	site	manager.	technicolor	established	a	corporate	
eh&s	initiatives	and	requirements,	and	finally,	to	assist	in	the	establishment	    eh&s	group	in	1993	to	develop,	direct	and	oversee	the	development	
of	location-specific	programs	that	conform	to	technicolor’s	requirements	          of	global	policies,	guidelines,	programs	and	initiatives.	the	corporate	
and	meet	the	needs	of	the	group.                                                   eh&s	organization	reports	to	human	resources	and	sourcing,	headed	
                                                                                   by	the	director	of	human	resources	and	sourcing,	who	is	a	member	
geneRal                                                                            of	technicolor’s	executive	committee.	overseeing	the	eh&s	group	
                                                                                   is	a	corporate	manager,	who	directs	the	efforts	of	eh&s	personnel	
Global	Compact	Initiative                                                          throughout	the	business.	business	unit	liaisons	work	to	ensure	that	initia-
                                                                                   tives	relevant	to	their	particular	business	are	shared	quickly	among	sites	
the	global	compact	is	a	united	nations	initiative	which	challenges	its	            with	similar	industrial	activity.	legal	support	and	counsel	for	issues	such	as	
members	to	develop	a	set	of	core	values	in	the	areas	of	human	rights,	labor	       product	safety,	environmental	protection	and	workplace	safety	is	provided	
standards	and	environmental	practices.	technicolor	has	been	a	member	              by	technicolor	in-house	attorneys.
of	the	global	compact	since	september	2003	and	reports	regularly	on	
progress	through	public	reports	and	the	global	compact	website.                    It	is	the	responsibility	of	the	corporate	eh&s	organization	to	develop	
                                                                                   policies,	programs,	processes	and	initiatives	to	help	the	business	meet	
                                                                                   the	principles	and	commitments	outlined	within	the	eh&s	charter.	each	
Policy	and	Charter                                                                 technicolor	industrial	location	identifies	personnel	who,	along	with	the	
as	a	global	leader	in	providing	a	diverse	range	of	communication	and	              support	of	local	eh&s	committees,	are	responsible	for	reviewing	and	
video	technologies,	finished	products,	systems,	equipment,	and	services	           localizing	corporate	policies	and	guidelines	and	applicable	governmental	
to	businesses	and	professionals	in	the	entertainment	and	media	industries,	        laws	and	regulations,	and	for	implementing	site-specific	programs	and	


                                                                                                     technIcolor	–	2010	annual	report                         37
           |	Information	on the company
2          PROPERTY,	PLANT	AND	EquIPMENT



                                                                                 Contents
                                                                         ➜
                                                                                                ➜


    procedures	which	will	ensure	compliance	and	minimize	the	potential	for	          In	2010,	53,837	hours	of	documented	training	were	provided	on	a	wide	
    their	operation	to	cause	harm	to	human	health	or	the	environment.                variety	of	environmental	and	safety	compliance	and	protection,	injury	
                                                                                     prevention,	emergency	preparedness	and	response,	and	occupational	
                                                                                     health	topics.	compared	with	2009	on	the	basis	of	a	ratio	of	the	hours	of	
    PRogRams, systems, and activities                                                ehs-related	training	to	the	total	hours	worked,	the	2010	training	hours	
    a	number	of	programs	and	initiatives	have	been	established	and	imple-            increased	approximately	25%.
    mented	to	ensure	that	the	group	meets	its	legal	responsibilities	and	
    operates	in	a	manner	that	identifies	risks	and	takes	measures	to	reduce	         Emergency	Preparedness	and	Response
    harm	to	human	health	and	the	environment.	the	most	significant	of	these	
    are	described	below:                                                             even	the	best	designed	programs	and	procedures	cannot	eliminate	the	
                                                                                     occurrence	of	unforeseen	events.	the	development	and	periodic	review	
                                                                                     of	emergency	preparedness	and	response	plans	is	critical	to	the	success	of	
    Policies	and	Guidelines                                                          technicolor’s	eh&s	program,	making	these,	along	with	associated	training	
    corporate	eh&s	policies	and	guidelines	have	been	developed	to	establish	         and	testing,	key	components	of	the	eh&s	performance	measurement	
    requirements	and	provide	guidance	for	the	development,	implementation	           process.
    and	maintenance	of	eh&s	programs.	eh&s	policies	and	guidelines	were	             one	of	the	many	challenges	that	are	present	in	a	globally	operated	
    first	developed	in	1993	and	are	periodically	reviewed	and	revised,	and	          business	is	ensuring	effective	communication,	particularly	in	the	event	
    when	necessary,	adapted	to	ensure	that	they	address	current	regulatory	          of	a	crisis.	at	technicolor,	a	system	was	designed	to	provide	a	consistent	
    and	business	needs,	most	recently	distracted	driving,	emerging	disease	          worldwide	 approach	 for	 managing	 and	 mitigating	 significant	 eh&s	
    (h1n1	flu	for	example),	and	workplace	violence.                                  incidents.	the	significant	business	Incident	(sbI)	system	enables	timely	
    each	 technicolor	 industrial	 location	 is	 responsible	 for	 reviewing	 the	   communication	to	and	involvement	of	top	management	and	ensures	the	
    eh&s	policies	and	guidelines	and	applicable	laws	and	regulations,	and	           quick	and	effective	allocation	of	appropriate	resources	with	consistent	
    developing	local	programs	that	ensure	compliance	and	address	site-               crisis	management	measures	throughout	the	world.	this	process	also	
    specific	issues.	along	with	the	charter	and	other	key	information,	the	          serves	as	a	valuable	tool	for	identifying	potential	concerns	within	each	
    policies	and	guidelines	are	available	to	employees	via the	technicolor	          of	technicolor’s	businesses	and	to	ensure	that	appropriate	preventive	
    eh&s	intranet	website.                                                           measures	are	effectively	implemented.	during	2010,	and	in	partnership	
                                                                                     with	the	office	of	the	chief	security	officer,	the	sbI	policy	and	process	
                                                                                     was	renewed	and	cascaded	throughout	the	group.
    Annual	Performance	Measurement	Process
                                                                                     In	2010,	three	sbI’s	associated	with	eh&s	aspects	were	reported,	with	no	
    a	process	was	implemented	in	1997	to	allow	for	the	consistent	internal	          penalties	or	fines	incurred.
    benchmarking	of	key	management	programs	and	requirements	within	
    each	of	the	group’s	industrial	locations,	and	tracking	of	site	progress	
    toward	environmental,	safety	and	resource	conservation	improvement	              Management	Systems
    goals.	this	process	establishes	benchmark	criteria,	helping	the	group	           an	environmental	management	system	(ems)	is	a	continual	cycle	of	
    create	consistent	global	focus	and	action	plans	on	key	programs,	require-        planning,	implementing,	evaluating	and	improving	practices,	processes	and	
    ments	and	initiatives.                                                           procedures	to	meet	environmental	obligations	and	successfully	integrate	
    measured	criteria	include	eh&s	related	employee	training,	each	location’s	       environmental	concerns	into	normal	business	practices.	an	effective	
    progress	toward	zero	work	related	injuries	and	lost	workdays,	reducing	          ems	helps	identify	and	eliminate	the	causes	of	potential	environmental	
    environmental	impacts,	and	reducing	the	consumption	of	water	and	                problems,	establish	and	achieve	environmental	goals,	reduce	potential	
    energy.                                                                          risk	and	liability,	and	operate	a	more	effective	environmental	program.	
                                                                                     Iso	14001	is	the	most	widely	accepted	international	standard	for	an	ems.	
                                                                                     In	today’s	global	market,	participation	in	the	Iso	14001	process	is	one	way	
    Training
                                                                                     for	an	organization	to	demonstrate	its	commitment	to	the	environment.	
    technicolor	understands	that	each	employee	has	the	ability	to	impact	            to	receive	certification,	organizations	are	required	to	develop	detailed	
    the	group’s	eh&s	efforts	and	performance,	thus	it	is	critical	that	they	         plans	and	procedures	to	identify,	evaluate,	quantify,	prioritize	and	monitor	
    are	provided	with	appropriate	tools,	resources	and	knowledge.	the	eh&s	          environmental	impacts	of	its	activities.
    training	program	develops	awareness	and	skills	that	allow	employees	
                                                                                     during	2010,	a	total	of	16	sites	held	an	Iso	14001	certification,	one	site	
    and	contractors	to	perform	their	jobs	in	such	a	manner	that	will	not	
                                                                                     was	in	the	process	of	recertification,	and	one	remaining	site	requiring	
    only	ensure	compliance	with	appropriate	laws,	regulations	and	policies,	
                                                                                     certification	was	working	toward	certification.
    but	also	prevents	accidents	which	may	lead	to	injuries	or	harm	to	the	
    environment.	training	programs	are	evaluated	during	the	corporate	
    eh&s	audit	process,	and	are	a	core	requirement	in	the	eh&s	performance	
    measurement	process.




    38       technIcolor	–	2010	annual	report
                                                                                                  |	Information	on the company
                                                                                              PROPERTY,	PLANT	AND	EquIPMENT                                            2
                                                                              Contents
                                                                      ➜
                                                                                              ➜



Technicolor	Locations	with	ISO	14001	Certified	EMS
 Site                                                                                                           Business	unit       Original	certification	date
 breda                                                                                                            grass	valley                  december	2000
 coventry                                                                                              entertainment	services                   november	2004
 guadalajara                                                                                           entertainment	services                     october	2004
 madrid                                                                                                entertainment	services                          July	2010
 manaus                                                                                                        digital	delivery                     august	2003
 melbourne                                                                                             entertainment	services                   december	2005
 mirabel                                                                                               entertainment	services                     october	2004
 montreal                                                                                              entertainment	services                     october	2004
 new	york                                                                                              entertainment	services                   december	2004
 north	hollywood                                                                                       entertainment	services                   november	2004
 piaseczno                                                                                             entertainment	services                   december	2004
 pinewood                                                                                              entertainment	services                      august	2009
 roma                                                                                                  entertainment	services                   november	2001
 rugby                                                                                                 entertainment	services                   november	2004
 sydney                                                                                                entertainment	services                   december	2005
 toronto                                                                                               entertainment	services                     october	2005


Restriction	of	Hazardous	Substances	(RoHS)	and	waste	                             In	2010,	eight	locations	were	audited	as	part	of	technicolor’s	objective	of	
Electrical	and	Electronical	Equipments	(wEE)                                      auditing	each	industrial	location	at	least	every	three	years.	as	a	result	of	
                                                                                  these	audits	potential	improvement	items	were	identified	and	evaluated,	
compliance	methods	and	actions	are	in	place	with	regard	to	the	rohs,	             and	more	importantly,	appropriate	associated	action	plans	developed.
weee,	 and	 reach	 (registration,	 evaluation,	 authorisation	 and	
restriction	of	chemicals)	european	directives,	or	similar	legislation	in	other	
regions,	dealing	with	the	restriction	on	the	use	of	hazardous	substances	         Supplier	Involvement	and	Compliance
within	products	and	systems,	and	preparing	for	better	end-of-life	handling	       through	meetings	and	other	methods	of	formal	communication,	the	
of	electrical	and	electronic	equipment	waste.                                     group	shares	its	expectations	that	suppliers	and	their	subcontractors	
                                                                                  provide	safe	and	healthy	working	conditions	for	their	employees,	abide	
Audits	and	Internal	Governance                                                    by	human	rights	laws	and	standards,	and	strive	for	continual	improvement	
                                                                                  in	their	environmental	management	systems,	processes	and	product.
eh&s	audits	remain	a	key	part	of	technicolor’s	continued	efforts	to	
improve	eh&s	management	and	performance,	and	to	prevent	accidents	                technicolor	requires	its	suppliers	to	actively	support	its	eh&s	principles.	
from	occurring.	In	addition	to	the	establishment	of	internal	audits	within	       suppliers	are	required	to	comply	with	the	legal	requirements	and	stan-
each	 manufacturing,	 packaging,	 and	 film	 lab	 site,	 a	 comprehensive	        dards	of	their	service	or	industry	as	applicable	under	the	national	law	of	
corporate	audit	program	was	implemented	in	1996.	the	aim	of	the	audit	            the	countries	in	which	they	operate.	technicolor	suppliers	also	ensure	
program	is	to	review	the	group’s	industrial	locations’	compliance	with	           the	compliance	of	their	components	and	products	with	specific	legal	
corporate	eh&s	policies	and	guidelines	and	specific	applicable	eh&s	              requirements	applicable	in	the	countries	where	their	products	are	being	
laws	and	regulations.	the	audit	program	has	also	been	demonstrated	to	            sold.	certificates	are	required	from	suppliers	as	to	their	compliance	with	
be	a	valuable	tool	for	increasing	eh&s	awareness,	identifying	best	practice	      such	regulations	and	standards	as	well	as	with	technicolor	programs	and	
opportunities,	 communicating	 successful	 initiatives	 between	 plants,	         specifications.	a	key	supplier	audit	tool,	which	includes	a	review	of	eh&s	
creating	opportunities	for	different	approaches	to	problem	solving,	and	          systems	and	performance,	has	been	developed.	In	light	of	regulations	
exposing	eh&s	personnel	to	other	aspects	of	the	group’s	multi-faceted	            banning	or	restricting	certain	chemical	substances,	technicolor	imple-
business.                                                                         mented	an	extended	process	for	obtaining	and	tracking	information	about	
                                                                                  its	suppliers.	this	system	allows	for	the	identification	and	estimation	of	
the	audits	include	physical	inspections	of	the	location,	review	of	docu-          relevant	chemical	substances	in	technicolor’s	products	and	ensures	that	
ments	and	records,	and	examination	of	activities	within	the	eh&s	program.	        banned	substances	are	not	included.
the	use	of	technicolor	specific	audit	protocols	helps	ensure	and	maintain	
consistency	in	approach	while	also	bringing	renewed	focus	to	key	corpo-
rate	requirements.	In	addition,	the	protocols	allow	for,	and	require,	the	        Acquisitions	and	Closures
inclusion	of	location-specific	regulatory	and	business	requirements.	Issues	      technicolor	has	established	a	process	for	reviewing	locations	prior	to	
and	recommendations	identified	during	the	audit	process	are	reviewed	             acquisition	and	upon	closure	to	identify	and	understand	the	likelihood	
and	discussed	with	members	of	the	location’s	management.                          and	extent	of	potential	environmental	contamination	associated	with	the	
                                                                                  locations’	activities.	this	process	not	only	helps	limit	financial	liability,	but	


                                                                                                     technIcolor	–	2010	annual	report                           39
           |	Information	on the company
2          PROPERTY,	PLANT	AND	EquIPMENT



                                                                                  Contents
                                                                          ➜
                                                                                                  ➜


    also	to	understand	the	type	and	level	of	support	required	to	ensure	that	              a	 remediation	 strategy	 prepared.	 the	 remediation	 strategy	 was	
    the	group’s	corporate	policies	and	guidelines	are	effectively	implemented.	            approved	by	the	governing	environmental	and	health	agencies	at	end	
    once	acquired,	locations	are	expected	to	comply	with	technicolor’s	eh&s	               of	2009,	and	sub-surface	remedial	chemical	treatment	was	completed	
    policies	and	guidelines,	which	include,	as	an	example,	the	development	                during	2010.	groundwater	monitoring	continues	as	the	effects	of	the	
    of	chemical	and	waste	management	practices	to	minimize	the	potential	                  remedial	treatment	progress.
    for	uncontrolled	releases	to	air,	water	and	land.
                                                                                      the	 group	 believes	 that	 the	 amounts	 reserved	 and	 the	 contractual	
                                                                                      guarantees	 provided	 by	 its	 contracts	 for	 the	 acquisition	 of	 certain	
    Environmental	Investments,	Remediation,	and	Pollution	                            production	assets	will	enable	it	to	reasonably	cover	its	safety,	health	
    Prevention                                                                        and	environmental	obligations.	however,	potential	problems	cannot	be	
                                                                                      predicted	with	certainty	and	it	cannot	be	assumed	that	these	reserve	
    In	total,	approximately	€1.23 million	was	spent	on	environmental	remedia-         amounts	 will	 be	 sufficient.	 In	 addition,	 future	 developments	 such	 as	
    tion	projects	in	2010.                                                            changes	in	governments	or	in	safety,	health	and	environmental	laws	or	
    a	 certain	 number	 of	 technicolor’s	 current	 and	 previously-owned	            the	discovery	of	new	risks	could	result	in	increased	costs	and	liabilities	that	
    manufacturing	sites	have	an	extended	history	of	industrial	use.	soil	and	         could	have	a	material	effect	on	the	group’s	financial	condition	or	results	of	
    groundwater	contamination,	which	occurred	at	some	sites,	may	occur	or	            operations.	based	on	current	information	and	the	provisions	established	
    be	discovered	at	other	sites	in	the	future.	Industrial	emissions	at	sites	that	   for	the	uncertainties	described	above,	the	group	does	not	believe	it	is	
    technicolor	has	built	or	acquired	expose	the	group	to	remediation	costs.	         exposed	to	any	material	adverse	effects	on	its	business,	financial	condition	
    the	group	has	identified	certain	sites	at	which	chemical	contamination	           or	results	of	operations	arising	from	its	environmental,	health	and	safety	
    has	required	or	will	require	remedial	measures.                                   obligations	and	related	risks.

    ■■   soil	 and	 groundwater	 contamination	 was	 detected	 at	 a	 former	         In	addition,	technicolor	has	initiated	a	number	of	environmental	projects	
         production	facility	in	taoyuan,	taiwan	acquired	in	the	1987	transaction	     at	various	locations	to	ensure	that	they	are	in	compliance	with	applicable	
         with	general	electric	company	and	technicolor’s	affiliate	in	taiwan	         laws	and	regulations	and	technicolor	standards,	for	which	approximately	
         owned	the	facility	from	approximately	1988	to	1992,	when	it	was	sold	        €0.15 million	was	invested.
         to	an	entity	outside	the	group.	soil	remediation	was	completed	in	
         1998.	In	2002,	the	taoyuan	environmental	protection	bureau	ordered	
         remediation	of	the	groundwater	underneath	the	former	facility.	the	
                                                                                      oPeRational data and Results
         groundwater	remediation	process	is	underway.	It	is	technicolor’s	            Goals	and	Performance	2009-2011
         position	that	general	electric	company	has	a	contractual	obligation	
         to	indemnify	technicolor	with	respect	to	certain	liabilities	resulting	      technicolor	established	the	following	eh&s	goals	and	objectives	for	the	
         from	activities	that	occurred	prior	to	the	1987	agreement	with	general	      group,	to	be	met	by	its	worldwide	industrial	operations	by	the	end	of 2011:
         electric.                                                                    ■■   5%	annual	reduction	of	Injury	rate;
         to	 date,	 in	 order	 to	 comply	 with	 the	 environmental	 protection	      ■■   10%	annual	reduction	in	water	consumption;
         bureau’s	order,	tcetvt	has	incurred	approximately	u.s.$7.2 million	
         for	the	groundwater	remediation.	In	the	class	action	case	referenced	        ■■   5%	annual	Increase	in	waste	recycling	rate.
         in	note 37	to	the	group’s	consolidated	financial	statements	under	
         “taoyuan	county	former	rca	employees’	solicitude	association,”	              Reporting	Perimeter
         tcetvt	has	incurred	approximately	u.s.$5.7 million	to	date	to	
         defend	the	action.	It	is	tcetvt’s	position	that	general	electric	is	         this	report	contains	data	from	49	operating	locations,	of	which	33	are	
         responsible	for	most	if	not	all	of	the	costs	incurred	by	tcetvt	for	         industrial.	 prior	 year	 data	 are	 reported	 for	 the	 same	 locations	 when	
         both	matters,	including	all	future	costs	and	any	judgment	awarded.           available,	although	some	newly	acquired	sites	may	not	have	data	values	
                                                                                      for	years	prior	to	acquisition.	given	the	diversity	of	the	group’s	operations,	
    ■■   during	site	closure	at	an	Indiana	(usa)	crt	factory,	soil	contamina-
                                                                                      the	environmental	aspects	and	potential	impacts	vary	by	location,	thus	
         tion	was	discovered	while	de-commissioning	storage	pits	and	liners.	
                                                                                      not	every	location	is	required	to	report	on	each	of	the	established	metrics.
         site	assessment	work	was	begun	in	2005	and	technicolor	entered	
         into	 a	 voluntary	 remediation	 agreement	 with	 the	 appropriate	          for	the	first	time	in	2010,	larger	non-industrial	locations	began	reporting	
         environmental	agency	in	2006.	Initial	soil	clean-up	actions	took	place	      their	consumption	of	energy	and	water.	a	detailed	view	showing	data	
         in	2006	and	groundwater	assessment	was	completed	during	2009.	               reported	by	site	and	by	year	is	found	at	the	end	of	this	report	in	the	data	
         the	remediation	work	plan	for	this	site	has	been	approved	and	is	now	        collection	method	and	rationale	subsection.
         primarily	related	to	monitoring.
                                                                                      the	corporate	eh&s	organization	has	identified	key	information	that	is	
    ■■   as	a	result	of	a	minor	groundwater	contamination	discovered	at	              tracked	and	reported	on	either	a	monthly,	quarterly,	or	annual	basis.	this	
         a	former	technicolor	site	in	north	carolina	(usa),	an	exhaustive	            information	includes	utility	consumption,	waste	generation,	recycling	and	
         environmental	 site	 assessment	 and	 corrective	 action	 plan	 was	         disposal,	air	emissions,	main	raw	materials	used,	and	water	effluent	from	
         completed	in	2005.	the	corrective	action	plan	was	approved	by	               industrial	locations.
         the	 appropriate	 environmental	 agency	 in	 september  2006,	 and	
         remediation	activities	at	the	site	were	completed	in	2007.	monitoring	       technicolor	is	firmly	committed	to	continually	assessing	the	impacts	of	its	
         of	the	declining	groundwater	contamination	continued	in	2010.                facilities	and	products.	technicolor’s	goal	is	to	continually	evaluate	informa-
    ■■   during	site	demolition	at	a	closed	london	film	lab	with	a	prior	history	     tion	needs	and	collection	processes	to	ensure	that	it	remains	consistent,	
         of	contaminated	groundwater,	soil	contamination	was	discovered	              with	a	focus	on	present	activities	and	issues	as	well	as	anticipated	future	
         while	removing	below	grade	structures	and	piping.	all	contaminated	          requirements.
         soil	was	excavated	and	disposed	of	properly.	after	demolition	was	
         completed,	 a	 sitewide	 groundwater	 assessment	 was	 made,	 and	


    40       technIcolor	–	2010	annual	report
                                                                                                           |	Information	on the company
                                                                                                       PROPERTY,	PLANT	AND	EquIPMENT                                    2
                                                                                  Contents
                                                                         ➜
                                                                                                       ➜


Environment                                                                            energy
the	year	2010	continued	a	shift	in	the	environmental	profile	of	the	group	             In	2010	worldwide	energy	use	was	approximately	1,618(1)	tera	joules,	an	
in	alignment	with	the	increasing	emphasis	on	business	to	business	partner-             increase	of	23%	compared	with	2009.	of	the	total	energy	consumed,	77.7%	
ships	with	media	&	entertainment	professionals.                                        was	in	the	form	of	electricity	(of	which	9.1%	was	from	renewable	sources),	
                                                                                       21.9%	was	in	the	form	of	fossil	fuels,	and	0.4%	was	in	the	form	of	purchased	
what	follows	are	results	of	key	environmental	metrics	that	were	tracked	in	            steam.	when	compared	to	total	revenue,	average	energy	use	rate	was	
2010.	prior	year	results	are	reported	for	sites	within	the	reporting	perimeter	        0.398	tJ/m€	across	the	business	in	2010.	In	2010,	non-industrial	sites	were	
of	the	year	reported,	thus	sites	divested	may	continue	to	be	reported	                 asked	to	provide	their	consumption	for	the	first	time.	their	consumption	
in	prior	years	and	sites	acquired	are	not	reported	in	prior	year’s	results.            represented	approximately	15%	of	the	total	2010	consumption.	 the	
                                                                                       table	below	shows	2010	energy	consumption	using	the	2009	perimeter	
                                                                                       of	industrial	sites	only.

Energy	consumption	(tera joules or tj/m€)
                                                                                              Total            Electricity     Fuel	Sources         Total	per	revenue
 2008                                                                                         1,407                 1,079               328                     0.291
 2009                                                                                         1,313                   996                317                    0.320
 2010	(ref	2009)                                                                              1,369                 1,021               348                     0.336
 2010 	(ref	2010)
      (1)
                                                                                            1,618(2)
                                                                                                                    1,258               354                     0.398

 (1) Total energy includes energy from 16 non-industrial locations not reporting energy in prior years.
 (2) Total energy includes less than 0.5% steam purchase (6 TJ).


2010	energy	consumption	(tera joules or %)
                                           Total	Energy         %	Total	Group             Electricity      %	Total	Division             Fuels        %	Total	Division
 digital	delivery                                     221                13.7%                      192              86.9%                     29               13.1%
 entertainment	services                             1,289                79.7%                      993               77.0%               296                  23.0%
 technology                                               5               0.3%                         5              100%                      -                   -
 grass	valley                                          78                 4.8%                      49               62.8%                     29               37.2%
 corporate                                           25   (1)
                                                                           1.5%                      19              76.0%                      -                   -

 (1) Total energy includes less than 0.5% steam purchase (6 TJ).

Water                                                                                  approximately	9%	of	the	total	2010	consumption.	the	table	below	shows	
In	2010,	water	consumption	at	the	technicolor	reporting	locations	increased	           2010	water	consumption	using	the	2009	perimeter	of	non-industrial	sites	
by	6.6%	versus	2009	to	1,962(1)	thousand	cubic	meters.	when	compared	to	               only.	on	a	constant	perimeter	basis	(2009	perimeter	without	industrial	
total	revenue,	average	water	consumption	rate	was	0.482	Km3/m€	across	                 sites),	total	water	consumption	and	total	water	consumption	per	revenue	
the	business	in	2010.	In	2010,	non-industrial	sites	were	asked	to	provide	             declined	approximately	2%	during	2010.
their	water	consumption	for	the	first	time.	this	consumption	represented	

water	consumption (thousand cubic meters or km /m€)              3




                                                                                                                         Total	Consumption          Total	per	Revenue
 2008                                                                                                                                1,957                     0.404
 2009                                                                                                                                 1,841                    0.449
 2010	(ref	2009)                                                                                                                      1,791                    0.440
 2010	(ref	2010)                                                                                                                    1,962(1)                    0.482

 (1) Total water includes water from 16 non-industrial locations not reporting water in prior years.




                                                                                                            technIcolor	–	2010	annual	report                       41
            |	Information	on the company
2           PROPERTY,	PLANT	AND	EquIPMENT



                                                                                Contents
                                                                        ➜
                                                                                                   ➜



    2010	water	consumption	(thousand cubic meters)
                                                                                                                       Total	Consumption                   %	Total
     digital	delivery                                                                                                                    89                   4.5%
     entertainment	services                                                                                                           1,835                  93.5%
     technology                                                                                                                           3                   0.2%
     grass	valley                                                                                                                        28                   1.4%
     corporate                                                                                                                            7                   0.4%


    Process Waste Water                                                                 Waste
    within	technicolor’s	facilities,	15	utilize	water	within	their	manufacturing	       technicolor	has	a	long-standing	commitment	to	the	principles	of	sound	
    processes.	In	order	to	assess	the	potential	environmental	impact	of	the	            and	environmentally	responsible	management	of	waste.	establishing	the	
    discharge	of	this	treated	water,	the	group	referenced	both	the	european	            hierarchy	of	internal	re-use,	recycling	and	reclaiming	followed	by	treat-
    community	(ec)	 and	us	environmental	protection	agency	(epa)	                       ment	and	then	landfill	as	the	last	option,	technicolor	has	developed	and	
    criteria	for	“priority	pollutants”.	based	upon	these	lists,	and	information	        implemented	programs	to	reduce	waste	generation,	decrease	the	amount	
    provided	by	technicolor’s	sites	regarding	the	parameters	that	require	to	           of	hazardous	waste,	decrease	waste	sent	to	landfill,	and	increase	recycling.
    monitoring	and	reporting,	13	pollutants	were	identified	on	either	the	ec	
                                                                                        hazardous	 waste	 is	 defined	 at	 each	 site	 using	 guidance	 from	 local	
    or	epa	list.
                                                                                        governing	 agencies,	 but	 in	 general	 it	 means	 waste	 chemicals,	 fuels,	
    for	2010,	the	amount	of	treated	water	discharged	was	1.40 million	cubic	            oils,	solvents,	batteries,	fluorescent	light	bulbs,	or	other	items	that	may	
    meters,	and	the	total	estimated	amount	of	discharged	priority	pollutants	           have	been	in	contact	with	the	hazardous	material,	for	example,	cleaning	
    was	0.3 metric	tons.                                                                materials	or	empty	containers.
    In	addition,	due	to	effluent	characteristics,	nine	sites	are	required	to	           total	waste	generated	was	38,837	tons,	a	decrease	of	4,511	metric	tons	
    monitor	biological	oxygen	demand	(bod)	or	chemical,	oxygen	demand	                  or	10.4%	compared	to	2009.	the	recycling	rate	was	75.5%	decreasing	
    (cod),	an	estimated	total	of	229	and	227	metric	tons	were	discharged	               slightly	from	2009.	when	compared	to	total	revenue,	the	average	waste	
    within	process	effluent	respectively.                                               generation	rate	across	the	business	was	9.54	m-ton/m€	in	2010.
    all	above	quantities	of	discharged	pollutants	are	fully	compliant	with	
    authorized	limits.

    waste	(metric tons or m-ton/m€)
                                                              Total	waste	Generated          %	Treated	Hazardous               %	Recycled      Total	per	Revenue
     2008                                                                           43,318                     4.9%                  72.5%                    8.95
     2009                                                                       43,348                         3.2%                   77.1%                  10.58
     2010                                                                       38,837                         5.2%                  75.5%                    9.54




    2010	waste	generation	(metric tons or %)
                                                              Total	waste	Generated                     %	Total       %	Treated	Hazardous             %	Recycled
     digital	delivery                                                                 986                  2.6%                       5.0%                   76.6%
     entertainment	services                                                         37,488                96.5%                        5.2%                  75.7%
     technology                                                                         0                      -                          -                       -
     grass	valley                                                                     363                  0.9%                       4.2%                   53.7%
     corporate                                                                          0                      -                          -                       -




    42       technIcolor	–	2010	annual	report
                                                                                                    |	Information	on the company
                                                                                                 PROPERTY,	PLANT	AND	EquIPMENT                                         2
                                                                                  Contents
                                                                         ➜
                                                                                                 ➜


air emission                                                                         data collection method and Rationale
upon	evaluation	of	its	operations,	technicolor	determined	the	most	
significant	but	limited	air	emission	contaminant	resulting	from	the	group’s	         this	report	contains	data	from	49	locations.	given	the	diversity	of	the	
industrial	operations	to	be	carbon	dioxide	associated	with	on-site	combus-           group’s	operations,	environmental	impacts	vary	by	location,	thus	not	
tion	of	fuels	for	heating.                                                           every	location	is	required	to	report	on	each	of	the	established	metrics.

In	2010,	a	total	of	19,916(1)	metric	tons	of	co2	were	emitted	from	combus-           new	for	2010	–	for	the	first	time,	larger	non-industrial	locations	began	
tion	sources	within	technicolor’s	industrial	plants	and	larger	non-industrial	       reporting	their	consumption	of	energy	and	water.
locations.	this	figure	was	calculated	using	the	1996	Intergovernmental	              the	corporate	eh&s	organization	has	identified	key	information	that	is	
panel	on	climate	change	(Ipcc)	emission	factors.                                     tracked	and	reported.	this	information	includes	utility	consumption,	waste	
                                                                                     generation,	recycling	and	disposal,	air	emissions	and	water	effluent	from	
                                                                                     the	identified	locations.	to	ensure	the	timely	and	consistent	reporting	
Air	emission (metric tons)                                                           of	information	from	technicolor’s	worldwide	locations,	the	group	has	
                                                                                     developed	its	own	electronic	reporting	system.	this	system	serves	as	
                                                                          CO2        a	vital	tool	for	identifying	and	acting	upon	trends	at	the	reporting	site,	
                                                                                     business	unit,	regional	and	global	levels.	the	reporting	locations	provide	
 2008                                                                    19,098
                                                                                     required	data	through	the	electronic	system	on	a	monthly	and	annual	
 2009                                                                    17,987      basis,	 depending	 upon	 the	 information	 provided.	 data	 is	 organized	
 2010(1)                                                                 19,916      and	consolidated	globally	and	is	communicated	to	the	vice	president,	
                                                                                     corporate	eh&s	and	others	as	appropriate.
 (1) Total energy includes energy from 16 non-industrial locations not
     reporting energy in prior years.                                                collection	period:	January	1,	2010	–	december	31,	2010
                                                                                     data	verification:	data	reporting	requirements,	and	data	collection	and	
                                                                                     consolidation	systems	are	developed	by	the	corporate	eh&s	organization	
In	 2010,	 technicolor	 participated	 for	 the	 fourth	 consecutive	 year	 in	       communicated	to	individual	locations.	each	location	is	responsible	for	
the	carbon	disclosure	project,	targeting	collaboration	between	large	                developing	 internal	 systems	 for	 the	 collection	 of	 required	 data	 and	
international	firms	and	investors	related	to	global	warming.	technicolor's	          reporting	that	data	to	the	corporate	eh&s	group.	corporate	eh&s	
answer	is	available	on	the	cdp's	website:	http://www.cdproject.net.                  reviews	the	submitted	data	for	accuracy	and	works	directly	with	the	
                                                                                     locations	to	clarify	and	when	necessary,	resolve	inconsistencies.	In	addition,	
the	group’s	first	carbon	footprint	assessment	was	published	for	the	year	
                                                                                     the	location’s	data	are	reviewed	during	scheduled	corporate	eh&s	audits.
2008,	taking	into	account	business	travel,	worker	travel	between	home	and	
work,	incoming	and	outgoing	freight	and	transportation,	energy	use,	waste	           scope	of	data	collection:	the	following	sites	provided	data	for	this	report:
disposal,	raw	materials,	and	the	use	of	refrigerants	and	industrial	gasses.

raw Material usage
the	main	raw	materials	consumed	by	the	group’s	businesses	in	2010	were:


Raw	materials	(metric tons)
 polycarbonate	molding	plastic                                           18,377
 cardboard	and	paper	packaging                                           11,014
 polyester	motion	picture	film                                            6,166
 plastic	packaging                                                        2,532
 bonding	resin                                                             950




                                                                                                       technIcolor	–	2010	annual	report                         43
             |	Information	on the company
2            PROPERTY,	PLANT	AND	EquIPMENT



                                                                             Contents
                                                                       ➜
                                                                                         ➜



                                                                                       2008             2009             2010
                                  Segment
     Site                         (ref	2010)               Location                E          H&S   E          H&S   E   utility   H&S
     angers                       digital	delivery         france                  x           x    x           x    x        x     x
     atlanta                      n/a  (1)
                                                           georgia,	usa                        x                x
     bangalore                    entertainment	services   India                                                x             x     x
     bangkok                      entertainment	services   thailand                x           x    x           x    x        x     x
     beaverton                    grass	valley             oregon	usa                          x                x             x     x
     bejing                       digital	delivery         china                               x                x             x     x
     Issy/boulogne                corporate                france                              x                x             x     x
     brampton                     entertainment	services   canada                  x           x    x           x    x        x     x
     breda                        grass	valley             the	netherlands         x           x    x           x    x        x     x
     burbank                      entertainment	services   california,	usa                     x                x             x     x
     camarillo                    entertainment	services   california,	usa         x           x    x           x    x        x     x
     chiswick                     digital	delivery         uK                                  x                x             x     x
     conflans	st.-honorine        grass	valley             france                  x           x    x           x    x        x     x
     coventry                     entertainment	services   uK                      x           x    x           x    x        x     x
     detroit                      entertainment	services   michigan,	usa           x           x    x           x    x        x     x
     glendale                     digital	delivery         california,	usa                     x                x             x     x
     guadalajara                  entertainment	services   mexico                  x           x    x           x    x        x     x
     hannover                     technology               germany                             x                x             x     x
     hilversum                    digital	delivery         the	netherlands                     x                x             x     x
     hollywood                    entertainment	services   california,	usa                     x                x             x     x
     Indianapolis                 digital	delivery         Indiana,	usa                        x                x             x     x
     Kobe                         grass	valley             Japan                               x                x             x     x
     livonia                      entertainment	services   michigan,	usa           x           x    x           x    x        x     x
     london	mpc                   entertainment	services   uK                                  x                x             x     x
     madrid                       entertainment	services   spain                   x           x    x           x    x        x     x
     manaus                       digital	delivery         brazil                  x           x    x           x    x        x     x
     melbourne                    entertainment	services   australia               x           x    x           x    x        x     x
     memphis                      entertainment	services   tennessee,	usa          x           x    x           x    x        x     x
     mexicali                     entertainment	services   mexico                  x           x    x           x    x        x     x
     mirabel                      entertainment	services   canada                  x           x    x           x    x        x     x
     montreal                     entertainment	services   canada                  x           x    x           x    x        x     x
     nevada	city                  grass	valley             california,	usa         x           x    x           x    x        x     x
     new	york                     entertainment	services   new	york,	usa           x            x   x            x   x        x      x
     north	hollywood              entertainment	services   california,	usa         x            x   x            x   x        x      x
     ontario	california           entertainment	services   california,	usa         x            x   x            x   x        x      x
     perivale                     digital	delivery         uK                                   x                x            x      x
     piaseczno                    entertainment	services   poland                  x            x   x            x   x        x      x
     pinewood                     entertainment	services   uK                                       x            x   x        x      x
     princeton                    technology               new	Jersey,	usa                      x                x            x      x
     rennes	cesson                digital	delivery         france                  x            x   x            x   x        x      x
     rome                         entertainment	services   Italy                   x            x   x            x   x        x      x
     rugby                        entertainment	services   uK                      x            x   x            x   x        x      x
    (1) These sites have since been closed or divested.

    44         technIcolor	–	2010	annual	report
                                                                                                    |	Information	on the company
                                                                                               PROPERTY,	PLANT	AND	EquIPMENT                                     2
                                                                               Contents
                                                                       ➜
                                                                                               ➜



                                                                                             2008                 2009                    2010
                              Segment
 Site                         (ref	2010)                   Location                      E          H&S       E          H&S        E      utility     H&S
 saint-cloud                  digital	delivery             france                                    x                    x                     x         x
 southwick                    grass	valley                 massachusetts,	usa            x           x        x           x         x           x         x
 sydney                       entertainment	services       australia                     x           x        x           x         x           x         x
 toronto                      entertainment	services       canada                        x           x        x           x         x           x         x
 türgi                        grass	valley                 switzerland                   x           x        x           x         x           x         x
 tultitlan (1)
                              entertainment	services       mexico                        x           x        x           x         x           x         x
 vancouver                    n/a  (2)
                                                           canada                        x           x        x           x
 villingen                    n/a(2)                       allemagne                                 x                    x
 weiterstadt                  grass	valley                 germany                       x           x        x           x         x           x         x
 west	drayton                 n/a(2)                       uK                            x           x
 wilmington                   entertainment	services       ohio,	usa                     x           x        x           x         x           x         x

 E = Environmental Data, Utility = Water and Energy Data, H&S = Work Injuries Data.
 (1) In prior year reporting, Tultitlan site was named Mexico City.
 (2) These sites have since been closed or divested.



2.4.3	Insurance
technicolor	has	a	“corporate	risk	&	Insurance”	department	in	charge	of	            the	deductible	levels	are	determined	and	applied	according	to	the	assets	
insurance	and	associated	risk	management	for	the	company.                          and	operational	risks	of	the	business	units.
through	this	department,	technicolor	arranges	global	insurance	programs	           Insurance	 policies	 are	 purchased	 whenever	 required	 by	 law	 or	 when	
covering	the	major	risks	related	to	its	activities	that	are	underwritten	with	     activities	or	circumstances	render	them	necessary.	thus,	the	group	has	
well-known	insurers	via a	global	broker.	these	programs,	established	on	           established	insurance	covering	motor	vehicles	and	personal	liability,	in	
behalf	of	its	subsidiaries	worldwide,	are	implemented	through	a	“master”	          countries	where	such	insurance	is	required.
insurance	policy	that	strengthens	the	coverage	offered	by	local	policies,	
                                                                                   In	addition,	in	partnership	with	its	insurers,	technicolor	has	developed	a	
and	provides	“difference	in	conditions”	and	“difference	in	limits”	over	these	
                                                                                   program	of	prevention	and	protection	of	its	production	sites	in	order	to	
policies.
                                                                                   reduce	its	exposure	to	its	assets	and	operating	losses	that	may	occur	in	
these	programs	cover	risks	such	as	general	and	professional	liability,	            case	such	risks	should	materialize.	the	corporate	legal	department	has	
property	and	business	interruption,	and	country-specific	risks	such	as	            established	procedures	and	rules	in	order	to	manage	contractual	risk.	It	
employer’s	liability	in	the	u.K.	and	workers’	compensation	insurance	              ensures,	in	conjunction	with	the	corporate	risk	&	Insurance	team,	that	
in	the	u.s.                                                                        these	rules	are	applied	throughout	the	world.
for	 risks	 considered	 non-strategic,	 subsidiaries	 are	 allowed	 to	 take	      the	group	intends	to	continue	its	policy	of	comprehensive	coverage	
additional	insurance	policies	in	their	local	market.                               for	all	its	exposure	to	major	risks,	expand	its	coverage	when	necessary	
                                                                                   and	reduce	costs	through	self-insurance	when	it	is	deemed	appropriate.
these	insurance	programs	also	cover	the	risk	of	damage	to	goods	in	
transit,	where	such	insurance	is	required,	as	well	as	the	environmental	           the	group	does	not	foresee	difficulties	in	setting	up	insurance	policies	
damage	caused	by	pollution.	In	addition,	technicolor	has	insurance	for	            in	the	future.
the	risks	associated	with	the	liability	of	its	directors	and	executive	officers.
                                                                                   to	date,	the	group	does	not	have	a	captive	insurance	or	reinsurance	
the	group	insurance	policies	are	issued	on	an	“all	risks”	basis,	but	with	         company.
standard	market	exclusions.




                                                                                                      technIcolor	–	2010	annual	report                    45
           |	Information	on the company
2          TECHNICOLOR	FOuNDATION	FOR	CINEMA	HERITAGE



                                                                                Contents
                                                                        ➜
                                                                                                ➜



    2.5	 technIcolor	foundatIon	for	cInema	herItage
    the	technicolor	foundation	for	cinema	heritage	operates	worldwide	              ■■   it	defines	and	conducts	specific	education	programs	targeting	mostly	
    to	safeguard	films	of	the	past,	in	order	that	they	may	be	seen	now	and	              film	school	students:	the	foundation	is	involved	in	various	ways	from	
    in	the	future.                                                                       offering	a	complete	curriculum	incorporated	in	film	school	programs	
                                                                                         to	conducting	regular	workshops	in	these	programs	or	during	festivals	
    created	in	2006	for	an	initial	duration	of	five	years,	the	technicolor	
                                                                                         (India,	usa,	china,	france,	romania,	russia,	Italy,	portugal,	ethiopia	
    foundation	is	a	non-profit	entity,	acting	in	the	field	of	the	preservation	
                                                                                         and	turkey).	these	educational	programs	cover	basic	aspects	of	film	
    and	promotion	of	film	heritage,	which	reflects	the	history	and	the	culture	
                                                                                         heritage:	preservation	concerns	and	risks,	access	to	film	heritage,	basic	
    of	a	country.	Its	duration	has	just	been	extended	for	five	years	and	remains	
                                                                                         technical	and	legal	knowledge,	filmmaker	responsibilities	(rights	and	
    extendable	indefinitely.	the	foundation	changed	its	name	in	2010,	from	
                                                                                         duties).	the	objective	is	to	raise	the	awareness	of	the	future	genera-
    thomson	foundation	to	technicolor	foundation,	as	a	consequence	of	
                                                                                         tion	of	filmmakers,	in	close	liaison	with	film	industry	representatives	
    its	founder's	name	change.
                                                                                         and	film	archive	institutions;
    the	programs	are	built	around	three	main	guiding	principles:                    ■■   it	supports	classics	festivals	or	creates	specific	festivals	or	events	for	
    ■■   preserve	film	heritage	as	a	key	part	of	a	country’s	memory;                     the	promotion	of	film	heritage:	creation	in	India	of	the	pune	film	
                                                                                         treasures	festival	and	IffI	goa	film	treasures,	classics	section	of	
    ■■   promote	and	highlight	film	heritage	in	order	that	it	may	be	seen	by	            the	International	film	festival	of	India;	free-access	and	outdoor	
         and	shared	with	as	wide	an	audience	as	possible;	and                            events	mixing	screening	and	music	on	stage	(tati	concerts	at	the	
    ■■   train	and	sensitize	everyone	who	can	play	a	part	in	the	safeguarding	           International	film	festival	of	la	rochelle	(france)	followed	by	hong	
         of	film	heritage.                                                               Kong,	addis-abeba	and	berlin)	to	provide	access	to	film	heritage	to	
                                                                                         a	new	audience;	and
    to	meet	these	three	main	objectives,	the	foundation	operates	in	different	
    ways:                                                                           ■■   it	supports	film	archive	federations:	regular	support	of	the	fIaf	
                                                                                         (International	film	archive	federation);	annual	support	to	the	annual	
    ■■   it	operates	directly	on	site	with	the	related	film	and/or	television	           conference	of	amIa	(association	of	moving	Image	archivists)	which	
         archive	institutions	(cambodia,	India):	annual	programs	are	defined	            gathers	film	archive	professionals	from	around	the	world	in	the	usa;	
         to	upgrade	the	archive	and	enable	access	to	these	archives	(preserva-           and	professional	training	with	scholarships	in	moving	image	archiving	
         tion	work,	equipment	donations,	education	programs	for	local	teams,	            (sid	sollow	scholarship	and	technicolor	foundation/technicolor	
         collection	enrichment,	etc.);                                                   fellowship).
    ■■   it	defines	and	monitors	major	restorations:	each	year,	one	of	the	objec-
                                                                                    In	 2010,	 particular	 attention	 was	 paid	 to	 The Complete Film Works	
         tives	of	the	foundation	is	to	restore	and	promote	key	international	
                                                                                    by	pierre	etaix,	which	had	not	been	viewable	for	more	than	20	years	
         cinema	titles	in	order	better	to	raise	audiences’	awareness	of	the	
                                                                                    due	to	a	legal	imbroglio,	that	was	solved	by	the	direct	support	of	the	
         importance	of	film	heritage	and	the	risks	of	endangering	films	that	
                                                                                    technicolor	foundation,	jointly	with	the	groupama	gan	foundation.	the	
         are	not	properly	safeguarded.	a	project	team	is	set	up,	which	includes	
                                                                                    foundation	also	worked	on	several	other	restoration	projects	including	
         the	foundation,	the	rights	owners	and	a	film	archive	institution.	the	
                                                                                    films	by	agnès varda	(france),	Jin	xie	(china)	and	an	early	cinema	film	
         foundation	monitors	the	whole	process	from	the	preservation	to	the	
                                                                                    by	georges	méliès,	each	expected	to	be	implemented	in	2011.	
         non-commercial	distribution	of	the	restored	version	in	the	world.	the	
         foundation	also	most	notably	provides	legal	support	and	technical	         for	all	of	these	programs,	the	foundation	identifies	the	appropriate	
         expertise.	In	2008,	the	foundation	restored	Lola Montès	by	max	            resources	required	and	helps	set	up	multi-disciplinary	teams.	these	include	
         ophuls	and	in	2009	Mr Hulot’s Holiday by	Jacques	tati,	Selvi Boylum        experts	from	its	founder	technicolor	and	experts	from	leading	film	archive	
         al Yazmalim	by	atif	yilmaz	and	The Complete Film Works	of	pierre	          institutions,	film	preservation	schools	and	cinema	schools.	Knowledge	
         etaix	in	2010	with	The Great Love	selected	at	cannes	classics.	the	        transmission	and	education	play	a	key	role	in	each	program.
         films	 were	 proposed	 and	 selected	 by	 cannes	 and	 bologna	 film	
         festivals,	which	both	present	major	international	restorations	each	
         year,	before	a	large	circulation	around	the	world;




    46       technIcolor	–	2010	annual	report
        3
                         Management’s Discussion and
                         Analysis of Financial Condition
                         and Results of Operations
3.1	    overvIew	                                                  48   3.14	   results	of	operatIons	for	2010	and	2009	                           55
                                                                                3.14.1	 Analysis	of	revenues	                                      55
3.2	    trends	In	the	medIa	&	entertaInment	
        Industry	                                                  48           3.14.2	 Profit	(loss)	from	continuing	operations	before	tax	and	
                                                                                        net	finance	costs	                                         57
3.3	    summary	of	results	                                        49           3.14.3	 Net	finance	costs	                                         58
                                                                                3.14.4	 Income	tax	                                                59
3.4	    seasonalIty	                                               50
                                                                                3.14.5	 Share	of	profit	(loss)	from	associates	                    59
3.5	    effect	of	exchange	rate	fluctuatIons	                      50           3.14.6	 Profit	(loss)	from	continuing	operations	                  59
                                                                                3.14.7	 Profit	(loss)	from	discontinued	operations	                59
3.6	    geographIc	breaKdown	of	revenues	                          51
                                                                                3.14.8	 Net	income	(loss)	of the Group	                            59
3.7	    events	subsequent	to	december 31,	2010	                    52           3.14.9	 Adjusted	indicators	                                       59
                                                                                3.14.10	Reconciliation	of	2009	adjusted	indicators	reported	
3.8	    crItIcal	accountIng	polIcIes	                              52                   for the year	ended	December 31,	2009	                      62
3.9	    changes	In	accountIng	prIncIples	                          52   3.15	   results	of	operatIons	for	2009	and	2008	                           62
3.10	   changes	In	the	scope	of	consolIdatIon	                                  3.15.1	 Analysis	of	revenues	                                      62
        In 2010	                                                   53           3.15.2	 Profit	(Loss)	from	continuing	operations	before	tax	and	
                                                                                        net	finance	costs	                                         64
        3.10.1	 Main	acquisitions	and consolidations	              53
                                                                                3.15.3	 Net	finance	costs	                                         65
        3.10.2	 Main	disposals	                                    53
                                                                                3.15.4	 Income	tax	                                                66
        3.10.3	 Changes	in	the	scope	of	discontinued	operations	   53
                                                                                3.15.5	 Share	of	Profit	(Loss)	from	associates	                    66
3.11	   notIfIcatIon	of	Interests	acquIred	                                     3.15.6	 Profit	(Loss)	from	continuing	operations	                  66
        In the	share	capItal	of	french	                                         3.15.7	 Profit	(Loss)	from	discontinued	operations	                66
        companIes	In 2010	                                         54           3.15.8	 Net	Income	(Loss)	of	the	Group	                            66
3.12	   changes	In	the	scope	of	consolIdatIon	                          3.16	   	 lIquIdIty	and	capItal	resources	                                 67
        In 2009	                                                   54           3.16.1		 Overview	                                                 67
        3.12.1	 Main	acquisitions	and consolidations	              54           3.16.2	 Cash	flows	                                                68
        3.12.2	 Main	disposals	                                    54           3.16.3	 Financial	resources	                                       69
        3.12.3	 Changes	in	the	scope	of	discontinued	operations	   54
                                                                        3.17	   contractual	oblIgatIons	and	
3.13	   notIfIcatIon	of	Interests	acquIred	                                     commercIal	commItments	IncludIng	
        In the	share	capItal	of	french	                                         off-balance	sheet	arrangements	                                    75
        companIes	In 2009	                                         54           3.17.1	 unconditional	contractual	obligations	and	commercial	
                                                                                        commitments	                                               76
                                                                                3.17.2	 Conditional	contractual	obligations	and	commercial	
                                                                                        commitments	                                               77
                                                                        3.18	   prIorItIes	and	obJectIves	for	2011	                                78




                                                                                        technIcolor	–	2010	annual	report                     47
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          OvERvIEw



                                                                                 Contents
                                                                         ➜
                                                                                                ➜



    3.1	 overvIew
    technicolor	provides	a	wide	range	of	video	technologies,	systems,	finished	      segment	bringing	together	the	connect	business	and	the	digital	content	
    products	and	services	to	the	media	&	entertainment	(“m&e”)	industry.	            delivery	business,	which	was	formerly	part	of	the	entertainment	services	
    In	 2010,	 technicolor’s	 activities	 were	 organized	 into	 three	 operating	   segment).	all	other	activities	and	corporate	functions	(unallocated)	are	
    segments:	technology,	entertainment	services	and	digital	delivery	(a	new	        presented	within	the	“other”	segment.




    3.2	 trends	In	the	medIa	&	entertaInment	Industry
    technicolor’s	strategic	priorities,	described	in	chapter 2:	“Information	on	the	company”,	section 2.1.4:	“	strategy”	of	this	annual	report,	are	based	on	
    its	vision	of	how	the	media	&	entertainment	industry	may	develop	over	the	coming	years.



    key	developments	in	2010	and trends	for 2011
    one	of	the	key	issues	in	the	media	&	entertainment	industry	in	2010,	            on	the	other	hand,	network	services	providers	(nsps)	who	are	major	
    which	is	likely	to	continue	to	dominate	in	2011	and	beyond,	has	been	the	        content	distributors	(pay-tv	and	video-on-demand	/	pay-per-view	
    emergence	of	consumers	who	access	video	content	via	an	over-the-top	             platforms)	 are	 also	 deploying	 strategies	 to	 offset	 slower	 subscriber	
    (“ott”)	model.	this	access	model	allows	subscribers	to	view	content	on	          growth	and	rising	content	cost	with	the	objective	to	ensure	ownership	of	
    their	television	sets	and	via	their	internet	connection	that	is	provided	by	     the	consumer	relationship.	nsps	strategies	include	bundling	of	services,	
    third	party	competitors	of	the	viewers’	own	network	operator.	three	key	         integration	of	ott	offers	to	raise	consumer	satisfaction	and	reduce	churn	
    ott	models	have	been	developed	and	are	likely	to	impact	consumer	                and	development	of	ott	models	to	include	new	features	and	better	user	
    behaviors,	technology,	business	models	and	more	generally	the	ecosystem	         experience.	these	strategies	seek	control	over	the	digital	home	with	the	
    for	network-based	electronic	content	consumption	over	the	next	few	years:        gateway	as	the	home	network	hub	and	a	large	installed	base	of	set-top	
                                                                                     boxes	("stbs")	which	are	already	connected	to	the	tv,	and	to	explore	
    ■■   “transaction-based”	models,	dominated	by	apple,	microsoft	and	
                                                                                     new	relationships	with	content	owners.
         amazon	 provide	 limited	 and	 mostly	 premium	 content.	 from	 a	
         consumer	perspective	this	model	tends	to	be	generally	for	occasional	
         use;                                                                        tRend infoRmation
    ■■   “subscription-based”	models	dominated	by	netflix	provide	an	"all	you	
                                                                                     technicolor	believes	that	the	following	market	drivers	will	shape	the	media	
         can	eat"	service	with	inexpensive	and	mostly	catalogue	content;	and
                                                                                     &	entertainment	industry	during	2011	and	over	the	next	few	years:
    ■■   finally,	most	recent	are	“advertising-based”	models,	using	internet-
         connected	tv	sets	and	dominated	by	companies	such	as	google,	               1.	 continued	growth	in	overall	consumer	electronics	market,	with	a	
         roku	and	boxee.	                                                                cagr	’10-’14	ranging	from	+3%	for	digital	tv,	+5%	for	digital	stbs	
                                                                                         and	lcd	monitors,	+11%	for	digital	media	products,	and	to	+24%	in	
    these	three	models	are	perceived	as	competitive	or	complementary	to	                 video	capable	smartphones	(sources: DisplaySearch Q3/10; IMS 2010;
    the	pay-tv	industry.                                                                 and FutureSource 2010);
    all	three	models	have	both	positive	and	negative	implications	for	studios,	      2.	 continued	dominance	of	u.s. studios	generating	approximately	70%	
    tv	networks,	and	network	service	providers	(cable,	satellite	and	telco	              of	box	office	receipts	worldwide	and	dvd/blu-ray™	spending	in	the	
    operators).	piracy,	audience	fragmentation	and	substitution	of	profitable	           largest	home	entertainment	markets,	and	which	are	expected	to	remain	
    business	are	negative	implications.	on	the	other	hand,	an	increase	in	the	           the	primary	content	creators	and	distributors;
    number	of	platforms,	lower	distribution	costs,	and	new	targeted	ad-models	       3.	 continued	investment	by	studios	in	releases	with	large	visual	effects	
    are	positive	implications.	In	addition	to	technology	and	standard	stakes,	the	       ("vfx"),	animation,	and	3d	(with	25	releases	in	2010	and	over	30	
    distribution	and	consumption	of	electronic	content	will	require	a	balanced	          releases	scheduled	in	2011)	budgets;
    optimization	of	economic	rent	for	the	key	participants	in	the	value	chain.
                                                                                     4.	 large	increase	(48%)	in	the	number	of	u.s. consumers	with	3d	experi-
    technicolor	sees	content	owners	adopting	a	variety	of	strategies	to	address	         ence	(film,	game	or	concert)	at	a	movie	theater	and	a	potential	of	25%	
    the	development	of	electronic	contents	including	the	monetization	of	                of	u.s. consumers	owning	a	3dtv	within	the	next	three	years	(source:
    content	across	platforms;	the	redefinition	of	release	windows	and	pricing	           CEA market research, 2010);
    across	channels;	and	the	exploration	of	direct	relationships	with	consumers	     5.	 Increasing	 migration	 from	 tape-based	 to	 file-based	 workflows	 is	
    via	direct	ott	models,	while	ensuring	the	protection	and	durability	of	              expected	to	shorten	time	to	market	and	create	new	opportunities	to	
    lucrative	revenue	streams	(pay-tv	affiliate	fees	and	dvd/blu-ray™	retail).           monetize	content;




    48       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
                                                                                                                       SuMMARY	OF	RESuLTS                             3
                                                                                 Contents
                                                                         ➜
                                                                                                ➜


   6.	 Increased	penetration	of	digital	cinema	deployment	with	an	estimated	         11.	 content	will	likely	remain	the	most	important	aspect	of	triple-and	
       67%+	penetration	in	north	america	and	58%+	penetration	in	western	                 quadruple-play	 bundles,	 with	 the	 goal	 of	 improving	 customer	
       europe	by	2013	(Source: Screendigest, 2010);                                       retention,	attracting	new	customers	and	achieving	higher	average	
   7.	 continued	consumer	demand	for	packaged	media	but	with	approxi-                     revenues	per	user;
       mately	2%	consumer	spending	decline	expected	in	technicolor’s	served	         12.	 new	television	business	models	(à la carte,	subscription	and	ad-funded)	
       markets	by	2013	(source: FutureSource consulting, 2010);                           are	expected	to	change	the	landscape	for	television	networks,	through	
   8.	 strong	blu-ray™	growth	following	wide-scale	adoption	due	to	strong	                digital	migration,	technological	innovations,	new	ways	of	using	video	
       on-going	studio	marketing	support	and	decrease	in	blu-ray™	player	                 and	the	multiplication	of	content	delivery	channels.
       pricing;                                                                      the	above	trends	have	influenced	technicolor’s	strategic	choices	and	the	
   9.	 continued	growth	in	the	€14bn	digital	home	device	market	(gateways	           vision	of	its	future	growth	opportunities.	for	further	information	associated	
       and	set-top	boxes)	at	a	4.2%	cagr	between	2010	and	2015	(sources:             with	these	trends,	see	chapter 1:	“Key	Information	and	risk	factors”,	
       IMS research, 2010; Broadband CPE market Infonetics, 2010).                   section 1.3.4:	“risks	related	to	the	business”.	for	more	information	on	
   10.	the	electronic	distribution	of	content	is	an	increasingly	strategic	issue.	   technicolor’s	strategy	and	outlook,	see	chapter 2:	“Information	on	the	
       successful	digital	distribution	models	will	emerge	over	the	next	few	         company”,	section 2.1.4:	“strategy”	of	this	annual	report.
       years	with	nsps	and	ott	providers	competing	for	control	over	digital	
       distribution	and	accelerating	the	move	to	non-linear	consumption;



   3.3	 summary	of	results
   technicolor’s	 revenues	 from	 continuing	 operations	 amounted	 to	              net	finance	result	was	an	income	of	€116 million	in	2010,	compared	
   €3,574 million	in	2010,	down	1.2%	at	current	currency	compared	with	              with	a	loss	of	€68 million	in	2009	and	€374 million	in	2008,	respectively.	
   2009,	and	down	5.4%	at	constant	currency.	excluding	the	retail	telephony	         the	finance	result	included	a	gain	of	€381 million	in	2010	resulting	from	
   business,	from	which	the	group	exited	at	the	end	of	2009,	revenues	               technicolor’s	debt	restructuring	on	may	26,	2010.	for	more	information,	
   increased	by	1.5%	at	current	currency	in	2010	compared	with	2009,	and	            see	sections	3.14.3	and	3.15.3:	“net	finance	costs”	below	for	further	details.
   decreased	by	2.8%	at	constant	currency,	with	revenue	growth	in	the	second	
                                                                                     the	group's	total	income	tax	amounted	to	a	profit	of	€2 million	in	
   half	offsetting	the	first	half	revenue	drop.
                                                                                     2010,	compared	with	a	charge	of	€35 million	in	2009	and	a	charge	of	
   technology	revenues	recorded	strong	growth	in	2010	compared	with	                 €105 million	in	2008.	see	sections	3.14.4	and	3.15.4:	“Income	tax”	for	
   2009,	reflecting	the	performance	of	the	licensing	business	during	the	            further	information.
   year,	driven	by	a	strong	increase	in	revenues	from	mpeg	la	and	by	the	
                                                                                     profit	from	continuing	operations	was	€156 million	in	2010,	compared	
   sustained	performance	of	the	other	licensing	programs.	the	entertain-
                                                                                     with	a	loss	of	€4 million	in	2009	and	a	loss	of	€1,257 million	in	2008.	
   ment	services	revenue	decline	of	the	first	half	of	2010	was	more	than	
                                                                                     for	more	information,	see	sections	3.14.6	and	3.15.6:	“profit	(loss)	from	
   offset	in	the	second	half	of	the	year,	driven	by	higher	levels	of	activity	in	
                                                                                     continuing	operations”.
   creation	services,	due	to	market	share	gains,	increased	digital	production	
   capacities	and	improved	market	conditions	in	postproduction,	as	well	as	by	       In	2010,	the	total	loss	from	discontinued	operations	was	€225 million	
   the	increase	in	dvd	volumes,	resulting	from	the	warner	bros.	agreement	           (compared	with	a	loss	of	€338 million	in	2009	and	a	loss	of	€676 million	
   and	the	overall	growth	in	blu-ray™	volumes.	theatrical	services	revenues	         in	2008),	mainly	due	to	the	grass	valley	businesses.	for	more	informa-
   declined	in	2010	compared	with	2009	as	the	acceleration	in	digital	cinema	        tion,	see	sections	3.14.7	and	3.15.7:	“profit	(loss)	from	discontinued	
   theater	installations	in	the	us	and	europe	continued	to	strongly	benefit	         operations”.
   the	group’s	digital	cinema	distribution	business	but	weighed	significantly	
   on	photochemical	film	volumes.	In	digital	delivery,	the	revenue	decline	          the	group’s	share	of	the	consolidated	net	loss	totaled	€69 million	in	2010,	
   of	the	first	half	of	2010	was	partly	offset	in	the	second	half	of	the	year,	      compared	with	a	loss	of	€342 million	in	2009	and	a	loss	of	€1,930 million	
   driven	by	solid	growth	in	digital	home	ans	set-top	box	products	volumes	          in	2008.	for	more	information,	see	sections	3.14.8	and	3.15.8:	“net	income	
   and	media	services	activities.	                                                   (loss)	of	the	group”.

   see	sections	3.14.1	and	3.15.1:	“analysis	of	revenues”	for	further	details.       net	loss	per	non-diluted	share	was	€0.8 in	2010,	compared	with	a	net	loss	
                                                                                     per	non-diluted	share	of	€13.0	and	€74.1	in	2009	and	2008,	respectively.
   profit	from	continuing	operations	before	tax	and	net	finance	costs	was	
   €38  million	 in	 2010,	 compared	 with	 a	 profit	 of	 €99  million	 in	 2009	
   and	a	loss	of	€774 million	in	2008.	adjusted	ebItda	(as	detailed	in	
   section 3.14.9:	“adjusted	indicators”)	from	continuing	operations	increased	
   by	€6 million	in	2010	compared	with	2009.	following	the	decrease	in	the	
   first	half	of	2010,	the	group	showed	an	improvement	in	adjusted	ebItda	
   in	the	second	half,	driven	by	the	increase	in	revenues	and	tight	cost	control,	
   notwithstanding	the	decision	to	maintain	investments	in	r&d	and	sales	to	
   drive	growth	in	its	key	activities.	for	more	information,	see	section 3.14.2	
   and	3.15.2:	“profit	(loss)	from	continuing	operations	before	tax	and	net	
   finance	costs”	and	section 3.14.9:	“adjusted	indicators”.



                                                                                                       technIcolor	–	2010	annual	report                        49
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          SEASONALITY



                                                                                    Contents
                                                                           ➜
                                                                                                    ➜



    3.4	 seasonalIty
    the	group’s	revenues	have	historically	tended	to	be	higher	in	the	second	           technology	revenues	totaled	€261 million	in	the	second	half	of	2010,	
    half	of	the	year	than	in	the	first	half,	with	customers’	activity	being	greater	    accounting	for	58%	of	the	segment’s	2010	revenues,	compared	with	
    in	the	second	half,	especially	for	entertainment	services	and	digital	              50%	in	2009	and	54%	in	2008.	entertainment	services	revenues	totaled	
    delivery.	this	trend	did	not	occur	in	2009,	mainly	because	the	operations	          €1,029 million	in	the	second	half	of	2010,	accounting	for	61%	of	the	
    of	digital	delivery	were	impacted	in	the	second	half	of	the	year	by	the	            segment’s	2010	revenues,	compared	with	54%	in	2009	and	56%	in	2008.	
    group’s	reduced	capacity	to	win	new	contracts	in	the	field	of	connect	              digital	delivery	revenues	totaled	€783 million	in	the	second	half	of	2010,	
    products,	given	its	financial	situation	at	that	time.	In	the	second	half	of	        accounting	for	55%	of	the	segment’s	2010	revenues,	compared	with	45%	in	
    2010,	continuing	operating	revenues	totaled	€2,075 million,	or	58%	of	the	          2009	and	56%	in	2008.	see	sections	3.14.1	and	3.15.1:	“analysis	of	revenues”	
    group’s	annual	revenues,	compared	with	€1,776 million	in	the	second	half	           for	further	information.
    of	2009,	representing	49%	of	annual	revenues,and	€2,317 million	in	the	
    second	half	of	2008,	representing	55%	of	annual	revenues.




    3.5	 effect	of	exchange	rate	fluctuatIons
    as	 the	 group	 has	 an	 important	 part	 of	 its	 activities	 located	 in	 the	    In	sections	3.14:	“results	of	operations	for	2010	and	2009”	and	3.15:	“results	
    united	states	or	in	other	countries	whose	currency	is	closely	linked	to	            of	operations	for	2009	and	2008”,	certain	revenue	figures	at	group	and	
    the	u.s. dollar,	the	main	exposure	to	fluctuations	in	foreign	currencies	is	        segment	levels	are	presented,	where	indicated,	on	a	comparable	basis	
    related	to	the	exchange	rate	of	the	u.s. dollar	against	the	euro.	generally,	       at	constant	exchange	rates.	for	year-on-year	comparisons,	the	current	
    a	rise	of	the	dollar	against	the	euro	has	a	positive	effect	on	group	revenues	      financial	year	revenue	figures	are	adjusted	accordingly	by	applying	the	
    while	a	decrease	of	the	dollar	against	the	euro	has	the	opposite	impact.	In	        exchange	rate	used	for	the	consolidated	statement	of	 operations	 in	
    2010	compared	with	2009,	exchange	rate	fluctuations,	and	in	particular	the	         the	previous	financial	year.	the	group	believes	that	this	presentation	
    appreciation	of	the	u.s. dollar	against	the	euro,	had	a	positive	impact	of	         of	change	in	revenues,	adjusted	to	reflect	exchange	rate	fluctuations,	is	
    €151 million	on	consolidated	revenues	and	a	negative	impact	of	€7 million	          helpful	in	analyzing	its	performance	from	one	year	to	the	next.	
    on	profit	from	continuing	operations	before	tax	and	net	finance	costs.	In	
                                                                                        the	table	below	shows	the	exchange	rate	effect	on	the	group’s	revenues	
    2009,	exchange	rate	fluctuations	had	a	positive	impact	of	€29 million	on	
                                                                                        from	continuing	operations	in	2010,	compared	with	2009,	on	a	consoli-
    consolidated	revenues	compared	with	2008,	and	a	negative	impact	of	
                                                                                        dated	and	a	segment-by-segment	basis.
    €10 million	on	profit	from	continuing	operations	before	tax	and	net	finance	
    costs.	for	more	information	on	exchange	rate	fluctuations,	including	an	
    analysis	of	the	impact	of	an	appreciation	of	10%	of	the	u.s. dollar	against	
    the	euro	on	revenues	and	result	from	continuing	operations	before	taxes	
    and	 net	 finance	 costs,	 see	 note  27.1.(f)	 to	 the	 group’s	 consolidated	
    financial	statements.



                                            2009	revenues	       2010 revenues                            2010 revenues             %	change	
                                                  at	2009	             at 2009         Exchange	rate	            at 2010          at	constant	         %	at	current	
     (in € millions)                        exchange	rates      exchange rates               impact      exchange rates        exchange	rates       exchange	rates
     continuing	operations                             3,619                3,423                 151                3,574                 (5.4)                (1.2)
     Of which:
     technology                                          391                 458                  (8)                 450                   17.3                15.0
     entertainment	services                            1,593                1,605                  92                1,697                  0.8                  6.6
     digital	delivery                                  1,529                1,356                  67                1,423                (11.3)               (6.9)
     other                                              106                     4                   0                    4               (96.0)               (95.9)




    50       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
                                                                                     GEOGRAPHIC	BREAkDOwN	OF	REvENuES                                          3
                                                                              Contents
                                                                    ➜
                                                                                            ➜


   the	table	below	shows	the	exchange	rate	effect	on	technicolor’s	revenues	from	continuing	operations	in	2009	compared	with	2008,	on	a	consolidated	
   and	a	segment-by-segment	basis.

                                       2008	revenues	      2009	revenues	                         2009	revenues	            %	change	
                                             at	2008	            at	2008	       Exchange	rate	          at	2009	          at	constant	         %	at	current	
    (in € millions)                    exchange	rates      exchange	rates             impact      exchange	rates       exchange	rates       exchange	rates
    continuing	operations                         4,192              3,590                 29               3,619               (14.4)                (13.7)
    Of which:
    technology                                     394                 393                 (2)                391                 0.0                 (0.8)
    entertainment	services                        1,723              1,575                  18               1,593              (8.6)                  (7.6)
    digital	delivery                              1,792               1,518                 11               1,529              (15.3)               (14.6)
    other                                          283                 104                   2                106               (63.3)               (62.7)


   for	more	information	on	market	risks,	see	notes	24	and	27.1	to	the	group’s	consolidated	financial	statements	and	“risk	of	exchange	rate	fluctuation”	in	
   chapter	1:	“Key	Information	and	risk	factors”,	section 1.3:	“risk	factors”	of	this	annual	report.



   3.6	 geographIc	breaKdown	of	revenues

   the	table	below	shows	group	2010,	2009	and	2008	revenues	from	continuing	operations	broken	down	by	destination	and	classified	by	customer	origin.	as	
   the	table	shows,	the	group’s	most	important	markets	are	the	united	states	and	europe,	accounting	for	43.9%	and	32.2%,	respectively,	of	revenues	in	2010.

    Revenues	of	continuing	operations	by	destination                                                                 2010           2009              2008
    united	states                                                                                                    43.9%         44.6%             49.2%
    rest	of	americas                                                                                                 13.2%          9.0%               7.8%
    europe                                                                                                           32.2%         35.7%             35.0%
    asia-pacific                                                                                                      9.6%           9.3%              7.2%
    other                                                                                                             1.1%           1.4%             1.0%


   the	table	below	shows	group	2010,	2009	and	2008	revenues	from	continuing	operations	broken	down	by	origin	and	classified	by	the	location	of	the	
   entity	that	invoices	the	customer.	as	the	table	shows,	the	group’s	most	important	markets	are	the	united	states	and	europe,	accounting	for	37.2%	and	
   45.1%,	respectively,	of	revenues	in	2010.

    Revenues	of	continuing	operations	by	origin                                                                      2010           2009              2008
    united	states                                                                                                    37.2%          37.2%            42.4%
    rest	of	americas                                                                                                 11.7%         10.3%               9.1%
    europe                                                                                                           45.1%         46.3%             43.5%
    asia-pacific                                                                                                     6.0%           6.2%              5.0%




                                                                                                  technIcolor	–	2010	annual	report                        51
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          EvENTS	SuBSEquENT	TO	DECEMBER 31,	2010



                                                                                   Contents
                                                                           ➜
                                                                                                  ➜



    3.7	 events	subsequent	to	december 31,	2010
    on	december 23,	2010	technicolor	received	a	fully	documented	binding	              on	february	23,	2011	technicolor	has	received	a	fully	documented	binding	
    offer	from	parter	capital	group	for	the	acquisition	of	the	grass	valley	           offer	from	the	fcde	(fonds	de	consolidation	et	de	développement	des	
    transmission	business.	the	offer	made	by	parter	capital	group	comprises	           entreprises)	for	the	acquisition	of	the	grass	valley	head-end	business,	
    the	following:                                                                     operating	under	the	thomson	video	networks	brand.	the	transaction	
                                                                                       is	expected	to	close	in	the	first	half	of	2011,	subject	to	the	relevant	
    ■■   €2.5 million	in	cash;
                                                                                       customary	regulatory	administrative	approvals	and	consultations.
    ■■   the	transfer	by	technicolor	of	a	specified	level	of	cash	and	working	
         capital	required	for	the	ongoing	management	of	the	activity.                  tss	holders	have	appealed	to	the	french	supreme	court	(Cour de
                                                                                       cassation)	through	a	“pourvoi en cassation”	procedure	against	the	decision	
    technicolor	signed	a	share	purchase	agreement	(spa)	on	march	22,	2011	             of	the	versailles	court	of	appeal	on	february	14,	2011	(see	note	37	to	the	
    with	parter	capital	group.                                                         group’s	financial	statements	for	more	information).



    3.8	 crItIcal	accountIng	polIcIes
    technicolor’s	critical	accounting	policies	are	described	in	note 3	to	group’s	consolidated	financial	statements.




    3.9	 changes	In	accountIng	prIncIples
    the	accounting	policies	applied	by	the	group	in	2010	are	consistent	with	          recognition	of	a	financial	non-cash	gain	of	€150 million,	representing	
    those	followed	in	the	preparation	of	the	group’s	consolidated	financial	           the	difference	between	the	carrying	amount	of	the	debt	extinguished	by	
    statements	for	the	year	ended	december 31,	2009.	the	new	amend-                    the	debt	restructuring	process	and	the	fair	value	of	the	equity	instruments	
    ments	and	interpretations	effective	in	2010	are	disclosed	in	note 2	to	the	        remitted	at	may	26,	2010.
    consolidated	financial	statements.
                                                                                       for	a	description	of	the	accounting	principles	applied	by	the	group,	see	
    In	2010,	technicolor	elected	to	early	apply	IfrIc	19.	the	main	impact	             note 2	to	the	consolidated	financial	statements.
    of	 this	 interpretation	 in	 the	 consolidated	 financial	 statements	 is	 the	




    52       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
                                                                       CHANGES	IN	THE	SCOPE	OF	CONSOLIDATION	IN 2010                                                 3
                                                                               Contents
                                                                       ➜
                                                                                                 ➜



   3.10	 changes	In	the	scope	of	consolIdatIon	
         In 2010

   3.10.1	 Main	acquisitions	and consolidations
   none.


   3.10.2	 Main	disposals                                                               this	disposal	process	contributes	to	the	strategic	refocus	around	
                                                                                        technicolor’s	content	creator	and	network	service	provider	customer	
                                                                                        base,	initiated	by	the	group	in	2009.	the	transaction	closed	on	
   ■■   on	 october  14,	 2010,	 technicolor	 closed	 a	 transaction	 under	            december 31,	2010.
        which	it	sold	the	majority	of	its	50%	interest	in	technicolor	cinema	
                                                                                        the	transaction	with	francisco	partners	comprised	the	following:
        advertising,	llc	(“screenvision	us”)	to	a	newly	formed	holding	
        company,	sv	holdco,	llc	(“sv	holdco”),	an	affiliate	of	shamrock	                •■   us$80 million	promissory	note	(€60 million	at	the	transaction	
        capital	growth	fund	II,	a	leading	private	equity	fund	focused	on	                    date)	issued	to	technicolor	with	a	six-year	maturity	and	bearing	
        media,	entertainment	and	communication.	the	sale	price	for	the	                      a	capitalized	interest	of	5%	per	year.	the	amount	of	the	note	
        shares	was	$60 million	(€43 million	at	october 14,	2010	rate),	of	which	             represents	the	value	of	the	business	minus	the	present	value	of	
        $55 million	(€39 million)	was	paid	in	cash	and	$5 million	(€4 million)	              retirement	liabilities	transferred;
        was	placed	in	escrow	to	satisfy	post	closing	indemnity	claims	against	          •■   the	transfer	by	technicolor	of	a	net	amount	of	€27 million	of	cash	
        technicolor.	as	part	of	the	transaction,	technicolor	also	exchanged	                 required	for	the	ongoing	management	of	the	activity;
        its	remaining	interest	in	screenvision	us	for	a	minority	interest	in	sv	        •■   the	right	for	technicolor	to	receive	additional	consideration	from	
        holdco	represented	by	class	a	common	units.	simultaneously	at	                       the	buyer	based	on	the	potential	future	remuneration	of	the	new	
        closing,	carmike	cinemas,	Inc.	acquired	class	c	common	units	in	                     owners	of	the	disposed	entity.
        sv	holdco	representing	20%	of	the	voting	rights	and	20%	of	profit	
        and	loss	of	sv	holdco,	in	exchange	for	entering	into	a	long	term	               based	on	the	book	value	of	the	assets,	the	group	registered	a	loss	
        theater	agreement	with	screenvision	us.	technicolor’s	class	a	                  for	this	disposal	in	its	2010	consolidated	financial	statements	of	
        common	units	represented	an	18.8%	interest	in	sv	holdco.                        €97 million.	given	the	structure	of	the	deal,	technicolor	did	not	
                                                                                        receive	cash	proceeds	from	this	disposal	to	be	applied	toward	the	
        under	the	terms	of	the	transaction,	technicolor	will	no	longer	have	            dpn	issued	in	may	2010.
        joint	control	of	screenvision	us,	but	will	retain	one	seat	on	the	board	
        of	sv	holdco	and	will	continue	to	be	screenvision	us’s	provider	of	        ■■   on	January	27,	2010,	technicolor	entered	into	an	agreement	with	
        both	film	and	digital	services.	accordingly,	technicolor	will	have	a	           sony	electronics	Inc.	for	the	sale	of	convergent	media	system	
        significant	influence	and	will	account	for	its	stake	in	screenvision	us	        corporation,	specialized	in	digital	signage	and	content	distribution	
        under	the	equity	method.                                                        systems.	convergent	lies	outside	the	scope	of	technicolor’s	strategic	
                                                                                        focus	on	content	creators.	the	impact	of	the	disposal	on	the	group	
        In	accordance	with	Ias	31	paragraph	45,	the	residual	interest	has	been	         consolidated	financial	statements	is	a	loss	of	€7 million	at	the	date	
        accounted	for	at	fair	value	(€9.1 million)	after	discount	for	lack	of	          of	transaction	(the	sale	price	amounts	to	€4.6 million	at	the	date	of	
        marketability	and	lack	of	control.	the	net	loss	recognized	in	net	loss	         transaction)	recognized	in	net	loss	from	discontinued	operations.	
        from	discontinued	operations	on	the	disposal	date	was	€16 million.	             technicolor	applied	the	cash	proceeds	towards	redemption	of	the	
        the	portion	of	that	result	attributable	to	recognizing	the	investment	          dpn	issued	on	may	26,	2010	(see	note	1.2	to	the	consolidated	
        retained	in	the	former	subsidiary	at	its	fair	value	when	joint	control	         financial	statements).
        was	lost	is	€4 million.	technicolor	applied	the	$60 million	proceeds	
        towards	repayment	of	the	dpn	(see	note	1.2	to	the	consolidated	            for	further	information	regarding	the	group’s	decisions	related	to	its	
        financial	statements).                                                     organizational	 structure	 and	 the	 disposal	 of	 non	 strategic	 activities,	
   ■■   on	July 26,	2010	technicolor	received	a	binding	offer	from	francisco	      please	refer	to	chapter	2:	"Information	on	the	company",	section 2.1.4:	
        partners	for	the	acquisition	of	the	grass	valley	broadcast	business.	      “strategy”	of	this	annual	report.



   3.10.3	 Changes	in	the	scope	of	discontinued	operations
   all	transactions	described	in	section 3.10.2:	“main	disposals”	are	related	     discontinued	operations	in	2009,	has	been	reclassified	in	continuing	
   to	the	scope	of	discontinued	operations.                                        operations	and	was	withdrawn	from	the	assets	held	for	sale	classification.
   for	 the	 year	 2010,	there	have	been	no	changes	in	the	discontinued	           for	further	information	regarding	the	group’s	decisions	related	to	its	
   perimeter	with	the	exception	of	prn	(premier	retail	networks).	prn	was	         organizational	structure	and	the	disposal	of	non-core	activities,	please	refer	
   part	of	former	media	network	disposal	group	and	technicolor	has	decided	        to	chapter	2:	"Information	on	the	company",	sections 2.1.4:	“strategy”	
   to	end	this	disposal	process.	accordingly,	prn,	which	was	classified	as	        and 2.2.5:	“discontinued	operations”	of	this	annual	report.


                                                                                                       technIcolor	–	2010	annual	report                       53
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          NOTIFICATION	OF	INTERESTS	ACquIRED	IN THE	SHARE	CAPITAL	OF	FRENCH	COMPANIES	IN 2010



                                                                                 Contents
                                                                         ➜
                                                                                                ➜



    3.11	 notIfIcatIon	of	Interests	acquIred	In the	
          share	capItal	of	french	companIes	In 2010

    In	compliance	with	article	l. 233-6	of	the	french	commercial	code,	technicolor	notes	that	the	group	did	not	acquire	an	interest	in	any	french	
    companies	in	2010.




    3.12	 changes	In	the	scope	of	consolIdatIon	In 2009

    3.12.1	 Main	acquisitions	and consolidations
    In	december 2009,	the	group	acquired	the	residual	37%	interest	in	               India	pvte	ltd	(formerly	paprikaas)	is	consolidated	in	the	entertainment	
    technicolor	 India	 pvte	 ltd	 (formerly	 paprikaas)	 for	 u.s.$7  million	      services	segment.	the	main	impact	of	this	additional	share	acquisition	is	
    (equivalent	to	€5 million	at	the	date	of	the	transaction).	technicolor	          an	increase	in	goodwill	amounting	to	€3 million.



    3.12.2	 Main	disposals
    In	July 2009,	technicolor	sold	its	software	technology	solutions	(sts)	          this	entity	up	to	a	maximum	of	€2 million.	this	obligation	was	recorded	in	
    activities	to	civolution.	the	impact	on	the	group’s	consolidated	financial	      technicolor’s	2009	consolidated	financial	statements.	the	total	impact	of	
    statements	was	a	loss	of	€4 million.                                             the	disposal	on	the	group’s	consolidated	financial	statements	was	a	loss	
                                                                                     of	€7 million	(of	which	€2 million	was	recorded	as	restructuring	costs).
    In	december 2009,	technicolor	sold	its	retail	telephony	activities	(cns)	to	
    verdoso.	as	part	of	the	agreement,	technicolor	has	an	obligation	towards	



    3.12.3	 Changes	in	the	scope	of	discontinued	operations
    on	January 28,	2009,	technicolor	announced	its	decision	to	sell	the	             by	 Ifrs  5.	 for	 further	 information	 regarding	 the	 group’s	 decisions	
    grass	valley	and	media	networks	businesses.	they	have	been	classified	           related	 to	 its	 organizational	 structure	 and	 the	 disposal	 of	 non-core	
    as	discontinued	operations	in	the	consolidated	financial	statements,	as	the	     activities,	please	refer	to	chapter	2:	"Information	on	the	company",	
    requirements	under	Ifrs 5	were	fulfilled	at	the	beginning	of	the	second	         sections 2.1.4: “strategy”	and 2.2.5:	“discontinued	operations”	of	this	
    quarter	of	2009.	the	group	also	decided	to	sell	its	retail	telephony	            annual	report.
    activities.	 these	 activities	 have	 not	 been	 classified	 as	 discontinued	
    operations,	as	they	are	not	considered	as	a	disposal	group	as	defined	



    3.13	 notIfIcatIon	of	Interests	acquIred	In the	
          share	capItal	of	french	companIes	In 2009
    In	compliance	with	article	l. 233-6	of	the	french	commercial	code,	the	group	did	not	acquire	an	interest	in	any	french	companies	in	2009.




    54       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
                                                                                     RESuLTS	OF	OPERATIONS	FOR	2010	AND	2009                                          3
                                                                                 Contents
                                                                         ➜
                                                                                                 ➜



   3.14	 results	of	operatIons	for	2010	and	2009
   the	group’s	revenues	and	profit	(loss)	from	continuing	operations	before	          the	group’s	results	are	presented	in	accordance	with	Ifrs 5.	conse-
   tax	and	net	finance	costs	for	the	years	2010	and	2009	are	presented	below	         quently	the	contributions	of	discontinued	operations	are	presented	in	one	
   for	each	of	the	group’s	operating	segments	–	technology,	entertainment	            line	in	the	consolidated	statements	of	operations,	named	“net	loss	from	
   services	and	digital	delivery	–	as	well	as	the	“other”	segment.	the	results	       discontinued	operations”.	prior-period	results	have	been	adjusted	to	take	
   of	discontinued	operations	are	presented	separately	under	section 3.14.7:	         into	account	the	current	scope	of	discontinued	operations.
   “profit	(loss)	from	discontinued	operations”.



   3.14.1	 Analysis	of	revenues
   technicolor’s	 revenues	 from	 continuing	 operations	 amounted	 to	               an	application	for	tablets	and	smartphones,	supporting	android,	webos,	
   €3,574 million	in	2010,	down	1.2%	at	current	currency	compared	with	               windows7,	meego	and	ios	operating	systems.	It	operates	a	set	of	web	
   2009,	and	down	5.4%	at	constant	currency.	excluding	the	retail	telephony	          services	in	connection	with	not	just	technicolor	set-top	boxes,	but	also	
   activities,	from	which	the	group	exited	at	the	end	of	2009,	revenues	              third	party	set-top	boxes	and	connected	tvs.	It	is	also	underpinned	by	
   increased	by	1.5%	at	current	currency	in	2010	compared	with	2009,	and	             several	patent	families	developed	by	technicolor	in	these	domains.	the	
   decreased	by	2.8%	at	constant	currency,	with	revenue	growth	in	the	second	         medianavi	platform	commercialization	is	therefore	based	on	a	technology	
   half	offsetting	the	first	half	revenue	decrease.                                   licensing	model.
   technology	revenues	recorded	strong	growth	in	2010	compared	with	                  due	to	the	close	link	with	the	digital	home,	set-top	box	and	media	
   2009,	reflecting	the	performance	of	the	licensing	business	during	the	             services	 activities	 of	 the	 digital	 delivery	 segment,	 medianavi	 was	
   year,	driven	by	a	strong	increase	in	revenues	from	mpeg	la	and	by	the	             initially	developed	within	that	segment.	given	the	chosen	business	model,	
   sustained	performance	of	the	other	licensing	programs.	the	entertain-              validated	by	the	first	feedback	provided	by	potential	clients	and	partners,	
   ment	services	revenue	decrease	of	the	first	half	of	2010	was	more	than	            and	the	group’s	initiative	in	the	later	part	of	2010	to	set-up	a	technology	
   offset	in	the	second	half	of	the	year,	driven	by	higher	levels	of	activity	in	     licensing	 practice	 within	 the	 technology	 segment,	 medianavi	 was	
   creation	services,	due	to	market	share	gains,	increased	digital	production	        transferred	from	the	digital	delivery	segment	to	the	technology	segment.
   capacities	and	improved	market	conditions	in	postproduction,	as	well	as	by	
                                                                                      consolidated	 revenues	 for	 licensing	 totaled	 €447  million	 in	 2010,	
   the	increase	in	dvd	volumes,	resulting	from	the	warner	bros.	agreement	
                                                                                      compared	with	€386 million	in	2009,	up	15.8%	at	current	currency	and	
   and	the	overall	growth	in	blu-ray™	volumes.	theatrical	services	revenues	
                                                                                      18.1%	at	constant	currency.	growth	in	worldwide	consumer	electronic	
   declined	in	2010	compared	with	2009	as	the	acceleration	in	digital	cinema	
                                                                                      products	shipments	favorably	impacted	revenues	from	the	mpeg	la	
   theater	installations	in	the	us	and	europe	continued	to	strongly	benefit	
                                                                                      program	and	the	sustained	performance	of	the	other	licensing	programs	
   the	group’s	digital	cinema	distribution	business	but	weighed	significantly	
                                                                                      of	the	group,	particularly	in	the	second	half	of	the	year.
   on	photochemical	film	volumes.	as	detailed	in	chapter 2:	“Information	
   on	the	company”,	section 2.1.2:	“historical	background”	of	this	annual	            licensing	revenues	are	based	on	estimates	from	license	agreements.	
   report,	the	prn	(premier	retail	networks)	business,	previously	consoli-            the	difference	between	estimated	and	actual	revenue	figures	derived	
   dated	as	part	of	discontinued	operations,	is	now	consolidated	as	part	of	          from	cash	collection	for	the	years	ended	december 31,	2010	and	2009,	
   continuing	operations.	In	2010,	prn	revenues	were	lower	compared	with	             measured	as	a	percentage	of	total	licensing	revenues,	amounted	to	
   2009,	reflecting	the	change	in	the	scope	of	the	relationship	with	walmart	         excesses	of	actual	over	estimated	revenue	of	3.1%	and	2.1%,	respectively.
   which	occurred	when	the	long-term	agreement	with	this	key	customer	was	
   renewed	at	the	end	of	2009,	partly	offset	by	a	strong	increase	in	overall	
   advertizing	sales	to	other	customers	and	by	the	addition	of	two	new	retail	        enteRtainment seRvices
   clients	in	the	course	of	the	year.	In	digital	delivery,	the	revenue	decrease	
                                                                                      as	announced	on	february	23,	2011,	the	group	decided	to	end	the	
   recorded	in	the	first	half	of	2010	was	partly	offset	in	the	second	half	of	the	
                                                                                      disposal	process	for	the	prn	business,	which	is	now	consolidated	as	part	
   year,	driven	by	solid	growth	in	digital	home	and	set-top	box	products	
                                                                                      of	its	continuing	operations	within	the	entertainment	services	segment.
   volumes	and	media	services	activities.
                                                                                      consolidated	revenues	for	entertainment	services	totaled	€1,697 million	
                                                                                      in	2010,	compared	with	€1,593 million	in	2009,	up	6.6%	at	current	currency	
   technology                                                                         and	up	0.8%	at	constant	currency.	the	decline	in	dvd	volumes	in	the	
   consolidated	revenues	for	technology	totaled	€450 million	in	2010,	                first	half	of	the	year	and	in	photochemical	film	activities	was	fully	offset	
   compared	with	€391 million	in	2009,	up	15.0%	at	current	currency,	and	             by	stronger	market	positions	and	improved	market	conditions	in	creation	
   up	17.3%	at	constant	currency.	technology	revenues	in	2010	benefited	              services	and	digital	cinema	distribution	over	the	year,	and	by	the	gain	
   from	the	strong	performance	of	the	licensing	business,	particularly	in	            of	a	key	new	client	(warner	bros.),	which	contributed	significantly	to	the	
   the	second	half	of	the	year.                                                       strong	volume	increase	in	dvd	in	the	second	half	of	2010.

   technicolor	presented	at	the	consumer	electronic	show	2011	a	new	                  creation	services	(visual	effects,	animation	and	postproduction)	benefited	
   service	 platform	 named	 medianavi,	 simplifying	 and	 enhancing	 the	            from	higher	levels	of	activity	in	2010	compared	with	2009,	driven	by	market	
   media	consumption	experience,	while	aggregating	operator,	web	and	                 share	gains,	increased	digital	production	capacities	and	improved	market	
   each	customer’s	personal	media.	medianavi	has	been	designed	to	run	as	             conditions	in	postproduction.



                                                                                                       technIcolor	–	2010	annual	report                        55
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          RESuLTS	OF	OPERATIONS	FOR	2010	AND	2009



                                                                                Contents
                                                                        ➜
                                                                                                ➜


    theatrical	 services	 (film	 services	 and	 digital	 cinema	 distribution)	     dvd	services	revenues	grew	in	2010	compared	with	2009.	following	
    revenues	were	lower	in	2010	compared	with	2009,	with	growth	in	digital	         a	first	half	impacted	by	a	15%	year-over-year	volume	drop,	the	second	
    cinema	distribution	partly	offsetting	the	decline	in	photochemical	film	        part	of	2010	benefited	from	an	acceleration	in	blu-ray™	growth	and	an	
    volumes.	In	film	services,	the	group	processed	3.2 billion	feet	of	footage	     overall	very	strong	dvd	volume	increase,	mainly	due	to	the	warner	
    in	2010,	compared	with	3.8 billion	feet	in	2009,	reflecting	primarily	the	      bros.	agreement	and	to	higher-than-expected	orders	from	other	existing	
    acceleration	in	digital	cinema	theater	installations,	particularly	in	north	    and	new	customers	in	the	second	part	of	the	year.	a	total	of	1.3 billion	
    america	where	digital	cinema	accounted	for	approximately	36%	of	                dvds	were	replicated	in	2010,	up	16%	compared	with	2009	(1.1 billion	
    screens	at	the	end	of	2010.	In	addition,	technicolor	terminated	its	film	       units).	excluding	the	warner	bros.	volume	impact,	technicolor	benefited	
    printing	contract	with	universal	studios	in	the	fourth	quarter	2010.	digital	   in	the	second	part	of	2010	from	continuing	improvements	in	consumer	
    cinema	distribution	activities	recorded	a	strong	increase	in	sales	in	2010,	    dvd	purchasing	and	from	the	acceleration	in	blu-ray™	growth,	driven	by	
    reflecting	the	continued	growth	in	digital	screen	penetration	in	the	u.s.	      increased	household	penetration	of	blu-ray™	players	and	by	a	growing	
    and	in	europe.                                                                  blu-ray™	catalog	business.


    Replicated	DvD	volumes
     (in millions of units)                                                                                             2010             2009      Change	(%)
     ToTal DVD                                                                                                         1,263           1,086             +16%
     of	which	sd-dvd                                                                                                    1,073              913            +18%
     of	which	blu-ray™                                                                                                     94               51            +84%
     of	which	dvd	for	games	and	kiosks                                                                                     96              122            (21)%


    prn	revenues	were	lower	in	2010	compared	with	2009,	reflecting	the	             ■■   the	ongoing	impact	of	market	share	loss	with	one	european	telecom	
    change	in	the	scope	of	the	relationship	with	walmart	following	the	renewal	          operator,	as	reported	in	the	third	quarter	of	2009,	leading	to	a	decline	
    of	the	contract	with	this	key	customer	at	the	end	of	2009,	partly	offset	by	         in	telecom	volumes	in	2010,	reflecting	weaker	deliveries	of	Ip	set-top	
    a	strong	increase	in	overall	advertising	sales	to	other	customers	and	by	the	        boxes	and	basic	dsl	modems,	partially	offset	by	robust	growth	in	
    addition	of	two	new	retail	clients	in	the	course	of	the	year.                        shipments	of	broadband	gateways,	particularly	in	the	second	half	
                                                                                         of	2010.

    digital deliveRy                                                                the	digital	content	delivery	business	recorded	a	slight	year-on-year	
                                                                                    decline	in	revenues	in	2010.	media	services	activities	suffered	from	signifi-
    consolidated	revenues	for	digital	delivery	totaled	€1,423 million	in	2010,	     cant	pressure	on	volumes	in	the	first	half	of	2010,	due	to	fewer	productions	
    compared	with	€1,529 million	in	2009,	down	6.9%	at	current	currency	and	        and	reduced	catalog	activities,	but	recovered	during	the	second	half	of	
    down	11.3%	at	constant	currency,	reflecting	a	decrease	in	revenues	from	        2010,	reflecting	an	improvement	in	the	overall	market	environment	and	
    both	connect	(digital	home,	set-top	box	and	Iptv	&	voIp)	and	digital	           market	share	gains,	along	with	stronger	customer	demand	for	compres-
    content	delivery	(media	services	and	broadcast	services)	businesses.            sion	&	authoring	and	localization	(dubbing	and	subtitling)	services.	
    the	decrease	in	connect	revenues	in	2010	primarily	reflected	a	less	favor-      broadcast	services	revenues	remained	flat	in	2010	compared	with	2009,	
    able	overall	mix	year-over-year	in	digital	home	and	set-top	box	activities,	    with	a	continuing	migration	of	tv	broadcast	networks	to	high-definition.
    despite	slightly	higher	total	volumes	of	24.9m	units	compared	with	2009	
    (24.8m	units),	as	well	as	lower	revenues	from	Iptv	&	voIp	customers.
                                                                                    otheR
    the	change	in	digital	home	and	set-top	box	volumes	and	overall	mix	
                                                                                    revenues	presented	in	the	other	segment	are	comprised	of:
    was	mainly	related	to:
                                                                                    ■■   corporate	revenues	for	€1 million	in	2010,	compared	with	€4 million	
    ■■   the	impact	of	a	weak	north-american	market	in	the	first	half	of	2010,	
                                                                                         in	2009,	mainly	related	to	services	charged	to	third	parties;
         with	a	decline	in	set-top	box	orders,	due	to	higher	levels	of	returns	
         and	refurbishments	of	previously	deployed	boxes,	partly	offset	by	a	       ■■   other	activities	totaling	€3 million	in	2010	compared	to	€102 million	
         sharp	recovery	in	the	second	half	of	2010,	driven	by	market	share	gains	        in	 2009,	 mainly	 related	 to	 the	 north	 american	 tv	 after-sales	
         with	a	key	customer	based	in	north	america,	along	with	increased	               services	operations	and	the	retail	telephony	activities.	the	decrease	
         shipments	of	higher-end	products	such	as	hd	pvrs;                               in	revenues	mainly	reflected	reduced	external	revenues	from	the	retail	
                                                                                         telephony	activities,	from	which	the	group	exited	in	2009.
    ■■   a	 strong	 growth	in	cable	volumes,	driven	 particularly	by	higher	
         deliveries	of	digital-to-analog	adapters	to	a	key	customer	based	
         in	north	america,	as	well	as	by	continued	growth	in	shipments	of	
         cable	modems,	especially	in	south	america,	weighing	nevertheless	
         on	overall	cable	product	mix;




    56       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
                                                                                   RESuLTS	OF	OPERATIONS	FOR	2010	AND	2009                                           3
                                                                               Contents
                                                                       ➜
                                                                                               ➜



   3.14.2	 Profit	(loss)	from	continuing	operations	before	tax	and	net	
           finance	costs
   profit	from	continuing	operations	before	tax	and	net	finance	costs	was	          the	group	to	scale	down	its	photochemical	film	replication	capacities,	and	
   €38 million	in	2010,	compared	with	a	profit	of	€99 million	in	2009,	mainly	      a	charge	of	€103 million	on	digital	delivery,	reflecting	in	particular	the	
   due	to	goodwill	and	asset	impairment	charges	and	restructuring	costs,	           impact	on	profitability	of	the	group’s	commercial	difficulties	encountered	
   which	totaled	€224 million	in	2010,	compared	with	€169 million	in	2009.          in	relation	with	its	financial	restructuring.	net	asset	write-offs	(excluding	
                                                                                    goodwill)	amounted	to	€22 million	in	2010,	mainly	related	to	photo-
                                                                                    chemical	film	activities.	for	further	information,	see	notes	9,	13	and	14	to	
   Cost	of	sales                                                                    the	group’s	consolidated	financial	statements.
   cost	of	sales	amounted	to	€2,795 million	in	2010,	nearly	stable	compared	
   with	€2,804 million	in	2009.	gross	margin	from	continuing	operations	
                                                                                    Other	Income	(Expense)
   totaled	€779 million,	or	21.8%	of	consolidated	revenues	in	2010	(compared	
   with	€815 million	in	2009	or	22.5%	of	revenues).	the	slight	decline	in	gross	    other	income	(expense)	totaled	€28 million	in	2010,	compared	with	an	
   margin	reflected	mainly	the	impact	of	the	non-recurring	transition	and	          income	of	€12 million	in	2009.	for	further	information,	see	note 7	to	the	
   on-boarding	costs	for	the	warner	bros.	agreement	in	dvd	services	and	            group’s	consolidated	financial	statements.
   ongoing	price	erosion	on	connect	products.	these	impacts	were	partly	
   offset	by	improvements	in	production	costs	and	sourcing	management	
   in	connect	as	well	as	optimization	of	logistics,	packaging	and	distribution	     technology
   costs	in	dvd	services.                                                           profit	from	continuing	operations	before	tax	and	net	finance	costs	for	
                                                                                    technology	was	€315 million	in	2010,	or	70.1%	of	revenues,	compared	with	
   Selling	and	administrative	expenses                                              €217 million	in	2009,	or	55.5%	of	revenues.	adjusted	ebIt	(as	defined	
                                                                                    in	section 3.14.9)	for	technology	was	€315 million	in	2010,	or	70.0%	of	
   sales	and	marketing	expenses	amounted	to	€118 million	in	2010,	or	3.3%	          revenues,	compared	with	€258 million	in	2009,	or	66.0%	of	revenues.	
   of	revenues	(compared	with	€127 million	in	2009,	or	3.5%	of	revenues),	a	        adjusted	ebItda	(as	defined	in	section 3.14.9)	for	technology	was	
   7%	reduction	compared	with	2009.	this	decrease	was	mainly	attributable	          €327 million	in	2010,	or	72.7%	of	revenues,	compared	with	€276 million	
   to	the	exit	of	the	retail	telephony	activities	in	2009.                          in	2009,	or	70.6%	of	revenues.	the	increase	of	2.1	percentage	points	
   general	and	administrative	expenses	amounted	to	€279 million	in	2010,	           in	adjusted	ebItda	margin	for	technology	resulted	mainly	from	the	
   or	7.8%	of	revenues	(compared	with	€277 million	in	2009,	or	7.7%	of	             increase	in	licensing	revenues	and	from	continuing	optimization	in	patent	
   revenues).	general	and	administrative	costs	increased	slightly	in	the	first	     prosecution,	filing	and	annuities	costs.
   half	of	the	year,	as	a	result	of	the	costs	associated	with	the	rollout	of	       restructuring	costs	totaled	€3 million	in	2010	(compared	with	€27 million	
   new	systems	and	processes	in	the	framework	of	operational	efficiency	            in	2009).
   programs,	but	decreased	in	the	second	halfof	the	year.


   Research	and	development	expenses                                                enteRtainment seRvices
   research	and	development	expenses	for	continuing	operations	amounted	            loss	from	continuing	operations	before	tax	and	net	finance	costs	for	
   to	€148 million	in	2010,	or	4.1%	of	revenues	(compared	with	€155 million	        entertainment	services	was	€62 million	in	2010,	compared	with	a	loss	
   in	2009,	or	4.3%	of	revenues).	the	slight	decrease	in	r&d	costs	resulted	        of	€34 million	in	2009,	mainly	as	a	result	of	an	impairment	charge	of	
   mainly	from	the	closure	of	the	villingen	(germany)	site	in	2009	and	             €58 million,	resulting	from	the	decision	taken	by	the	group	to	scale	down	
   from	the	ongoing	optimization	of	the	research	organization.	of	the	total	        its	photochemical	film	replication	capacities,	and	a	€17 million	net	asset	
   spending	on	research	and	development	in	2010,	€47 million	was	spent	             write-off,	mainly	related	to	photochemical	film	activities.	adjusted	ebIt	
   in	the	technology	segment,	which	includes	the	research	&	Innovation	             (as	defined	in	section 3.14.9)	for	entertainment	services	was	€35 million	
   business.                                                                        in	2010,	or	2.1%	of	revenues,	compared	with	€74 million	in	2009,	or	
                                                                                    4.6%	of	revenues.	adjusted	ebItda	(as	defined	in	section 3.14.9)	for	
                                                                                    entertainment	services	totaled	€217 million	in	2010,	or	12.8%	of	revenues,	
   Restructuring	costs                                                              compared	with	€219 million	in	2009,	or	13.7%	of	revenues.	this	decrease	
                                                                                    of	0.9	percentage	points	in	adjusted	ebItda	margin	for	entertainment	
   restructuring	costs	for	continuing	operations	totaled	€41 million	in	2010	
                                                                                    services	was	attributable	to	the	impact	of	the	non-recurring	transition	
   (compared	with	€41 million	in	2009).	In	2010,	restructuring	costs	were	
                                                                                    and	on-boarding	costs	for	the	warner	bros.	agreement	in	dvd	services,	
   mainly	related	to	entertainment	services,	with	the	scale	down	of	the	
                                                                                    partly	offset	by	profitability	improvements	across	all	other	businesses:
   photochemical	film	business.
                                                                                    ■■   in	creation	services,	the	continued	improvement	of	margins	in	2010	
                                                                                         compared	with	2009	was	driven	by	higher	levels	of	activity	resulting	
   Impairment	losses	on	non-current	operating	assets                                     from	market	share	gains,	higher	capacity	utilization	level	in	visual	
   the	group	recorded	impairment	charges	for	an	amount	of	€183 million	in	               effects,	expansion	of	animation	operations	in	India,	and	improved	
   2010,	compared	with	€128 million	in	2009.	goodwill	impairment	charges	                market	conditions	in	postproduction;
   amounted	to	€161 million	in	2010,	including	a	charge	of	€58 million	on	
   entertainment	services,	essentially	resulting	from	the	decision	taken	by	



                                                                                                      technIcolor	–	2010	annual	report                        57
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          RESuLTS	OF	OPERATIONS	FOR	2010	AND	2009



                                                                                 Contents
                                                                         ➜
                                                                                                 ➜


    ■■   theatrical	services	profitability	benefited	from	the	greater	contribu-      2010	following	a	significant	drop	in	the	first	half	of	2010,	but	remained	
         tion	of	digital	cinema	distribution	to	revenues	compared	with	2009	         below	2009	levels	as	a	percentage	of	revenues,	reflecting	a	less	favorable	
         and	from	cost	reduction	initiatives	in	photochemical	film;                  overall	mix	year-over-year	within	digital	home	and	set-top	box	activities,	
    ■■   prn	 profitability	 benefited	 from	 additional	 network	 operating	        ramp	up	costs	of	new	contracts,	as	well	as	significant	investments	in	major	
         efficiencies	and	from	a	tight	control	over	its	cost	base.                   new	growth	initiatives	which	were	unveiled	at	ces	2011.

    restructuring	 costs	 totaled	 €27  million	 in	 2010	 (compared	 with	          restructuring	costs	totaled	€9 million	in	2010	(compared	with	€3 million	
    €7 million	in	2009),	mainly	due	to	the	scale	down	of	the	photochemical	          in	2009).
    film	replication	capacities.
                                                                                     otheR
    digital deliveRy                                                                 losses	from	continuing	operations	before	tax	and	net	finance	costs	for	
    loss	from	continuing	operations	before	tax	and	net	finance	costs	for	            the	group’s	other	segment	were	€97 million	in	2010	(compared	with	a	
    digital	delivery	amounted	to	€118 million	in	2010,	compared	with	a	              loss	of	€112 million	in	2009)	and	comprised:
    profit	of	€28 million	in	2009,	mainly	as	result	of	a	goodwill	impairment	        ■■   losses	from	continuing	operations	before	tax	and	net	finance	costs	
    of	€103 million,	reflecting	in	particular	the	impact	on	profitability	of	the	         of	€96 million	in	2010	(compared	with	a	loss	of	€91 million	in	2009)	
    group’s	commercial	difficulties	encountered	in	relation	with	its	financial	           related	to	unallocated	corporate	functions;
    restructuring.	adjusted	ebIt	(as	defined	in	section 3.14.9)	for	digital	
                                                                                     ■■   losses	from	continuing	operations	before	tax	and	net	finance	costs	
    delivery	was	€(20) million	in	2010,	or	(1.4)%	of	revenues,	compared	with	
                                                                                          of	€1 million	in	2010	(compared	with	a	loss	of	€21 million	in	2009)	
    €36 million	in	2009,	or	2.4%	of	revenues.	adjusted	ebItda	(as	defined	in	
                                                                                          related	to	other	activities,	mainly	reflecting	a	decrease	in	the	operating	
    section 3.14.9)	for	digital	delivery	totaled	€55 million	in	2010,	or	3.9%	of	
                                                                                          loss	from	the	retail	telephony	activities,	from	which	the	group	exited	
    revenues,	compared	with	€123 million	in	2009,	or	8.0%	of	revenues.	digital	
                                                                                          in	2009.
    delivery	adjusted	ebItda	margin	partly	recovered	in	the	second	half	of	



    3.14.3	 Net	finance	costs
    the	net	financial	result	was	an	income	of	€116 million	in	2010	(compared	        otheR financial income (exPense)
    with	a	cost	of	€68 million	in	2009),	and	breaks	down	as	follows:
                                                                                     other	financial	expense	for	continuing	operations	totaled	€126 million	in	
                                                                                     2010,	compared	with	€25 million	in	2009.	In	2010,	other	financial	expense	
    net inteRest exPense                                                             included	€55 million	of	exchange	loss,	€32 million	of	fees	linked	to	the	debt	
                                                                                     restructuring	not	recognized	in	equity	(refer	to	details	in	the	consolidated	
    the	net	interest	expense	for	continuing	operations	totaled	€139 million	
                                                                                     statements	of	changes	in	equity	and	note	23	to	the	group's	consolidated	
    in	2010	compared	with	€43 million	in	2009.	see	notes 10	and	26	to	the	
                                                                                     financial	statements)	and	to	the	2%	late	payment	interest	payable	pursuant	
    group’s	consolidated	financial	statements	for	further	information.	Interest	
                                                                                     to	the	Sauvegarde	plan.	other	financial	expense	in	2009	included	a	gain	
    expense	has	been	computed	at	the	effective	interest	rate	on	the	new	
                                                                                     of	€7 million	on	sales	of	videocon	Industries	shares	together	with	charges	
    reinstated	debt	from	may	26,	2010.
                                                                                     related	to	the	restructuring	of	the	group’s	debt	(consultant	fees,	waiver	
    technicolor’s	 debt	 restructuring	 on	 may	 26,	 2010	 led	 to	 a	 gain	 of	    fees	and	default	interest)	amounting	to	€42 million	and	€7 million	of	
    €381 million	in	2010.	this	gain	consisted	primarily	of	a	gain	of	€150 million	   impairment	loss	on	unlisted	securities.
    representing	 the	 difference	 between	 the	 carrying	 value	 of	 the	 debt	
                                                                                     see	note 10	to	the	group’s	consolidated	financial	statements	for	further	
    extinguished	and	the	fair	value	of	the	equity	instruments	issued	and	
                                                                                     information.
    €231 million	representing	the	difference	between	the	nominal	value	
    and	the	fair	value	of	the	new	debt	(see	notes	1.2,	3.9,	23	and	26	to	the	
    group’s	consolidated	financial	statements	of	this	annual	report	for	more	
    information).




    58       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
                                                                                       RESuLTS	OF	OPERATIONS	FOR	2010	AND	2009                                           3
                                                                                   Contents
                                                                           ➜
                                                                                                   ➜



   3.14.4	 Income	tax
   In	 2010,	 the	 group’s	 total	 income	 tax	 profit	 (current	 and	 deferred)	       as	per	technicolor’s	current	interpretation	of	u.s.	tax	rules,	namely	section	
   on	continuing	operations	was	€2 million,	compared	with	a	charge	of	                  code	382,	the	may	26,	2010	share	capital	increase	of	technicolor	sa	and	
   €35 million	in	2009.                                                                 nrs	issuance	under	the	Sauvegarde	plan	led	to	an	“ownership	change”	of	
                                                                                        the	us	group	of	subsidiaries.	such	“ownership	change”	severely	restricts	
   the	current	tax	charge	in	2010	was	notably	the	result	of	current	taxes	
                                                                                        the	use	of	tax	losses	carried	forward	of	the	u.s.	subsidiaries.	the	group	
   due	 in	 france,	 brazil,	 australia,	 mexico	 and	 Italy	 (where	 tax	 losses	
                                                                                        is	lobbying	against	such	a	severe	application	of	the	section	382.
   expired	at	the	end	of	2009)	as	well	as	withholding	taxes	on	income	
   earned	by	licensing	activities,	which	were	only	partially	credited	against	          due	to	this	restriction	on	technicolor’s	us	tax	losses,	gross	deferred	tax	
   taxes	payables	in	france	and	in	the	united	states,	and	were	booked	                  assets	were	written	down	from	€1,033 million	to	€364 million,	but	without	
   as	an	income	tax	charge.	the	current	income	tax	charge	amounted	to	                  p&l	impact	as	those	gross	deferred	tax	assets	had	been	depreciated	up	
   €10 million	in	france	(reflecting	mainly	withholding	taxes	and	“cvae”)	              to	the	level	of	the	deferred	tax	liabilities.
   and	€20 million	outside	france.
                                                                                        see	note 11	to	the	group’s	consolidated	financial	statements	for	further	
   In	2010,	technicolor	recorded	a	net	deferred	tax	profit	of	€32 million	              information.
   mainly	due	to	the	additional	recognition	of	tax	losses	in	france.



   3.14.5	 Share	of	profit	(loss)	from	associates
   the	share	of	profit	(loss)	from	associates	was	not	material	in	2010	and	2009,	compared	with	a	loss	of	€4 million	in	2008,	which	related	principally	to	
   nutune,	a	joint	venture	between	technicolor	and	nxp	semiconductors	combining	their	respective	tuner	activities.



   3.14.6	 Profit	(loss)	from	continuing	operations
   profit	from	continuing	operations	was	€156 million	in	2010,	compared	with	a	loss	of	€4 million	in	2009.



   3.14.7	 Profit	(loss)	from	discontinued	operations
   In	2010,	the	total	loss	from	discontinued	operations	was	€225 million	               of	€17 million	on	discontinued	operations	to	adjust	the	held	for	sale	busi-
   (compared	with	a	loss	of	€338 million	in	2009).	the	loss	from	discon-                nesses	at	their	fair	value	less	costs	to	sell	(compared	with	an	impairment	
   tinued	operations	before	impairment	losses	on	assets	was	€208 million	               loss	of	€230 million	in	2009).
   in	2010	(compared	with	a	loss	of	€108 million	in	2009),	including	a	loss	
                                                                                        see	note 12	to	the	group’s	consolidated	financial	statements	for	further	
   of	€182 million	(compared	with	loss	of	€109 million	in	2009)	relating	to	
                                                                                        information.
   grass	valley	businesses.	In	2010,	the	group	recorded	an	impairment	loss	



   3.14.8	 Net	income	(loss)	of the Group
   the	group’s	consolidated	net	loss	was	€69 million	in	2010	(compared	                 able	to	shareholders	of	technicolor sa	totaled	€69 million	(compared	with	
   with	a	loss	of	€342 million	in	2009).	the	net	loss	attributable	to	minority	         a	loss	of	€342 million	in	2009).	net	loss	per	non-diluted	share	was	€0.8	
   shareholders	in	2010	and	2009	was	€0.	accordingly,	the	net	loss	attribut-            in	2010,	compared	with	a	net	loss	per	non-diluted	share	of	€13	in	2009.



   3.14.9	 Adjusted	indicators
   In	addition	to	its	published	results	presented	in	accordance	with	Ifrs	and	          in	adjusted	ebIt).	technicolor	considers	that	this	information	may	help	
   with	the	aim	of	providing	a	more	comparable	view	of	the	changes	in	its	              investors	in	their	analysis	of	the	group’s	performance	by	excluding	factors	
   operating	performance,	the	group	presents	a	set	of	adjusted	indicators,	             it	considers	to	be	non-representative	of	technicolor’s	normal	operating	
   which	 exclude	 impairment	 charges,	 restructuring	 charges	 and	 other	            performance.	technicolor	uses	adjusted	ebIt	and	adjusted	ebItda	
   income	and	expenses	with	respect	to	adjusted	ebIt,	and	amortization	                 to	evaluate	the	results	of	its	strategic	efforts.	technicolor’s	financing	
   charges	as	well	as	the	impact	of	provisions	for	risks,	warranties	and	litigation	    agreements,	both	prior	to	and	post	restructuring,	use	similar	measures	in	
   with	respect	to	adjusted	ebItda	(in	addition	to	adjustments	included	                calculating	applicable	financial	covenants.




                                                                                                          technIcolor	–	2010	annual	report                        59
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          RESuLTS	OF	OPERATIONS	FOR	2010	AND	2009



                                                                                    Contents
                                                                                ➜
                                                                                                  ➜


    these	 adjustments	 for	 2010	 are	 directly	 identifiable	 in	 the	 group’s	      of	taxes,	or	capital	expenditures	necessary	to	replace	depreciated	assets.	
    consolidated	financial	statements,	with	the	exception	of	the	heading	              adjusted	ebItda	and	adjusted	ebIt	indicators	do	not	have	standard	
    “depreciation	and	amortization”	(d&a).	the	adjustments	published	                  definitions	and,	as	a	result,	technicolor’s	definition	of	adjusted	ebItda	
    previously	for	2009	have	been	restated,	and	include	the	prn	business,	             and	adjusted	ebIt	may	not	correspond	to	the	definitions	given	to	these	
    now	treated	in	continuing	operations	in	accordance	with	Ifrs.                      terms	by	other	companies.	In	evaluating	these	indicators,	please	note	that	
                                                                                       technicolor	may	incur	similar	charges	in	future	periods.	the	presentation	
    the	 additional	 indicators	 have	 inherent	 limitations	 as	 performance	
                                                                                       of	these	indicators	does	not	mean	that	technicolor	considers	its	future	
    indicators.	 adjusted	 profit	 from	 continuing	 operations	 before	 tax,	
                                                                                       results	will	not	be	affected	by	exceptional	or	non-recurring	events.	due	
    finance	costs,	plus	depreciation	and	amortization	(adjusted	ebItda)	
                                                                                       to	these	limitations,	these	indicators	should	not	be	used	exclusively	or	as	
    and	adjusted	profit	from	continuing	operations	before	tax	and	net	finance	
                                                                                       a	substitute	for	Ifrs	measures.
    costs	(adjusted	ebIt)	are	not	indicators	recognized	by	Ifrs	and	are	
    not	representative	of	cash	generated	by	these	activities	for	the	periods	          these	 adjustments	 amount	 to	 an	 impact	 on	 the	 group	 ebIt	 from	
    indicated.	In	particular,	adjusted	ebItda	does	not	reflect	the	group’s	            continuing	operations	of	€196 million	for	the	year	2010,	compared	to	an	
    working	capital	needs	for	its	operations,	interest	charges	incurred,	payment	      impact	of	€157 million	for	the	year	2009.


    Reconciliation	of	adjusted	indicators
     (in € millions unless otherwise stated)                                                                              2010             2009         Change
     Profit	(Loss)	from	continuing	operations	before	tax	and	net	finance	costs                                               38              99             (61)
     restructuring	costs,	net                                                                                               (41)            (41)              +0
     net	impairment	losses	on	non-current	operating	assets                                                                (183)            (128)            (55)
     other	income/(expense)                                                                                                  28               12              16
     Adjusted	EBIT	from	continuing	operations                                                                               234             256             (22)
     as	a	%	of	revenues                                                                                                    6.5%             7.1%         (0.6)	pt
     depreciation	and	amortization	(d&a)(*)                                                                                 271              243             +28
     Adjusted	EBITDA	from	continuing	operations                                                                            505              499               +6
     as	a	%	of	revenues                                                                                                   14.1%           13.8%           +0.3	pt

     (*) Including impact of provisions for risks, litigation and warranties.

    the	adjusted	profit	from	continuing	operations	before	tax	and	net	finance	costs	plus	depreciation	and	amortization	(adjusted	ebItda)	totaled	
    €505 million	in	2010,	or	14.1%	of	revenues,	an	increase	of	0.3 point	compared	with	2009.




    60       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
                                                                                    RESuLTS	OF	OPERATIONS	FOR	2010	AND	2009                              3
                                                                                   Contents
                                                                               ➜
                                                                                              ➜


   the	adjusted	profit	from	continuing	operations	before	tax	and	net	finance	costs	(adjusted	ebIt)	totaled	€234 million	in	2010,	or	6.5%	of	revenues,	
   a	decrease	of	0.6 point	compared	with	2009.


   Profit	from	continuing	operations	before	tax	and	net	finance	costs	and	
   adjusted indicators by segment
                                                                                                                                          variation	
    (in € millions unless otherwise indicated)                                                                  2010           2009      2010/2009
    Profit	(Loss)	from	continuing	operations	before	tax	and	net	finance	costs                                     38              99            (61)
    As a % of revenues                                                                                           1.1%           2.7%        (1.6) pts
    of	which:
    technology                                                                                                    315            217             +98
    As a % of revenues                                                                                         70.1%           55.4%        +14.7 pts
    entertainment	services                                                                                       (62)           (34)            (28)
    As a % of revenues                                                                                         (3.7)%         (2.1)%        (1.6) pts
    digital	delivery                                                                                            (118)             28           (146)
    As a % of revenues                                                                                        (8.3)%            1.8%       (10.1) pts
    Adjusted	EBIT	from	continuing	operations                                                                     234             256            (22)
    As a % of revenues                                                                                          6.5%            7.1%        (0.6) pt
    of	which:
    technology                                                                                                    315            258             +57
    As a % of revenues                                                                                         70.0%           66.1%         +3.9 pts
    entertainment	services                                                                                         35             74            (39)
    As a % of revenues                                                                                           2.1%           4.6%        (3.5) pts
    digital	delivery                                                                                             (20)             36            (56)
    As a % of revenues                                                                                          2.4%          (1.4)%        (3.8) pts
    Adjusted	EBITDA(*)	from	continuing	operations                                                                505             499              +6
    As a % of revenues                                                                                          14.1%          13.8%         +0.3 pt
    of	which:
    technology                                                                                                    327            276             +51
    As a % of revenues                                                                                         72.7%           70.7%         +2.0 pts
    entertainment	services                                                                                        217            219             (2)
    As a % of revenues                                                                                         12.8%           13.8%         (1.0) pt
    digital	delivery                                                                                              55             123            (68)
    As a % of revenues                                                                                          3.9%            8.1%        (4.2) pts

    (*) Including impact of provisions for risks, litigation and warranties.




                                                                                                  technIcolor	–	2010	annual	report                 61
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          RESuLTS	OF	OPERATIONS	FOR	2009	AND	2008



                                                                                   Contents
                                                                               ➜
                                                                                                  ➜



    3.14.10	 Reconciliation	of	2009	adjusted	indicators	reported	
             for the year	ended	December 31,	2009
    for	the	convenience	of	the	reader,	technicolor	is	presenting	the	table	below,	which	reconciles	the	adjusted	indicators	presented	in	the	annual	report	
    for	fiscal	year 2009,	with	the	figures	set	forth	in	the	present	report,	which	have	been	restated	to	take	into	account	the	current	scope	of	discontinued	
    activities	(Ifrs 5).

                                                                                                                        2009                              2009
                                                                                                                 as published          Change	in	 As	published	
     (in € millions)                                                                                                  in 2010             scope        in	2009
     Profit	(Loss)	from	continuing	operations	before	tax	and	net	finance	costs                                               99              (37)              136
     restructuring	costs,	net                                                                                               (41)                0             (41)
     net	impairment	losses	on	non-current	operating	assets                                                                 (128)             (48)             (80)
     other	income/(expense)                                                                                                   12                2               10
     Adjusted	EBIT	from	continuing	operations                                                                               256                 9              247
     As a % of revenues                                                                                                     7.1%                              7.0%
     depreciation	and	amortization	(d&a)       (*)
                                                                                                                            242	                3	             239	
     Adjusted	EBITDA	from	continuing	operations                                                                             499                13             486
     As a % of revenues                                                                                                   13.8%                              13.8%

     (*) Including impact of provision for risks, litigation and warranties.




    3.15	 results	of	operatIons	for	2009	and	2008
    the	group’s	revenues	and	profit	(loss)	from	continuing	operations	before	         for	information	related	to	the	evolution	of	the	nomenclature	of	the	
    tax	and	net	finance	costs	for	the	years	2009	and	2008	are	presented	              group's	activities	between	2008	and	2009,	see	chapter	2:	“Information	
    below	 for	 each	 of	 the	 group’s	 operating	 segments	 –	 technology,	          on	the	company”,	section	2.2	:	“business	overview”	of	the	2009	form	20-f.
    entertainment	services,	digital	delivery	–	and	the	“other”	segment.	
                                                                                      In	 2009,	 technicolor’s	 results	 were	 affected	 both	 by	 the	 company’s	
    the	results	of	discontinued	operations	are	presented	separately	under	
                                                                                      financial	difficulties	as	well	as	the	difficult	economic	environment.	In	this	
    section 3.15.7:“profit	(loss)	from	discontinued	operations”.
                                                                                      regard,	the	company	is	not	able	to	precisely	distinguish,	and	therefore	
    the	group’s	results	are	presented	in	accordance	with	Ifrs 5.	conse-               quantify,	the	impact	resulting	from	its	financial	difficulties	from	the	impact	
    quently	the	contributions	of	discontinued	operations	are	presented	on	one	        related	to	the	economic	environment,	and	in	particular	the	impact	on	its	
    line	in	the	consolidated	statements	of	operations,	named	“net	loss	from	          relationship	with	its	suppliers	and	customers.
    discontinued	operations”.	prior-period	results	have	been	adjusted	to	take	
    into	account	the	current	scope	of	discontinued	operations.



    3.15.1	 Analysis	of	revenues
    In	2009,	technicolor’s	revenues	from	continuing	operations	amounted	              services	(film	and	digital	cinema)	and,	in	the	second	half,	in	digital	
    to	€3,619 million,	compared	with	€4,192 million	in	2008,	down	13.7%	              production	(visual	effects	and	animation).	despite	a	growth	in	the	first	half	
    at	current	currency	and	down	14.4%	at	constant	currency.	the	decline	             of	the	year,	digital	delivery’s	full-year	revenues	were	negatively	affected	
    in	revenues	was	primarily	due	to	lower	revenues	in	the	entertainment	             by	the	group’s	financial	situation,	which	reduced	the	segment’s	capacity	
    services	and	digital	delivery	segments	as	well	as	the	group’s	exit	from	          to	win	major	new	contracts,	and	by	high	replacement	levels	of	previously	
    the	retail	telephony	activities	in	2009.	revenues	for	technology	segment	         deployed	set-top	boxes	in	the	north	american	market.	with	the	exception	
    were	almost	stable	in	2009	compared	with	2008	despite	the	disposal	of	the	        of	one	specific	european	telecom	operator,	the	group	believes	that	digital	
    software	and	technology	solutions	activities	to	civolution	in	July 2009.          delivery	and	particularly	connect	maintained	their	market	share	with	
                                                                                      existing	customers	in	2009.
    entertainment	services	suffered	from	a	strong	decline	in	dvd	volumes	
    in	2009,	the	impact	of	which	was	partially	offset	by	growth	in	theatrical	




    62       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
                                                                                   RESuLTS	OF	OPERATIONS	FOR	2009	AND	2008                                            3
                                                                               Contents
                                                                       ➜
                                                                                                ➜



   technology                                                                       creation	services	(visual	effects,	animation	and	postproduction	services)	
                                                                                    had	a	slight	decline	in	revenues	in	2009:
   consolidated	revenues	for	technology	totaled	€391 million	in	2009,	
   compared	with	€394 million	in	2008,	down	0.8%	at	current	currency,	and	          ■■   digital	production	was	affected	in	the	first	half	of	the	year	by	industry	
   flat	at	constant	currency	compared	with	2008.	technology’s	2009	revenues	             uncertainty	over	the	financing	of	new	film	projects	and	the	weakness	
   were	impacted	by	the	sale	of	the	software	and	technology	solutions	                   of	the	advertising	market,	which	weighed	on	demand	for	visual	effects	
   activities	to	civolution	in	July 2009.                                                for	films	and	commercials.	the	group	nevertheless	managed	to	
                                                                                         secure	a	number	of	major	contracts	in	the	second	quarter	of	2009,	
   consolidated	 revenues	 for	 licensing	 totaled	 €386  million	 in	 2009,	            which	boosted	revenues	from	visual	effects	for	films	in	the	second	
   compared	with	€380 million	in	2008,	up	1.5%	at	current	currency	and	2.3%	             half	of	the	year,	including	major	projects	such	as	Prince of Persia,	
   at	constant	currency.	In	2009,	this	business	benefited	from	a	stable	revenue	         Clash of the Titans,	Percy Jackson and	Robin Hood.	In	a	difficult	
   stream	from	mpeg	la,	whose	contribution	to	licensing	revenues	was	                    advertising	market,	technicolor’s	market	position	in	the	visual	effects	
   stable	compared	with	2008	(i.e.	roughly	40%).	other	programs,	including	              for	commercials	business	improved	in	2009;
   digital	tv,	also	made	a	significant	contribution.	at	the	end	of	2009,	the	       ■■   postproduction	 services	 saw	 a	 decline	 in	 revenues	 over	 the	 full	
   group	had	1,125	licensing	contracts	in	force,	compared	with	1,097	at	the	             year	in	2009,	particularly	in	north	america,	due	to	the	economic	
   end	of	2008	and	990	at	the	end	of	2007.                                               environment	and	tighter	financing	conditions	for	independent	studios	
   licensing	revenues	are	based	on	estimates	from	license	agreements.	                   for	the	promotion	of	film	releases.	despite	these	difficult	market	
   the	difference	between	estimated	and	actual	revenue	figures	derived	                  conditions,	the	group	believes	that	its	overall	market	share	increased	
   from	cash	collection	for	the	years	ended	december 31,	2009	and	2008,	                 in	this	business	in	2009.
   measured	as	a	percentage	of	total	licensing	revenues,	amounted	to	               theatrical	services	(photochemical	film	and	digital	cinema	distribution)	
   excesses	of	actual	over	estimated	revenue	of	2.1%	and	1.6%,	respectively.        had	an	increase	in	revenues	in	2009.	In	film	services,	the	group	processed	
                                                                                    3.8 billion	feet	of	film	footage	in	2009,	compared	with	3.7 billion	feet	in	
   enteRtainment seRvices                                                           2008.	In	2008,	technicolor’s	operations	benefited	from	a	strong	release	
                                                                                    slate	and	an	overall	improvement	in	its	mix.	the	group	believes	that	its	
   In	 2009,	 the	 media	 networks	 business,	 previously	 included	 in	            market	position	remained	stable	in	film	in	2009,	while	the	digital	cinema	
   entertainment	services,	was	classified	in	discontinued	operations.               segment	continued	to	expand	over	the	year.
   consolidated	revenues	for	entertainment	services	totaled	€1,593 million	         a	total	of	1.1 billion	dvds	were	replicated	in	2009,	down	22%	compared	
   in	2009,	compared	with	€1,723 million	in	2008,	down	7.6%	at	current	             with	2008	(1.4 billion	units),	mainly	due	to	lower	sd-dvd	(standard-
   currency	and	down	8.6%	at	constant	currency.	the	change	in	revenues	             definition	dvd)	volumes	worldwide.	this	decrease	mainly	reflected	a	
   was	attributable	mainly	to	the	noticeable	decline	in	the	contribution	           lower-than-expected	performance	of	new	dvd	title	releases	and	catalog	
   from	dvd	services	over	the	full	year,	partially	offset	by	the	strong	            titles	from	major	studios,	as	well	as	a	drop	in	kiosk-related	volumes.	the	
   performance	of	creation	services	in	the	second	half	of	2009	and	by	              decline	in	revenues	was	partially	offset	by	an	improvement	in	the	mix,	with	
   growth	in	theatrical	services	over	the	full	year.                                a	strong	increase	in	sales	of	high-definition	discs	(blu-ray™).


   Replicated	DvD	volumes
    (in millions of units)                                                                                               2009             2008     Change	(%)
    ToTal DVD                                                                                                          1,086            1,390            (22)%
    of	which	sd-dvd                                                                                                        913             1,152           (21)%
    of	which	blu-ray™                                                                                                       51               28            +82%
    of	which	dvd	for	games	and	kiosks                                                                                      122             209            (42)%


   the	contribution	of	physical	media	(dvd	services	and	film	services)	             this	change	in	connect	volumes	mainly	resulted	from:
   to	revenues	was	down	in	2009	compared	with	2008.	revenues	derived	
                                                                                    ■■   the	group’s	reduced	ability	to	win	major	new	contracts	in	2009	due	
   from	physical	media	accounted	for	81.7%	ot	total	entertainment	services	
                                                                                         to	its	overall	financial	situation;
   revenues	in	2009,	compared	with	83.3%	in	2008.
                                                                                    ■■   the	weakness	of	the	north	american	market,	with	a	decline	in	orders	
   prn	revenues	were	slightly	down	in	2009,	compared	with	2008,	mainly	                  for	satellite	set-top	boxes	due	to	higher	refurbishment	levels	of	previ-
   as	a	result	of	a	weak	advertising	market.                                             ously	deployed	boxes	caused	by	an	increase	in	attrition	rates	among	
                                                                                         operators’	end-customers.	despite	the	21%	fall	in	volumes	over	the	
                                                                                         year,	the	group	believes	that	its	market	share	in	the	satellite	market	
   digital deliveRy                                                                      was	stable	in	2009;

   consolidated	revenues	for	digital	delivery	totaled	€1,529 million	in	2009,	      ■■   a	significant	decline	in	revenues	in	cable	operators,	due	mainly	to	an	
   compared	with	€1,792 million	in	2008,	down	14.6%	at	current	currency	and	             unfavorable	comparison	base,	2008	having	benefited	from	a	very	
   down	15.3%	at	constant	currency,	as	a	result	of	the	decline	in	the	digital	           high	level	of	orders	for	digital-to-analog	adaptors	from	one	u.s. cable	
   content	delivery	business	(media	services	and	broadcast	services)	and	                operator	at	the	end	of	the	year.	the	group	believes	that	its	market	
   a	15%	fall	in	digital	home	and	set-top	box	product	volumes	year-on-year.	             share	in	the	cable	market	remained	stable	in	2009;



                                                                                                      technIcolor	–	2010	annual	report                         63
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          RESuLTS	OF	OPERATIONS	FOR	2009	AND	2008



                                                                                Contents
                                                                        ➜
                                                                                                ➜


    ■■   market	share	loss	with	one	european	telecom	operator,	as	reported	         otheR
         in	the	third	quarter	of	2009,	due	to	the	phasing	out	of	deployments	
         of	an	existing	product.	the	group	believes	that	its	market	share	in	       revenues	presented	in	the	other	segment	comprise:
         telecoms	has	been	stable	since	the	third	quarter	of	2009.
                                                                                    ■■   corporate	revenues	for	€4 million	in	each	of	2009	and	2008,	mainly	
    Iptv	&	voIp	revenues	declined	sharply	in	2009,	reflecting	sharp	cuts	to	             related	to	services	charged	to	third	parties;
    operators’	capital	expenditures	in	an	unfavorable	economic	environment.         ■■   other	activities	totaling	€102 million	in	2009	compared	to	€279 million	
    the	digital	content	delivery	business	posted	a	decline	in	revenues	in	               in	2008,	mainly	related	to	the	north	american	tv	after-sales	services	
    2009.	media	services	activities	suffered	from	significant	pressure	on	               operations	and	the	retail	telephony	activities.	the	decrease	in	revenues	
    volumes,	particularly	in	the	second	half	of	the	year,	due	to	lower	orders	           mainly	reflected	reduced	external	revenues	from	the	retail	telephony	
    for	tv	content	and	dvd	management	services	from	studios	and	broad-                   activities,	from	which	the	group	exited	during	the	course	of	2009.
    casters.	In	a	broadcasting	market	hit	by	a	decline	in	advertising	spending,	
    broadcast	services	revenues	edged	down	in	2009	compared	with	2008.



    3.15.2	 Profit	(Loss)	from	continuing	operations	before	tax	and	net	
            finance	costs
    profit	from	continuing	operations	before	tax	and	net	finance	costs	was	         Restructuring	Costs
    €99 million	in	2009,	compared	with	a	loss	of	€774 million	in	2008.	the	
    extent	of	this	increase	was	attributable	mainly	to	the	goodwill	and	asset	      restructuring	costs	for	continuing	operations	totaled	€41 million	in	2009	
    impairment,	and	restructuring	charges,	which	totaled	€866 million	in	2008,	     (compared	with	€166 million	in	2008).	In	2009,	restructuring	costs	related	
    ongoing	improvement	in	the	overall	business	mix	and	the	revenue	mix	of	         mainly	to	site	closures,	particularly	of	the	technology’s	research	site	in	
    entertainment	services	and	digital	delivery,	as	well	as	efficiency	gains	in	    villingen	(germany).	In	2008,	restructuring	costs	were	mainly	related	to	
    most	of	the	group’s	businesses.                                                 retail	telephony	activities,	entertainment	services	and	digital	delivery.


                                                                                    Impairment	Losses	on	Non-Current	Operating	Assets
    cost of sales
                                                                                    In	2009,	technicolor	recorded	net	impairment	losses	on	non-current	oper-
    cost	 of	 sales	 amounted	 to	 €2,804  million	 in	 2009,	 compared	 with	      ating	assets	of	€128 million,	compared	with	€700 million	in	2008.	In	2009,	
    €3,422 million	in	2008,	a	decrease	of	€618 million,	due	primarily	to	the	       a	€44 million	impairment	charge	was	made	against	a	contract	advance	to	
    decline	in	revenues,	but	also	to	efficiency	gains	in	most	of	the	group’s	       a	north	american	client	in	entertainment	services,	as	well	as	an	€8 million	
    activities.	accordingly,	gross	margin	from	continuing	operations	totaled	       net	loss	on	customer	relationship,	and	a	€12 million	impairment	charge	
    €815 million,	or	22.5%	of	consolidated	revenues	in	2009	(compared	with	         on	brands	and	patents	in	technology,	due	to	the	write-off	of	the	rca	
    €770 million	in	2008	or	18.4%	of	revenues).                                     brand.	In	2008,	impairment	losses	on	goodwill	totaled	€395 million	and	
                                                                                    impairment	losses	on	non-current	operating	assets	totaled	€305 million.	
    Selling	and	Administrative	Expenses                                             for	further	information,	see	notes	9,	13	and	14	to	the	group’s	consolidated	
                                                                                    financial	statements.
    sales	and	marketing	expenses	amounted	to	€127 million	in	2009,	or	3.5%	
    of	revenues	(compared	with	€178 million	in	2008,	or	4.2%	of	revenues),	a	
    decrease	of	€51 million	compared	with	2008.	this	decrease	was	attribut-         Other	Income	(Expense)
    able	in	part	to	efficiency	gains	in	most	of	the	group’s	businesses.             other	income	(expense)	represented	income	totaling	€12 million	in	2009,	
    general	and	administrative	expenses	amounted	to	€277 million	in	2009,	          compared	with	an	expense	of	€25 million	in	2008.	for	further	information,	
    or	7.6%	of	revenues	(compared	with	€304 million	in	2008,	or	7.3%	of	            see	note 7	to	the	group’s	consolidated	financial	statements.
    revenues),	a	decrease	of	€27 million	compared	with	2008.	the	increase	
    as	a	percentage	of	revenues	was	mainly	driven	by	lower	revenues,	which	
    was	partly	offset	by	efficiency	gains.                                          technology
                                                                                    profit	from	continuing	operations	before	tax	and	net	finance	costs	for	
    Research	and	Development	Expenses                                               technology	was	€217 million	in	2009,	compared	with	a	profit	of	€236 million	
                                                                                    in	2008,	or	a	profit	margin	of	55.4%	in	2009	compared	with	59.9%	in	
    research	and	development	expenses	for	continuing	operations	amounted	           2008.	adjusted	ebIt	(as	defined	in	section 3.14.9)	for	technology	was	
    to	€155 million	in	2009,	or	4.3%	of	revenues	(compared	with	€171 million	       €258 million	in	2009,	or	66.0%	of	revenues,	compared	with	€263 million	in	
    in	2008,	or	4.1%	of	revenues),	a	decrease	of	€16 million	compared	with	         2008,	or	66.8%	of	revenues.	adjusted	ebItda	(as	defined	in	section 3.14.9)	
    2008.	the	decrease	was	attributable	mainly	to	the	closure	of	the	silicon	       for	technology	was	€276 million	in	2009,	or	70.7%	of	revenues,	compared	
    solutions	and	retail	telephony	activities.	of	the	total	spending	on	research	   with	€281 million	in	2008,	or	71.4%	of	revenues.
    and	development	in	2009,	€45 million	was	spent	in	technology,	which	
    includes	the	research	&	Innovation	businness.                                   the	decline	in	the	profit	from	continuing	operations	before	tax	and	
                                                                                    net	 finance	 costs	 for	 technology	 was	 attributable	 to	 a	 €12  million	




    64       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
                                                                                     RESuLTS	OF	OPERATIONS	FOR	2009	AND	2008                                           3
                                                                                 Contents
                                                                         ➜
                                                                                                  ➜


   write-down	on	the	brand	portfolio	and	costs	related	to	the	launch	of	the	          in	section 3.14.9)	for	digital	delivery	totaled	€123 million	in	2009,	or	8.1%	
   advanced	design	center	within	research	&	Innovation,	partly	offset	by	             of	revenues,	compared	with	€133 million	in	2008,	or	7.4%	of	revenues.	the	
   the	rationalization	of	research	sites	and	a	slight	increase	in	patent	filing,	     improvement	in	the	adjusted	ebItda	margin	reflected	the	impact	of	the	
   prosecution	and	maintenance	costs.	the	company	has	taken	action	to	                fall	in	connect	volumes	and	pricing	pressure,	which	was	largely	offset	by	
   optimize	its	patent	portfolio	management	costs.                                    mix	improvements	and	a	material	decrease	in	non-quality	costs,	resulting	
                                                                                      from	the	launch	in	the	third	quarter	of	2009	of	a	program	designed	to	
   restructuring	costs	totaled	€27 million	in	2009	(compared	with	€3 million	
                                                                                      optimize	operating	processes	and	product	development.	In	addition	
   in	2008).	these	costs	were	mainly	related	to	the	closure	of	the	villingen	
                                                                                      ebItda	margin	benefited	also	from	improved	profitability	in	digital	
   (germany)	site.
                                                                                      content	delivery	services,	despite	lower	activity,	with	a	tighter	control	
                                                                                      over	costs	and	operating	processes;
   enteRtainment seRvices                                                             restructuring	costs	totaled	€3 million	in	2009	(compared	with	€28 million	
   loss	from	continuing	operations	before	tax	and	net	finance	costs	for	              in	2008).
   entertainment	services	was	€34 million	in	2009,	compared	with	a	loss	of	
   €548 million	in	2008.	the	2008	loss	was	largely	impacted	by	impairment	
   charges	of	€502 million,	and	with	the	aim	of	providing	a	more	comparable	
                                                                                      otheR
   view	of	the	changes	in	its	operating	performance,	the	discussion	of	the	           losses	from	continuing	operations	before	tax	and	net	finance	costs	for	
   variances	between	2008	and	2009	below	includes	adjusted	indicators.	               the	group’s	other	segment	were	€112 million	in	2009	(compared	with	a	
   adjusted	ebIt	(as	defined	in	section 3.14.9)	for	entertainment	services	           loss	of	€284 million	in	2008)	and	are	comprised	of:
   was	€74 million	in	2009,	or	4.6%	of	revenues,	compared	with	€31 million	in	
                                                                                      ■■   losses	from	continuing	operations	before	tax	and	net	finance	costs	of	
   2008,	or	1.8%	of	revenues.	the	improvement	in	adjusted	ebIt	was	partially	
                                                                                           €91 million	in	2009	(compared	with	a	loss	of	€105 million	in	2008)	
   attributable	to	lower	depreciation	and	amortization,	due	mainly	to	the	
                                                                                           related	to	unallocated	corporate	functions;
   recognition	of	asset	write-offs	at	the	end	of	2008.	adjusted	ebItda	(as	
   defined	in	section 3.14.9)	for	entertainment	services	totaled	€219 million	        ■■   losses	from	continuing	operations	before	tax	and	net	finance	costs	
   in	2009,	or	13.1%	of	revenues,	compared	with	€214 million	in	2008,	or	12.4%	            of	€21 million	in	2009	(compared	with	a	loss	of	€178 million	in	
   of	revenues.	this	improvement	was	attributable	to	the	following	factors:                2008),	mainly	reflecting	a	decrease	in	the	operating	loss	on	the	retail	
                                                                                           telephony	activities	(a	loss	of	€4 million	in	2009	compared	with	a	
   ■■   in	creation	services,	despite	a	decrease	in	postproduction	services,	              loss	of	€88 million	in	2008),	from	which	the	group	exited	in	2009.
        operating	profitability	improved	in	2009	compared	with	2008,	thanks	
        to	an	increase	in	visual	effects	for	films,	the	development	of	animation	
        operations	in	India	and	visual	effects	for	advertising	in	los	angeles,	

   ■■
        as	well	as	efficiency	gains;
                                                                              	
        in	theatrical	services,	operating	profitability	improved	significantly	
                                                                                      3.15.3	 Net	finance	costs
        in	 2009,	 with	 mix	 improvements	 in	 film	 and	 growth	 in	 digital 
        production,	as	well	as	efficiency	gains;                                      net	finance	costs,	which	comprise	the	total	of	net	interest	expenses	
                                                                                      and	other	financial	expenses,	were	€68 million	in	2009,	compared	with	
   ■■   in	dvd	services,	operating	profitability	remained	stable	in	value	            €374 million	in	2008,	and	break	down	as	follows:
        despite	the	fall	in	revenues,	thanks	to	cost-cutting	measures	and	
        efficiency	gains,	as	well	as	mix	improvements	compared	with	2008,	
        reflecting	strong	growth	in	blu-ray™	 volumes	and	a	reduction	in	             Net	interest	expense
        kiosk-related	volumes.
                                                                                      despite	a	higher	level	of	average	debt	in	2009	than	in	2008,	net	interest	
   ■■   in	prn,	operating	profitability	increased	in	2009	compared	with	2008,	        expense	for	continuing	operations	totaled	€43 million	in	2009	compared	
        mainly	as	a	result	of	significant	decrease	in	its	selling	&	marketing	and	    with	€73 million	in	2008	due	mainly	to	lower	interest	rates	in	2009.	see	
        general	&	administrative	expenses.                                            note 10	and	26	to	the	group’s	consolidated	financial	statements	for	further	
   restructuring	costs	totaled	€7 million	in	2009	(compared	with	€22 million	         information.
   in	2008).
                                                                                      Other	financial	income	(expense)
   digital deliveRy                                                                   other	financial	expense	for	continuing	operations	totaled	€25 million	
                                                                                      in	2009,	compared	with	€301 million	in	2008,	including	a	€151 million	
   profit	 from	 continuing	 operations	 before	 tax	 and	 net	 finance	 costs	       expense	relating	to	the	impairment	of	the	group’s	financial	stake	in	
   for	digital	delivery	amounted	to	€28 million	in	2009,	compared	with	               videocon	Industries	and	a	€36 million	expense	covering	the	revaluation	
   a	loss	of	€178 million	in	2008.	the	2008	loss	was	largely	impacted	by	             of	u.s. dollar	hedge	borrowings.	In	2009,	other	financial	income	(expense)	
   impairment	charges	of	€170 million,	and	with	the	aim	of	providing	a	               included	a	€7 million	gain	on	the	sale	of	videocon	Industries	shares	and	a	
   more	comparable	view	of	the	changes	in	its	operating	performance,	the	             gain	of	€36 million	relating	to	the	unwinding	of	interest	rate	swaps,	as	well	
   discussion	of	variances	between	2008	and	2009	below	includes	adjusted	             as	expenses	relating	to	the	restructuring	of	the	group’s	debt	for	a	total	of	
   indicators.	 adjusted	 ebIt	 (as	 defined	 in	 section  3.14.9)	 for	 digital	     €42 million.	see	note 10	to	the	group’s	consolidated	financial	statements	
   delivery	was	€36 million	in	2009,	or	2.4%	of	revenues,	compared	with	              for	further	information.
   €51 million	in	2008,	or	2.8%	of	revenues.	adjusted	ebItda	(as	defined	




                                                                                                        technIcolor	–	2010	annual	report                        65
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          RESuLTS	OF	OPERATIONS	FOR	2009	AND	2008



                                                                                    Contents
                                                                            ➜
                                                                                                   ➜



    3.15.4	 Income	tax
    In	2009,	the	group’s	total	income	tax	charge	(current	and	deferred)	                January 1,	2009	of	a	new	tax	treaty	between	france	and	the	u.s.,	which	
    on	continuing	operations	was	€35 million,	compared	with	a	charge	of	                removed	the	withholding	tax	on	licensing	revenues,	withholding	tax	
    €105 million	in	2008.                                                               was	down	compared	with	2008.	the	current	tax	charge	was	€14 million	
                                                                                        in	france	(mainly	reflecting	withholding	taxes)	and	€13 million	outside	
    the	current	tax	charge	in	2009	was	the	result	of	current	taxes	due	in	brazil,	
                                                                                        france.
    australia	and	mexico,	as	well	as	withholding	taxes	on	income	earned	by	
    the	group’s	licensing	activities,	which	were	only	partially	credited	against	       In	2009,	technicolor	recorded	a	net	deferred	tax	charge	of	€8 million	
    taxes	payable	in	france	and	the	united	states,	and	as	such	represent	an	            due	mainly	to	the	use	of	french	deferred	tax	assets,	partially	offset	by	
    additional	tax	expense.	due	to	the	ratification	with	retroactive	effect	to	         the	benefit	of	the	removal	of	the	united	states-france	withholding	tax.



    3.15.5	 Share	of	Profit	(Loss)	from	associates
    the	share	of	profit	(loss)	from	associates	was	not	material	in	2009,	compared	with	a	loss	of	€4 million	in	2008,	which	related	principally	to	nutune,	a	
    joint	venture	between	technicolor	and	nxp	semiconductors	combining	their	respective	tuner	activities.



    3.15.6	 Profit	(Loss)	from	continuing	operations
    loss	from	continuing	operations	was	€4 million	in	2009,	compared	with	a	loss	of	€1,257 million	in	2008.



    3.15.7	 Profit	(Loss)	from	discontinued	operations
    In	2009,	the	total	loss	from	discontinued	operations	was	€338 million	              recorded	an	impairment	loss	of	€230 million	on	discontinued	operations,	
    (compared	with	a	loss	of	€676 million	in	2008).	the	loss	from	discon-               relating	mainly	to	grass	valley	businesses	(compared	with	an	impairment	
    tinued	operations	before	impairment	losses	on	non-current	assets	was	               loss	of	€430 million	in	2008).
    €108 million	in	2009	(compared	with	a	loss	of	€246 million	in	2008),	
                                                                                        see	note 12	to	the	group’s	consolidated	financial	statements	for	further	
    including	a	loss	of	€109 million	(compared	with	loss	of	€127 million	
                                                                                        information.
    in	2008)	relating	to	grass	valley	businesses.	In	2009,	the	group	also	



    3.15.8	 Net	Income	(Loss)	of	the	Group
    the	group’s	consolidated	net	loss	was	€342 million	in	2009	(compared	               totaled	€342 million	(compared	with	a	loss	of	€1,930 million	in	2008).	
    with	 a	 loss	 of	 €1,933  million	 in	 2008).	 the	 net	 loss	 attributable	 to	   net	loss	per	non-diluted	share	was	€13.0	in	2009,	compared	with	a	net	
    minority	shareholders	in	2009	was	nil,	compared	with	€3 million	in	2008.	           loss	per	non-diluted	share	of	€74.1	in	2008.
    accordingly,	the	net	loss	attributable	to	shareholders	of	technicolor sa	




    66       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
	                                                                                                 LIquIDITY	AND	CAPITAL	RESOuRCES                                     3
                                                                                  Contents
                                                                          ➜
                                                                                                 ➜



    3.16	 	lIquIdIty	and	capItal	resources
    this	section should	be	read	in	conjunction	with	chapter 1:	“Key	informations	and	risk	factors”,	section 1.3.2:	“market	risk”	of	this	annual	report	and	
    notes	24,	26	and	27	to	the	consolidated	financial	statements.



    3.16.1		 Overview
    3.16.1.1 PRinciPal cash RequiRements                                              3.16.1.2 key liquidity ResouRces
    the	principal	cash	requirements	of	the	group	arise	from	the	following:            to	meet	its	cash	requirements,	the	group’s	main	sources	of	liquidity	consist	
                                                                                      of:
    ■■   Working capital requirements from continuing operations.	the	working	
         capital	requirements	of	the	group	are	based	in	particular	on	the	level	      ■■   Cash and cash equivalents.	the	amount	of	Cash and cash equivalents	
         of	inventories,	receivables	and	payables.	In	the	past,	including	in	2008,	        was	€332 million	at	december 31,	2010.	of	this	amount,	€45 million	
         the	group	used	several	measures	to	actively	manage	its	working	                   held	by	tce	taiwan	television	can	be	used	only	for	the	payment	
         capital	requirements.	these	measures	included	the	use	of	factoring,	              of	local	expenses.	In	addition	to	the	€332 million	in	cash	and	cash	
         measures	aimed	at	accelerating	the	payment	of	the	group’s	receiv-                 equivalents,	€74 million	in	cash	collateral	and	security	deposits	was	
         ables	at	year	end,	and	the	lengthening	of	the	payment	period	of	the	              outstanding	at	december 31,	2010	to	secure	credit	facilities	and	other	
         group’s	supplier	invoices	at	year	end.	working	capital	requirements	              group	obligations.
         are	also	impacted	by	the	level	of	advances	on	customer	contracts	                 the	restructuring	under	the	Sauvegarde	plan	provided	for	a	maximum	
         and	prepaid	rebates.	the	new	management	team	decided	in	2008	to	                  of	€400 million	of	cash	to	remain	on	the	company’s	balance	sheet,	
         reduce	all	of	these	measures.	In	2009	technicolor	finalized	an	end	to	            adjusted	for	seasonal	variations	on	the	settlement	date	of	the	capital	
         factoring,	reduced	customer	advances	and	aligned	supplier	payment	                markets	transaction.	this	cash	amount,	as	adjusted	for	seasonal	varia-
         cycles	with	contract	terms;                                                       tions	at	february 28,	2010,	corresponded	to	€380 million.	under	the	
    ■■   Losses relating to discontinued operations. the	group	must	also	fund	             terms	of	the	Sauvegarde	plan,	on	the	settlement	date	of	the	capital	
         the	losses	and	cash	requirements	of	its	discontinued	operations.	for	             markets	transaction,	the	company	was	to	pay	to	its	senior	creditors	
         more	information	on	the	risks	associated	with	the	sale	of	these	activi-           an	amount	(the	“down	payment”)	equal	to	the	difference	between	
         ties	see	chapter 1	“Key	informations	and	risk	factors”	section 1.3.3:	            (i) the	cash	available	at	february 28,	2010,	minus	certain	specific	
         “risks	related	to	business	disposals”	of	this	annual	report;                      expenses	(including	transaction	costs,	the	payment	of	€25 million	
    ■■   Capital Expenditures.	the	new	financing	contracts	in	place	as	part	of	            to	the	tss	holders	and	capitalized	interest)	and	(ii) €380 million.	In	
         restructuring	under	the	Sauvegarde	plan	impose	limitations	on	the	                accordance	with	the	Sauvegarde	plan,	the	down	payment	was	to	be	
         amount	of	capital	expenditures	by	the	group.	for	more	information,	               applied	to	50%	of	the	maximum	amount	of	the	nrs	issuance	and	50%	
         see	“risks	related	to	changes	in	market,	technologies	and	consumer	               of	the	maximum	amount	of	the	dpn	issuance.	the	down	payment	
         demand”	chapter 1:	“Key	informations	and	risk	factors”		section 1.3.4	            amount	on	the	settlement	date	of	may	26,	2010	as	calculated	above	
         “risks	related	to	commercial	activity”	of	this	annual	report	and	note	            was	€0	(see	sections	2.1.2	and	3.16.3	of	this	annual	report	for	more	
         26.3	(g)	to	the	group’s	consolidated	financial	statements;                        information);
    ■■   Repayment or refinancing of debt.	at	each	debt	maturity	date,	the	           ■■   Cash generated from operating activities.	for	further	information	see	
         group	must	either	repay	or	refinance	the	maturing	amounts.                        note 35	of	the	group’s	consolidated	financial	statements.
         upon	taking	office	in	the	fall	of	2008,	the	new	management	team,	in	              as	part	of	the	restructuring	under	the	Sauvegarde plan,	the	group	
         close	consultation	with	the	board	of	directors,	conducted	a	review	               is	required	to	dedicate	80%	of	its	excess	cash	to	repaying	debt.	for	
         of	the	group’s	operations,	strategy,	operational	performance	and	                 more	information,	see	section 3.16.3:	“financial	resources”;
         financial	situation.	one	of	the	main	findings	of	this	review	was	that	       ■■   Proceeds from sales of assets.	as	part	of	the	restructuring	under	the	
         the	group	was	confronted	with	a	very	significant	amount	of	financial	             Sauvegarde	plan,	the	cash	flow	generated	in	2010	from	the	sale	of	
         debt	for	which	it	would	not	have	the	capacity	to	meet	the	scheduled	              certain	discontinued	activities	was	used	to	repay	in	cash	the	dpns	
         repayments	in	2011	and	2012.                                                      (described	below)	and	cash	flow	generated	from	the	sale	of	such	
         within	the	framework	of	the	group’s	debt	restructuring	under	the	                 activities	in	periods	beyond	2010	will	be	used	to	repay	the	reinstated	
         Sauvegarde	plan,	the	group’s	gross	debt	was	reduced	by	approxi-                   debt;
         mately	45%	(by	means	of	capitalization)	and	the	maturities	of	the	           ■■   Committed credit lines.	under	the	debt	restructuring,	the	group	
         group’s	senior	debt	were	restructured	pushing	the	key	maturities	out	             negotiated	two	lines	of	credit	secured	by	receivables,	for	an	amount	
         to	2016	and	2017.	for	more	information	see	section 3.16.3:	“financial	            of	€194 million.
         resources”;
                                                                                      the	board	of	directors	considered	the	group’s	cash	flow	projections	
    ■■   Dividends. no	dividends	were	paid	in	2010	for	2009	and	no	dividend	          which	support	the	operating	performance	and	believes	that	the	group	
         is	planned	for	2011.	the	financing	documentation	implemented	as	             can	meet	its	expected	cash	requirements,	address	potential	financial	
         part	of	the	restructuring	of	the	group’s	debt	imposes	restrictions	          consequences	of	ongoing	litigation	and	respect	its	financial	convenants	
         on	the	group’s	ability	to	pay	dividends.	for	more	information,	see	          until	at	least	december 31,	2011.
         section 3.16.3:	“financial	resources”.



                                                                                                        technIcolor	–	2010	annual	report                       67
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          	 LIquIDITY	AND	CAPITAL	RESOuRCES



                                                                               Contents
                                                                         ➜
                                                                                               ➜



    3.16.2	 Cash	flows
     (in € millions)                                                                                                    2010             2009              2008
     net	operating	cash	generated	from/(used	in)	continuing	activities                                                    120               195            (143)
     net	operating	cash	used	in	discontinued	operations                                                                  (55)              (97)            (175)
     NET cash fROm/(usEd iN) OPERaTiNg acTiviTiEs                                                                          65               98            (318)
     net	investing	cash	used	in	continuing	activities                                                                    (99)             (194)            (280)
     net	investing	cash	generated	from/(used	in)	discontinued	operations                                                   (5)             (34)             (71)
     NET cash usEd iN iNvEsTiNg acTiviTiEs                                                                             (104)             (228)            (351)
     net	financing	cash	generated	from/(used	in)	continuing	activities                                                  (207)              (74)              878
     net	financing	cash	used	in	discontinued	operations                                                                    (2)              (1)              (8)
     NET cash fROm/(usEd iN) fiNaNciNg acTiviTiEs                                                                      (209)              (75)              870
     NET (dEcREasE)/iNcREasE iN cash aNd cash EquivalENTs                                                              (248)             (205)              201
     exchange	losses	on	cash	and	cash	equivalents                                                                           11                5              (4)
     cash anD cash equiValenTs aT DeceMber 31                                                                            332              569              769



    net cash geneRated fRom/(used in)                                              ■■   net	change	in	provisions	of	€(22) million	(net	balance	of	the	new	
                                                                                        provisions	 for	 the	 year	 and	 the	 outflows	 linked	 to	 utilizations)	
    oPeRating activities                                                                compared	with	a	net	change	in	provisions	of	€(80) million	in	2009	
    net	cash	generated	from	operating	activities	was	€65 million	in	2010,	              (net	change	of	€94 million	in	2008);
    compared	with	€98 million	generated	from	operating	activities	in	2009	         ■■   net	 interest	 paid	 (corresponding	 to	 interest	 paid	 net	 of	 interest	
    and	€(318) million	used	in	operating	activities	in	2008.	this	significant	          received)	of	€134 million	in	2010	(compared	with	€43 million	in	2009	
    increase	compared	to	2008	was	principally	attributable	to	an	improve-               and	€65 million	in	2008);	and
    ment	in	net	income	and	the	working	capital	requirements	of	continuing	         ■■   taxes	paid	of	€21 million	in	2010	(compared	with	€35 million	in	2009	
    operations.                                                                         and	€30 million	in	2008).
                                                                                   profit	from	continuing	operations	in	2010	was	€156 million,	compared	
    Continuing	operations                                                          with	a	loss	of	€4 million	in	2009	(loss	of	€1,257 million	in	2008).	In	2010,	
    net	operating	cash	generated	from	continuing	operations	was	€120 million	      non-cash	elements	included	mainly:
    in	2010	(compared	with	€195 million	generated	in	continuing	operations	        ■■   impairment	of	assets	amounting	to	€184 million	(compared	with	
    in	2009	and	€(143) million	used	in	continuing	operations	in	2008).	this	            €129 million	in	2009	and	€745 million	in	2008);
    variation	reflects:
                                                                                   ■■   depreciation	 and	 amortization	 of	 €284  million	 (compared	 with	
    ■■   the	improvement	in	the	net	income	from	continuing	operations,	                 €273 million	in	2009	and	€466 million	in	2008);
         with	a	net	profit	of	€156 million	in	2010	compared	with	a	net	loss	of	    ■■   gain	on	debt	restructuring	of	€381 million;	and
         €4 million	in	2009;	however	a	large	portion	of	this	net	profit	in	2010	
                                                                                   ■■   net	change	in	provisions.
         consisted	of	non-cash	elements	as	explained	below;
    ■■   the	change	in	working	capital	requirements	and	other	assets	and	
         liabilities	 (including	 contract	 advances)	 which	 had	 a	 negative	    Discontinued	operations
         impact	of	€93 million	in	2010	compared	with	a	negative	impact	of	         net	operating	cash	used	in	discontinued	operations	was	€55 million	in	
         €117 million	in	2009	(a	negative	impact	of	€337 million	in	2008).	In	     2010	(compared	with	€97 million	in	2009	and	€175 million	in	2008).
         2009,	technicolor	finalized	the	initiatives	begun	in	2008	by	ending	
         factoring	and	reducing	customer	advances	and	aligning	its	supplier	
         payment	cycle	with	contractual	terms.	In	2009	and	2010,	technicolor	      net cash geneRated fRom/(used in)
         did	not	factor	receivables;
                                                                                   investing activities
    ■■   cash	 used	 in	 the	 restructuring	 of	 continuing	 operations,	 which	
         amounted	to	€36 million	in	2010,	compared	with	€68 million	in	2009	       net	cash	used	in	investing	activities	was	€104 million	in	2010	(compared	
         (€50 million	in	2008);                                                    with	€228 million	in	2009	and	€351 million	in 2008).




    68       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
	                                                                                                  LIquIDITY	AND	CAPITAL	RESOuRCES                                           3
                                                                                  Contents
                                                                          ➜
                                                                                                  ➜


    Continuing	operations                                                             used	in	2010	was	primarily	to	repay	borrowings	for	€338 million,	to	pay	
                                                                                      tss	holders	€25 million	in	accordance	with	the	Sauvegarde	plan	and	for	
    net	investing	cash	used	in	continuing	activities	was	€99 million	in	2010	         the	payment	of	fees	relating	to	the	debt	restructuring	of	€51 million.	the	
    (compared	with	€194 million	in	2009	and	€280 million	in	2008),	and	               payments	were	offset	in	part	by	the	€203 million	of	proceeds	from	the	
    included:                                                                         group’s	capital	increase.
    ■■   net	capital	expenditures	amounted	to	€165 million	in	2010	(compared	         the	net	cash	of	€74 million	used	in	2009	was	primarily	to	repay	borrow-
         with	€149 million	in	2009	and	€233 million	in	2008)	due	to	cash	             ings,	including	the	drawings	on	the	group’s	syndicated	credit	facility	for	
         expended	relating	to	tangible	and	intangible	capital	expenditures	of	        €44 million,	and	the	payment	of	fees	relating	to	the	debt	restructuring	
         €176 million,	net	of	cash	received	from	tangible	and	intangible	asset	       of	€27 million.
         disposals,	which	was	€11 million	in	2010	(compared	with	€17 million	
         in	2009	and	€3 million	in	2008);                                             the	net	amount	of	€878 million	generated	in	2008	by	financing	of	
    ■■   cash	outflow	for	the	acquisition	of	equity	holdings	in	subsidiaries	(net	    continuing	operations	mainly	reflects	the	increase	in	loans	and	includes	
         of	cash	acquired),	amounting	to	€4 million	in	2010	(compared	with	           drawings	 on	 the	 group’s	 syndicated	 credit	 facility	 for	 an	 amount	 of	
         €5 million	in	2009	and	€14 million	in	2008);                                 €1,610 million	offset	by	the	repayment	of	convertible	bonds	in	the	amount	
                                                                                      of	€367 million,	the	repayment	of	other	debt	for	€338 million	and	the	
    ■■   proceeds	 received	 from	 sales	 of	 equity	 holdings,	 amounting	 to	       payment	of	€29 million	in	distributions	to	holders	of	deeply	subordinated	
         €37 million	in	2010	(compared	with	€23 million	in	2009	and	€5 million	       perpetual	notes.
         in	2008);
    ■■   reduction	or	increase	of	cash	collateral	and	security	deposits	(to	secure	
         the	group’s	obligations)	generated	a	total	of	€34 million	in	2010	           Discontinued	operations
         (compared	with	cash	usage	of	€56 million	in	2009	and	€35 million	            cash	used	by	discontinued	operations	in	2010	was	€2 million	compared	
         in	2008).                                                                    to	€1 million	used	in	2009	(€8 million	used	in	2008).

    Discontinued	Operations                                                           net change in cash and cash equivalents
    net	investing	cash	used	in	discontinued	operations	was	€5 million	in	2010	
                                                                                      there	was	a	net	decrease	of	cash	and	cash	equivalents	of	€248 million	
    (compared	with	€34 million	of	cash	used	in	2009	and	€71 million	of	cash	
                                                                                      before	the	impact	of	exchange	rates	in	2010	compared	with	a	decrease	
    used	in	2008).
                                                                                      of	€205 million	in	2009	(and	an	increase	of	€201 million	in	2008).	cash	
                                                                                      and	cash	equivalents	amounted	to	€332 million	at	december 31,	2010	
    net cash geneRated fRom/(used in)                                                 compared	with	€569 million	at	december 31,	2009	(and	€769 million	at	
                                                                                      december 31,	2008).
    financing activities
                                                                                      the	group	estimates	that	its	cash	and	cash	equivalents	and	the	cash	
    net	cash	used	in	financing	activities	amounted	to	€209 million	in	2010	           generated	 by	 its	 activities	 as	 well	 as	 the	 liquidity	 available	 under	 its	
    (compared	with	€75 million	used	in	2009	and	€870 million	generated	               receivables	backed	committed	credit	facilities	are	sufficient	to	cover	its	
    in	2008).                                                                         working	capital	needs.

    Continuing	operations
    continuing	 operations	 used	 €207  million	 in	 2010	 compared	 with	
    €74 million	used	in	2009	(€878 million	generated	in	2008).	the	net	cash	



    3.16.3	 Financial	resources
    gross	financial	debt	totaled	€1,325 million	(Ifrs	value)	at	the	end	of	2010,	     the	private	placements	and	the	borrowings	drawn	under	the	group’s	
    compared	with	€2,743 million	at	the	end	of	2009.	at	december 31,	2010,	           credit	lines	were	restructured	in	2010	in	accordance	with	the	Sauvegarde	
    financial	debt	consisted	primarily	of	€519 million	of	notes	and	€777 million	     plan,	with	the	impact	of	reducing	the	amount	of	debt	and	extending	its	
    of	 term	 loans,	 both	issued	 in	may	2010	as	part	 of	the	group’s	debt	          maturity.
    restructuring.	at	december 31,	2009,	financial	debt	comprised	primarily	
                                                                                      please	see	notes 1.2	and	26	to	the	group’s	consolidated	financial	state-
    notes	placed	privately	with	financial	institutions	for	the	equivalent	of	
                                                                                      ments	for	more	detailed	information	on	the	restructuring	and	the	group’s	
    €1,021 million	and	€1,674 million	drawn	under	the	group’s	syndicated	
                                                                                      debt.
    credit	facility.	financial	debt	due	within	one	year	amounted	to	€47 million	
    at	the	end	of	2010,	compared	with	€2,727 million	at	the	end	of	2009.




                                                                                                         technIcolor	–	2010	annual	report                            69
              |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3             	 LIquIDITY	AND	CAPITAL	RESOuRCES



                                                                                     Contents
                                                                             ➜
                                                                                                       ➜


    the	table	below	summarizes	technicolor’s	net	financial	debt	at	december 31,	2010.

                                                                                                                   amount at
                                                                                                   Type	of	 December 31, 2010                   First	       Existence
                                                                                              interest	rate      (in € millions)           maturity(1)       of	hedges
     term	loans	(non-amortizing	tranche)                                                            floating                      528             2017              yes
     term	loans	(amortizing	tranche)                                                                floating                      249             2011              yes
     notes	(non-amortizing	tranche)                                                                    fixed                      166             2017              no
     notes	(amortizing	tranche)                                                                        fixed                      353             2011              no
     other	non-current	debt                                                                          various                       13             2012              no
     other	current	debt                                                                             floating                       16             2011              no
     ToTal DebT                                                                                                               1,325
     available	cash	and	deposits(2)                                                                 floating                      287    0	to	1	month               no
     available	committed	credit	facilities                                                          floating                      194
     ToTal liquiDiTy                                                                                                             481

     (1) See note 26.3 for a maturity schedule of the Group’s debt.
     (2) Cash and deposits net of restricted cash.


    Sauvegarde Plan                                                                           •■   the	issuance	of	notes	redeemable	in	shares	of	the	company	(the	
                                                                                                   nrs,	reserved	for	the	senior	creditors,	for	an	aggregate	principal	
    on	January 28	and	march 9,	2009,	the	company	announced	that	when	                              amount	of	up	to	€641 million(2)),	with	the	company’s	existing	
    the	 2008	 audited	 consolidated	 financial	 statements	 would	 become	                        shareholders	having	the	opportunity	to	purchase	such	nrs	up	
    available,	it	would	be	in	breach	of	certain	covenants	contained	in	financial	                  to	an	amount	of	approximately	€75 million	pursuant	to	warrants	
    agreements	under	which	the	company	had	borrowed	substantially	all	of	its	                      to	purchase	nrs	(subject	to	rules	relating	to	public	offerings	that	
    outstanding	senior	debt,	i.e. approximately	€2.8 billion	(the	senior	debt).                    restrict	participation	by	investors	in	certain	countries	including	the	
                                                                                                   united	states),
    the	group	then	entered	into	discussions	to	restructure	its	senior	debt.	
    on	november 30,	2009,	the	company	requested	that	the	commercial	                          •■   the	issuance	of	notes	redeemable	in	cash	or	shares	of	the	company	
    court	of	nanterre	open	a	Sauvegarde	proceeding.	on	february 17,	2010,	                         (disposal	proceeds	notes,	or	the	dpn),	linked	to	the	disposal	
    the	commercial	court	of	nanterre	approved	the	Sauvegarde	plan.	the	                            proceeds	of	certain	non-core	assets	of	the	company,	reserved	
    principal	characteristics	of	the	debt	restructuring	as	contemplated	by	the	                    to	 the	 senior	 creditors	 up	 to	 an	 aggregate	 principal	 amount	
    Sauvegarde	plan	were	as	follows:                                                               of	€300 million	which	was	reduced	by	€48 million	of	disposal	
                                                                                                   proceeds	received	before	the	closing	of	the	restructuring(3);
    ■■   a	conversion	of	up	to	an	aggregate	principal	amount	of	€1,289 million	
                                                                                         ■■   the	execution	of	a	new	term	loan	facility	and	the	issuance	of	new	
         (on	the	basis	of	the	exchange	rate	set	out	in	the	Sauvegarde	plan,	i.e.	
                                                                                              notes	 which	 would	 allow	 the	 repayment	 of	 up	 to	 an	 aggregate	
         u.s. $1.30/€1.00	and	€1.1/£1.00)	of	the	senior	debt	into	securities	
                                                                                              principal	amount	of	€1,550 million (1)	of	senior	debt	(on	the	basis	of	
         by	way	of:
                                                                                              the	exchange	rate	set	out	in	the	Sauvegarde	plan,	i.e.	u.s. $1.30/€1.00	
         •■   a	 share	 capital	 increase	 in	 cash	 through	 the	 issuance	 of	 new	         and	€1.1/£1.00).
              shares,	 while	 maintaining	 the	 preferential	 subscription	 rights	
              (droits préférentiels de souscription)	of	shareholders	(subject	to	
              rules	relating	to	public	offerings	that	restrict	participation	by	inves-
              tors	in	certain	countries	including	the	united	states)	in	up	to	a	
              maximum	amount	of	approximately	€348 million(1)	(including	share	
              premium).	the	capital	increase	was	fully	backstopped	pursuant	to	
              a	subscription	commitment	by	the	senior	creditors,



    (1) This maximum amount could be reduced depending on the total amount of debt recognized by the juge-commissaire.
    (2) Pursuant to the sauvegarde Plan, the aggregate principal amount of NRS to be issued was to be reduced by an amount equal to 50% of the Down Payment, i.e.
        the difference between (i) cash flow available on February 28, 2010, minus certain specified costs (including transaction costs, the payment of €25 million to
        the TSS holders and accrued interest) and (ii) €380 million (or €400 million, adjusted for seasonal variations on February 28, 2010). In addition, this maximum
        amount could be reduced depending on the total amount of debt recognized by the juge-commissaire.
    (3) Pursuant to the sauvegarde Plan, the aggregate principal amount of DPNs to be issued (initially €300 million) was reduced by €48 million of disposal proceeds
        of certain non-strategic assets as of February 28, 2010. On the settlement date of the capital markets transaction, the €48 million was to be paid to the senior
        creditors of the Company in redemption of their debt claims under the existing senior debt. The aggregate principal amount of DPNs to be issued was to be
        reduced by an amount equal to 50% of the Down Payment, i.e. the difference between (i) cash flow available on February 28, 2010, minus certain specified costs
        (including transaction costs, the payment of €25 million to the TSS holders and accrued interest) and (ii) €380 million (i.e. €400 million, adjusted for seasonal
        variations on February 28, 2010). This maximum amount could be reduced depending on the total amount of debt recognized by the juge-commissaire.

    70         technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
	                                                                                                LIquIDITY	AND	CAPITAL	RESOuRCES                                        3
                                                                                Contents
                                                                        ➜
                                                                                                 ➜


    the	principal	characteristics	of	the	new	shares,	the	nrs,	the	dpn	and	the	       and	payable	existing	debt	claims	against	the	company.	this	amount	of	
    reinstated	debt	(as	defined	below)	implemented	in	accordance	with	the	           €965 million	was	divided	into	two	tranches:
    Sauvegarde	plan	are	described	below	under	“description	of	indebtedness”	
                                                                                     ■■   one	 amortizing	 tranche	 for	 an	 amount	 of	 €311  million	 with	 a	  	
    and	“new	shares,	nrs	and	dpn”,	as	well	as	in	note 26.4	to	the	group’s	
                                                                                          six-year	maturity,	carrying	interest	payable	each	quarter	at	the	rate	of	
    consolidated	financial	statements.
                                                                                          eurIbor/lIbor	(subject	to	a	floor	of	2%)	plus	an	initial	margin	of	
                                                                                          500	basis	points	which	reduces	as	the	company’s	leverage	decreases;	
    descRiPtion of indebtedness                                                           and
                                                                                     ■■   one	tranche,	payable	at	maturity,	for	an	amount	of	€654 million	with	
    the	following	contains	an	overview	of	the	terms	of	the	group’s	reinstated	
                                                                                          a	seven-year	maturity,	carrying	interest	payable	each	quarter	at	the	
    debt	which	was	put	in	place	in	connection	with	the	closing	of	the	capital	
                                                                                          rate	of	eurIbor/lIbor	(subject	to	a	floor	of	2%)	plus	an	initial	
    markets	transactions	pursuant	to	the	Sauvegarde	plan	on	may	26,	2010.
                                                                                          margin	of	600	basis	points	which	reduces	as	the	company’s	leverage	
                                                                                          decreases.
    Overview
                                                                                     new notes
    pursuant	to	the	Sauvegarde	plan	described	above,	the	company	prepared	
                                                                                     pursuant	to	the	note	purchase	agreement,	and	on	the	settlement	date	
    documentation	relating	to	its	reinstated	senior	debt,	comprising	a	credit	
                                                                                     of	the	capital	markets	transactions,	the	company	issued	new	notes	in	a	
    agreement,	a	note	purchase	agreement	and	an	Intercreditor	agreement	
                                                                                     principal	amount	of	€628 million(1)	(the	new	notes),	which	was	placed	
    as	defined	below	(collectively,	the	reinstated	debt)	prior	to	the	launch	
                                                                                     in	private	transactions	with	the	company’s	existing	noteholders	and	was	
    of	the	capital	markets	transaction	described	below.	the	reinstated	debt	
                                                                                     subscribed	by	way	of	set-off	against	a	portion	of	the	due	and	payable	debt	
    was	advanced	by	way	of	set-off	against	the	amounts	due	under	existing	
                                                                                     claims	against	the	company	held	by	the	noteholders.
    debt	claims	on	the	settlement	date	of	the	capital	markets	transactions	
    on	may	26,	2010.                                                                 the	new	notes	were	substituted	for	the	relevant	existing	notes	in	their	
                                                                                     corresponding	currencies,	i.e.	in euros,	u.s. dollars	or	pounds	sterling.	the	
    In	particular,	the	company	entered	into	the	following	contractual	docu-
                                                                                     issue	of	the	new	notes	was	divided	into	two	tranches:
    mentation	related	to	the	reinstated	debt:
                                                                                     ■■   one	amortizing	tranche	for	an	amount	of	€203 million	with	a	6-year	
    (i)	 a	 loan	 agreement	 between	 the	 company	 as	 borrower,	 certain	
                                                                                          maturity,	carrying	an	annual	interest	payment	of	9%	for	the	notes	
         subsidiaries	as	guarantors,	a	facility	agent	and	the	lenders	thereunder	
                                                                                          in euros,	9.35%	for	the	notes	in	u.s. dollars	and	9.55%	for	the	notes	
         (the	credit	agreement);
                                                                                          in	pounds	sterling;	and
    (ii)	 a	note	purchase	agreement	between	the	company	as	issuer,	certain	
                                                                                     ■■   one	tranche,	payable	at	maturity,	for	an	amount	of	€425 million	with	
          subsidiaries	as	guarantors	and	the	noteholders	thereunder	(the	note	
                                                                                          a	7-year	maturity,	carrying	an	annual	interest	rate	of	9%	for	the	notes	
          purchase	agreement);	and
                                                                                          in euros,	9.35%	for	the	notes	in	u.s. dollars	and	9.55%	for	the	notes	
    (iii)	 an	Intercreditor	agreement	(as	defined	below).                                 in	pounds	sterling.
    a	 security	 package	 consisting	 of	 share	 pledges,	 pledges	 of	 certain	
                                                                                     Mandatory prepayments
    receivables	under	material	customer	contracts,	pledges	of	material	intra-
    group	loans	and	pledges	of	material	cash-pooling	accounts	secures	the	           the	company	is	required	to	prepay	the	outstanding	reinstated	debt	in	
    borrower’s	and	each	guarantor’s	obligations	under	the	credit	agreement	          certain	circumstances,	including	the	following:
    and	note	purchase	agreement.                                                     ■■   Asset disposals:	the	net	proceeds	in	respect	of	any	disposal	of	any	
    the	company	also	entered	into	two	committed	receivables	facilities	(the	              of	its	assets	to	an	unaffiliated	third	party	will	be	applied	to	repay	the	
    committed	receivables	facilities),	as	contemplated	under	the	reinstated	              outstanding	reinstated	debt,	subject	to	a	minimum	threshold,	on	the	
    debt	documents.	the	Sauvegarde	plan	provides,	and	the	reinstated	                     understanding	that	this	undertaking	will	not	apply	to:	(i) the	disposal	
    debt	permits,	that	the	group	may	borrow	up	to	€200 million	under	the	                 of	certain	non-core	assets	during	2010,	the	proceeds	of	which	will	
    committed	receivables	facilities.                                                     be	used	to	redeem	the	dpn;	and	(ii) the	disposal	of	certain	assets,	
                                                                                          the	proceeds	of	which	will	be	used	during	the	year	to	finance	capital	
                                                                                          expenditures;
    Reinstated	Debt
                                                                                     ■■   Equity issuances: at	least	80%	of	the	net	proceeds	received	in	respect	
    the	nominal	value	of	the	reinstated	debt	at	the	exchange	rates	prevailing	            of	any	new	equity	issuances	(other	than	any	share	issuances	permitted	
    on	the	settlement	date	of	the	capital	markets	transactions	of	may	26,	2010	           under	 the	 share	 capital	 increase	 that	 maintains	 the	 preferential	
    amounted	to	€1,593	billion.                                                           subscription	rights	(droits préférentiels de souscription)	of	shareholders	
                                                                                          under	the	terms	of	the	Sauvegarde	plan,	shares	issued	in	redemption	
    new Term loan facilities                                                              of	the	dpn	and	the	nrs)	will	be	applied	to	repay	the	outstanding	
    pursuant	to	the	credit	agreement,	and	on	the	settlement	date,	the	                    reinstated	debt.	In	addition,	the	company	may	opt	to	use	the	
    company	put	in	place	term	loans	for	€965 million(1)	(the	new	term	loan	               proceeds	received	in	respect	of	any	new	equity	issuances	to	prepay	
    facilities),	that	were	used	to	pay	by	way	of	set-off	a	portion	of	the	due	            a	portion	of	the	nrs	IIc;




    (1) Nominal amounts issued and converted at the exchange rates as of May 26, 2010.


                                                                                                       technIcolor	–	2010	annual	report                          71
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          	 LIquIDITY	AND	CAPITAL	RESOuRCES



                                                                                 Contents
                                                                         ➜
                                                                                                 ➜


    ■■   Excess cashflow:	in	respect	of	2010,	80%	of	the	company’s	excess	           ■■   substantially	change	the	general	scope	of	its	business;
         cashflow	(which	is	defined	as	the	aggregate	of	net	cash	from	operating	     ■■   enter	into	material	transactions	or	arrangements	with	affiliates	unless	
         and	investing	activities	subject	to	certain	adjustments)	will	be	applied	        in	the	ordinary	course	of	business	and	on	an	arm’s	length	basis;
         to	repay	the	dpn;	in	respect	of	2011	and	subsequent	financial	years,	
                                                                                     ■■   invest	in	joint	ventures	or	partnerships;
         80%	of	the	excess	cashflow	(which	is	defined	above)	will	be	applied	
         to	prepay	the	reinstated	debt;                                              ■■   acquire	any	companies,	businesses,	shares	or	securities;
    ■■   Change of control: upon	the	occurrence	of	a	change	of	control	in	the	       ■■   issue,	attribute	or	allot	any	shares	or	redeem	or	repurchase	any	shares	
         company,	(see	“change	of	control	provisions”	below),	all	advances	               previously	issued	(other	than	resulting	from	the	capital	increase	
         under	the	credit	agreement	and	the	outstanding	principal	amount	of	              provided	for	by	the	Sauvegarde	plan	and	the	redemption	in	shares	of	
         the	new	notes,	together	with	any	other	outstanding	amounts	under	                the	nrs	and	dpn	and	certain	other	contractual	arrangements);	and
         the	reinstated	debt,	will	become	immediately	due	and	payable.	In	           ■■   declare	or	pay	any	dividends	or	make	any	other	distribution	in	respect	
         addition,	the	nrs	will	become	immediately	redeemable	in	the	form	                of	any	class	of	its	share	capital	or	apply	any	sum	for	any	such	purpose.
         of	shares	at	the	option	of	the	holders	thereof;	and
    ■■   Other:	net	proceeds	in	respect	of	any	payment	or	claim	under	any	           events of Default
         insurance	policy	or	issuance	of	subordinated	debt	in	connection	with	       the	credit	agreement	and	the	note	purchase	agreement	also	contain	
         any	refinancing,	shall	in	each	case	be	applied	to	the	repayment	of	the	     certain	events	of	default,	the	occurrence	of	which	provide	creditors	with	
         reinstated	debt	(in	the	latter	case	a	customary	“make	whole”	amount	        the	ability	to	immediately	demand	payment	of	all	or	a	portion	of	the	
         must	be	paid	to	noteholders).                                               outstanding	amounts	under	the	reinstated	debt.	If	the	creditors	exercise	
                                                                                     their	enforcement	rights	pursuant	to	the	reinstated	debt,	the	nrs	and	
    Voluntary prepayments                                                            the	dpn	will	be	prepaid	in	shares	and	cash,	respectively.
    under	the	terms	of	the	credit	agreement,	note	purchase	agreement	                the	events	of	default	pursuant	to	the	reinstated	debt	include,	among	
    and	Intercreditor	agreement,	the	company	may,	at	its	election,	prepay	           other	things,	and	subject	to	certain	exceptions	and	grace	periods:
    all	or	part	of	its	advances	under	the	credit	agreement	and	any	principal	
    amount	of	the	new	notes,	including	any	make	whole	payment,	under	the	            ■■   non-payment	of	any	amount	due	under	the	reinstated	debt	or	any	
    note	purchase	agreement.                                                              permitted	hedging	agreements;
                                                                                     ■■   failure	by	the	company	or	any	of	the	guarantors	to	comply	with	its	
    covenants                                                                             material	obligations	and	undertakings	under	the	reinstated	debt;
    the	credit	agreement	and	the	note	purchase	agreement	contain	certain	            ■■   certain	events	of	insolvency;
    customary	representations	and	warranties.	they	also	contain	certain	
    affirmative	and	financial	covenants	including	covenants	that	in	particular	      ■■   any	auditor’s	report	qualification	made	to	either	the	company’s	ability	
    require	that	(i) ebItda	be	not	less	than	a	certain	multiple	of	net	total	             to	continue	as	a	going	concern	or	the	accuracy	of	the	information	
    interest	on	a	trailing	twelve	month	basis	(“interest	cover	covenant”)	on	             given;
    June 30	and	december 31	of	each	financial	year,	(ii) total	net	debt	be	not	      ■■   failure	by	the	company	or	any	guarantor	to	comply	with	the	material	
    more	than	a	certain	multiple	of	ebItda	on	a	trailing	twelve	month	basis	              obligations	under	the	Intercreditor	agreement;
    (“leverage	covenant”)	on	June 30	and	december 31	of	each	financial	year,	        ■■   non-payment	of	any	financial	indebtedness	of	any	group	member	
    and	(iii) capital	expenditure	be	not	more	than	a	certain	amount	for	each	             in	excess	of	€25 million;
    financial	year.	each	of	the	interest	cover	covenant	and	leverage	covenant	
                                                                                     ■■   acceleration	of	any	financial	indebtedness	of	any	group	member	in	
    will	become	stricter	over	time.	the	exact	levels	of	these	covenants	are	
                                                                                          excess	of	€25 million	under	the	committed	receivables	facilities	or	
    given	in	note	26.3(g)	to	the	group’s	consolidated	financial	statements.
                                                                                          default	under	any	other	financial	indebtedness	of	any	group	member	
    In	addition	to	certain	information	provision	covenants,	the	credit	agree-             in	excess	of	€25 million	that	gives	the	relevant	creditor	or	creditors	
    ment	and	note	purchase	agreement	include	certain	negative	covenants	                  the	right	to	accelerate	the	date	for	payment	of	such	indebtedness;
    that	restrict	the	ability	of	the	company	and	certain	of	its	subsidiaries,	       ■■   creditors’	proceedings	for	any	assets	in	excess	of	€25 million	that	are	
    subject	in	each	case	to	certain	exceptions	and	limitations,	to	(among	                not	discharged	within	60 days;
    other	things):
                                                                                     ■■   any	security	enforcement	in	excess	of	€25 million	that	is	not	set	aside	
    ■■   sell,	transfer	or	dispose	of	assets	with	a	proceeds	value	of	more	than	          within	30 days;	and
         €100 million	in	any	financial	year;                                         ■■   any	event	which	has	a	material	adverse	effect	on	the	ability	of	the	
    ■■   create	or	grant	security	interests	that	secure	financial	indebtedness	           company	or	its	guarantors,	taken	as	a	whole,	to	perform	their	material	
         on	any	of	its	present	or	future	assets;                                          obligations	under	the	reinstated	debt.
    ■■   incur	 additional	 financial	 indebtedness	 in	 excess	 of	 €40  million	
                                                                                     change of control provisions
         excluding	certain	permitted	financial	indebtedness	including,	among	
         others,	 the	 refinancing	 of	 the	 reinstated	 debt	 and	 committed	       under	the	terms	of	the	reinstated	debt,	in	the	event	of	a	change	of	
         receivables	facilities;                                                     control	in	the	company,	the	advances	under	the	credit	agreement	and	
                                                                                     the	outstanding	principal	amount	of	the	new	notes,	together	with	any	
    ■■   grant	guarantees;
                                                                                     other	outstanding	amounts	under	the	reinstated	debt,	will	become	
    ■■   enter	into	derivatives	contracts,	interest	rate	or	currency	hedging	or	     immediately	due	and	payable	upon	an	occurrence	of	a	change	of	control	
         treasury	transactions	other	than	as	required	by	the	credit	agreement	       in	the	company.	further,	such	change	of	control	in	the	company	will	
         and	 note	 purchase	 agreement	 and	 other	 than	 for	 hedging	             trigger	a	mandatory	redemption	in	shares	of	the	outstanding	nrs.
         transactions	arising	in	the	ordinary	course	of	business;
    ■■   amalgamate,	merge	or	consolidate	with	or	into	any	other	person;



    72       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
	                                                                                                  LIquIDITY	AND	CAPITAL	RESOuRCES                                     3
                                                                                   Contents
                                                                           ➜
                                                                                                  ➜


    Committed	Receivables	Facilities                                                   the	nrs	were	issued	in	nominal	amounts	of	1	euro,	1.30	u.s. dollar	and	
                                                                                       0.91	pounds	sterling	per	nrs.	each	subscriber	received	50%	of	nrs I	
    pursuant	to	the	Sauvegarde	plan,	and	as	permitted	under	the	reinstated	            and	50%	of	nrs II	and	IIc.
    debt,	the	company	entered	into	two	committed	receivables	facilities	
    pursuant	to	which	it	can	borrow	up	to	€200 million.	see	note	26.3(f)	to	           the	 nrs	 are	 redeemable	 in	 ordinary	 shares	 of	 the	 company	 on	
    the	consolidated	financial	statements	for	more	information	about	these	            december 31,	2010	(nrs I)	or	december 31,	2011	(nrs II	and	nrs IIc)	
    credit	facilities.                                                                 and	bear	interest	at	a	rate	of	10%,	payable	at	one	time	in	ordinary	shares	
                                                                                       of	the	company	at	the	redemption	date	(except	for	the	holder’s	ability	
                                                                                       to	defer	the	redemption	date,	for	each	nrs	tranche,	for	a	period	of	
    Intercreditor	Agreement                                                            one year).
    to	establish	the	relative	rights	of	certain	of	their	creditors	under	the	          at	december 31,	2010	1.7%	of	the	nrs	I	holders	requested	a	one-year	
    reinstated	 debt,	 the	 company	 and	 the	 guarantors	 entered	 into	 an	          deferral	of	the	redemption	date	and	the	remainder	of	the	nrs	I	were	
    intercreditor	agreement	with	the	lenders	under	the	credit	agreement,	              redeemed	for	approximately	45 million	new	shares.
    the	holders	of	the	new	notes,	each	holder	of	the	dpn,	certain	intra-
    group	lenders,	certain	intra-group	debtors	and	a	security	trustee	(the	            the	nrs	may	be	redeemed	in	ordinary	shares	of	the	company	prior	
    Intercreditor	agreement).                                                          to	their	maturity	at	the	holder’s	request,	specifically	on	the	occurrence	
                                                                                       of	(i) a	change	of	control	of	the	company,	(ii) the	disposal	of	all	or	
                                                                                       substantially	all	assets	of	technicolor	(except	for	activities	conducted	
    new shaRes, nRs, dPn                                                               by	grass	valley,	prn	or	screenvision	u.s.),	(iii) decisions	taken	by	the	
                                                                                       company’s	board	of	directors	in	breach	of	the	internal	rules	of	the	board	
    New	shares                                                                         of	directors	(see	chapter 4:	“corporate	governance	and	workforce”,	
    on	may	26,	2010,	the	company	proceeded	with	a	capital	increase	with	               section 4.1.4.2:	“structure	of	boards	of	directors’	work	–	Internal	board	
    shareholders’	preferential	subscription	rights,	in	an	amount	(including	the	       rules”	of	this	annual	report),	or	(iv) the	incurrence	of	an	event	of	default	
    share	premium)	of	€348 million through	the	issuance	of	526,608,781	new	            under	the	reinstated	debt.	the	internal	rules	of	the	board	of	directors	
    shares	at	a	subscription	price	of	€0.66	per	share,	corresponding	to	an	issue	      will	be	published	on	the	company’s	website	until	redemption	of	the	nrs.
    premium	of	€0.56	per	share.	on	July 15,	2010	the	company	effected	a	               In	addition,	the	company	has	the	option	to	redeem	all	or,	subject	to	certain	
    10	for	1	reverse	share	split	and	thus	the	number	of	these	new	shares	was	          conditions,	part	of	the	nrs IIc	in	cash	at	a	premium.
    reduced	by	a	factor	of	10	to	52,660,878.
                                                                                       the	nrs	are	redeemable	in	whole	in	cash	in	the	event	of	a	liquidation	of	
    the	 subscription	 for	 the	 new	 shares	 was	 reserved	 in	 priority	 to	 the	    the	company.	the	nrs	are	subordinated	to	the	new	term	loan	facilities,	
    company’s	existing	shareholders	and	to	third	parties	having	purchased	             the	new	notes	and	the	dpn.
    preferential	subscription	rights	in	the	market	from	the	company’s	existing	
    shareholders.	the	new	shares	could	be	subscribed	on	a	pro-rata	and	over-           the	nrs	were	subscribed	for	exclusively	by	the	senior	creditors,	and	
    subscription	basis	(à titre irréductible et à titre réductible)	on	the	basis	of	   the	company’s	existing	shareholders	were	entitled	to	purchase	nrs	
    two	new	shares	for	one	existing	share	held	in	the	company.	€203 million	           from	the	senior	creditors	for	an	aggregate	maximum	nominal	amount	
    of	the	€348 million	capital	increase	was	subscribed	by	shareholders	on	            of	€75,346,557	of	nrs	upon	exercise	of	the	nrs	warrants	(as	described	
    exercise	of	their	preferential	subscription	rights.                                below).

    all	of	the	new	shares	which	were	not	subscribed	by	the	company’s	existing	         the	 nrs	 were	 admitted	 to	 trading	 on	 euronext	 paris.	 as	 of	 	
    shareholders	or	third	parties	having	purchased	preferential	subscription	          december 31,	2010,	the	nrs	I,	in	respect	of	which	redemption	was	
    rights	on	the	market	were	subscribed	by	the	senior	creditors	in	accordance	        deferred	until	december 3,	2011,	are	no	longer	admitted	to	trading	on	
    with	a	subscription	agreement	as	stipulated	in	the	Sauvegarde	plan,	pro-rata	      euronext	paris.
    to	the	amount	of	their	debt	claims	against	the	company.
    the	subscription	price	of	the	new	shares	was	paid	by	the	senior	creditors	         NRS	warrants
    by	way	of	set-off	against	their	due	and	payable	debt	claims	against	the	           on	the	launch	date	of	the	capital	increase,	the	company	issued	warrants	
    company.                                                                           (the	“nrs	warrants”)	giving	their	holders	the	right	to	acquire	from	the	
                                                                                       senior	creditors	a	maximum	number	of	approximately	75,346,557(1)	nrs	
    NRS                                                                                denominated	in	euro,	representing	€75,346,557	of	nrs.

    on	may	26,	2010,	the	company	issued	nrs	for	an	amount	of	€638 million,	            the	nrs	warrants	were	allocated	free	of	charge	to	the	company’s	
    entitling	their	holders	to	receive	approximately	97 million	shares	of	the	         existing	shareholders,	in	proportion	to	the	number	of	shares	held	by	each	
    company	taking	into	account	the	10	for	1	reverse	share	split	that	occurred	        shareholder,	on	the	basis	of	1	nrs	warrant	for	1	share	held,	with	35	nrs	
    on	July 15,	2010.                                                                  warrants	entitling	the	holder	to	acquire	10	nrs	(5	nrs I,	3	nrs II	and	  	
                                                                                       2	nrs IIc).	a	total	of	41,242,915	of	these	warrants	were	exercised	by	
    the	issuance	of	nrs	was	divided	into	three	tranches:	nrs I,	nrs II	and	            existing	shareholders	entitling	them	to	purchase	11,783,690	nrs.
    nrs IIc.	each	tranche	was	subdivided	into	three	series:	one	in	euro,	one	
    in	u.s. dollar	and	one	in	pounds	sterling.




    (1) This maximum amount was subject to reduction depending on the total amount of debt recognized by the juge-commissaire.

                                                                                                         technIcolor	–	2010	annual	report                       73
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          	 LIquIDITY	AND	CAPITAL	RESOuRCES



                                                                                  Contents
                                                                          ➜
                                                                                                  ➜


    DPN                                                                               the	notes	are	perpetual	and	have	no	stated	maturity	date;	they	may,	
                                                                                      however,	be	redeemed	at	the	company	option	under	certain	conditions,	
    on	may	26,	2010,	the	company	issued	dpn	redeemable	in	cash	or	shares	             in	particular	(i) on	or	after	september 25,	2015,	(ii) at	any	time	in	the	
    of	the	company	on	december 31,	2010	for	a	net	amount	of	€261 million	             event	of	a	change	of	control	of	technicolor	or	(iii) as	a	result	of	certain	
    (€309 million,	converted	at	the	may	26,	2010	exchange	rate,	net	of	the	           tax	reasons.	these	notes	provide	that	if	there	is	a	change	of	control	and	
    €48 million	of	existing	disposal	proceeds).                                       as	a	result,	the	rating	for	the	company’s	senior	unsecured	obligations	
    the	dpn	were	to	be	redeemed	in	cash	up	to	an	amount	equal	to	the	sum	             is	downgraded	by	one	full	notch	by	either	moody’s	Investors	services	
    of	(i) the	net	disposal	proceeds	of	certain	non-strategic	assets	expected	to	     Inc.	(“moody’s”),	or	standard	and	poors	(“s&p”)	such	that	the	reduction	
    be	disposed	of	by	the	technicolor	group	(primarily	the	activities	conducted	      results	in	a	rating	below	baa3	by	moody’s	or	bbb-	by	s&p,	technicolor	
    by	grass	valley,	prn	and	screenvision	u.s.),	and	(ii) excess	cash	flow	(as	       may	redeem	the	notes	without	penalties.
    defined	in	the	reinstated	debt	agreements)	of	the	company	for	2010,	up	           pursuant	to	the	terms	of	the	Sauvegarde	plan,	technicolor	paid	€25 million	
    to	(i) the	nominal	value	of	the	dpn,	plus	(ii) capitalized	interest.	for	any	     to	the	holders	of	the	deeply	subordinated	perpetual	notes	in	definitive	
    difference,	redemption	was	to	be	made	in	ordinary	shares	of	the	company	          redemption	of	their	interest	claims	under	the	notes.	on	february	17,	2010	
    (issued	at	a	price	calculated	by	reference	to	the	weighted	average	market	        the	nanterre	commercial	court	approved	the	proposed	Sauvegarde	plan	
    price	of	technicolor	shares	over	a	period	of	40 days	ending	the	third	day	        after	ensuring	it	protected	the	interests	of	all	creditors	and	offered	a	“viable	
    prior	to	the	redemption	date	of	the	dpn).	however,	the	company	could	             solution”	for	the	continuation	of	the	group.	the	court	judgment	was	
    also	redeem	the	dpn	in	cash	by	using	its	available	cash	flow,	subject	to	         appealed	before	the	versailles	court	of	appeal	on	february,	23,	2010	by	
    certain	conditions.                                                               a	number	of	the	holders	of	the	company’s	tss.	on	november	18,	2010,	
    the	combined	shareholders’	meeting	held	on	January 27,	2010	approved	             the	versailles	court	of	appeal	dismissed	the	claims	of	the	tss	holders	
    in	the	ninth	resolution,	a	maximum	number	of	new	shares	that	could	               and	confirmed	the	validity	of	technicolor’s	Sauvegarde	plan.	however,	
    be	issued	in	redemption	of	the	dpn	(and	payment	of	corresponding	                 certain	tss	holders	have	appealed	to	the	french	supreme	court	(Cour
    interest),	or	50,000,000	new	shares	with	a	nominal	value	of	€1	per	share	         de cassation)	through	a	pourvoi en cassation	procedure	against	the	deci-
    (both	the	number	of	shares	and	the	nominal	value	have	been	adjusted	for	          sion	of	the	versailles	court	of	appeal	on	february	14,	2011.	for	more	
    the	10	for	1	reverse	share	split	that	occurred	on	July 15,	2010).	In	the	event	   information	about	this	proceeding,	refer	to	note	37	to	the	consolidated	
    the	maximum	number	of	shares	were	insufficient	to	permit	the	issuance	            financial	statements.	for	more	information	about	the	tss	instruments,	
    of	all	of	the	shares	to	be	issued	to	the	senior	creditors	in	redemption	of	       see	note 23.4	to	the	group’s	consolidated	financial	statements.
    the	dpn	(or	the	payment	of	corresponding	interest),	the	company	could	
    submit	to	the	vote	of	a	new	extraordinary	general	shareholders’	meeting	
    the	resolution	necessary	for	the	reserved	issuance	of	the	required	shares.	       PRovisions foR Pensions and assimilated
    In	the	absence	of	the	occurrence	of	the	required	reserved	share	capital	          benefits
    increase	on	or	prior	to	June 30, 2011,	the	amounts	owed	to	each	holder	
    of	dpn	would	become	immediately	due	and	payable	in	cash	in	their	                 In	addition	to	the	debt	position	as	described	above,	the	group	also	has	
    applicable	currency	on	demand	by	the	holders.                                     reserves	for	post-employment	benefits	that	it	provides	to	its	employees,	
                                                                                      which	amounted	to	€378 million	at	december 31,	2010	compared	with	
    the	dpn	were	issued	in	three	series:	one	in	euro,	one	in	us	dollar	and	           €370 million	at	december 31,	2009.	for	more	information	on	the	group’s	
    one	in	pounds	sterling.                                                           reserves	 for	 post-employment	 benefits,	 see	 note  28	 to	 the	 group’s	
                                                                                      consolidated	financial	statements.
    the	dpn	carried	interest	at	an	annual	rate	of	10%	payable	at	one	time	on	
    the	date	of	redemption,	in	cash	or	in	shares	as	applicable	on	the	redemp-
    tion	date	of	the	dpn.                                                             liquidity Risk
    the	dpn	could	be	redeemable	prior	to	maturity	in	cash	under	certain	              for	more	information	about	the	group’s	liquidity	risk,	see	note	27.3	to	the	
    circumstances.	they	were	subordinated	to	the	new	term	loan	facilities	            group’s	consolidated	financial	statements.
    and	the	new	notes.
    the	dpn	were	subscribed	for	exclusively	by	the	senior	creditors,	and	the	
    subscription	price	of	the	dpn	was	paid	by	the	senior	creditors	by	way	of	         Ratings
    set-off	against	their	due	and	payable	debt	claims	against	the	company.            the	group	uses	the	services	of	rating	agencies	to	help	investors	evaluate	
    on	the	redemption	date	of	december 31,	2010	the	dpn	(including	                   the	credit	quality	and	rate	the	group’s	debt.
    interest)	were	fully	redeemed	through	a	cash	payment	of	€52 million	              s&p	attributes	the	following	ratings	to	the	group:	a	long-term	issuer	rating	
    (including	the	proceeds	from	the	disposal	of	screenvision	us)	and	through	        and	a	short-term	credit	rating.	until	the	group’s	debt	restructuring	s&p	
    the	issuance	of	50 million	new	shares.                                            also	attributed	a	specific	rating	covering	the	group’s	syndicated	credit	
                                                                                      facility	and	a	specific	rating	covering	the	tss	issued	in	september	2005.
    Deeply	subordinated	perpetual	notes                                               moody’s	attributes	a	corporate	family	rating	(“corporate	rating”)	and	
    the	 group’s	 financial	 debt	 of	 €1,325  million	 (Ifrs	 value)	 as	 of	   	    until	the	execution	of	the	debt	restructuring	a	specific	rating	covering	the	
    december  31,	 2010,	 excludes	 the	 5.75%	 (5.85%	 yield	 to	 first	 call	       tss.	moody’s	also	publishes	a	rating	indicating	the	likelihood	of	default.
    date)	 €500  million	 deeply	 subordinated	 perpetual	 notes	 issued	 in	         following	 the	 execution	 of	 the	 group’s	 debt	 restructuring	 on	   	
    september 2005.	because	of	their	perpetual	and	subordinated	nature	               may	26,	2010,	moody’s	raised	the	corporate	rating	of	technicolor	to	caa1	
    and	 the	 optional	 nature	 of	 the	 coupon,	 these	 notes	 are	 recorded	 in	    from	caa3	and	the	likelihood	of	default	rating	to	caa1	from	d.	at	the	
    shareholders’	equity	under	Ifrs	for	the	net	value	received	of	€492 million	       same	time	they	withdrew	the	rating	on	the	tss	and	the	rating	outlook	
    (representing	the	issue	price	minus	the	offering	discount	and	fees).              was	changed	to	stable	from	negative.


    74       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
      CONTRACTuAL	OBLIGATIONS	AND	COMMERCIAL	COMMITMENTS	INCLuDING	OFF-BALANCE	
                                                           SHEET	ARRANGEMENTS
                                                                                                                                                                  3
                                                                               Contents
                                                                       ➜
                                                                                              ➜


   on	october 20,	2010,	s&p	raised	the	long-term	credit	rating	to	ccc+	            In	January 2009,	s&p	reduced	the	long-term	and	the	syndicated	credit	
   from	ccc-	with	positive	outlook	and	affirmed	the	c	short-term	credit	           ratings	from	b	to	cc	with	negative	outlook,	the	short-term	rating	from	
   rating	and	removed	all	ratings	from	creditwatch	positive.	on	June 1,	2010,	     b	to	c,	and	the	rating	on	the	tss	from	c	to	ccc-.	In	may 2009,	s&p	
   s&p	had	raised	the	group’s	long-	and	short-term	credit	ratings	to	ccc-/c	       reduced	the	short-	and	long-term	ratings	to	sd	(selective	default).	at	the	
   from	d/d.	at	the	same	time,	s&p	placed	these	ratings	on	creditwatch	            same	time,	s&p	confirmed	that	the	syndicated	credit	facility	had	been	
   with	positive	implications.	they	also	withdrew	the	ratings	on	the	group’s	      lowered	to	cc	and	the	tss	had	been	lowered	to	c.	In	december 2009,	
   tss	and	syndicated	credit	facility.                                             all	ratings	were	reduced	to	d.
   during	2009,	the	two	rating	agencies	revised	the	group’s	ratings	on	three	      In	January 2009,	moody’s	reduced	the	group’s	corporate	rating	from	
   occasions:	(i) in	January,	following	the	publication	of	the	press	release	in	   b1	to	caa3,	the	rating	on	the	tss	from	caa1	to	c	and	the	rating	on	the	
   which	the	group	stated	it	was	likely	to	breach	the	contractual	clauses	of	      likelihood	of	default	from	b1	to	ca.	In	may,	the	rating	on	the	likelihood	
   the	private	placement	agreements	upon	publication	of	its	consolidated	and	      of	default	was	lowered	further	to	ca/ld,	and	again	in	december to	d.
   audited	financial	statements;	(ii) in	may,	following	the	announcement	of	
                                                                                   neither	the	reinstated	debt,	the	nrs	nor	the	dpns	have	clauses	referring	
   an	agreement	with	creditors	to	defer	reimbursement	of	a	nominal	amount	
                                                                                   to	the	group’s	credit	ratings.
   of	the	group’s	debt;	and	(iii) in	december,	following	the	Sauvegarde	
   procedure	initiated	on	november 30,	2009.




   3.17	 contractual	oblIgatIons	and	commercIal	
         commItments	IncludIng	off-balance	sheet	
         arrangements
   the	 following	 tables	 provides	 information	 regarding	 the	 aggregate	       not	shown	in	the	tables	below	as	they	do	not	increase	the	group’s	commit-
   maturities	of	contractual	obligations	and	commercial	commitments	as	of	         ments	in	relation	to	the	initial	commitments	undertaken	by	the	entities	
   december 31,	2010,	for	which	the	group	is	either	obliged	or	conditionally	      concerned.	performance	guarantees	granted	contractually,	in	particular	
   obliged	 to	 make	 future	 cash	 payments.	 these	 tables	 include	 firm	       for	the	playout	activity	related	to	the	broadcast	services	activity	are	not	
   commitments	that	would	result	in	unconditional	or	conditional	future	           included	in	these	tables.
   payments,	but	excludes	all	options	since	the	latter	are	not	considered	
                                                                                   In	the	normal	course	of	its	activity,	the	entertainment	services	segment	
   as	 firm	 commitments	 or	 obligations.	 when	 an	 obligation	 leading	 to	
                                                                                   may	provide	guarantees	to	its	customers	on	the	products	stored	and	
   future	payments	can	be	cancelled	through	a	penalty	payment,	the	future	
                                                                                   then	distributed	against	any	risks	or	prejudices	that	may	occur	during	
   payments	included	in	the	table	are	those	that	management	has	determined	
                                                                                   manufacturing,	storage	or	distribution.	such	guarantees	provided	are	
   most	likely	to	occur	given	the	two	alternatives.
                                                                                   covered	by	insurance	and	are	therefore	excluded	from	the	tables	below.	
   the	group	provides	certain	guarantees	to	third	parties	(financial	insti-        guarantees	provided	by	entities	of	the	group	for	securing	debt,	capital	
   tutions,	customers,	partners	and	government	agencies)	to	ensure	the	            leases,	operating	leases	or	any	other	obligations	or	commitments	of	
   fulfilment	of	contractual	obligations	by	technicolor	and	its	consolidated	      other	entities	of	the	group	are	not	included,	as	the	related	obligations	
   subsidiaries	in	the	ordinary	course	of	their	business.	the	guarantees	are	      are	already	included	in	the	tables	below.




                                                                                                    technIcolor	–	2010	annual	report                       75
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          CONTRACTuAL	OBLIGATIONS	AND	COMMERCIAL	COMMITMENTS	INCLuDING	OFF-BALANCE	
           SHEET	ARRANGEMENTS


                                                                                   Contents
                                                                           ➜
                                                                                                    ➜



    3.17.1	 unconditional	contractual	obligations	and	commercial	
            commitments
    unconditional futuRe Payments
                                                                                                               Amount	of	commitments	by	maturity
                                                                                 December 31,        Less	than	1	                                        More	than	
     (in € millions)                                                                   2010                 year        1-3 years        3-5 years         5 years
     ON-BALANCE	SHEET	OBLIGATIONS
     financial	debt	excluding	finance	leases(*)                                             1,513             45              158              230            1,080
     finance	leases                                                                           10               2                2                6                  -
     payables	on	acquisition	and	disposal	of	companies                                          1               1               -                 -                 -
     OFF-BALANCE	SHEET	OBLIGATIONS
     operating	leases                                                                        352              80              121               57                 94
     purchase	obligations                                                                    104              99                5                 -                 -
     other	unconditional	future	payments                                                      43              18               19                5                  1
     ToTal unconDiTional fuTure PayMenTs                                                2,023               245             305               298             1,175

     (*) Nominal amount which differs from the IFRS amount in the balance sheet of €1,315 million due to the Reinstated Debt being originally recognized at fair
         value and subsequently measured at amortized cost. See note 26 to the Group’s consolidated financial statements for more details.

    the	above	table	is	only	related	to	continuing	operations.	unconditional	           the	 main	 operating	 leases	 relate	 to	 the	 office	 buildings	 in	 Issy-les-
    contractual	obligations	and	commercial	commitments	entered	into	by	                moulineaux	and	Indianapolis:
    discontinued	entities	amounted	to	€18 million	as	of	december 31,	2010.
                                                                                       ■■    on	 april  22,	 2008,	 technicolor	 signed	 a	 commitment	 for	 a	 new	
    as	of	december 31,	2010,	technicolor	had	a	total	of	€2,023 million	in	                   operating	lease	for	its	headquarters	in	france	in	Issy-les-moulineaux	
    unconditional	contractual	obligations	and	commercial	commitments,	                       near	paris	for	a	duration	of	nine	years	from	november 2009.	under	
    the	maturities	of	which	are	shown	in	the	table	above,	compared	with	                     the	lease	agreement,	technicolor	can	elect	to	move	in	december 2012	
    €3,195 million	as	of	december 31,	2009,	primarily	as	a	result	of	a	decrease	             without	any	penalty	if	an	eligible	lessee	is	proposed	by	technicolor	to	
    in	financial	debt	(excluding	finance	leases)	from	€2,730 million	as	of	                  the	lessor.	In	that	case,	technicolor	would	have	no	further	obligation.	
    december 31,	2009	to	€1,513 million	as	of	december 31,	2010.                             accordingly,	the	minimum	payments	for	this	lease	are	only	shown	for	
                                                                                             three	years	(2010	to	2012);
                                                                                             in	march 2000,	the	u.s. office	building	(administration	and	technical	
    financial debt excluding finance leases                                            ■■
                                                                                             services	buildings)	was	sold	and	subsequently	leased	back	from	the	
    the	nominal	amount	of	the	financial	debt	of	the	group	excluding	finance	                 purchaser	until	2012.
    leases	amounted	to	€1,513 million	as	of	december 31,	2010,	including	
                                                                                       the	net	operating	lease	expense	of	the	group	in	2010	was	€79 million	
    mainly	 debt	 to	 financial	 institutions	 in	 an	 amount	 of	 €1,507  million.	
                                                                                       (€89 million	in	rental	expenses	and	€10 million	in	rental	income).
    financial	debt	is	reported	for	its	principal	amount	and	accrued	interest.	
    future	interest	expense	and	the	impact	of	interest-rate	swaps	are	not	
    reported	in	this	table.	because	the	reinstated	debt	of	the	group	was	              PuRchase obligations
    originally	recognized	in	the	balance	sheet	at	its	fair	value	and	subsequently	
    is	measured	at	amortized	cost,	the	Ifrs	amount	of	the	financial	debt	of	           purchase	obligations	amounted	to	€104 million	as	of	december 31,	2010.	
    the	group	excluding	financial	leases	recorded	in	the	balance	sheet	was	            these	include	in	particular	commitments	to	purchase	minimum	volumes	
    €1,315 million	as	of	december 31,	2010	including	mainly	debt	to	financial	         of	products	from	asian	suppliers	for	€91 million,	which	result	from	firm	
    institutions	of	€1,309 million.                                                    commitments	to	purchase	definite	volumes	of	materials.


    finance leases                                                                     otheR unconditional futuRe Payments
    finance	leases	amounted	to	€10 million	as	of	december 31,	2010.	the	               other	unconditional	future	payments	amounted	to	€43 million	as	of	
    main	finance	leases	relate	to	entertainment	services	(€6 million	in	the	           december  31,	 2010.	 other	 unconditional	 future	 payments	 relate	 in	
    united	Kingdom).                                                                   particular	to	film	laboratory	and	post	production	services	agreements,	
                                                                                       sponsorship	agreements	entered	into	in	the	united	states	and	other	
                                                                                       contractual	advances.
    oPeRating leases
    operating	 leases	 commitments	 amounted	 to	 €352  million	 as	 of	
    december 31,	2010.

    76       technIcolor	–	2010	annual	report
|	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
        CONTRACTuAL	OBLIGATIONS	AND	COMMERCIAL	COMMITMENTS	INCLuDING	OFF-BALANCE	
                                                             SHEET	ARRANGEMENTS
                                                                                                                                                               3
                                                                             Contents
                                                                     ➜
                                                                                            ➜



   3.17.2	 Conditional	contractual	obligations	and	commercial	
           commitments
   the	following	table	includes	only	contingent	liabilities	or	commitments,	which	are	not	included	in	technicolor’s	balance	sheet.	these	are	described	in	
   detail	in	note 36	to	the	group’s	consolidated	financial	statements.


   Conditional	contractual	obligations	and	commercial	commitments
                                                                                                       Amount	of	commitments	by	maturity
                                                                           December 31,       Less	than	1	                                     More	than	
    (in € millions)                                                              2010                year       1-3 years       3-5 years        5 years
    OFF-BALANCE	SHEET	OBLIGATIONS
    guarantees	given                                                                  47               37               -               1               9
    other	conditional	future	payments                                                  6                2               2               2                -
    ToTal conDiTional fuTure PayMenTs                                                 53              39                2               3               9


   the	 above	 table	 relates	 only	 to	 continuing	 operations.	 conditional	   ■■   various	operational	guarantees	granted	to	customs	authorities	in	
   contractual	obligations	and	commercial	commitments	entered	into	by	                order	to	be	exempt	from	duties	goods	transiting	through	customs	
   discontinued	entities	amount	to	€18 million	as	of	december 31,	2010.               warehouses	for	re-exportation,	and	transit	guarantees	in	order	that	
                                                                                      taxes	are	paid	on	goods	only	at	their	final	destination	in	the	import	
   as	of	december 31,	2010,	the	group	had	a	total	of	€53 million	in	condi-
                                                                                      country.	the	maturity	of	these	bank	guarantees	match	the	one-month	
   tional	contractual	obligations	and	commercial	commitments	(payment	
                                                                                      renewable	term	of	the	agreements.
   obligations	which	are	subject	to	the	occurrence	or	realization	of	certain	
   events)	compared	with	€87 million	as	of	december 31,	2009.
                                                                                 otheR conditional futuRe Payments
   guaRantees                                                                    other	 conditional	 future	 payments	 amounted	 to	 €6  million	 as	 of	
                                                                                 december 31,	2010.	conditional	obligations	include	contingent	earn-out	
   the	company	gave	guarantees	in	an	amount	equal	to	€47 million	as	of	
                                                                                 payments	for	€6 million	related	to	past	acquisitions.
   december 31,	2010.	these	guarantees	comprise:
                                                                                 there	is	no	known	event,	demand,	commitment	or	uncertainty	that	
   ■■   guarantees	given	for	disposal	of	assets	for	€1 million;
                                                                                 is	reasonably	likely	to	result	in	the	termination	or	material	reduction	
   ■■   guarantees	 for	 customs	 duties	 and	 legal	 court	 proceedings	 for	   in	availability	to	the	company	of	the	off-balance	sheet	arrangements	
        €10 million,	comprising	mainly	duty	deferment	guarantees	required	       described	above	in	section 3.17.1:	“unconditional	contractual	obligations	
        by	the	customs	authorities	to	benefit	from	customs	duty	deferments.	     and	 commercial	 commitments”	 and	 section  3.17.2:	 “conditional	
        Imported	goods	are	normally	taxed	upon	entry.	In	the	case	of	regular	    contractual	obligations	and	commercial	commitments”.
        import	flows,	customs	may	permit	a	cumulative	duty	payment	after	
        one-month	credit	period	on	the	basis	of	a	bank	guarantee.	the	           for	additional	information	regarding	technicolor’s	commercial	commit-
        carrying	value	of	this	guarantee	is	to	cover	the	duties	to	be	paid	      ments,	see	note 36	to	the	consolidated	financial	statements.
        during	the	credit	period;




                                                                                                  technIcolor	–	2010	annual	report                      77
           |	management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations
3          PRIORITIES	AND	OBjECTIvES	FOR	2011



                                                                                Contents
                                                                        ➜
                                                                                                ➜



    3.18	 prIorItIes	and	obJectIves	for	2011
    based	on	its	commercial	and	technological	achievements	in	the	second	           ■■   digital	cinema –	building	on	its	over	60%	market	share	in	north	
    half	of	2010,	the	group	will	accelerate	organic	investments	in	2011	in	the	          american	digital	cinema	distribution	and	the	accelerated	migration	
    following	areas:                                                                     of	screens	to	digital,	the	group	will	accelerate	investments	to	expand	
                                                                                         its	satellite	network	with	a	view	to	reach	over	1,500	sites	by	end	2012.
    ■■   technology	licensing –	medianavi	–	following	a	successful	service	
         introduction	at	the	2011	consumer	electronics	show	in	las	vegas,	          In	parallel,	the	group	will	continue	to	manage	its	operational	perfor-
         and	the	announcement	of	a	trial	with	talktalk	in	the	uK,	the	group	        mance	and	cost	structure	in	2011.	the	group	will	focus	specifically	on	
         is	engaged	in	discussions	with	a	number	of	additional	customers	and	       photochemical	film	rationalization,	operational	performance	and	quality	
         partners.	In	this	context,	the	group	expects	to	accelerate	its	related	    in	connect	and	dvd	services	particularly,	continued	efforts	on	cost	
         research	investments	in	2011.                                              improvements	and	cash	generation.
    ■■   digital	home –	the	group	has	recently	been	awarded	its	first	material	     the	group’s	objective	is	to	achieve	in	2011	slight	revenue	growth	overall	
         order	from	a	tier	1	european	operator	for	the	next	generation	set-top	     at	constant	rates.	more	specifically,	the	group	expects	entertainment	
         box	based	on	the	new	software	platform.	additional	customers	are	          services	and	digital	delivery	to	grow	faster	than	the	market.	with	regard	
         also	 expected	 in	 2011.	 the	 group	 has	 therefore	 accelerated	 its	   to	licensing,	following	a	very	strong	2010	performance	and	given	its	
         software	development	investments	to	ensure	that	it	is	able	to	deliver	     exposure	to	the	global	consumer	electronics	market,	the	group	expects	
         material	volumes	in	2012.	the	group	also	expects	to	announce	in	           a	small	decline	in	revenue	in	2011	linked	to	consumer	electronics	volumes.
         2011	its	first	customer	for	mediaencore	solution	(integrated	access	
         gateway	and	media	server).                                                 the	focus	in	2011	is	to	favor	organic	growth	and	innovation	to	ensure	that	
                                                                                    the	group	lays	a	solid	foundation	for	the	coming	years.	notwithstanding	
    ■■   digital	 production  –	 given	 the	 strength	 of	 the	 market	 and	 the	
                                                                                    this	focus,	the	objective	is	to	be	able	to	generate	an	adjusted	ebItda	
         fast	and	profitable	growth	in	this	business,	the	group	intends	to	
                                                                                    in	2011	at	least	at	the	level	achieved	in	2010.
         accelerate	investments	in	2011	to	both	increase	capacity	and	develop	
         new	software	with	the	objective	to	more	than	double	turnover	by	
         2013.	additional	physical	expansions	will	occur	principally	in	london,	
         vancouver,	new	york	and	bangalore,	India.




    78       technIcolor	–	2010	annual	report
       4
                        Corporate governance
                        and workforce
4.1	   dIrectors	                                                        80   4.3	   employees	and	worKforce	                                           99
       4.1.1	 Corporate	governance	structure	                            80          4.3.1	  Overview	                                                   99
       4.1.2	 Composition	and	expertise	of	the	Board	of Directors	       80          4.3.2	  Employee	profit-sharing	                                   100
       4.1.3	 Other	information	about	Members	of	the	Board	                          4.3.3	  Shares	held	by	employees	                                  100
              of Directors	                                              82          4.3.4	  Stock	option	plans	and	free	share	plans/redeemable	
       4.1.4	 Preparation	and	organization	of	the Board	of Directors’	                       share	subscription	or	purchase	warrants	                   100
              work	                                                      86          4.3.5	 Human	Resources	&	Sustainable	Development	                  102
       4.1.5	 Compensation	and	benefits	of	Directors	                    91          4.3.6	 Talent	and	development	                                     103
4.2	   executIve	commIttee	                                              97          4.3.7	 Remuneration	policy	                                        104
                                                                                     4.3.8	 Labor	relations	                                            105
       4.2.1	 Members	of	the	Executive	Committee	                        97
                                                                                     4.3.9	 Global	compact	progress	                                    105
       4.2.2	 Executive	Committee	compensation	                          98
                                                                                     4.3.10	 Health	and	safety	management	                              105




                                                                                              technIcolor	–	2010	annual	report                     79
           |	corporate	governance	and workforce
4          DIRECTORS



                                                                                Contents
                                                                        ➜
                                                                                                 ➜



    4.1	 dIrectors

    4.1.1	 Corporate	governance	structure
    the	company	is	governed	by	a	board	of	directors	and	a	chief	executive	          the	chief	executive	officer	is	vested	with	the	broadest	possible	powers	to	
    officer.                                                                        act	in	any	circumstances	on	behalf	of	the	company,	subject	to	limitations	
                                                                                    imposed	by	the	corporate	purpose	and	those	matters	expressly	reserved	
    In	accordance	with	french	law,	the	chairman	of	the	board	of	directors	
                                                                                    by	law	to	the	general	shareholders’	meeting	and	the	board	of	directors.	
    organizes	and	directs	the	activities	of	the	board	of	directors,	and	reports	
                                                                                    however,	as	an	internal	rule,	these	powers	are	subject	to	certain	limita-
    thereon	to	the	general	shareholders’	meeting.	he	ensures	the	proper	
                                                                                    tions	set	forth	in	the	Internal	rules	of	the	board	of	directors	described	
    functioning	of	the	company’s	management	bodies	and	in	particular	that	
                                                                                    in	paragraph 4.1.4.2	below.
    the	directors	are	capable	of	performing	their	duties.



    4.1.2	 Composition	and	expertise	of	the	Board	of Directors
    as	of	the	date	hereof,	the	board	of	directors	comprises	nine	members,	          compromise	the	exercise	of	his	free	judgment.	according	to	the	recom-
    including	one	woman.	mr. denis	ranque	has	been	chairman	of	the	board	           mendations	of	the	afep-medef	corporate	governance	code,	of	the	
    since	february 17,	2010.	mr. frederic	rose	has	served	as	chief	executive	       nine	members	of	the	board	of	directors,	seven	directors	are	considered	
    officer	since	september 1,	2008	and	is	also	a	director.                         independent:	ms. catherine	guillouard,	messrs.	denis	ranque,	lloyd	
                                                                                    carney,	bruce	hack,	didier	lombard,	John	roche,	and	rémy	sautter.	
    In	connection	with	the	final	phase	of	the	company’s	financial	restructuring,	
                                                                                    those	directors	not	considered	independent	are	mr. frederic	rose,	chief	
    the	composition	of	the	board	of	directors	was	modified.	In	this	connection,	
                                                                                    executive	officer,	and	mr. loïc	desmouceaux,	an	employee	and	director	
    the	board	of	directors	held	on	february 17,	2010	accepted	the	resigna-
                                                                                    representing	employee	shareholders.
    tions	of	messrs.	eric	bourdais	de	charbonnière,	françois	de	carbonnel,	
    pierre	lescure	and	paul	murray.	the	board	also	co-opted	ms. catherine	          Expertise:
    guillouard	and	messrs.	denis	ranque,	bruce	hack	and	John	roche	as	
                                                                                    messrs.	denis	ranque,	frederic	rose,	lloyd	carney,	and	didier	lombard	
    directors.	these	co-optations	were	ratified	by	the	general	shareholders’	
                                                                                    have	acquired,	through	their	professional	experience	in	high	technology	
    meeting	held	on	June 17,	2010,	which	also	approved	the	appointment	of	
                                                                                    companies,	a	high	degree	of	experience	in	technology	and	research.	
    mr. lloyd	carney	as	director.	In	addition,	mr. rémy	sautter	was	appointed	
                                                                                    messrs.	bruce	hack,	rémy	sautter	and	loïc	desmouceaux	share	a	high	
    as	vice	chairman	of	the	board	and	lead	Independent	director.	In	this	
                                                                                    degree	of	professional	experience	in	the	media	&	entertainment	sector.	
    capacity,	mr. sautter	chairs	the	board	in	the	event	of	the	absence	of	the	
                                                                                    finally,	ms. catherine	guillouard	and	mr. John	roche	have	significant	
    chairman,	as	well	as	any	meeting	of	the	board	deciding	matters	relating	
                                                                                    financial	experience	in	international	groups.	the	biographies	setting	forth	
    to	the	chairman	(remuneration,	evaluation	of	his	performance	or	renewal	
                                                                                    the	professional	experience	of	the	members	of	the	board	are	set	forth	in	
    of	his	term	of	office).
                                                                                    paragraph 4.1.3.1	below.
    Independance:
                                                                                    the	duration	of	the	directors’	term	of	office	is	defined	by	the	company’s	
    during	its	meeting	held	on	december 16,	2010,	the	board	of	directors	           bylaws	and	is	set	at	three	years.	directors	may	be	re-elected	and	can	be	
    reviewed	the	independence	of	its	members	according	to	the	definition	and	       dismissed	at	any	time	by	the	ordinary	general	shareholders’	meeting.	
    criteria	set	forth	in	the	corporate	governance	code	of	listed	companies	        article 16	of	the	company’s	bylaws	provides	that	the	term	of	office	of	
    issued	by	the	Association Française des Entreprises Privées	(afep)	and	         the	chairman	will	automatically	terminate	when	he	reaches	70 years	of	
    the	Mouvement des Entreprises	de France	(medef)	of	april 2010	(the	             age.	article	11.2	of	the	company’s	bylaws	provides	that	directors	are	
    afep-medef	corporate	governance	code)	to	which	the	company	                     each	required	to	hold	at	least	200 shares	of	technicolor	stock	during	
    adheres	(see	paragraph 4.1.4.1	below).	according	to	this	code,	“a	director	     their	term	of	office.
    is	independent	when	he	does	not	maintain	a	relationship	of	any	kind	
                                                                                    the	members	of	the	board	of	directors	have	no	family	relationship	with	
    whatsoever	with	the	company,	its	group	or	its	management	that	may	
                                                                                    one	another.




    80       technIcolor	–	2010	annual	report
                                                                                  |	corporate	governance	and workforce
                                                                                                                                  DIRECTORS                   4
                                                                          Contents
                                                                     ➜
                                                                                           ➜



Composition	of	the	Board	of	Directors	as	of	the	date	of	the	present	Annual	Report
                                                                                                                         Remuneration,	
                                                     Present	        Main	                        End	of	                Governance	
                                                     position	       positions	held	 Start	of	    term	      Audit	      and	
                                                     within	the	     outside	the	    term	of	     of	        Commit-     Nomination	         Technology	
Name            Age Main	business	address            Company         Company         office       office     tee         Committee           Committee
denis	          59     technicolor                   director	       -                february	 agm(*)	                  member
ranque(1)              1-5,	rue	Jeanne	d’arc,        chairman	of	                     2010      2012
                       92130	Issy-les-moulineaux     the	board	of	
                                                     directors
frederic	rose 48       technicolor                   chief	          -                october	    agm(*)	
                       1-5,	rue	Jeanne	d’arc,        executive	                       2008        2012
                       92130	Issy-les-moulineaux     officer
loïc	       48         technicolor                   director,      market	           may	        agm(*)	                                    member
desmouceaux            1-5,	rue	Jeanne	d’arc         employee	      business	         2003        2011
                       92130	Issy-les-moulineaux     shareholders	 Intelligence
                                                     representative
catherine	       46    eutelsat                      director        financial	       february	 agm(*)	 member
guillouard(1)(4)       70,	rue	balard,	75015 paris                   director,	       2010      2011
                                                                     eutelsat
bruce		         62     151	central	park	west,	       director        -                february	 agm(*)	 member           member
hack(1)(2)             10c,	new	york,	ny 10023                                        2010      2013
didier	         69     -                             director        -                may	        agm(*)	                                    member
lombard(1)(2)                                                                         2004        2013
John	roche(1)   63     -                             director        -                february	 agm(*)	 chairman
                                                                                      2010      2012
rémy	           65     edIradIo/rtl                  director        president	       January	    agm(*)	                chairman
sautter(1)             22,	rue	bayard                                of	the	          2006        2011
                       75008	paris                                   supervisory	
                                                                     board	of	
                                                                     ediradio/rtl
lloyd		         49     xsigo	systems                 director        ceo,	xsigo	      June	       agm(*)	                                    chairman
carney(1)(3)           70	w.	plumeria	drive                          systems          2010        2013
                       san	Jose,	ca	95134

(*) Annual General Shareholders’ Meeting.
(1) Independent Director.
(2) The offices of Mr. Bruce Hack and Mr. Didier Lombard were renewed by the Annual General Shareholders’ Meeting held on June 17, 2010 for a duration
    of 3 years.
(3) Mr. Lloyd Carney was appointed as a Director by the Annual General Shareholders’ Meeting held on June 17, 2010.
(4) The Board of Directors held on February 17, 2010 designated Ms. Catherine Guillouard for the duration of the office of her predecessor.




                                                                                                 technIcolor	–	2010	annual	report                        81
           |	corporate	governance	and workforce
4          DIRECTORS



                                                                               Contents
                                                                       ➜
                                                                                              ➜



    4.1.3	 Other	information	about	Members	of	the	Board	of Directors
    4.1.3.1 biogRaPhies of diRectoRs,                                              Past Directorships held during the past five years:
                                                                                                                                                     	
                                                                                   chairman	 of	 the	 board	 of	 directors	 of	 technicolor  sa	 from	
                functions and diRectoRshiPs held
                                                                                   april	27,	2009	to	february	17,	2010;
                duRing the Past five yeaRs
                                                                                   director	 of	 alcatel-lucent	 teletas	 telekomunikasyon	 a.s.,	 alcatel	
                                                                                   Integracion	y	servicios s.a.,	alcatel-lucent	china	Investment	co. ltd,	
    Denis	Ranque                                                                   alcatel	Japan ltd.,	alcatel-lucent	singapore	pte ltd.,	alcatel	Korea ltd.,	
                                                                                   alcatel-lucent	Japan ltd.,	alcatel-lucent	australia	limited,	taiwan	
    mr. denis	ranque	holds	board	positions	in	various	french-headquartered	
                                                                                   International	standard	electronics	limited,	alcatel-lucent	new	zealand	
    international	companies.	he	was	chairman	and	chief	executive	officer	
                                                                                   limited,	alcatel	shanghai	bell	software	co. ltd.,	alcatel	shanghai	bell	
    of	 thales	 from	 January  1998	 to	 may  2009,	 on	 which	 date	 thales’s	
                                                                                   co. ltd.;
    main	shareholder	changed.	from	1994	to	1998,	he	was	chief	executive	
    officer	of	thomson	marconi	sonar,	the	sonar	systems	joint	venture	set	         vice	chairman	and	member	of	the	supervisory	board	of	alcatel-lucent	
    up	by	thomson-csf	and	gec-marconi,	and	from	1992	to	1994,	he	was	              austria	ag;
    chairman	and	ceo	of	thomson	sintra	activités	sous-marines.	prior	to	
                                                                                   vice	 chairman	 of	 board	 of	 directors	 of	 zhejiang	 bell	 technology	
    that,	he	held	various	positions	within	the	thomson	group	and	became	
                                                                                   co. ltd.,	alcatel	(chengdu)	communication	system	co. ltd.,	alcatel	
    chief	executive	officer	of	thomson	tubes	electroniques	in	1989.	he	
                                                                                   shanghai	bell	software	co. ltd.;
    joined	the	thomson	group	in	1983	as	planning	director.	he	began	his	
    career	at	the	french	ministry	for	Industry,	where	he	held	various	positions	   vice-chairman	and	chief	executive	officer	of	alcatel-lucent	shanghai	
    in	the	energy	sector.	In	1999,	mr. denis	ranque	was	made	Chevalier de          bell	co. ltd.;
    l’Ordre de la Légion d’Honneur,	and	in	2008	was	promoted	to	Officier	
    in	the	same	order.	he	is	also	an	Officier de l’Ordre National du Mérite.	      chairman	of	the	board	of	directors	of	alcatel-lucent	philippines Inc.,	
    furthermore,	denis	ranque	was	appointed	honorary	commander	of	                 alcatel-lucent	china	Investment	co. ltd.
    the	order	of	the	british	empire	(cbe)	in	July 2004	and	member	of	the	
    Ordre du Mérite de la République Fédérale d’Allemagne	in	september 2010.	      Lloyd	Carney
    mr. denis	ranque	chairs	the	Cercle de l’Industrie	and	the	Association
    Nationale Recherche Technologie	(anrt),	as	well	as	the	École des Mines	        mr. lloyd	carney	has	been	chief	executive	officer	and	director	of	
    Paris Tech.	mr. denis	ranque	graduated	from	École Polytechnique	and	           xsigo	since	2007.	prior	to	that,	mr. lloyd	carney	was	general	manager	
    École des Mines.                                                               of	Ibm’s	netcool	division,	which	provides	It	and	telecom	infrastructure	
                                                                                   management	tools	to	a	variety	of	customers	in	enterprise	computing,	
    current Directorships:                                                         transportation,	and	wireless	networking.	when	Ibm	acquired	micromuse,	
    ■■   In	france:                                                                mr. lloyd	carney	was	appointed	chairman	and	ceo	of	this	company.	
                                                                                   mr. lloyd	carney	was	coo	at	Juniper	networks,	where	he	oversaw	
    director	of	saint-gobain	and	cma-cgm,	cgg	veritas	and	scIlab-                  the	sales,	marketing,	engineering,	manufacturing,	and	customer	service	
    enterprises.                                                                   organizations.	he	also	has	headed	up	three	divisions	at	nortel	networks,	
                                                                                   including	 the	 core	 Ip	 division,	 the	 wireless	 Internet	 division	 and	
    Past Directorships held during the past five years:
                                                                                   the	enterprise	data	division.	mr. lloyd	carney	chairs	the	lloyd	and	
    president	and	chief	executive	officer	of	thales.                               carole carney	foundation.

                                                                                   current Directorships:
    Frederic	Rose
                                                                                   ■■   outside	france:
    mr. frederic	rose	served	as	chief	executive	officer	and	a	director	since	
                                                                                   director	of	xsigo	systems	and	cypress	semiconductor.
    september 1,	2008.	he	was	also	chairman	of	the	board	of	directors	from	
    april 27,	2009	to	february 17,	2010.                                           Past Directorships held during the past five years:
    prior	to	joining	technicolor,	mr. frederic	rose	held	various	positions	        director	of	micromuse	and	bigband	networks.
    within	alcatel-lucent,	and	was	a	member	of	that	company’s	executive	
    committee.	from	2007	to	2008,	he	was	president	of	alcatel-lucent’s	
    europe,	asia	and	africa	region.	prior	to	that,	he	was	president	of	the	asia	   Loïc	Desmouceaux
    pacific	region	and	held	the	position	of	president	of	alcatel	shanghai	bell,	   mr.  loïc	 desmouceaux	 has	 been	 vice	 president	 market	 business	
    alcatel-lucent’s	flagship	joint	venture	in	china.	mr. frederic	rose	is	a	      Intelligence	for	technicolor	since	november 2006.In	the	group	since	
    graduate	of	the	georgetown	university	school	of	foreign	service	and	           1988,	he	has	held	various	management	positions	in	marketing,	strategy	
    the	georgetown	university	law	center.                                          and	technology.		In	2006	he	was	prospective	marketing	manager	and	
                                                                                   strategic	development.	from	2001	to	2005	he	was	research	and	Inno-
    current Directorships:                                                         vation	marketing	manager.	from	1996	to	2001	he	served	as	marketing	
    ■■   In	france:                                                                manager,	user	Interface	and	consumer	experience.	from	1993	to	1996	
    chief	executive	officer	of	technicolor sa                                      he	was	product	manager	europe,	video	division.	from	1988	to	1993,	he	
                                                                                   held	the	position	of	market	research	manager	and	product	manager	in	
    ■■   outside	france:                                                           the	television	division	europe.	mr. loïc	desmouceaux	graduated	from	
    director	of	logica	plc	and	of	the	weinstein	company	holding	llc.


    82       technIcolor	–	2010	annual	report
                                                                                |	corporate	governance	and workforce
                                                                                                                                DIRECTORS                    4
                                                                             Contents
                                                                  ➜
                                                                                           ➜


the	Institut d’Études Politiques	of	bordeaux	and	from	the	École Supérieure      director	of	isuppli	corporation.
de Commerce et d’Administration des Entreprises	of	bordeaux.

current Directorships:                                                          Didier	Lombard
■■   In	france:                                                                 mr. didier	lombard	was	chief	executive	officer	of	france	telecom	
permanent	representative	of	sovemarco	europe s.a.,	at	sellenium s.a.’s	         from	2005	to	march	2010	and	chairman	of	the	board	from	march	2005	
board	member;                                                                   to	february	2011.	from	2003	to	2005,	he	was	executive	vice	president	
                                                                                of	 france	 telecom	 in	 charge	 of	 the	 technologies,	 partnership	 and	
permanent	representative	of	sellenium	sa	at	the	supervisory	committee	          new	services	mission.	from	1999	to	the	beginning	of	2003,	mr. didier	
of	yb	holding sas;                                                              lombard	served	as	ambassador	in	charge	of	foreign	investment	and	chief	  	
                                                                                executive	officer	of	the	french	agency	for	international	investment.	
board	member	of	desamais	distribution s.a.
                                                                                from	1991	to	1998,	he	was	chief	executive	officer	of	Industrial	strategy	
Past Directorships held during the past five years:                             in	the	ministry	of	economy,	finance	and	Industry.	from	1988	to	1990,	he	
                                                                                served	as	technical	and	scientific	manager	in	the	ministry	of	research	
member	of	the	supervisory	board	of	yvan	béal s.a.                               and	technology.	mr. didier	lombard	graduated	from	École Polytechnique	
                                                                                and	École Nationale Supérieure des Télécommunications.
Catherine	Guillouard
                                                                                current Directorships:
ms. catherine	guillouard	has	been	chief	financial	officer	of	eutelsat	
                                                                                ■■   In	france:
since	 september  2007.	 she	 is	 a	 member	 of	 the	 group’s	 executive	
committee.	prior	to	joining	eutelsat,	ms. catherine	guillouard	held	            member	of	the	supervisory	board	of	radiall;
various	positions	within	air	france.	from	2005	to	september 2007,	she	          director	of	thales.
was	senior	vice	president	finance	at	air	france.	prior	to	that,	she	was	
senior	vice	president	human	resources	and	change	management,	                   ■■   outside	france:
senior	vice	president	flight	operations	and	deputy	vice	president	              member	of	the	supervisory	board	of	stmicroelectronics.
corporate	control.	she	began	her	career	in	1993	at	the	treasury	of	the	
ministry	of	finance	in	the	cfa	zone	in	the	africa	department	and	               Past Directorships held during the past five years:
then	in	the	banking	affairs	department.	she	graduated	from	the	Iep	             chairman	and	chief	executive	officer	of	france	telecom;
business	school	and	the	french	national	school	of	administration	(École
Nationale d’Administration),	1991-1993	gambetta	promotion,	and	holds	a	         chairman	of	the	board	of	directors	of	orange.
phd	(dess)	in	european	union	law.
ms.	catherine	guillouard	does	not	hold	any	other	directorships.                 john	Roche
                                                                                mr. John	roche	is	a	director	and	the	chairman	of	the	audit	committee	
Bruce	Hack                                                                      of	the	banque	accord.	he	also	worked	at	the	auchan	group	from	1990	
                                                                                to	2010	where	he	was	advisor	of	the	president,	secretary	to	the	board	
mr. bruce	hack	is	a	director	of	several	companies	and	is	the	chairman	of	       and	secretary	of	auchan’s	audit	committee.	he	was	also	a	director	and	
the	audit	committee	of	demerx, Inc.	mr. bruce	hack	was	vice	chairman	           the	chairman	of	the	audit	committee	of	the	adeo	group.	prior	to	that,	
of	the	board	and	chief	corporate	officer	of	activision	blizzard	until	          he	held	various	positions	within	citibank,	mainly	in	asia.	mr. John	roche	
2009.	prior	to	that,	mr. hack	was	chief	executive	officer	of	vivendi	           graduated	from	princeton	and	stanford.
games	from	2004	to	2008.mr. hack	also	served	as	evp,	development	
and	strategy,	vivendi	universal,	from	2001	to	2003;	vice	chairman	              current Directorships:
of	the	board,	universal	music	group,	from	1998	to	2001;	and	chief	
                                                                                ■■   In	france:
financial	officer,	universal	studios,	from	1995	to	1998.	he	joined	the	
seagram	company ltd.	in	1982	after	serving	as	a	trade	negotiator	at	            director	of	the	banque	accord;
the	u.s.	treasury	in	washington,	d.c.	amongst	his	roles	at	seagram	             manager	of	the	company	etIma.
were	chief	financial	officer	of	tropicana	products, Inc.	and	director,	
strategic	planning,	at	the	seagram	company ltd.	mr. hack	earned	a	              Past Directorships held during the past five years:
b.a.	in	government	at	cornell	university	and	an	m.b.a.	in	finance	at	the	
                                                                                director	of	the	adeo	group.
university	of	chicago.

current Directorships:                                                          Rémy	Sautter
■■   outside	france:                                                            mr.  rémy	 sautter	 has	 been	 chairman	 of	 the	 supervisory	 board	 of	
director	of	mimedx	group, Inc.	and	demerx, Inc.                                 ediradio/rtl	since	2000.	from	1996	to	2000,	he	was	chief	executive	
                                                                                officer	of	clt	multi	media	and	then	of	cltufa	group	(luxembourg).	
Past Directorships held during the past five years:                             from	1985	to	1996,	he	served	as	vice	chairman	and	chief	executive	
director	and	chief	executive	officer	of	vivendi	games;                          officer	of	ediradio/rtl.	from	1983	to	1985,	he	was	chief	financial	
                                                                                officer	of	havas.	mr. rémy	sautter	graduated	from	the	Institut d’Études
director	and	vice	chairman	of	activision	blizzard;                              Politiques	of	paris	and	the	ena	(École Nationale d’Administration).




                                                                                                  technIcolor	–	2010	annual	report                    83
           |	corporate	governance	and workforce
4          DIRECTORS



                                                                               Contents
                                                                       ➜
                                                                                              ➜


    current Directorships:                                                         4.1.3.4 Potential conflicts of inteRest
    ■■   In	france:
                                                                                   french	 law	 governs	 agreements	 known	 as	 “regulated	 agreements”,	
    chairman	of	the	supervisory	board	of	ediradio/rtl;                             which	are	agreements	entered	into	between	a	company	and	(i) its	chief	       	
    chairman	and	chief	executive	officer	of	société	Immobilière	bayard	            executive	officer,	(ii) one	of	its	deputy	chief	executive	officers	if	any,	
    d’antin;                                                                       (iii) one	of	its	directors	or	certain	shareholders	(shareholders	holding	more	
                                                                                   than	10%	of	the	voting	rights	or,	in	the	case	of	a	company	shareholder,	
    member	of	the	supervisory	board	of	m6;                                         the	parent	company	controlling	it).	regulated	agreements	are	authorized	
    director	of	pages	Jaunes,	serc/fun	radio,	sodera/rtl2,	Ip	and	                 under	french	law,	but	are	subject	to	a	specific	procedure	if	they	are	not	
    Ip	régions.                                                                    related	to	ordinary	transactions	entered	into	on	arms’	length	terms.

    ■■   outside	france:                                                           regulated	agreements	must	be	approved	by	the	board	of	directors	before	
                                                                                   their	execution,	reviewed	by	the	statutory	auditors,	who	issue	a	special	
    director	of	partner	reinsurance ltd	and	tvI s.a	belgique.                      report	on	the	transaction,	and	submitted	to	the	shareholders’	approval	
                                                                                   pursuant	to	articles	l. 225-38	et seq.	of	the	french	commercial	code.	
    Past Directorships held during the past five years:
                                                                                   see	section	9.8:	“special	report	of	the	statutory	auditors	on	regulated	
    chairman	of	the	board	of	directors	of	fIve	and	of	sIcav	multimedia &	          agreements”	in	chapter	9,	“technicolor	consolidated	and	annual	financial	
    technologies;                                                                  statements”	of	this	annual	report.
    director	of	taylor	nelson	sofres ltd,	wanadoo	and	m6	publicité;                to	the	company’s	knowledge,	there	is	no	potential	conflict	of	interest	
    member	of	the	supervisory	board	of	navimo.                                                                                                t
                                                                                   between	the	directors	and	company	managers’	duties	towards		 echnicolor	
                                                                                   and	their	private	interests	and/or	other	duties.
                                                                                   In	accordance	with	the	company’s	bylaws,	a	member	of	the	board	of	
    4.1.3.2 diRectoRshiPs held duRing the Past                                     directors	must	hold	a	minimum	of	200 shares	during	their	term	of	office.	
            five yeaRs by diRectoRs whose teRm                                     other	than	the	above	obligation,	members	of	the	board	of	directors	are	
                                                                                   not	subject	to	any	contractual	restriction	regarding	the	shares	they	hold	
            of office within the comPany has                                       in	the	company’s	share	capital.	the	company’s	“corporate	policy	on	the	
                ended                                                              purchase	and	sale	of	company	stock,	Insider	trading	and	protection	of	
                                                                                   material	non-public	information”	defines	the	rules	applicable	to	transac-
    the	directorships	held	during	the	past	five	years	by	messrs.	eric	bourdais	    tions	in	technicolor	securities	and	defines	“black-out	periods”	during	which	
    de	charbonnière,	françois	de	carbonnel,	pierre	lescure,	paul	murray	and	       transactions	are	prohibited.
    marcel	roulet	are	mentioned	in	the	appendix	to	this	chapter.


    4.1.3.3 statement on the absence of                                            4.1.3.5 aRRangements oR agReements
                                                                                           made with majoR shaReholdeRs,
            convictions foR fRaud, bankRuPtcy,
                                                                                           customeRs, suPPlieRs oR otheRs
                and Public incRimination duRing the
                                                                                           PuRsuant to which the boaRd
                Past five yeaRs
                                                                                           membeRs weRe selected
    to	the	company’s	knowledge,	no	member	of	the	board	of	directors	or	of	
    the	executive	committee	has	been:	(i) convicted	of	fraud,	(ii) associated	     as	of	the	date	hereof,	there	are	no	arrangements	or	agreements	with	the	
    with	a	bankruptcy,	receivership	or	liquidation,	(iii) sanctioned	by	any	       major	shareholders,	customers,	suppliers	or	other	parties,	by	virtue	of	which	
    statutory	or	regulatory	authorities	(including	professional	organizations),	   a	member	of	the	board	of	directors	has	been	selected.
    or	(iv) disqualified	by	a	court	decision	from	(a)	acting	as	a	member	of	the	
    administrative,	management	or	supervisory	bodies	of	a	public	company	
    or	(b)	acting	in	the	management	or	conduct	of	the	affairs	of	a	public	         4.1.3.6 diRectoRs’ shaReholdings in the
    company	during	the	past	five	years.                                                    comPany’s RegisteRed caPital
    as	mentioned	in	chapter 2:	“Information	on	the	company”,	section	              In	accordance	with	the	article 11.2	of	the	company’s	bylaws,	a	member	
    2.1.2:	“historical	background”,	mr. frederic	rose,	in	his	capacity	as	chief	   of the	board	of	directors	must	hold	a	minimum	of	200 shares	of	technicolor	
    executive	officer	of	the	company,	requested	the	opening	of	a	Sauvegarde	       stock	during	their	term	of	office.	article	11.2	of	the	bylaws	was	modified	to	
    proceeding	on	behalf	of	the	company.	this	proceeding	was	opened	on	            reflect	the	reverse	share	split	implemented	by	the	company	on	July 15,	2010	
    november 30,	2009	and	a	judgment	of	the	nanterre	commercial	court	             (for	more	information	about	this	transaction,	please	refer	to	chapter 5:	
    approved	the	company’s	Sauvegarde	plan	on	february 17,	2010.                   “shareholders	and	listing	information”,	section	5.1.1:	“share capital”).




    84       technIcolor	–	2010	annual	report
                                                                                    |	corporate	governance	and workforce
                                                                                                                                        DIRECTORS                      4
                                                                              Contents
                                                                      ➜
                                                                                                ➜


to	the	company’s	knowledge,	the	situation	regarding	executive	directors’	shareholdings	in	the	company’s	registered	capital	as	of	the	date	hereof	is	
as	follows:

                                                                                                                                    Technicolor	shares/Shares	
 Directors	present	as	of	the	date	hereof                                                                                                held	through	FCPE(1)
 d.	ranque                                                                                                                                                 2,000
 f.	rose                                                                                                                                                  25,600
 l.	carney                                                                                                                                               30,000
 l.	desmouceaux   (2)
                                                                                                                                                            3,788
 c.	guillouard                                                                                                                                               800
 b.	hack                                                                                                                                                   5,000
 d.	lombard                                                                                                                                                  641
 J.	roche                                                                                                                                                  6,000
 r.	sautter                                                                                                                                                  940

 (1) Number of shares due to the reverse share split implemented by the Company on July 15, 2010 by which 10 old shares with a nominal value of €0.10 each
     were exchanged for 1 new share with a nominal value of €1 each.
 (2) Mr. Loïc Desmouceaux also holds 1,320 NRS, which will be redempted on December 31, 2011.

details	regarding	stock	subscription	or	purchase	options	granted	to	executive	directors	are	set	forth	in	paragraph 4.1.5.5,	“stock	options	awarded	to	
directors	–	performance	shares.”
the	table	below	shows	the	transactions	in	technicolor’s	securities	executed	during	2010	by	the	directors	and	officers	in	application	of	article	l. 621-18-2	
of	the	french	monetary	and	financial	code:

                                                                                             Description	of	
                                                                Date	of	          Type	of	    the	financial	      Number	of	                        Transaction	
 First	name	and	last	name                                   transaction       transaction      instrument         securities(*)    unit	price(*)        amount
 J.	roche                                                   05/03/2010          purchase              shares           20,000            €1.077      €21,540.00
 f.	rose                                                     23/03/2010         purchase              shares           50,000             €1.09     €54,500.00
 d.	ranque                                                   18/05/2010         purchase              shares           20,000           €0.685       €13,700.00
 f.	rose                                                     26/05/2010         purchase              shares          100,000            €0.66      €68,640.00
 r.	sautter                                                  26/05/2010         purchase              shares             7,600           €0.66        €5,016.00
 d.	lombard                                                  26/05/2010         purchase              shares            4,000            €0.66        €2,640.00
 l.	desmouceaux                                              26/05/2010         purchase              shares            18,488           €0.66       €12,202.08
 l.	desmouceaux                                              26/05/2010         purchase      units	of	fcpe              2,058           €0.67         €1,378,98
 l.	desmouceaux                                              26/05/2010         purchase                nrs              2,640               €1       €2,640.00
 c.	guillouard                                              03/06/2010          purchase              shares            8,000            €0.56        €4,480.00
 l.	carney                                                  24/06/2010          purchase              shares         300,000             €0.52     €156,000.00
 b.	hack                                                    24/06/2010          purchase              shares           50,000             €0.53      €26,500.00
 l.	desmouceaux                                              02/12/2010         purchase              shares                 8           €0.45             €3.60

 (*) These transactions took place before the reverse share split transaction of July 15, 2010; the transaction of December 2, 2010 was made in connection with
     regrouping old fractional shares for the purpose of the reverse share split transaction.



4.1.3.7 seRvice and otheR contRacts between boaRd membeRs and the gRouP
to	the	company’s	knowledge,	as	of	the	date	hereof,	there	are	no	service	contracts	between	board	members	and	the	group	or	any	of	its	subsidiaries	
that	provides	for	benefits	upon	termination	of	such	directors.
mr. loïc	desmouceaux,	director	representative	of	employee	shareholders,	has	an	employment	contract	with	the	company.


4.1.3.8 loans and guaRantees gRanted to boaRd membeRs
none.
                                                                                                      technIcolor	–	2010	annual	report                            85
           |	corporate	governance	and workforce
4          DIRECTORS



                                                                                  Contents
                                                                          ➜
                                                                                                  ➜



    4.1.4	 Preparation	and	organization	of	the Board	of Directors’	work
    this	sub-section	4.1.4	constitutes	the	first	part	of	the	chairman’s	report	       commercial	court	on	february 17,	2010	(for	more	information,	please	
    on	conditions	for	preparation	and	organization	of	the	board	of	directors’	        refer	to	chapter	2:	“Information	of	the	company”,	section:	2.1.2	“historical	
    work	on	internal	control	procedures	and	risk	management	issued	under	             background”),	and	on	april 21,	2010	by	the	renewed	board	of	directors.	
    article	l. 225-37	of	the	french	commercial	code.	the	second	part	of	              the	main	provisions	of	the	Internal	rules	are	summarized	below.
    this	report	is	contained	in	chapter 7:	“Internal	and	external	controls	and	
    procedures”,	section	7.1	“Internal	control	procedures	implemented	by	the	
    company”	of	this	annual	report.
                                                                                      Board	of	Directors’	powers	and	missions
                                                                                      the	board	of	directors	determines	the	group’s	strategic	direction	and	
    this	report	was	established	by	mr. denis	ranque,	chairman	of	the	board	
                                                                                      ensures	its	implementation.	It	examines	all	questions	relating	to	the	proper	
    since	february 17,	2010,	and	reviewed	by	the	audit	committee	and	the	
                                                                                      functioning	of	the	company,	subject	to	the	powers	explicitly	attributed	
    renumeration,	nominations	and	governance	committee.	It	was	approved	
                                                                                      to	the	shareholders’	meetings.
    by	the	board	of	directors	during	its	meeting	of	february 28,	2011.
                                                                                      pursuant	to	article	l. 225-35	of	the	french	commercial	code,	security	
                                                                                      interests	and	guarantees	granted	by	the	company	on	behalf	of	third	
    4.1.4.1 comPliance with afeP-medef                                                parties	must	be	authorized	by	the	board	of	directors.	an	annual	report	
            coRPoRate goveRnance code                                                 is	made	to	the	board	of	directors	on	the	use	of	such	authorization.

    pursuant	 to	 the	 law	 of	 July  3,	 2008,	 which	 transposed	 the	 directive	
    2006/46/ec	of	June 14,	2006,	the	company	now	adheres	to	the	afep-                 Limitations	imposed	by	the	Board	of	Directors	on	
    medef	corporate	governance	code	of	april 2010	in	the	preparation	of	              the powers	of	the	Chief	Executive	Officer
    the	report	contemplated	by	article l. 225-37	of	the	french	commercial	
                                                                                      according	 to	 french	 law	 and	 the	 company’s	 bylaws,	 the	 chief	
    code.
                                                                                      executive	officer	is	vested	with	the	broadest	possible	powers	to	act	in	any	
    the	corporate	governance	code	focuses	in	particular	on	the	composition	           circumstances	on	behalf	of	the	company,	subject	to	limitations	imposed	
    of	the	board	of	directors	and	the	board	committees,	which	must	combine	           by	the	company’s	corporate	purpose	and	those	matters	expressly	reserved	
    independence	and	expertise	in	the	company’s	businesses	and	interests,	            by	law	to	the	general	shareholders’	meeting	and	the	board	of	directors.	
    as	well	as	in	the	functioning	of	the	board	of	directors	which	must	be	able	       moreover,	the	chief	executive	officer	must	obtain	board	approval	for	
    to	rely	on	on-going	and	timely	information	and	be	governed	by	internal	           the	decisions	listed	below	falling	within	its	scope	(see	“decisions	of	the	
    rules	(Règlement Intérieur).                                                      board	of	directors”	below).
    In	accordance	with	article l. 225-37	of	the	french	commercial	code,	              In	 accordance	 with	 article	 l.  225-56-1	 paragraph  3	 of	 the	 french	
    the	company	declares	it	has	not	followed	the	recommendation	of	the	               commercial	code,	these	limitations	of	powers	are	drawn	up	as	internal	
    afep-medef	corporate	governance	code	that	the	composition	of	                     rules	and	are	not	enforceable	by	third	parties.
    the	remuneration	committee	does	not	include	an	executive	director	
    (dirigeant mandataire social,	namely	the	chairman	of	the	board	and	the	
    chief	executive	officer).	In	its	decision	of	february 17,	2010,	the	board	
                                                                                      Decisions	of	the	Board	of	Directors
    decided	to	combine	the	remuneration	committee	and	the	governance	                 In	accordance	with	the	Sauvegarde	plan,	the	Internal	board	rules	were	
    and	nominations	committee,	and	named	mr. denis	ranque	as	chairman	                amended	in	order	to	require	that	the	following	strategic	decisions	of	
    of	 the	 board	 and	 member	 of	 the	 remuneration,	 nomination	 and	             the	company	be	approved	by	a	qualified	majority	of	two-thirds	of	the	
    governance	committee.	the	board	of	directors	(i)	believed	that	the	               directors:
    considerable	experience	of	mr. denis	ranque	with	other	business	groups	
    was	complementary	to	that	of	messrs.	rémy	sautter	and	bruce	hack,	                (i)	   the	acquisition	or	transfer	of	any	entity	or	activity	whatsoever	by	any	
    (ii) recalled	that	the	board	of	directors	comprises	nine	directors,	including	           member	of	the	group,	including	the	company	or	its	subsidiaries	(in	
    seven	independent	directors,	and	three	committees,	(iii)	intended	that	the	              accordance	with	article	l. 233-1	of	the	french	commercial	code),	
    remuneration,	nomination	and	governance	committee	be	composed	                           for	an	amount	of	more	than	€25 million,	either	per	operation	or	per	
    solely	of	independent	directors	and	(vi)	decided	that	mr. denis	ranque	                  series	of	related	operations;
    (independent	director)	would	not	chair	the	committee	with	respect	to	             (ii)	 the	acquisition	by	the	company	of	its	own	ordinary	shares	(with	
    any	questions	relating	to	the	chairman	of	the	board	of	directors,	whether	              the	exception	of	the	acquisition	of	shares	conducted	in	the	context	
    concerning	his	term	of	office,	evaluation	or	remuneration.	finally,	as	                 of	plans	giving	executive	or	salaried	employees	rights	to	shares,	or	
    previously	indicated,	the	functions	of	chairman	and	chief	executive	                    stock-option	plans,	or	in	the	context	of	a	liquidity	contract	concluded	
    officer	have	been	separated.                                                            by	the	company);
                                                                                      (iii)	 any	 decision	 relating	 to	 the	 payment	 of	 dividends	 or	 other	
                                                                                             distributions;
    4.1.4.2 stRuctuRe of boaRd of diRectoRs’                                          (iv)	 any	anticipated	merger	aimed	at	the	absorption	of	the	company	
            woRk – inteRnal boaRd Rules                                                     (or	one	of	its	main	subsidiaries)	by	another	corporation;
    the	preparation	and	organization	of	the	board	of	directors’	work	are	             (v)	 any	decision	modifying	the	company’s	articles	of	association,	and	
    described	in	the	board	of	directors’	Internal	board	rules.	these	rules	                specifically,	any	modification	designed	to	change	the	number	of	
    were	modified	on	January 27,	2010	in	order	to	conform	to	the	company’s	                directors	of	the	company	currently	provided	for	in	the	articles	of	
    commitments	under	the	Sauvegarde	plan	approved	by	the	nanterre	                        association;



    86       technIcolor	–	2010	annual	report
                                                                                      |	corporate	governance	and workforce
                                                                                                                                         DIRECTORS                     4
                                                                                  Contents
                                                                          ➜
                                                                                                 ➜


(vi)	 the	 issuance	 or	 the	 authorization	 of	 the	 issuance	 of	 any	 new	         each	committee	formulates	proposals,	recommendations	and	assessments	
      shares	(ordinary	or	preference)	or	any	equity-linked	securities	in	             in	its	area	of	expertise,	which	is	defined	by	the	charter	of	each	committee.	
      the	company	or	that	of	one	of	its	main	subsidiaries,	by	way	of	                 for	this	purpose,	it	may	carry	out	any	study	that	may	help	the	board	of	
      redemption,	conversion,	exchange,	or	any	other	means	(with	the	                 directors’	deliberations.
      exception	of	issuances	required	to	implement	the	Sauvegarde	plan	
                                                                                      the	chairman	of	each	committee	draws	up	the	agenda	for	the	meetings,	
      approved	by	the	nanterre	commercial	court	in	the	context	of	the	
                                                                                      which	is	communicated	to	the	chairman	of	the	board	of	directors.
      company’s	Sauvegarde proceeding);
(vii)	 the	modification	of	the	terms	of	the	main	finance	contracts	or	the	            the	proposals,	recommendations	and	assessments	produced	by	the	
       conclusion	of	new	finance	contracts	increasing	the	technicolor	                committees	are	compiled	in	a	report	to	the	board	of	directors.	please	
       group’s	level	of	indebtedness	(with	the	exception	of	decisions	made	           see	below	the	report	on	each	committee’s	activities.
       for	the	purpose	of	implementing	the	Sauvegarde	plan	approved	by	
       the	nanterre	commercial	court	in	the	context	of	the	company’s	                 Board	meetings
       Sauvegarde	proceeding);
(viii)	 the	granting	of	any	security	or	guarantee	to	any	of	the	creditors	for	        each	year,	the	board	of	directors	draws	up	the	calendar	of	its	meetings	
        a	financial	debt	of	the	technicolor	group	of	more	than	€20 million,	          for	the	coming	year,	based	on	a	proposal	from	the	chairman.
        or	any	modification	of	any	such	security	or	guarantee;                        this	calendar	sets	the	dates	for	the	board	of	directors’	regular	meetings	
(ix)	 the	takeover	by	any	company	of	the	group	of	a	third-party	entity	for	           (in	conjunction	with	the	release	of	quarterly	financial	information,	the	
      more	than	€25 million,	or	any	contributions,	mergers	or	de-mergers	             previous	year’s	annual	results,	the	half	year	results,	the	ordinary	general	
      having	an	impact	of	more	than	€25 million	on	the	company’s	busi-                shareholders’	meeting,	etc.).	In	addition	to	the	meetings	included	in	the	
      ness	value;                                                                     calendar,	the	board	of	directors	holds	meetings	whenever	required	by	
(x)	 the	appointment	of	the	chairman	of	the	board	of	directors	and	the	               the	company’s	circumstances.	If	necessary,	the	directors	meet	in	working	
     chief	executive	officer	of	the	company;                                          sessions.	In	addition,	the	directors	may	meet	in	“executive	sessions”,	in	
                                                                                      which	the	executive	management	does	not	participate.
(xi)	 any	 decision	 concerning	 the	 liquidation	 or	 dissolution	 of	 the	
      company	(or	of	one	of	its	main	subsidiaries),	or	any	decision	to	
      proceed	with	a	restructuring;                                                   Directors’	right	to	information
(xii)	 any	decision	to	implement	protective	mechanisms	for	nrs	holders	               the	chairman	is	required	to	communicate	to	each	director	all	documents	
       in	 the	 event	 of	 any	 operation	 on	 capital	 as	 set	 out	 in	 articles	   and	information	necessary	to	carry	out	his	or	her	work.
       l. 228-98	et seq.	of	the	french	commercial	code	or	in	compliance	
       with	the	specific	terms	applicable	to	the	nrs	by	virtue	of	the	note	           the	board	of	directors	may	consult	with	the	company’s	outside	advisors	
       agreement;                                                                     (financial	and	legal	advisors)	during	its	meetings.
(xiii)	 the	appointment	of	a	statutory	auditor	who	is	not	part	of	a	network	          In	2010,	in	connection	with	the	renewal	of	the	board	of	directors’	composi-
        of	international	repute;                                                      tion,	the	company	organized	working	sessions	known	as	Induction Sessions,	
(xiv)	 any	decision,	by	any	member	of	the	group,	to	settle	litigation	                tailored	for	its	directors	and	in	particular	for	the	audit	committee.	during	
       underway	where	such	settlement	would	result	in	a	payment	of	more	              the	2010	sessions,	the	company	presented	its	businesses,	its	operational	
       than	€10 million	to	the	relevant	counterparty;                                 and	functional	organization	(support	functions,	corporate	governance),	its	
                                                                                      primary	undertakings	(in	particular,	its	major	agreements),	and	its	financial	
(xv)	 the	commencement	of	any	litigation	where	the	amount	at	issue	is	
                                                                                      and	accounting	situation.	the	company	also	provided	a	presentation	on	
      more	than	€10 million;
                                                                                      the	regulatory	framework	and	governance	rules	to	the	audit	committee	
(xvi)	 any	 decision	 to	 modify	 the	 business	 plan	 having	 the	 effect	 of	       members.	the	directors	also	had	the	opportunity	to	visit	certain	premises	
       reducing	the	ebItda	of	the	company	by	more	than	€50 million	                   such	as	sunset	gower	(post-production	activities)	or	the	mpc	studios	
       on	an	annual	basis;                                                            (special	effects	and	animation	activities).
(xvii)	any	significant	changes	to	accounting	principles	applicable	to	the	
       company	or	to	any	subsidiary	of	the	group,	other	than	changes	
       made	in	application	of	applicable	law	or	required	by	the	statutory	
                                                                                      Directors’	duties
       auditors	of	the	company	or	the	relevant	subsidiary.                            members	of	the	board	of	directors	are	required	to	abide	by	a	general	
                                                                                      confidentiality	obligation	concerning	the	content	of	deliberations	in	
                                                                                      the	board	and	its	committees,	and	in	relation	to	information	that	is	
Board	Committees
                                                                                      confidential	in	nature	or	presented	by	its	chairman	as	being	confidential.
until	february 17,	2010,	the	board	of	directors	was	assisted	in	the	exercise	
                                                                                      the	Internal	board	regulations	stipulate	that	each	director	is	required	
of	its	duties	by	three	committees:	the	audit	committee,	the	governance	
                                                                                      to	inform	the	chairman	of	any	personal	situation	that	is	likely	to	create	a	
and	nominations	committee	and	the	remuneration	committee.	on	
                                                                                      conflict	of	interest	with	the	company	or	any	of	the	group’s	companies.	If	
february 17,	2010,	the	board	of	directors	decided	to	create	a	technology	
                                                                                      necessary	the	chairman	asks	for	an	assessment	from	the	remuneration,	
committee	and	to	merge	the	governance	and	nominations	committee	
                                                                                      nomination	and	governance	committee.
and	remuneration	committee	into	a	single	committee:	the	remunera-
tion,	nomination	and	governance	committee.




                                                                                                        technIcolor	–	2010	annual	report                        87
           |	corporate	governance	and workforce
4          DIRECTORS



                                                                                   Contents
                                                                           ➜
                                                                                                  ➜



    4.1.4.3 boaRd of diRectoRs’ activities in 2010
    In	2010	the	board	met	13	times,	with	an	average	participation	rate	of	90.7%.
    the	table	below	shows	the	participation	rates	of	each	director:

     Directors                                                                                                                                  Participation	rate
     d.	ranque                                                                                                                                               100%
     f.	rose                                                                                                                                                 100%
     l.	carney  (1)
                                                                                                                                                            85.7%
     l.	desmouceaux                                                                                                                                          100%
     c.	guillouard                                                                                                                                            91%
     b.	hack                                                                                                                                                  82%
     d.	lombard                                                                                                                                             66.6%
     J.	roche                                                                                                                                                 91%
     r.	sautter                                                                                                                                              100%

     (1) Mr. Lloyd Carney was appointed as a Director by the Annual General Shareholders’ Meeting held on June 17, 2010. This rate is calculated prorata	temporis
         as from the start of his term of office.

    In	line	with	its	activities	in	2009,	in	2010	the	board	of	directors	pursued	       meetings.	the	board	of	directors	reviewed	the	financial	communication	
    its	work	in	connection	with	the	financial	debt	restructuring.	It	reviewed	in	      and	documentation	(document de référence)	after	its	review	by	the	audit	
    particular	the	implementation	of	the	Sauvegarde	plan	approved	by	the	              committee.
    nanterre	commercial	court	on	february 17,	2010.
                                                                                       In	connection	with	the	restructuring	of	its	financial	indebtedness,	the	
    the	board	of	directors	on	april 21,	2010,	acting	within	the	scope	of	the	          board	of	directors	reviewed	the	governance	of	the	company	and,	on	      	
    authority	delegated	to	it	by	the	combined	general	shareholders’	meeting	           mr.	 frederic	 rose’s	 proposal	 and	 upon	 the	 recommendation	 of	 the	
    of	January	27,	2010,	decided	(i)	to	proceed	with	a	capital	increase	for	a	         governance	and	nomination	committee,	approved	the	separation	of	
    maximum	amount	of	€348	million,	(ii)	the	issuance	of	notes	redeemable	             the	functions	of	chairman	of	the	board	and	chief	executive	officer	on	
    in	shares	of	the	company	(“nrs”)	for	a	total	amount	of	€638	million,	              february 17,	2010.
    (iii)	 the	 issuance	 of	 a	 maximum	 total	 of	 263,712,951	 non	 assignable	
                                                                                       the	board	of	directors	also	reviewed	the	number	and	the	composition	of	
    warrants	to	purchase	a	maximum	of	75,346,557	nrs	(“nrs	warrants”)	
                                                                                       its	committees	as	well	as	the	Internal	board	rules	and	the	charters	of	the	
    and	(iv)	the	issuance	of	2,902,074	disposal	proceeds	notes	redeemable	
                                                                                       committees	(please	refer	to	section	4.1.4.2:	“structure	of	board	of	direc-
    in	cash	or	in	shares	(dpn).	those	transactions	were	implemented	on	          	
                                                                                       tors’	work	–	Internal	board	rules” above).	In	performing	its	missions,	the	
    may  26,	 2010.	 In	 June  2010,	 the	 board	 of	 directors	 decided	 to	    	
                                                                                       board	of	directors	reviewed	the	remuneration	of	the	executive	directors	
    proceed	with	a	reverse	share	split	of	the	company’s	share	capital,	such	
                                                                                       as	well	as	the	allocation	of	directors	fees	(please	refer	to	section	4.1.5:	
    that	10	shares	with	a	nominal	value	of	€0.10	each	were	exchanged	for	
                                                                                       “compensation	and	benefits	of	directors”	below).
    one	new	share	with	a	nominal	value	of	€1.00	(please	refer	to	chapter	
    5:	“shareholders	and	listing	information”,	section:	5.1.1	“share	capital”).	       finally,	the	board	of	directors	launched	a	self-evaluation	of	its	performance	
    In	october	and	december 2010,	the	board	of	directors	examined	the	                 and	that	of	the	audit	committee	and	the	remuneration,	nomination	and	
    redemption	of	the	dpn	and	tranche	I	of	the	nrs.	both	transactions	were	            governance	committee,	by	means	of	a	detailed	questionnaire	drawn	
    implemented	on	december 31,	2010.                                                  up	by	the	remuneration,	nomination	and	governance	committee	and	
                                                                                       sent	to	all	directors.	the	evaluation	questionnaire	included	a	series	of	
    In	addition	to	the	restructuring	of	the	financial	debt,	the	board	of	directors	
                                                                                       questions	on	the	following	themes:	the	structure,	missions	and	functions	
    oversaw	the	implementation	of	the	disposal	program	and,	if	necessary,	
                                                                                       of	the	board	of	directors,	the	board’s	meetings,	the	functioning	of	the	
    the	restructuring	of	the	disposal	activities.	It	reviewed	the	offers	of	the	
                                                                                       board	of	directors,	contacts	outside	the	board	of	directors,	organiza-
    potential	buyers	and	finally	approved	the	disposals	of	screenvision	us	
                                                                                       tion	and	functioning	of	the	committees,	and	training.	the	results	of	this	
    and	the	grass	valley	broadcast business.
                                                                                       self-evaluation	were	examined	by	the	remuneration,	nomination	and	
    In	 carrying	 out	 its	 duties,	 the	 board	 of	 directors	 also	 examined	 the	   governance	committee,	and	then	reviewed	by	the	board	of	directors.	
    company’s	quarterly,	half	yearly	and	annual	financial	information:	review	         the	board	of	directors	concluded	in	particular	that	the	efforts	of	the	
    of	the	2010	annual	budget,	statutory	and	consolidated	accounts	for	the	            company	to	organize	induction	sessions	were	beneficial	and	should	be	
    fiscal	year 2009	and	the	first	half	of	2010,	quarterly	revenues	for	the	first	     implemented	on	a	regular	basis	to	provide	training	for	the	directors	either	
    and	third	quarters	of	2010	and	the	process	for	establishing	this	informa-          on	the	scope	of	regulations	or	on	improving	their	understanding	of	the	
    tion.	It	reviewed	the	main	accounting	questions	such	as	depreciations	of	          group’s	business.
    goodwill.	In	addition,	the	board	of	directors	reviewed	questions	related	to	
                                                                                       the	 board	 of	 directors	 noted	 the	 progress	 on	 its	 functioning,	 in	
    the	accounting	of	restructuring	of	the	financial	debt.	each	board	meeting	
                                                                                                                                                                 	
                                                                                       particular,	concerning	the	timeline	for	communicating	presentations	to	the	
    which	approved	the	quarterly,	half	year	or	annual	accounts	was	preceded	
                                                                                       directors.	an	evaluation	of	the	performance	of	the	chairman	of	the	board	
    by	one	or	more	meetings	of	the	audit	committee,	which	systematically	
                                                                                       of	directors	will	be	launched	in	2011.
    provided	a	report	to	the	board	on	the	questions	reviewed	during	these	



    88         technIcolor	–	2010	annual	report
                                                                                |	corporate	governance	and workforce
                                                                                                                                   DIRECTORS                      4
                                                                            Contents
                                                                    ➜
                                                                                            ➜



4.1.4.4 comPosition and activities                                              organization of the audit committee’s activities

        of the boaRd committees
                                                                                the	audit	committee	meets	at	least	four	times	a	year,	and	whenever	
                                                                                necessary	before	a	board	of	directors’	meeting	according	to	a	predeter-
Audit	Committee                                                                 mined	annual	schedule.	In	performing	its	missions,	the	committee	may	
                                                                                directly	discuss	matters	with	the	statutory	auditors	in	the	absence	of	the	
adherence to the aMf’s report on audit committees                               managers	or	of	persons	contributing	to	the	preparation	of	the	financial	
the	company	referred	to	the	amf’s	report	on	audit	committees	issued	            statements.	It	may	also	directly	discuss	matters	with	the	internal	auditors	in	
on	July 22,	2010	for	the	preparation	of	the	section	below	of	the	chairman’s	    the	absence	of	management	or	of	persons	contributing	to	the	preparation	
report	on	corporate	governance,	internal	control	procedures	and	risk	           of	the	financial	statements.
management	issued	under	article	l. 225-37	of	the	french	commercial	
                                                                                the	audit	committee	may	call	upon	the	services	of	experts	within	or	
code.
                                                                                                                                                             	
                                                                                outside	 the	 group,	 in	 particular	 legal	 counsel,	 accountants	 or	 other	
                                                                                advisors	or	independent	experts.
composition
until	 february  2010,	 the	 audit	 committee	 comprised	 mr.  françois	        the	statutory	auditors	participate	in	each	audit	committee	meeting.
                                                                       	
de	 carbonnel	 (chairman),	 mr.  Éric	 bourdais	 de	 charbonnière,	 and	
mr. paul	murray,	mr. marcel	roulet,	advisor,	and	mr. loïc	desmouceaux,	         audit committee’s activities
director	 representing	 employee	 shareholders	 participated	 in	 the	          the	audit	committee	met	eight	times	in	2010,	with	an	average	participa-
committee	meetings.                                                             tion	rate	of	100%.
since	february 17,	2010,	the	audit	committee	comprises	mr. John	roche	          during	2010,	the	audit	committee	examined	the	following	financial	
(chairman),	ms. catherine	guillouard,	and	mr. bruce	hack.	the	board	            information:	the	statutory	and	consolidated	accounts	for	the	fiscal	year	
of	directors	of	february 17,	2010,	which	decided	the	composition	of	the	        ended	december 31,	2009	and	of	the	first	half	of	2010,	and	the	2010	
audit	committee,	reviewed	questions	relating	to	the	independence	               first	and	third	quarter	revenues.	the	financial	statements,	notes	to	the	
and	expertise	of	the	members	of	the	committee,	and	determined	that	             financial	statements,	and	critical	accounting	policies	were	presented	and	
its	composition	was	in	compliance	with	the	requirements	of	article	             annotated	by	the	group’s	financial	management.	the	audit	committee	
l. 823-19	of	the	french	commercial	code	established	by	the	ordinance	           looked	into	accounting	issues	relating	to	the	closing	of	the	statutory	and	
no.	2008-1278	of	december 8,	2008	transposing	into	french	law	the	              consolidated	accounts	for	the	fiscal	year 2009,	and	in	particular	reviewed	
directive	2006/43/ec	relating	to	the	control	of	annual	and	consolidated	        the	impairment	tests	on	goodwill	and	assets	as	well	as	the	major	accounting	
financial	statements	(please	refer	to	section	4.1.2	“composition	and	           issues	in	connection	with	the	closing	of	the	financial	statements.
expertise	of	the	board	of	directors”	above).
                                                                                In	the	context	of	the	financial	restructuring,	the	audit	committee	also	
Mission                                                                         regularly	 examined	 the	 group’s	 indebtedness	 and	 liquidity	 position,	
                                                                                particularly	in	connection	with	the	opening	of	the	Sauvegarde	proceeding	
the	audit	committee’s	mission	and	the	organization	of	its	activities	are	       by	the	nanterre	commercial	court	on	november 30,	2009,	as	well	as	with	
defined	by	applicable	law	(the	ordinance	of	december 8,	2008,	its	charter,	     the	Sauvegarde	plan	approved	on	february 17,	2010.	the	audit	committee	
and	by	the	Internal	board	rules.	In	2010,	on	the	recommendation	of	the	         also	examined	the	procedures	implemented	by	the	group	to	follow	up	
remuneration,	nomination	and	governance	committee	and	the	audit	                the	commitments	taken	with	respect	to	the	debt	restructuring	and	the	
committee,	the	charter	of	the	committee	was	amended	to	take	into	               Sauvegarde	plan,	as	well	as	concerning	general	approval	procedures	of	
account	updates	of	regulations	and	best-practices	recommendations.	the	         major	decisions	of	the	group,	in	particular	those	related	to	investments.
committee	assists	the	board	of	directors	in	fulfilling	its	responsibilities	
concerning	financial	information	and	its	publication,	internal	control	proce-   In	addition,	from	the	end	of	2009,	the	audit	committee	undertook	a	
dures	and	risk	management,	internal	auditing,	and	internal	procedures	          review	of	the	process	for	selecting	the	statutory	auditors	whose	term	
to	verify	compliance	with	applicable	laws	and	regulations.	In	particular	it	    expired	following	the	annual	general	shareholders’	meeting	held	to	
examines	the	draft	parent	company	unconsolidated	financial	statements	          approve	the	financial	statements	for	the	year	ended	december 31,	2009.	
and	consolidated	financial	statements	prior	to	their	presentation	to	the	       the	audit	committee	examined	with	particular	attention	the	candidate	
board	of	directors,	and	verifies	that	the	procedures	adopted	(i) ensure	that	   selection	process,	and	issued	a	recommendation	on	the	renewal	of	the	
the	accounts	provide	an	accurate	and	sincere	reflection	of	the	company’s	       appointment	of	the	statutory	auditors	mazars	to	the	board	of	directors.
financial	position;	and	(ii) are	in	compliance	with	applicable	accounting	
                                                                                the	 audit	 committee	 was	 also	 presented	 with	 an	 enterprise	 risk	
standards.
                                                                                assessment,	the	internal	audit	half	year	plans	and	their	results,	the	status	
similarly,	the	audit	committee	expresses	its	opinion	and	makes	proposals	       of	the	retirement	programs	implemented	by	the	company’s	non-french	
to	the	board	of	directors	concerning	the	nomination,	remuneration,	             subsidiaries,	as	well	as	the	internal	control	procedures	implemented	by	
dismissal,	mission	and	activities	of	the	statutory	auditors.	In	compliance	     the	group	(see	chapter 7	“Internal	controls	and	procedures”,	section	7.1:	
with	applicable	regulations,	the	committee	also	gives	its	authorization,	       “Internal	control	procedures”	in	this	annual	report).
or	adopts	procedures	for	authorization	of	missions	other	than	audits	by	
                                                                                statutory	auditors	attended	those	sessions	and	provided	their	comments.
the	statutory	auditors.
                                                                                finally,	the	audit	committee	conducted	a	self-evaluation	of	its	activity	
pursuant	to	the	ordinance	of	december 8,	2008,	the	work	of	the	audit	
                                                                                in	2010.	the	audit	committee	believes	the	meetings	are	well	prepared	
committee	also	relates	to	the	evaluation	of	the	efficiency	of	internal	
                                                                                by	its	members,	that	discussions	are	open	and	constructive,	and	that	
controls	and	the	assessment	of	risks.	the	ethics	compliance	committee	
                                                                                the	reports	provided	to	the	board	of	directors	are	exhaustive	and	of	
reports	to	the	audit	committee.	as	such,	the	audit	committee	reviews	
                                                                                a	good	quality.
the	 works	 conducted	 by	 the	 ethics	 compliance	 committee,	 which	
includes	“whistleblowing”	investigations.



                                                                                                  technIcolor	–	2010	annual	report                        89
           |	corporate	governance	and workforce
4          DIRECTORS



                                                                                Contents
                                                                        ➜
                                                                                               ➜


    Remuneration,	Nomination	and	Governance	Committee                               Mission
    a	 remuneration,	 nomination	 and	 governance	 committee	 was	 put	   	         the	technology	committee	deals	with	questions	relating	to	innovation	
    in	 place	 following	 the	 decision	 of	 the	 board	 of	 directors	 of	
                                                                          	         and	research.	It	provides	opinions	and	recommendations	to	the	board	of	
    february 17,	2010	to	merge	the	governance	and	nomination	committee	             directors	on	the	various	technological	choices	they	face,	and	participates	
    with	 the	 remuneration	 committee.	 It	 comprises	 mr.  rémy	 sautter	         in	defining	the	strategic	direction	of	the	company.	the	committee	carries	
    (chairman),	mr. denis	ranque	and	mr. bruce	hack.                                out	its	work	alongside	the	technology	director,	the	scientific	director	and	
                                                                                    the	research	director,	and	regularly	meets	with	the	scientific	committee,	
    Mission                                                                         which	is	not	a	board	committee,	formed	in	2009.
    the	remuneration,	nomination	and	governance	committee	submits	                  Technology committee’s activities
    proposals	pertaining	to	the	company’s	governance,	in	particular	in	respect	
    of	the	organization	and	functioning	of	the	board	of	directors.	It	also	         the	technology	committee	met	for	the	first	time	in	2010,	with	an	average	
    makes	proposals	to	the	board	of	directors	for	the	appointment	of	the	           participation	rate	of	100%.
    board	members,	the	chairman,	the	chief	executive	officer	and	board	             the	committee	examined	corporate	governance	issues	in	connection	
    committee	members.                                                              with	the	newly	constituted	committee	and	proposed	the	appointment	of		
    In	addition,	the	remuneration,	nomination	and	governance	committee	             lloyd	carney	as	chairman	of	the	committee.	It	drafted	the	committee’s	
    issues	recommendations	to	the	board	of	directors	regarding	the	compen-          charter	and	submitted	it	to	the	remuneration,	nomination	and	gover-
    sation	of	the	executive	directors	and	the	amount	of	the	directors’	fees	to	     nance	committee	for	its	approval	by	the	board	of	directors.
    be	submitted	to	the	shareholders’	meeting.	the	committee	also	makes	            during	its	first	meeting,	the	committee	reviewed	the	various	technology	
    proposals	in	respect	of	the	awarding	of	stock	options	and	free	shares	to	the	   programs	launched	in	the	digital	delivery	segment,	which	included	the	
    group’s	employees,	and	more	generally	concerning	employee	shareholder	          following:	(i)	“excellence”,	whose	purpose	is	to	enhance	the	operational	
    and	shareholder	savings	programs,	and	issues	a	recommendation	on	the	           performance	of	the	segment	and	the	quality	of	the	products,	(ii)	“opera-
    coherence	between	the	remuneration	of	executive	directors	with	that	of	         tional	framework”,	which	defines	the	strategic,	financial	and	operational	
    the	other	managers	and	employees.                                               plan	of	the	segment	for	5	years,	and	(iii)	“revolution”,	which	is	related	
                                                                                    to	digital	home.
    remuneration, nomination and Governance committee’s
    activities                                                                      moreover,	the	committee	heard	a	presentation	on	the	organization	of	the	
                                                                                    research	and	Innovation	activity	and	on	main	ongoing	research	programs.
    the	remuneration,	nomination	and	governance	committee	met	five	times	
    in	2010	(from	march	24,	2010)	with	an	average	participation	rate	of	100%.       finally,	the	committee	examined	the	plan	to	open	a	new	research	center	
                                                                                    in	palo	alto,	california,	specialized	in	content	research.
    In	performing	its	mission	in	connection	with	remuneration,	the	committee	
    called	upon	the	services	of	independent	experts,	cabinet	hewitt,	to	assist	
    the	committee	on	(i)	the	remuneration	policy	applicable	to	directors	and	
    executive	officers,	(ii)	the	implementation	of	management	incentive	plans,	
                                                                                    4.1.4.5 otheR infoRmation of the
    while	ensuring	the	consistency	of	these	remunerations	with	the	company’s	               chaiRman’s RePoRt on conditions
    remuneration	policy	in	connection	with	stock	options	and	free	share	plans.                  foR PRePaRation and oRganization
    In	particular,	it	examined	the	variable	compensation	of	the	chief	executive	                of the      boaRd of diRectoRs’
    officer,	the	compensation	of	the	chairman	of	the	board	(please	refer	
    to	section	4.1.5	“compensation	and	benefits	of	directors”)	as	well	as	the	                  woRk and on inteRnal contRol
    implementation	of	the	mid-term	incentive	management	plan	awarding	                          PRoceduRes and Risk management
    stock	options	and	free	shares	(please	refer	to	section	4.3.4:	“stock	option	
    plans	and	free	share	plans/redeemable	share	subscription	or	purchase	           Principles	and	rules	adopted	by	the	Board	of	Directors	on	
    warrants	(bsaar)”.	In	addition,	it	reviewed	the	proposal	for	the	imple-         the	compensation	and	benefits	of	Directors	under	Article	
    mentation	of	an	employee	shareholding	plan,	and	concluded	that	market	          L. 225-37	of	the	French	Commercial	Code
    conditions	were	not	favorable	to	such	a	plan	in	2010.
                                                                                    principles	and	rules	adopted	by	the	board	of	directors	regarding	(i) the	
    concerning	governance,	the	committee	recommended	renewing	the	                  chairman	and	chief	executive	officer’s	compensation	and	benefits	
    terms	of	messrs.	didier	lombard	and	bruce	hack,	and	the	appointment	            are	presented	in	paragraph 4.1.5.1	below	and	(ii) director’s	fees	or	other	
    of	mr. lloyd	carney	as	a	director.	It	also	examined	the	committees’	            remuneration	allocated	to	the	directors	are	presented	in	paragraph 4.1.5.4	
    charters	and	the	representation	of	women	on	the	board	of	directors	in	          below.
    line	with	existing	recommendations.	finally,	it	reviewed	the	evaluation	
    process	the	board	of	directors	and	the	board	committees’	activities	as	         Information	on	stock	option	plans	and	free	share	plans	granted	to	execu-
    well	as	the	results	of	this	evaluation.                                         tive	officers	are	set	forth	in	paragraph 4.1.5.5	and	section	4.3.4	below.


    Technology	Committee                                                            Participation	of	shareholders	in	general	meetings
                                                                                    there	is	no	specific	arrangement	for	participation	of	shareholders	in	the	
    composition
                                                                                    company’s	general	meetings.	for	more	information	about	the	conditions	
    the	technology	committee	was	created	by	a	decision	of	the	board	of	             for	participation	in	the	meetings,	see	chapter 6:	“additional	information”,	
    directors	on	february 17,	2010.	Its	members	are	messrs.	didier	lombard,	        section	6.2:	“memorandum	and	articles	of	association.
    lloyd	carney	and	loïc	desmouceaux.	mr. lloyd	carney	was	appointed	
    chairman	of	the	committee	by	the	board	of	directors	of	July 28,	2010.


    90       technIcolor	–	2010	annual	report
                                                                                       |	corporate	governance	and workforce
                                                                                                                                           DIRECTORS                      4
                                                                                Contents
                                                                        ➜
                                                                                                  ➜


Elements	likely	to	have	an	impact	in	the	event	of	                                    likely	to	have	an	impact	in	the	event	of	a	takeover	bid,	in	compliance	with	
a takeover	bid                                                                        article l. 225-100-3	of	the	french	commercial	code.

chapter 6:	“additional	information”,	section	6.1.9:	“elements	likely	to	have	
an	influence	in	case	of	a	public	offer”	provides	information	on	elements	



4.1.5	 Compensation	and	benefits	of	Directors
4.1.5.1 comPensation and benefits of mR. denis Ranque, chaiRman of the boaRd
mr. denis	ranque	took	up	his	position	on	february 17,	2010.	he	does	not	have	any	employment	contract	with	the	company	or	any	group	company	
and	is	not	an	officer	of	any	other	group	company.
the	compensation	of	mr. denis	ranque	in	his	capacity	as	chairman	of	the	board	amounts	to	€180,000	gross	a	year.	mr. denis	ranque	does	not	receive	
any	directors’	fees	in	his	capacity	as	director.


Table	summarizing	the	compensation	of	Mr. Denis	Ranque
(table	no	2	of	the	afep-medef	recommendation)

                                                                                                                                                2010
 (in €)                                                                                                                         Amounts	due            Amounts	paid
 fixed                                                                                                                            155,537.60	   (1)
                                                                                                                                                         155,537.60(1)
 variable                                                                                                                                  n/a                  n/a
 directors’fees                                                                                                                            n/a                  n/a
 fringe	benefits                                                                                                                           n/a                  n/a
 ToTal                                                                                                                           155,537.60            155,537.60

 (1) Amount calculated prorata temporis from February 17, 2010.


4.1.5.2 comPensation and benefits of                                                  ■■   c
                                                                                           	 onsolidated	free	cash	flow(2)	target,	accounting	for	40%	of	the	total	
                                                                                           targeted	bonus;
        mR. fRedeRic Rose, chief executive                                            ■■   a	qualitative	target	tied	to	the	successful	completion	of	the	strategic	
        officeR                                                                            refocusing,	accounting	for	20%	of	the	total	targeted	bonus,	the	
                                                                                           achievement	of	which	is	determined	in	the	discretion	of	the	board	
mr. frederic	rose	took	up	his	position	on	september 1,	2008.	he	does	not	
                                                                                           of	directors.
have	an	employment	contract	with	the	company	or	any	group	company	
and	is	not	an	officer	of	any	other	group	company.                                     finally,	 80%	 of	 each	 objective	 must	 be	 achieved	 in	 order	 to	 entitle	
                                                                                      mr.  frederic	 rose	 to	 receive	 that	 variable	 component.	 In	 the	 event	
                                                                          	
the	 compensation	 of	 mr.  frederic	 rose	 for	 his	 functions	 as	 chief	
                                                                                      that	80%	to	100%	of	an	objective	is	achieved,	the	amount	of	variable	
executive	 officer	 was	 decided	 by	 the	 board	 of	 directors	 on	      	
                                                                                      compensation	for	that	objective	would	be	reduced.	the	amount	of	variable	
July 23,	2008	on	the	basis	of	proposals	by	the	remuneration	committee	
                                                                                      compensation	may	represent	100%	of	the	annual	gross	fixed	compensation	
and	on	march 24,	2010	regarding	the	performance	criteria	applicable	
                                                                                      in	the	event	the	objectives	are	achieved,	and	is	limited	to	125%	in	the	event	
to	2010.
                                                                                      the	objectives	are	exceeded.
his	compensation	includes	a	fixed	portion	for	an	annual	gross	amount	of	
                                                                                      the	 board	 of	 directors	 of	 february  28,	 2011	 reviewed	 the	 level	 of	
€800,000,	and	a	variable	portion	conditional	upon	achievement	in	2010	
                                                                                      achievement	of	the	above	objectives	for	2010.	the	consolidated	ebItda	
of	the	following	performance	targets:
                                                                                      objective	was	96.8%	achieved;	the	consolidated	free	cash	flow	objective	
■■   	 onsolidated	adjusted	ebItda(1)	target,	accounting	for	40%	of	the	
     c                                                                                was	120%	achieved.	the	qualitative	target	tied	to	the	successful	completion	
     total	targeted	bonus;




(1) Adjusted EBITDA is defined as profit before net restructuring costs, net impairment losses on non-current operating assets, other income/expense, depreciation,
    amortization, tax and net finance costs.
(2) Free Cash Flow is defined as net operating cash from/(used in) operating activities less purchases of property, plant & equipment (net of disposals) and intangible
    assets.


                                                                                                         technIcolor	–	2010	annual	report                           91
           |	corporate	governance	and workforce
4          DIRECTORS



                                                                                    Contents
                                                                            ➜
                                                                                                      ➜


    of	the	strategic	refocusing	was	110%	achieved.	as	a	result,	the	variable	             Indemnity	payable	in	case	of	removal	of	position	as	Chief	
    remuneration	of	mr. frederic	rose	for	2010	amounted	to	€869,760	gross.                Executive	Officer
    given	the	very	positive	impact	of	the	financial	restructuring	and	the	                In	the	event	of	removal	from	his	position	as	chief	executive	officer,	
    approval	of	the	Sauvegarde	plan	by	the	commercial	court	of	nanterre	                  except	 in	 the	 case	 of	 gross	 negligence	 or	 gross	 misconduct,	     	
    on	february 17,	2010,	the	board	of	directors	decided	the	payment	of	an	               mr. frederic	rose	is	entitled	to	an	indemnity	whose	maximum	gross	
    exceptional	fixed	bonus	of	€600,000	gross	to	mr. frederic	rose.	this	                 amount	would	be	equal	to	fifteen	months	fixed	and	variable	compensa-
    bonus	was	granted	to	mr. frederic	rose	in	consideration	of	the	efforts	               tion.	this	amount	would	be	calculated	according	to	his	total	fixed	and	
    made	in	view	of	the	adoption	of	the	Sauvegarde	plan	by	the	commercial	                variable	compensation	in	relation	to	the	fiscal	year	preceding	the	date	of	
    court	of	nanterre.	the	adoption	of	the	Sauvegarde	plan	came	at	the	                   the	board	of	director’s	decision	to	remove	him	from	office.	pursuant	to	
    end	of	a	very	complex	process	in	which	mr. frederic	rose	worked,	in	a	                article	l. 225-42-1	of	the	french	commercial	code,	the	payment	of	this	
    particularly	difficult	environment,	with	customers,	suppliers	and	creditors	          indemnity	is	subject	to	performance	requirements	based	on	the	group	
    in	order	to	allow	the	streamlining	of	the	group’s	financial	situation.                operational	consolidated	adjusted	ebItda(1)	and	free	cash flow(2),	
    upon	the	request	of	mr. frederic	rose,	payment	of	a	signing	bonus	                    determined	on	a	yearly	basis	by	the	board	of	directors.
    compensation	of	€150,000	gross,	decided	by	the	board	of	directors	                    half	of	the	indemnity	payment	is	subject	to	the	achievement	of	a	consoli-
    on	July 23,	2008	as	partial	compensation	for	loss	of	rights	due	to	his	               dated	ebItda	target	and	the	remaining	half	is	subject	to	achievement	
    departure	from	alcatel	lucent,	was	suspended.	following	the	opening	                  of	a	free	cash	flow	target.	If	at	least	80%	of	either	the	ebItda	or	
    of	the	Sauvegarde	proceeding	by	the	nanterre	commercial	court	on	                     free	cash	flow	performance	target	is	not	achieved,	no	indemnity	will	be	
    november 30,	2009,	this	sum	was	declared	as	part	of	the	company’s	                    due.	should	the	percentage	of	achievement	of	either	target	fall	between	
    liabilities,	 and	 has	 been	 settled	 under	 the	 conditions	 set	 out	 in	 the	     80%	and	100%,	the	indemnity	would	be	correspondingly	reduced.	the	
    company’s	Sauvegarde	plan.                                                            achievement	of	all	operational	consolidated	ebItda	and	free	cash	flow	
    finally,	 in	 2009,	 given	 group’s	 situation	 as	 of	 december  31,	 2008,	
                                                                                	         targets	is	measured,	on	the	basis	of	a	constant	scope	of	consolidation,	
    mr.  frederic	 rose	 decided	 to	 waive	 this	 €66,000	 monthly	 bonus,	              by	comparison	to	the	average	ebItda	and	free	cash	flow	targets	
    amounting	to	€264,000	gross,	for	the	period	from	september 1,	2008	                   determined	for	the	three	fiscal	years	prior	to	the	dismissal	date.
    to	december 31,	2008,	which	he	had	been	granted	on	taking	up	his	duties.	             In	case	of	removal	before	december 31,	2011,	the	achievement	of	each	
    mr. frederic	rose	also	waived	the	1,000,000	stock	options	(corresponding	             operational	consolidated	ebItda	and	free	cash	flow	target	is	measured,	
    to	100,000	stock	options	after	adjustment	due	to	the	reverse	share	split)	            on	the	basis	of	a	constant	scope	of	consolidation,	by	comparison	to	the	
    granted	by	the	board	of	directors	on	July 23, 2008	and	all	his	directors	             average	ebItda	and	free	cash	flow	targets	determined	for	fiscal	years	
    fees	for	2008.	                                                                       2009	and	2010.
    from	2010,	mr. frederic	rose	is	not	entitled	to	directors	fees	in	his	                finally,	the	right	to	such	compensation	is	subject	to	the	condition	that	
    capacity	as	director.                                                                 mr. frederic	rose	exercise	his	functions	for	at	least	one	financial	year	at	the	
                                                                                          date	of	his	termination,	which	condition	was	met	on	december 31,	2009.
    Management	Incentive	Plan	(MIP-SP1)                                                   furthermore,	in	the	event	of	termination	from	his	duties,	a	non-competition	
    on	the	recommendation	of	the	remuneration,	nomination	and	gover-                      clause	will	be	enforceable	for	a	period	of	9 months	following	termination,	
    nance	committee,	the	board	of	directors	decided	on	June 17,	2010,	to	                 and	applicable	in	europe,	asia	and	the	united	states,	in	exchange	for	
    implement	of	a	mid-term	management	Incentive	plan	designed	to	retain	                 which	he	will	receive	monthly	compensation	calculated	on	the	basis	of	his	
    key	company	employees	while	aligning	their	interests	with	those	of	the	               last	monthly	overall	pay.	this	commitment	was	approved	by	the	board	of	
    company	and	its	shareholders.	mr. frederic	rose	is	a	beneficiary	of	this	             directors’	meeting	of	July 23,	2008	and	modified	at	the	board	meeting	
    plan	which	awards	performance	units	comprised	of	half	cash	and,	in	the	               of	march 9,	2009	which	cancelled	the	company’s	ability	to	refuse	this	
    case	of	mr. frederic	rose,	half	stock	options.	under	this	plan,	performance	          commitment.	this	modification	was	approved	by	the	annual	shareholders’	
    units	were	granted	to	mr. frederic	rose	representing	10	to	15	months	                 meeting	held	on	June 16,	2009.
    of	fixed	compensation	at	the	date	of	award,	i.e.	a	cash	bonus	ranging	                mr. frederic	rose	does	not	benefit	from	any	additional	pension	scheme.	
    from	€333,300	to	€500,000	maximum	and	stock	options	ranging	from	                     he	enjoys	fringe	benefits	under	a	service	contract	in	connection	with	the	
    143,720	to	215,570	(after	adjustment	due	to	the	reverse	share	split).	the	            use	of	a	vehicle,	for	an	amount	of	€4,260	for	2010.
    conditions	of	this	management	Incentive	plan,	including	the	conditions	
    of	attendance	and	performance,	are	described	in	paragraph 4.1.5.6	below.                                                                               	
                                                                                          the	 employer’s	 charges	 paid	 by	 the	 company	 in	 respect	 of	
                                                                                          mr. frederic	rose’s	compensation	amounted	to	€569,437	in	2010.




    (1) EBITDA is defined as profit before depreciation, amortization, tax and net finance costs.
    (2) Free Cash Flow is defined as net operating cash from/(used) in operating activities less purchases of property, plant & equipment (net of disposals) and intangible
        assets.

    92       technIcolor	–	2010	annual	report
                                                                                      |	corporate	governance	and workforce
                                                                                                                                          DIRECTORS                       4
                                                                                Contents
                                                                       ➜
                                                                                                  ➜



Table	summarizing	the	compensation	of	Mr. Frederic	Rose
(table	no	2	of	the	afep-medef	recommendation)

                                                                                                  2009                                        2010
 (in €)                                                                             Amounts	due          Amounts	paid          Amounts	due           Amounts	paid
 fixed                                                                                    800,000               800,000              800,000               800,000
 variable                                                                               400,000   (1)
                                                                                                                       0            869,760   (2)
                                                                                                                                                         400,000(1)
 exceptional	bonus	under	Sauvegarde                                                            n/a                  n/a              600,000               600,000
 signing	bonus	(2008)   (3)
                                                                                               n/a                     0                  n/a            150,000(3)
 directors’	fees(4)                                                                               0                    0                      0                      0
 fringe	benefits                                                                               n/a                  n/a                 4,260                  4,260
 ToTal                                                                               1,200,000              800,000              2,274,020            1,954,260

 (1) Variable compensation for 2009 paid in 2010.
 (2) Variable compensation for 2010 paid in 2011.
 (3) Given the Company’s situation, Mr. Frederic Rose requested that the payment of the signing bonus be suspended. This compensation was declared as
     part of the Company’s liabilities under the sauvegarde proceeding opened in favor of the Company on November 30, 2009 and has been paid under the
     sauvegarde Plan.
 (4) Mr. Frederic Rose waived payment of his Directors’ fees in respect of the fiscal years 2008 and 2009. From 2010, he is no longer entitled to Directors’ fees.



4.1.5.3 comPensation and benefits of mR. fRançois de caRbonnel, diRectoR in 2009
mr. françois	de	carbonnel	was	coopted	as	director	on	april	2007.	he	served	as	chairman	of	the	board	of	directors	from	april 9,	2008	to	april 27, 2009	
and	served	as	director	until	february 17,	2010.


Table	summarizing	the	compensation	of	Mr. François	de	Carbonnel
(table	no	2	of	the	afep-medef	recommendation)

                                                                                                                        2009                            2010
 (in €)                                                                                                   Amounts	due          Amounts	paid          Amount	paid
 directors’	fees(1)                                                                                               73,770              58,924(2)            73,770(3)
 fringe	benefits                                                                                                    n/a                   n/a
 ToTal                                                                                                          73,770               58,924                73,770

 (1) These amounts were subject to withholding tax.
 (2) Directors’ fees for 2008 paid in 2009.
 (3) Directors’ fees for 2009 paid in 2010.




                                                                                                         technIcolor	–	2010	annual	report                            93
              |	corporate	governance	and workforce
4             DIRECTORS



                                                                                   Contents
                                                                           ➜
                                                                                                       ➜



    4.1.5.4 summaRy of comPensation, benefits, oPtions and PeRfoRmance shaRes attRibuted
            to executive diRectoRs


    Summary	table	of	the	compensation	options	and	shares	awarded	to each	Executive	Director
    (table	no	1	of	the	amf	recommendation)

                                                                                                            Denis	                                              François	de	
                                                                                                           Ranque               Frederic	Rose                    Carbonnel
     (in €)                                                                                            fiscal 2010         Fiscal	2009       fiscal 2010        Fiscal	2009
     remuneration	in	respect	of	the	fiscal	year	(detailed	in	the	table	provided	in	paragraphs	
     4.1.5.1,	4.1.5.2	and	4.1.5.3)                                                                      155,537.60(1)       1,200,000          2,274,020	          73,770(3)
     valuation	of	options	granted	during	the	fiscal	year	(detailed	in	the	table	provided	
     in paragraph 4.3.4)                                                                                       n/a              n/a(2)           333,344               n/a
     valuation	of	performance	shares	granted	during	the	fiscal	year                                            n/a               n/a                n/a                n/a
     ToTal                                                                                           155,537.60     (1)
                                                                                                                          1,200,000          2,607,364             73,770

     (1) Mr. Denis Ranque’s directorship started on February 17, 2010; the amount paid for 2010 was calculated on a prorata basis (see paragraph 4.1.5.1).
     (2) Mr. Frederic Rose waived the 1,000,000 stock options he had been granted by the Board of Directors held on July 23, 2008.
     (3) Directors fees for 2009 paid in 2010; this amount was subject to withholding.



    Summary	table	of	benefits	granted	to	the	Executive	Directors	
    (table	no	10	of	the	amf	recommendation)

                                                                                                      Indemnities	or	benefits	due	or	
                                                                                                    possibly	due	following	taking	up,	        Allowances	in	relation	to	a	
                                 Employment	Contract          Additional	pensions	scheme                ceasing	or	changing	position             non-competition	clause
     Executive	Directors                Yes           No                Yes              No                    Yes                  No                Yes               No
     denis	ranque                                       x                                    x                                           x                                x
     frederic	rose                                      x                                    x                  x (1)
                                                                                                                                                      x   (1)


     françois	de	
     carbonnel                                          x                                    x                                           x                                x

     (1) See paragraph 4.1.5.2 above.


    4.1.5.5 diRectoRs’ fees and otheR                                                   ■■       a	fee	of	€2,000	per	meeting	of	the	board	of	directors	or	board	
                                                                                                 committee.
                 comPensation
                                                                                        advisors	 ("censeurs")	 receive	 remuneration	 equivalent	 to	 the	 fees	
    In	compliance	with	article	l. 225-37	of	the	french	commercial	code,	                received	by	the	directors.
    the	principles	and	rules	stated	by	the	board	of	directors	to	determine	the	
    directors’	fees	awarded	to	executive	directors	are	shown	below.                     for	2009,	the	amount	of	the	directors’	fees	was	distributed	according	to	
                                                                                        the	director’s	actual	attendance,	within	the	limit	of	€450,000	set	by	the	
    the	remuneration,	nomination	and	governance	committee	recom-                        annual	general	shareholders’	meeting.	given	the	company’s	situation,	
    mends	to	the	board	of	directors	the	total	amount	of	directors’	fees	to	be	          the	board	of	directors	on	march 9,	2009	decided	to	suspend	the	payment	
    submitted	for	shareholders’	approval	at	the	annual	general	shareholders’	           of	the	2009	directors’	fees	and	to	review	the	decision	according	to	the	
    meeting,	 and	 their	 allocation	 among	 the	 directors.	 the	 maximum	             evolution	of	the	financial	situation	of	the	company	and	the	evolution	of	
    annual	amount	of	directors’	fees	that	can	be	paid	to	the	directors	was	             the	board	of	directors.	given	the	advancement	in	the	debt	restructuring,	
    set	at	€450,000	by	the	annual	general	shareholders’	meeting	held	on	     	          the	 board	 of	 directors	 on	 January  27,	 2010	 decided	 to	 allocate	 the	
    may 7,	2004	and	this	amount	has	not	been	modified	since	this	date.                  payment	of	the	2009	directors’	fees.
    for	2010,	the	annual	allocation	of	directors’	fees	was	decided	by	the	board	        the	directors	did	not	receive	any	other	compensation	besides	directors’	
    of	directors	according	to	the	following	terms:                                      fees	in	respect	of	fiscal	year 2010.	the	directors	of	the	company	do	not	
    ■■   a	fixed	fee	of	€35,000	for	each	director;                                      hold	office	at	any	of	the	company’s	subsidiaries.
    ■■   an	additional	fixed	fee	of	€5,000	for	each	director	non-resident	in	
         france;


    94        technIcolor	–	2010	annual	report
                                                                                    |	corporate	governance	and workforce
                                                                                                                                       DIRECTORS                   4
                                                                              Contents
                                                                     ➜
                                                                                               ➜



Directors’	fees	and	other	compensation	allocated	to	the	non-executive	Directors	
(table	no	3	of	the	amf	recommendation)

 Name                                                                       Amounts	paid	in	2009(1)(3)                     amounts paid in 2010(2)(3)
                                                                                                 Extraordinary	                                 Extraordinary	
 (in €)                                                                 Directors’	fees          compensation           Directors’	fees         compensation
 Éric	bourdais	de	charbonnière                                                   42,888                          -                57,715                       -
 françois	de	carbonnel                                                           58,924                          -               73,770                        -
 loïc	desmouceaux                                                               38,786(4)                        -              59,016(6)                      -
 eddy	w.	hartenstein(8)                                                           19,020               16,000(7)                        -              20,880(7)
 pierre	lescure                                                                  36,548                          -               26,905                        -
 didier	lombard                                                                   33,938                         -               53,809                        -
 gérard	meymarian                                                              20,885(5)                         -                      -                      -
 paul	murray                                                                     48,855                8,000(10)                 59,016
 marcel	roulet(9)                                                                39,905                  17,500(7)                      -              64,815(7)
 rémy	sautter                                                                     53,703                         -               60,752                        -
 ToTal                                                                       393,452                   41,500                390,983                   85,695

 (1)  Directors’ fees for 2008 paid in 2009.
 (2)  Directors’ fees for 2009 paid in 2010.
 (3)  Some amounts were subject to withholding.
 (4)  €3,000 has been paid directly to the Technicolor Employee Shareholders’ Association on behalf of Mr. Loïc Desmouceaux.
 (5)  €1,500 has been paid directly to the Technicolor Employee Shareholders’ Association on behalf of Mr. Gérard Meymarian.
 (6)  €4,000 has been paid directly to the Technicolor Employee Shareholders’ Association on behalf of Mr. Loïc Desmouceaux.
 (7)  Compensation in the capacity of advisor.
 (8)  Mr. Eddy Hartenstein served as Director until May 22, 2008. He was appointed to the position of advisor on July 23, 2008 for a period of 18 months.
 (9)  Mr. Marcel Roulet resigned from the Board of Directors effective as of October 12, 2008. He was appointed to the position of advisor for a period
      of 18 months on October 15, 2009.
 (10) Extraordinary compensation for his work in respect of his services provided to handle the follow up of a dispute.

the	amf	recommendation	of	december 10,	2009	requires	the	disclosure	               10 to	15	months	of	fixed	compensation	at	the	date	of	award,	i.e.	a	cash	
of	the	amount	of	directors	fees	paid	in	2009	and	2010.	as	a	consequence,	          bonus	ranging	from	€333,300	to	€500,000	maximum	and	stock	options	
the	amount	of	the	directors	fees	paid	in	2011	in	respect	of	2010	will	be	          ranging	from	143,720	to	215,570	(after	adjustment	due	to	the	reverse	share	
disclosed	in	the	company’s	2011	annual	report.                                     split).		the	exercise	price	of	the	stock	options,	determined	in	compliance	
                                                                                   with	article	l. 225-177	of	the	french	commercial	code,	cannot	be	less	
                                                                                   than	€0.66,	which	corresponds	to	the	price	for	the	subscription	of	the	
4.1.5.6 stock oPtions awaRded to                                                   shares	issued	in	connection	with	the	share	capital	increase	implemented	
        diRectoRs – PeRfoRmance shaRes                                             on	may 26,	2010.	the	subscription	price	has	been	fixed	at	€6.60	(adjusted	
                                                                                   from	€0.66	to	€6.60	to	take	into	consideration	the	reverse	share	split).
during	the	2010	fiscal	year,	a	mid-term	management	Incentive	plan	was	
implemented.	the	chief	executive	officer	and	eighty	high-level	managers	           the	performance	units	are	subject	to	presence	and	performance	condi-
benefit	from	this	plan	which	awards	performance	units	comprised	of	half	           tions.	these	conditions	are	cumulative.
cash	and,	depending	on	the	categories	of	beneficiaries,	either	half	stock	         presence	conditions:	the	beneficiary	must	be	present	uninterruptedly	
options	or	half	performance	shares	(see	paragraph 4.1.5.3	above).	for	             during	the	whole	acquisition	period	of	the	plan,	either	as	an	employee	
mr. frederic	rose,	the	plan	comprises	the	grant	of	stock	options.                  or	executive	director	(dirigeant mandataire social)	within	the	company	
                                                                                   and/or	affiliated	companies.
Stock	options	granted	to	Mr. Frederic	Rose                                         subject	to	the	achievement	of	the	presence	and	performance	conditions,	
on	 the	 recommendation	 of	 the	 remuneration,	 nomination	 and	                  the	stock	options	will	be	exercisable	after	the	fourth	year	following	their	
governance	 committee,	 the	 board	 of	 directors	 decided	 on	           	        allotment	by	the	board	of	directors,	or	after	June 18,	2014.
June 17,	2010	to	implement	a	mid-term	management	Incentive	plan	                   subject	to	the	achievement	of	the	presence	and	performance-related	
designed	to	retain	key	company	employees	while	aligning	their	interests	           conditions,	the	cash	portion	of	the	performance	units	will	be	acquired	by	
with	those	of	the	company	and	its	shareholders	(mIp-sp1).	mr. frederic	            beneficiaries	on	the	date	the	board	of	directors	approves	the	accounts	
rose	is	beneficiary	of	this	plan	which	awards	performance	units	comprising	        for	the	fiscal	year	ended	december 31,	2012	and	will	be	paid	as	soon	as	
half	cash	and,	for	mr. frederic	rose,	half	stock	options.	under	this	plan,	        possible	after	the	determination	of	such	cash	portion.
performance	units	were	granted	to	mr. frederic	rose,	representing	




                                                                                                      technIcolor	–	2010	annual	report                        95
           |	corporate	governance	and workforce
4          DIRECTORS



                                                                              Contents
                                                                      ➜
                                                                                                 ➜


    performance	conditions:                                                            in	the	contracts.	the	definition	and	calculation	of	this	ratio	and	of	its	
                                                                                       components	(net	debt	and	ebItda)	will	be	the	same	as	outlined	
    ■■   technicolor	shall	not	breach	the	covenants	set	forth	in	the	contracts	
                                                                                       in	the	contracts.	for	the	sake	of	confidentiality,	the	ratios	defined	by	
         signed	with	its	creditors	under	the	company’s	debt	restructuring	
                                                                                       the	board	of	directors	are	not	made	public.
         process	(credit	agreement	dated	april 23,	2010	and	note	purchase	
         agreement	dated	april 23,	2010).	should	this	occur,	the	performance	      In	application	of	article	l.	225-185	paragraph 4	of	the	french	commercial	
         units	will	be	considered	null	and	void.                                   code,	in	the	event	all	or	some	of	the	stock	options	granted	to	the	ceo	
    ■■   the	amount	of	performance	units	definitely	acquired	by	the	benefi-        were	exercised,	the	ceo	will	have	to	keep	(in	the	registered	form)	the	
         ciaries	will	be	based	on	the	net	debt/ebItda	ratio	validated	by	the	      amount	of	shares	acquired	through	the	exercise	of	options	representing	
         board	of	directors	based	on	the	accounts	for	the	fiscal	year	ended	       20%	of	net	proceeds,	defined	as	the	difference	between	the	value	of	the	
         december 31,	2012.                                                        shares	on	the	date	of	exercise	and	the	strike	price	free	of	taxes	and	social	
                                                                                   contributions	including	social	charges	or	charges	of	any	nature	due	on	
         this	ratio	is	defined	in	the	covenants	set	forth	in	the	credit	agree-
                                                                                   the	date	of	exercise	as	well	as	those	potentially	due	after	that	date,	and	
         ment	 and	 the	 note	 purchase	 agreement	 dated	 april  23,	 2010.	
                                                                                   this	regardless	of	the	country	in	which	these	charges	apply.
         for	the	purposes	of	the	plan,	the	net	debt/ebItda	ratio	will	be	
         established	based	on	the	same	terms	and	conditions	as	those	set	forth	


    Stock	options	and	performance	shares	granted	to	Mr. Frederic	Rose
                                                                       Type	of	   value	of	the	       Number	of	options	          Exercise	          Exercise	
     Plan	number	and	date                                              options        options        granted	during	2010             price            period
     mIp-sp1                                                                                                                                   June	18,	2014	–	
     June	17,	2010                                                subscription         333,344                   215,570(1)          €6.60       June	16,	2018

     (1) Maximum number of options that can be granted depending on the achievement of the performance conditions.



    Other	information	concerning	stock	option	plans	or	performance	shares	awarded	to	executive	
    Directors
    during	2010,	no	stock	options	previously	awarded	to	the	executive	directors	were	exercised	by	the	beneficiaries.

     Stock	Options	exercised	during	the	fiscal	year	by	each	executive	Director
     (Table	no	5	of	the	Afep-Medef	recommendation)                                                                                                      None


    no	performance	shares	were	granted	to	executive	officers	in	2010.

     Performance	shares	granted	to	each	executive	officer	in	2010
     (Table	no	6	of	the	Afep-Medef	recommendation)                                                                                                      None
     Performance	shares	that	became	available	for	each	executive	officer	in	2010
     (Table	no	7	of	the	Afep-Medef	recommendation)                                                                                                      None




    96       technIcolor	–	2010	annual	report
                                                                                   |	corporate	governance	and workforce
                                                                                                                   ExECuTIvE	COMMITTEE                                4
                                                                           Contents
                                                                   ➜
                                                                                                  ➜



4.2	 executIve	commIttee

4.2.1	 Members	of	the	Executive	Committee
as	of	the	date	hereof,	the	executive	committee	comprises	nine	members.	the	following	table	shows	their	responsibilities	and	year	of	appointment.

 Name	of	Executive	Committee	Member                         Age                Responsibility                                                       Appointed
 frederic	rose                                              48                 chief	executive	officer                                                     2008
 delphine	abellard                                          47                 general	secretary	and	legal                                                  2011
 david	chambeaud                                            43                 human	resources	&	sustainability,	sourcing	and	security                     2009
 béatrix	de	russé                                           63                 Intellectual	property	&	licensing                                           2004
 gary	donnan                                                52                 strategy,	technology	&	research                                             2010
 chuck	parker                                               40                 chief	commercial	officer                                                     2011
 vince	pizzica                                              47                 digital	delivery                                                            2008
 lanny	raimondo                                             67                 entertainment	services                                                      2001
 stéphane	rougeot                                           42                 chief	financial	officer,	It                                                 2008


biogRaPhies of executive committee membeRs                                         Mr.  Gary Donnan	 is	 head	 of	 strategy,	 technology	 &	 research.	
                                                                                   before	joining	technicolor	in	october	2005,	mr. donnan	held	similar	
Mr.  Frederic Rose	 took	 position	 as	 chief	 executive	 officer	 starting	       responsibilities	 at	 alcatel	 in	 research	 &	 Innovation,	 in	 addition	 to	
september 1,	2008.	for	more	information	about	his	biography,	please	               serving	on	the	alcatel	france	executive	committee.	Immediately	prior	
refer	to	paragraph 4.1.3.1	above.                                                  to	that	role,	he	was	the	r&d	technical	director	(3g)	in	alcatel/fujitsu	
                                                                                   (evolium).	during	the	previous	14	years,	mr. gary	donnan	worked	in	r&d	
Ms. Delphine Abellard	was	appointed	general	secretary	&	legal	on	
                                                                                   operations	in	the	fields	of	satellite	&	nuclear	control	systems,	transmission	
march	15,	2011.	previously	and	since	1998,	she	worked	at	eurazeo,	a	listed	
                                                                                   systems,	switching	systems,	and	radio	infrastructure.	In	addition	to	leading	
investment	company,	where	she	was	general	counsel	and,	since	2008,	
                                                                                   technicolor	research	&	Innovation,	mr. gary	donnan	currently	heads	the	
also	secretary	to	the	supervisory	board.	from	1992	to	1998,	she	practised	
                                                                                   company’s	strategy,	technology,	and	research	organization	–	charged	
law	as	an	attorney,	mainly	in	the	mergers	and	acquisitions	department	
                                                                                   with	promoting	advanced	technologies	and	services	throughout	the	
of	coudert	brothers,	an	american	law	firm	in	paris.	from	1988	to	1991,	
                                                                                   company.	 he	 received	 his	 degrees	 in	 computer	 systems	 from	 the	
delphine	abellard	worked	in	washington	d.c.	for	stewart	&	stewart,	a	
                                                                                   university	of	ulster,	Ireland.
law	firm	specialized	in	trade	law.	member	of	the	paris	and	new	york	bars,	
she	holds	an	mba	in	finance	from	virginia	polytechnic	Institute,	a	master	         Mr. Chuck Parker	was	appointed	chief	commercial	officer	for	technicolor	
of	laws	from	georgetown	university	and	from	paris	panthéon-sorbonne.	              in	January	2011,	overseeing	the	company’s	global	sales	function.	during	
she	graduated	from	the	Institut d’Études Politiques	of	paris.                      the	prior	two	years,	chuck	was	president	of	technicolor’s	digital	content	
                                                                                   delivery	division,	which	included	broadcast	services,	media	services,	and	
Mr. David Chambeaud	 was	 appointed	 head	 of	 human	 resources	 &	
                                                                                   the	creation	and	launch	of	the	medianavi	business.	mr.	chuck	parker	
sustainability	in	July 2009.	as	an	executive	committee	member,	he	is	also	
                                                                                   joined	the	group	in	1996	and	since	then	has	held	several	senior	manage-
in	charge	of	managing	sourcing	and	security	at	group	level.	previously	
                                                                                   ment	positions	including	evp	International	of	the	home	entertainment	
and	since	2005,	he	was	head	of	sourcing	for	the	group.	from	1995	
                                                                                   services	division	and	chief	Information	officer.	before	joining	the	group,	
to	2005,	mr. david	chambeaud	occupied	various	functions	within	the	
                                                                                   he	was	a	combat	arms	officer	serving	for	the	u.s.	army.		he	holds	an	
sourcing	management	team	based	in	france	and	germany	assuming	
                                                                                   mba	from	the	university	of	notre	dame,	where	he	graduated	with	honors.
regional	or	division	responsibilities.	he	also	worked	within	the	packaging	
division	of	the	danone	group.	david	chambeaud	is	a	graduate	of	the	                Mr.  Vince Pizzica	 is	 head	 of	 digital	 delivery	 since	 June  2010	 after	
epscI	(École des practiciens du commerce international),	an	international	         being head	of	research	and	Innovation	and	connect	since	2008.	prior	
business	school	which	is	part	of	the	essec	group.                                  to joining	technicolor	and	over	a	27–year	career	in	the	telecoms	industry,	
                                                                                   mr.  vince	 pizzica	 spent	 17	 years	 at	 telstra	 at	 various	 operation	 and	
Ms. Béatrix de Russé	is	head	of	Intellectual	property	and	licensing	since	
                                                                                   technology	positions	including	the	advisor	to	the	coo	of	telstra	on	
february 2004.	prior	to	this	and	since	1999,	she	was	head	of	licensing.	
                                                                                   mediacomms	technology	and	he	spent	also	7	years	at	alcatel	lucent	in	
from	1993	to	1999	she	was	successively	head	of	licensing,	then	head	of	
                                                                                   charge	of	technology,	strategy	and	marketing	for	the	emea	and	apac	
patents	and	licensing	for	thomson.	from	1984	to	1992,	ms.	béatrix	de	
                                                                                   region	as	well	as	cto	for	the	apac	region.	mr. vince	pizzica	holds	a	
russé	was	in	charge	of	international	contracts	and	Intellectual	property	
                                                                                   bachelor	of	engineering	from	the	Institute	of	engineers	in	australia,	and	
at	thomson	components	and	stmicroelectronics,	where	she	special-
                                                                                   a	master	of	telecoms	&	Info	systems	from	the	university	of	essex,	u.K.
ized	in	Intellectual	property	matters.	from	1976	to	1983,	she	worked	as	
an	international	attorney	at	the	international	division	of	thales	(former	         Mr. Lanny Raimondo	has	been	head	of	entertainment	services	since	
thomson	csf).	ms.	béatrix	de	russé	holds	a	master’s	degree	in	law	and	             september	 2001.	 mr.  lanny	 raimondo	 has	 worked	 at	 technicolor	
dess	in	International	trade	law	as	well	as	a	master’s	degree	in	english	           since	1994	and	was	appointed	president	and	chief	executive	officer	
and	a	cdcI	diploma.                                                                of	technicolor	group	in	1998,	after	having	served	as	president	of	the	


                                                                                                      technIcolor	–	2010	annual	report                         97
           |	corporate	governance	and workforce
4          ExECuTIvE	COMMITTEE



                                                                                 Contents
                                                                         ➜
                                                                                                 ➜


    company’s	home	entertainment	business.	prior	to	that,	he	spent	16 years	         is	a	graduate	of	the	Iep	business	school	in	paris	and	holds	a	dea	in	
    with	 pirelli	 cable	 corporation	 where	 he	 managed	 large	 subsidiary	        International	economics	and	finance	from	paris	dauphine	university.
    companies	in	great	britain,	canada	and	the	u.s.,	holding	the	position	of	
    president	and	chief	executive	officer	of	north	american	group	from	
    1985	to	1994.	mr. raimondo	is	a	graduate	of	purdue	university	with	a	            Role of the executive committee
    degree	in	electrical	engineering.                                                the	executive	committee	meets	under	the	direction	of	the	ceo	every	week	
    Mr. Stéphane Rougeot	joined	technicolor	in	november 2008	as	chief	               or	every	two	weeks,	with	an	agenda	determined	collectively	by	its	members.	
    financial	officer,	also	overseeing	It.	prior	to	this	appointment,	he	spent	      It	examines	questions	relating	to	the	activities	of	the	group.	In	this	regard,	
    five	years	with	france	telecom	orange,	first	as	head	of	strategy	for	                                                                                           	
                                                                                     it	deals	primarily	with	business	activities,	specific	projects,	following	up	on	
    equant,	then	as	head	of	Indirect	sales	for	orange	business	services	             transactions	and	financial	results,	and	the	identification	and	assessment	
    and	finally	as	group	controller.	previously,	he	had	been	in	charge	of	           of	risks.
    investor	relations	and	head	of	corporate	communications	for	technicolor.	        see	also	chapter 7:	“Internal	and	external	controls	and	procedures”,	
    mr. rougeot	began	his	career	with	total	in	africa	and	paris,	serving	in	         section	7.1.2:	“general	control	environment	–	group	management	and	
    a	range	of	financial	control,	project	finance	and	m&a	functions.	he	             decision	–	making	processes”.



    4.2.2	Executive	Committee	compensation
    executive committee comPensation                                                 the	executive	committee	was	paid	in	2009	with	respect	to	the	second	half	
                                                                                     of	2008).	the	total	amount	of	compensation	paid	to	previous	members	
    In	2010,	the	total	compensation	paid	by	the	company	and/or	other	                of	the	executive	committee	amounted	to	€0.8 million.
    companies	of	the	group	to	the	members	of	the	executive	committee,	
    including	the	chief	executive	officer,	was	€7.2 million	(including	a	variable	   the	total	amount	provided	for	pensions	and	retirement	and	other	similar	
    component	of	€1.8	million	with	respect	to	2009	on	the	basis	of	the	group	        benefits	granted	to	the	members	of	the	executive	committee	amounts	
    financial	results	as	well	as	the	exceptional	bonus	under	Sauvegarde	paid	to	     to	€3 million	in	2010.
    the	chief	executive	officer	(see	paragraph	4.1.5.2	hereabove).
    In	2009,	the	total	compensation	paid	by	the	company	and/or	companies	            loans and guaRantees gRanted oR
    of	the	group	to	members	of	the	executive	committee	(including	that	
                                                                                     established foR the membeRs of the
    paid	to	the	ceo)	within	technicolor	as	of	the	publication	of	the	2009	
    annual	report	amounted	to	€4.7 million	(given	the	financial	situation	of	        executive committee
    the	group,	no	portion	of	the	variable	remuneration	of	the	members	of	
                                                                                     none.




    98       technIcolor	–	2010	annual	report
                                                                               |	corporate	governance	and workforce
                                                                                                   EMPLOYEES	AND	wORkFORCE                                      4
                                                                            Contents
                                                                   ➜
                                                                                          ➜



4.3	 employees	and	worKforce

4.3.1	 Overview
on	december 31,	2010,	the	group	employed	17,858 employees,	(67%	male	          the	highly	competitive	and	rapidly-changing	media	&	entertainment	
and	33%	female)	compared	to	20,818 employees	at	december 31, 2009,	            sector	in	which	the	group	provides	its	products,	technology	and	services	
a	decrease	of	14.2%.                                                           requires	continuing	adjustment	to	the	workforce.

the	table	below	shows	technicolor’s	total	workforce	as	of	december 31,	2010,	2009	and	2008,	as	well	as	the	distribution	of	personnel	across	geographical	
regions.

                                                                                                                   2010             2009             2008
 europe                                                                                                            6,424            7,590            7,683
 north	america                                                                                                      7,473           8,719            10,211
 asia(1)                                                                                                            1,797            2,139           2,055
 other	countries    (2)
                                                                                                                   2,164            2,370            2,646
 ToTal nuMber of eMPloyees(3)                                                                                   17,858           20,818           22,775
 number	of	employees	in	entities	accounted	for	under	the	equity	method(*)                                            277            3,092            2,655

 (*) Mainly the joint venture with NXP, NuTune in 2009 and 2008.
 (1) Of which People’s Republic of China including Hong Kong                                                         606              720              672
 (2) Including Mexico                                                                                              1,435            1,468            1,527
 (3) Includes employees of activities treated as discontinued.

total	workforce	figures	above	account	for	executives,	non-executives	and	workers.	temporary	employees	and	trainees	are	excluded.

the	following	table	indicates	the	number	of	group	employees	by	segment	as	of	december 31,	2010:

 Division	/	Segment                                                                                               Number	of	employees         Percentage
 entertainment	services                                                                                                            10,737             60%
 digital	delivery                                                                                                                   3,974             22%
 technology                                                                                                                           507               3%
 transversal	functions                                                                                                               1,793            10%
 other(1)                                                                                                                             847              5%
 ToTal                                                                                                                           17,858            100%

 (1) Includes employees of activities treated as discontinued.

the	overall	reductions	in	work	force	during	2010	resulted	primarily	from	      the	decline	in	film	processing	and	film	print	distribution	required	a	realign-
the	group	strategy	to	refocus	on	its	core	business	implying	the	following	     ment	of	the	workforce	in	these	activities	in	europe,	north	america	and	
business	transfers:                                                            asia.
■■   grass	valley	broadcast	activities	to	francisco	partners;                  on	the	contrary,	the	animation	activities	are	continuing	in	bangalore,	
■■   screenvision	usa	to	shamrock	capital	growth	fund	II,	investment	          India,	in	connection	with	the	close	relationship	between	technicolor	India	
     fund	specialized	in	media,	entertainment	&	communication	sector;          and	dreamworks	animation,	nickelodeon	or	electronic	arts	in	particular,	
                                                                               as	well	as	with	the	opening	of	the	mpc	visual	special	effects	studio	in	
■■   convergent	media	systems	to	sony	electronics.
                                                                               october	2010.




                                                                                                 technIcolor	–	2010	annual	report                        99
           |	corporate	governance	and workforce
4          EMPLOYEES	AND	wORkFORCE



                                                                            Contents
                                                                     ➜
                                                                                           ➜



    4.3.2	Employee	profit-sharing
    three	french	subsidiaries	of	the	company	offer	employees	incentive	         ■■   amounts	distributed	in	2010	for	year	2009:	€1,616,929.
    plans	based	on	the	related	subsidiary’s	results.
                                                                                In	addition,	several	of	the	company’s	locations	in	france	and	in	the	united	
    the	total	annual	bonuses	distributed	to	employees	in	connection	with	       states	offer	their	employees	profit-sharing	plans	based	on	company	results	
    these	incentive	plans	over	the	three	most	recent	years	amount	to	the	       and/or	achievement	of	individual	objectives.	the	executive	committee	
    following:                                                                  and	other	members	of	senior	management	are	incentivized	with	plans	
                                                                                based	 on	 group	 and	 business	 unit	 results	 and	 the	 achievement	 of	
    ■■   amounts	distributed	in	2008	for	year	2007:	€579,275;
                                                                                individual	performance	objectives.
    ■■   amounts	distributed	in	2009	for	year	2008:	€358,521;	and



    4.3.3	Shares	held	by	employees
    In	accordance	with	article	l. 225-102	of	the	french	commercial	code	and	    the	combined	shareholders’	meeting	of	January	27,	2010	authorized	the	
    to	the	company’s	knowledge,	the	number	of	shares	held	by	the	group’s	       board	of	directors	to	proceed	with	share	capital	increases	reserved	to	the	
    employees	and	former	employees	represented	around	0.35%	of	its	share	       group’s	employees	in	connection	with	an	employee	shareholding	plan	
    capital	at	december 31,	2010.	this	holding	decreased	in	2010	as	a	result	   (for	more	information,	see	chapter	6:	“additional	information”,	section	
    of	the	dilution	due	to	the	share	capital	increase	of	may	26,	2010.          6.1.8	“delegations	granted	to	the	board	of	directors	by	the	shareholders’	
                                                                                meetings).	the	remuneration,	nomination	and	governance	committee	
    as	of	december 31,	2010,	the	number	of	shares	held	by	the	group’s	
                                                                                reviewed	the	proposal	for	the	implementation	of	an	employee	shareholding	
    employees	in	the	group	saving	plan	(Plan d’Épargne Entreprise),	by	
                                                                                plan,	and	concluded	that	market	conditions	were	not	favorable	in	2010.
    employees	and	former	employees	through	technicolor’s	savings	plan	
    (Fonds Communs de Placement d’Entreprise),	and	the	number	of	shares	
    directly	 held	by	the	 employees	and	subject	to	a	lock-up	 period	 was	
    611,563 shares,	representing	0.20%	of	the	share	capital.



    4.3.4	Stock	option	plans	and	free	share	plans/redeemable	share	
          subscription	or	purchase	warrants
    stock oPtion Plans                                                          38	months,	and	is	valid	until	July 22,	2011.	options	granted	under	this	
                                                                                authorization	shall	not	give	rights	to	a	total	number	of	shares	greater	than	
    the	shareholder’s	meeting	held	on	may 22,	2008	authorized	the	board	        3%	of	the	share	capital	as	of	the	day	of	the	board	of	directors’	decision	
    of	directors	to	grant	subscription	or	purchase	options	to	the	group’s	      to	grant	the	options.
    employees	or	directors.	this	authorization	was	given	for	a	period	of	




    100      technIcolor	–	2010	annual	report
                                                                                       |	corporate	governance	and workforce
                                                                                                            EMPLOYEES	AND	wORkFORCE                                    4
                                                                                Contents
                                                                        ➜
                                                                                                   ➜


as	of	december 31,	2010,	the	company	has	established	the	following	existing	stock	option	plans:

                                                    Plan	1       Plan	2	       Plan	3    Plan	4                Plan	5        Plan	6        Plan	7
                                                 Purchase	 Subscription	 Subscription	 Purchase	             Purchase	 Subscription	 Subscription	           Plan
                                                  options      options       options    options               options      options       options          MIP-SP1
 decision	of	the	shareholder	meeting            november	       november 	      november	 november	            may 10,	           may 10,	   may 10,	      may 22,	
                                                  10,	2000       10,	2000         10,	2000  10,	2000             2005              	2005      	2005         	2008
 board’s	decision                              december	       october 12,	 september 22,	      april 19,	 december 8,	 september 21,	 december 14,	               	
                                                                                                                                                           June 17,	
                                                  18,	2000          2001           2004           2005          2005           2006          2007            2010
                                            march 16,	2001		
                                             July 23,	2001
 number	of	options	granted,	including:           4,018,500       3,540,300        7,366,590      719,400      1,993,175          2,739,740   1,307,100   12,167,000
 number	of	options	granted	to	
 directors	and	officers:
    frederic	rose(2)
    ■	   before	adjustments                               -               -                -           -               -                 -           -    2,155,700
    ■	   after	adjustments                                -               -                -           -               -                 -           -    215,570(1)
    loïc	desmouceaux
    ■	   before	adjustments                               -               -           7,600            -               -            2,000       1,000              -
    ■	   after	adjustments                                -               -             915            -               -              241          121             -
 number	of	options	granted	to	the	first	
 ten	employee	beneficiaries:
    ■	   before	adjustments                               -               -                -           -               -                 -           -    7,284,300
    ■	   after	adjustments                                -               -                -           -               -                 -           -    728,430(1)
 beginning	of	the	exercise	period            december 19,	     october 13,	 september 23,	      april 20,	 december 9,	 september 22,	 december 15,	       June 18,	
                                                   2003             2004           2007           2008          2008           2008          2009             2014
 plan	life                                         10	years        10	years        10	years     10	years       10	years            8	years    8	years       8	years
 expiration	date                             december 17,	     october 11,	 september 21,	      april 18,	 december 7,	 september 20,	 december 14,	               	
                                                                                                                                                           June 17,	
                                                   2010             2011           2014            2015          2015           2014         2015             2018
 exercise	price	at	grant	time                       €55.90          €31.50          €16.00       €20.82          €17.73            €12.49      €10.43        €0.66
 exercise	period                                50%	as	of	       50%	as	of	     50%	as	of	 50%	as	of	   50%	as	of	     50%	as	of	    50%	as	of	          100%	as	of	
                                             december 19,	     october 13,	 september 23,	 april 20,	 december 9,	 september 22,	 december 15,	            June 18,	
                                                2003	and	        2004	and	      2007	and	 2008	and	     2008	and	      2008	and	     2009	and	                2014
                                               100%	as	of	      100%	as	of	    100%	as	of	 100%	as	of	 100%	as	of	    100%	as	of	   100%	as	of	
                                             december 19,	     october 13,	 september 23,	 april 20,	 december 9,	 september 22,	 december 15,	
                                                   2004             2005           2008        2009        2009           2009           2010
 number	of	shares	subscribed	as	of	                       -               -                -           -               -                 1           -             -
 december 31,	2010
 number	of	options	cancelled	since	the	          4,018,500       3,268,800        3,075,350     299,900        844,850           940,050     279,600        722,100
 beginning	of	the	plan
 number	of	options	cancelled	in	2010              423,000            1,500         433,850        15,700       218,300            368,501    210,900        722,100
 number	of	outstanding	options	at	the	                   0        270,000         3,857,390     403,800        930,025           1,431,189   816,600     11,444,900
 end	of	2010	before	adjustments
 number	of	outstanding	options	at	the	                   0         324,775        4,640,021      485,735       1,118,778         1,721,660   982,360           n/a
 end	of	2010	(after	capital	adjustment	
 on	may 26,	2010)(3)
 exercise	price                                       n/a           €26.19           €13.30       €17.31        €14.74             €10.38      €8.67           n/a
 number	of	outstanding	options	at	the	                   0          32,479          464,103      48,588         111,966           172,284      98,401     1,144,490
 end	of	2010	(after	adjustments	due	to	
 the	grouping	of	shares	on	July 15,	2010)
 exercise	price                                       n/a         €261.90          €133.00       €173.10       €147.40           €103.80      €86.70         €6.60
 (1) Information provided pursuant to article L. 225-184 of the French Commercial Code.
 (2) Mr. Frederic Rose waived the 1,000,000 stock options he had been granted by the Board of Directors held on July 23, 2008.
 (3) Adjustment coefficient: 0.83135.


                                                                                                           technIcolor	–	2010	annual	report                    101
            |	corporate	governance	and workforce
4           EMPLOYEES	AND	wORkFORCE



                                                                                   Contents
                                                                           ➜
                                                                                                   ➜


    as	of	december 31,	2010,	the	total	options	granted	under	the	plans	                PeRfoRmance shaRe Plans
    amounted	to	160,554	purchase	options	and	1,911,757	subscription	options	
    granted	to	496	beneficiaries.                                                      Retention	Plan	2007-2009
    the	exercise	price	of	the	various	stock	option	plans	have	been	fixed	              the	board	of	directors’	meeting	held	on	october 17,	2007	approved	the	
    without	discount	and	calculated	on	the	basis	of	the	average	share	price	           implementation	of	a	long-term	Incentive	plan	for	the	retention	of	key	
    of	the	20	trading	days	prior	to	the	board	of	directors’	meeting	except	            managers	and	employees	with	high	potentials	employees	of	the	group	
    for	the	plan	mIp-sp1.                                                              with	the	intention	of	associating	beneficiaries	with	the	development	of	
                                                                                       the	group	and	the	execution	of	2007-2009	strategic	objectives.	within	
    pursuant	to	article l. 225-184	of	the	french	commercial	code,	the	
                                                                                       the	framework	of	this	plan,	free	shares	granting	rights	were	allocated,	
    company	notes	the	following:
                                                                                       the	final	acquisition	of	which	was	subject	to	conditions	of	operational	
    ■■    as	of	december 31,	2010,	no	purchase	options	of	the	above	plans	were	        performance	achievements	and	continued	employment	within	the	group	
          exercised,	and	one	subscription	option	of	plan	no.	6	was	exercised	in	       on	october 17,	2009	for	the	first	acquisition,	and	then	on	october 17,	2010	
          connection	with	the	reverse	share	split	transaction;                         for	the	second	acquisition.	as	the	operational	performance	conditions	for	
    ■■    the	 board	 of	 directors	 of	 June  17,	 2010	 approved	 the	          	    both	acquisition	periods	having	not	been	achieved,	the	company	has	not	
          implementation	of	a	mid-term	management	incentive	plan	(manage-              granted	any	free	shares	under	this	plan.
          ment	Incentive	plan	2010-2014	-	mIp-sp1)	for	the	benefit	of	the	
          ceo	and	approximately	80	group	key	executives.	this	plan	awards	             Management	Incentive	Plan	2010-2014	(MIP-SP1)
          performance	units	comprised	of	half	cash	and,	according	to	the	
          categories	of	beneficiaries,	either	half	subscription	options	or	half	       the	description	of	this	plan,	approved	by	the	board	of	directors	of	      	
          performance	shares.	depending	on	the	achievement	of	attendance	              June	17,	2010,	provides	rights	to	receive	subscription	options	or	perfor-
          and	performance	conditions,	subscription	options	will	be	exercisable	        mance	shares.	It	is	detailed	in	the	paragraph “stock	option	plans”	above.
          as	from	June 18,	2014.	on	december 31,	2010,	the	remaining	rights	to	        depending	on	the	achievement	of	cumulative	attendance	and	perfor-
          receive	existing	shares,	after	the	four-year	vesting	period,	and	subject	    mance	conditions,	this	plan	requires,	depending	on	the	country,	a	four-year	
          to	the	achievement	of	specified	acquisition	conditions,	is	1,144,490,	       acquisition	period	or	a	two-year	acquisition	period	with	a	two-year	holding	
          accounting	for	0.7%	of	the	share	capital.                                    period	as	from	the	acquisition	of	the	performance	shares.
                                                                                       on	december 31,	2010,	the	maximum	number	of	rights	to	receive	existing	
    fRee shaRe Plan                                                                    company	shares	at	the	end	of	the	acquisition	periods	mentioned	above	
                                                                                       amounts	to	416,400	shares.
    Global	Free	Share	Plan	2007
    the	shareholders’	meeting	of	may 15,	2007	authorized,	with	delegation	
    to	the	board	of	directors,	the	allocation	of	free	shares	to	employees	and	         Redeemable shaRe subscRiPtion oR PuRchase
    officers	of	the	group.                                                             waRRants (bsaaR)
    making	use	of	this	delegation,	the	board	of	directors’	meeting	held	on	            the	general	shareholders’	meeting	of	January 27,	2010	authorized,	with	
    June 21,	2007	approved	the	implementation	of	a	global	free	share	plan	             delegation	to	the	board	of	directors,	the	issuance	of	redeemable	share	
    to	eligible	employees	of	the	group.	this	plan	provides,	depending	on	              subscription	or	purchase	warrants	(bsaar)	for	the	benefit	of	employees	
    the	country,	for	either	two-year	or	four-year	acquisition	periods.	on	    	        and	 executive	 officers	 of	 the	 company	 and	 its	 subsidiaries,	 without	 	
    June 21,	2009,	142,820	free	shares,	which	accounted	for	0.08%	of	the	              preferential	subscription	rights.	this	authorization	was	given	for	a	period	of	
    company’s	share	capital	at	that	time,	were	granted	to	employees	who	               18 months,	or	until	July 27,	2011.	the	nominal	amount	of	the	share	capital	
    met	all	the	granting	conditions.	as	of	december 31,	2010,	the	maximum	             increases	that	may	be	carried	out	pursuant	to	this	resolution	is	€4,500,000.
    number	of	remaining	shares	to	be	delivered	after	the	four-year	acquisition	
    period	and	subject	to	the	achievement	of	specified	granting	conditions	            the	board	of	directors	did	not	use	this	authorization	in	2010.
    was	14,700	shares,	accounting	for	0.01%	of	technicolor’s	share	capital.



    4.3.5	Human	Resources	&	Sustainable	Development
    technicolor’s	human	resources	&	sustainability	organization	is	aimed	              development	goals.	they	leverage	the	company’s	global	centers	of	
    at	reinforcing	technicolor’s	strategic	priorities	and	at	contributing	to	the	      expertise	and	regional	competence	centers	to	deliver	high	quality	and	
    group’s	objectives.	In	order	to	remain	fully	aligned	with	the	group’s	different	   cost-efficient	services.
    businesses	and	to	reinforce	global	hr	leadership	capability,	hr&s	has	
                                                                                       the	global	centers	of	expertise	ensure	consistency	and	delivery	of	key	
    adopted	a	new	operating	model	in	2010.	this	model	has	three	dimensions:
                                                                                       group	hr	projects	and	provide	specialized	advice	and	expertise	across	
    ■■    stronger	partnership	with	business;                                          the	whole	organization	in	the	following	areas:
    ■■    global	centers	of	expertise;                                                 ■■   compensation	&	benefits	focusing	on	rewards,	incentive	programs,	
    ■■    regional	human	resources	competence	centers.                                      pension	schemes,	medical	care	and	other	benefits;
    the	integration	of	business	strategy	and	hr	has	been	reinforced	through	           ■■   talent	and	organization	development	focusing	on	people	develop-
    a	new	hr	business	partner	function.	hr	business	partners	work	closely	                  ment,	talent	management,	mobility,	performance	management	and	
    with	business	leaders	to	analyze	and	plan	the	evolution	of	technicolor’s	               organizational	development	practices;
    workforce	skills	and	competencies	and	ensure	they	are	in	line	with	its	            ■■   hr	processes,	metrics	and	KpIs;

    102       technIcolor	–	2010	annual	report
                                                                                  |	corporate	governance	and workforce
                                                                                                        EMPLOYEES	AND	wORkFORCE                                   4
                                                                              Contents
                                                                        ➜
                                                                                             ➜


■■   corporate	social	responsibility	(csr);                                       ■■   asia-pacific;
■■   labor	relations.                                                             ■■   americas	(north	america	and	latin	america);
■■   the	regional	hr	competence	centers	ensure	a	consistent	hr	                   ■■   emea	(europe,	middle	east	and	africa).
     approach	across	sites	and	functions	within	each	geographical	region	
                                                                                  the	head	of	hr&s,	a	member	of	technicolor’s	executive	committee,	
     and	guarantee	that	technicolor	remains	fully	compliant	with	local	
                                                                                  defines	hr&s	strategic	priorities	in	line	with	technicolor’s	strategic	plan,	
     employment	laws	and	practices.	In	order	to	maximize	services	delivery	
                                                                                  implements	and	adapts	the	hr&s	model,	identifies	organizational	needs	
     and	quality,	technicolor's	three	regions	are	regrouped	under	a	unique	
                                                                                  and	related	resources,	and	pilots	hr&s	initiatives	across	all	of	the	group’s	
     leader	and	regional	hr	centers	are	geographically	organized	as	
                                                                                  activities.
     follows:



4.3.6	Talent	and	development
In	2010,	technicolor	concentrated	people	development	initiatives	in	the	          majoR talent & develoPment PRojects
support	of	the	workforce	evolution	and	adaptation	to	its	new	strategic	
focus	and	market	context.	to	set	the	people	development	priorities	               Talent	Review
and	focus	fundamental	issues	were	reviewed	such	as	the	alignment	of	
the	group’s	values	with	its	vision	and	strategy	and	the	leadership	skills	        technicolor’s	values	were	redefined	within	the	framework	of	the	company’s	
necessary	to	meet	its	goals.                                                      new	strategic	focus	and	goals.	as	the	company	believes	that	its	talent	
                                                                                  constitutes	the	foundation	of	the	new	technicolor,	it	has	integrated	the	
as	a	consequence,	the	group	revised	the	performance	of	management	                new	values	into	the	talent	review	process	by	including	assessments	based	
system	 in	 order	 to	 better	 support	 strategies,	 business	 priorities	 and	   on	these	values	along	with	associated	behaviors	and	leadership	skills.
employee	development.	technicolor	also	revisited	several	talent	and	
development	components	such	as	performance	management,	talent	                    the	talent	review	process	was	expanded	to	enable	a	deeper	identification	
review,	succession	planning,	development	of	capabilities,	cooperation	                                                                                      	
                                                                                  of	talents	within	all	layers	in	the	organization.	In	this	new	perspective,	
and	recognition.                                                                  13	talent	review	committees	with	the	participation	of	the	ceo	and	excom	
                                                                                  representatives	were	held	in	september and	october 2010	to	identify	
■■   a	new	worldwide	employee	performance	of	the	management	system,	              high	potentials	and	Key	contributors.
     the	step	(system	for	technicolor	employee	performance)	was	
     launched.	step	is	designed	as	a	people	development	tool:	in	addition	
     to	traditional	business	objectives	evaluation,	it	includes	assessments	      Leadership	development
     based	on	company	values	and	associated	behaviors	as	well	as	a	plan	          preparing	and	aligning	future	leaders	is	crucial	to	the	success	of	the	
     to	support	employee	development.                                             refocused	businesses.	In	this	regard,	technicolor	created	a	comprehensive	
■■   the	interconnection	of	the	group’s	performance	evaluation	and	its	           development	curriculum,	designed	to	build	strategic	business	evolution	
     talent	review	processes	was	reinforced:                                      as	well	as	leadership	capabilities.	this	leadership	curriculum	includes	a	
     •■   to	address	succession	plans;                                            digital	strategies	program,	a	workshop	and	individual	coaching	session	as	
                                                                                  well	as	a	leadership	forum	led	by	senior	executives	and	the	ceo.	In	2010,	
     •■   for	risk	analysis	for	key	positions;                                    30	high	potential	employees	and	executives	were	given	opportunities	to	
     •■   to	develop	human	capital	at	all	levels	of	the	organization.             participate	in	this	leadership	curriculum.
■■   Key	capabilities	were	developed	through:
     •■   identification	and	development	of	key	functional	and	technical	         Programs	to	reinforce	people	and	performance	
          skills;                                                                 management	skills
     •■   leadership	development;
                                                                                  training	sessions	for	hr	managers	were	organized	in	paris,	london,	
     •■   programs	to	reinforce	people	and	performance	management	skills;         Indianapolis,	hollywood	and	beijing	as	part	of	the	implementation	plan	for	
     •■   a	sales	academy	integrating	sales	force	training	and	development	       the	new	step	performance	evaluation	system,	and	to	ensure	consistency	
          worldwide.                                                              across	all	divisions	and	geographies.	the	sessions	prepared	hr	managers	
■■   cooperation	between	divisions	and	functions	was	enhanced	through	            to	train	and	support	business	managers	on	step	locally.	as	a	complement	
     internal	networks:                                                           to	this	program,	an	on-line	step	tutorial	was	designed	and	made	available	
                                                                                  to	all	employees	via	technicolor’s	intranet.
     •■   creation	of	a	worldwide	line	managers	network;
     •■   women’s	forum;                                                          In	addition,	a	comprehensive	on-line	performance	management	training	
                                                                                  program	was	offered	to	managers.	the	program	covered	such	essential	
     •■   expert	network	(fellowship	program).
                                                                                  performance	issues	as	objective	setting,	monitoring	and	appraisal,	as	
■■   best	achievements	and	practices	were	encouraged	and	recognized	              well	as	material	related	to	developing	individuals	and	teams.	more	than	 	
     through:                                                                     900	managers	actively	participated,	with	more	than	2,600	hours	of	on-line	
     •■   engineering	awards;                                                     training	delivered.
     •■   patent	awards;
     •■   procurement	awards.




                                                                                                       technIcolor	–	2010	annual	report                  103
           |	corporate	governance	and workforce
4          EMPLOYEES	AND	wORkFORCE



                                                                                Contents
                                                                        ➜
                                                                                                ➜


    Technicolor	Sales	Academy                                                       ness	and	innovation.	the	line	managers	network	learning	platform	
                                                                                    delivered	nearly	4,000	hours	of	training	in	2010.
    the	 company’s	 new	 sales	 approach	 aims	 to	 develop,	 in	 particular,	
    transversal	account	management	and	winning	sales	practices.	In	support,	        site	 meetings	 are	 regularly	 organized	 on	 specific	 topics;	 nearly		
    a	unified	sales	skills	development	approach	is	deployed	through	the	            100	meetings	were	held	at	technicolor	sites	around	the	world	in	2010.	
    technicolor	 sales	 academy.  the	 2010	 training	 and	 development	            meeting	topics	included	STEP & Performance Management, Setting a
    program	focused	on	strategic	account	management,	sales	management	              Workplace for Performance	and	Leadership.	stress	management	issues	
    and	reinforcement	of	customer	relations.	during	the	first	half	of	2010,	 	      were	discussed	to	sensitize	managers	to	stress-related	issues	and	provide	
    10	groups	in	north	america	and	europe	attended	a	training	program	              them	with	stress-prevention	techniques.
    spread	over	a	three-month	period.	other	groups	are	scheduled	in	europe,	
    latin	america	and	apac,	covering	virtually	the	entire	customer-facing	
                                                                                    Fellowship	network
    sales	force	by	mid-2011.
                                                                                    an	 achievement	 network,	 the	 fellowship	 network	 brings	 together	
                                                                                    individuals	from	various	scientific	domains,	whose	expertise	is	publicly	
    Internal	awards	and	networks                                                    recognized	inside	and	outside	the	company.	the	network	is	led	by	the	
    aligned	with	the	group’s	commitment	to	expertise	recognition	and	along-         group’s	chief	scientist.	membership	in	the	fellowship	network	depends	
    side	the	traditional	patents	and	procurement	awards,	a	new	engineering	         upon	a	certain	number	of	criteria	including	significant	contribution	to	the	
    award	was	created.	this	initiative	values	and	increases	the	visibility	of	      filing	of	patents	and	members	have	responsibility	for	key	projects,	thereby	
    the	group’s	best	r&d	projects	and	practices,	encouraging	a	high	level	          contributing	to	the	group’s	expertise.	the	nominations	of	several	fellows	
    of	involvement	from	employees	and,	simultaneously,	rewarding	creative	          were	endorsed	at	an	award	ceremony	in	february 2010.
    projects	and	initiatives.
                                                                                    other	initiatives	to	reinforce	and	consolidate	the	group’s	long-term	
                                                                                    research	and	scientific	capabilities	were	continued	in	2010.	research	&	
    Line	managers	network                                                           Innovation	career	development	paths	were	implemented	and	the	nomina-
                                                                                    tion	of	distinguished,	principal	and	senior	scientists	was	achieved	through	
    the	 technicolor	 line	 management	 network,	 set	 up	 in	 2010,	 brings	       a	cooptation	model.
    together	1,500	managers	around	the	themes	of	communication,	learning	
    and	sharing.	the	line	managers	network	opened	a	new	communication	              In	order	to	enhance	integration	with	the	evolution	of	the	group’s	scien-
    channel	for	managers	thanks	to	its	exclusive,	dedicated	space	on	the	           tific	capabilities	to	protect	technicolor	Intellectual	property,	the	Ip&l	 	
    	 echnicolor	intranet.	members	benefit	from	a	learning	platform	with	
    t                                                                               organization	has	identified	the	domains	in	which	its	experts	can	be	further	
    training	modules	in	business	and	management	topics.	a	specific	focus	           equipped	with	scientific	skills	to	address	new	research	areas	in	the	medium	
    was	given	to	the	reinforcement	of	technicolor’s	values	through	a	five	step	     and	long-term	and	will	develop	initiatives	in	2011	accordingly.
    on-line	training	course	on	management	practices	to	encourage	inventive-



    4.3.7	Remuneration	policy
    total	remuneration	is	considered	a	key	element	of	the	human	resources	          ■■   equitable	 approach:	 technicolor	 believes	 that	 it	 remunerates	
    policy	for	the	technicolor	group.	this	remuneration	policy	is	tailored	to	           its	 employees	 on	 an	 equitable	 basis	 in	 each	 of	 its	 geographical		
    recognize	and	acknowledge,	on	a	fair	basis,	an	employee’s	contribution	              locations	in	line	with	local	standards.	the	remuneration	policy	is	
    to	the	success	of	the	group.                                                         based	according	to	the	employee’s	level	of	responsibility,	experience	
                                                                                         and	contribution	to	the	group’s	success.	with	respect	to	company	
    technicolor	continues	to	incorporate	a	classification	system	according	     	
                                                                                         engineers	and	managers,	the	group’s	“broadbanding	policy”	allows	
    to	grades	and	bands	that	ultimately	reinforces	the	link	between	contribution	
                                                                                         for	consistent	assessment	of	responsibility	and	levels	of	expertise	
    and	 remuneration	 (the	 so-called	 towers	 watson	 methodology).	          	
                                                                                         on	an	international	basis.	In	addition,	the	remuneration	policy	of	
    classification	of	all	levels	of	employees	allows	the	group	to	provide	
                                                                                                                                                                   	
                                                                                         top	 executives	 is	 centralized	 to	 facilitate	 consistency	 of	 various	
    clear	job	definitions	and	assess	competitive	wages	according	to	peers	
                                                                                         remuneration	components;	and
    and	market.	market	benchmarks	are	assessed	through	salary	surveys	
    where	matching	between	survey	data	and	technicolor	positions	allows	            ■■   business	 and	 skills	 focus:	 the	 remuneration	 of	 professionals,	
    for	relevant	compensation	positioning	in	relative	markets.	this	provides	            engineers	 and	 managers	 is	 a	 sound,	 market-driven	 policy	 and	
    technicolor	 with	 a	 sustainable,	 objective	 and	 equitable	 means	 of	   	        ultimately	 administered	 to	 stimulate	 business	 performance.	 a	
    remunerating	employees.                                                              significant	part	of	the	total	remuneration	package	is	composed	of	
                                                                                         variable	elements	that	drive	a	performance	culture	and	support	the	
    the	total	remuneration	policy	is	structured	around	flexible	and	competitive	         company’s	strategy.	these	variable	elements	are	meant	to	stimulate,	
    fixed	and	variable	compensation	elements	driven	by	market	best	practices	            recognize	and	reward	not	only	individual	contribution	but	also	and	in	
    and	the	group’s	objectives	for	long-term	value	creation	appropriate	to	              particular,	strong	group	performance.
    circumstances	and	goals:
                                                                                    In	accordance	with	the	principles	and	rules	established	by	the	group,	each	
    ■■   competitiveness:	appropriate	market	benchmarks	of	total	compensa-          group	entity	is	entitled	to	recognize	the	potential	and	encourage	the	
         tion	against	peer	companies	allows	technicolor	to	offer	competitive	       development	of	its	employees	by	means	of	various	remuneration	factors	
         compensation	packages	to	employees	in	accordance	with	competitive	         defined	by	the	group.
         pressures	in	the	marketplace.	this	ensures	that	technicolor	continues	
         to	attract	and	retain	high	potential	and	key	contributors	for	which	
         technicolor	competes	in	an	international	market	place;


    104      technIcolor	–	2010	annual	report
                                                                                    |	corporate	governance	and workforce
                                                                                                        EMPLOYEES	AND	wORkFORCE                                      4
                                                                                Contents
                                                                        ➜
                                                                                               ➜



4.3.8	Labor	relations
labor	relations	with	technicolor	employees	are	the	responsibility	of	the	           do	not	allow	this	type	of	statistic	to	be	published).	In	2010,	technicolor	
managers	of	each	country	with	the	support	of	human	resources.                       entered	 into	 two	 collective	 bargaining	 agreements	 with	 its	 german	
                                                                                    employees;	11	such	agreements	in	france;	two	such	agreements	in	Italy,	
with	respect	to	its	european	operations,	technicolor	entered	into	a	
                                                                                    two	in	spain	and	one	agreement	in	the	united	Kingdom.
labor	agreement	with	a	european	council	of	employee	representatives	
(the	“european	council”)	confirming	the	group’s	labor	practices.	on	       	        In	canada,	in	2010,	we	entered	into	four	collective	bargaining	agreements.	
may 10,	2006,	this	agreement	was	renewed	unanimously	by	ten	union	                  approximately	21%	of	the	group’s	canadian	employees	are	unionized.
organizations	 representing	 the	 european	 companies	 in	 the	 group.	
                                                                                    In	the	united	states,	in	2010,	approximately	8.5%	of	the	group’s	employees	
                                                                           	
this	 council,	 which	 meets	 several	 times	 each	 year,	 comprises	 union	
                                                                                    were	unionized	and	were	covered	by	the	collective	bargaining	agreements	
representatives	or	members	of	the	works	councils	from	france,	germany,	
                                                                                    negotiated	with	the	national	and/or	local	unions.	these	agreements,	with	
belgium,	the	united	Kingdom,	the	netherlands,	poland	and	switzerland.	
                                                                                    an	average	duration	of	three	years,	address	salaries,	employment	benefits,	
technicolor’s	european	council	is	a	supranational	body,	the	purpose	
                                                                                    and	the	working	conditions	and	organization.	In	2010,	technicolor	entered	
of	which	is	to	address	topics	of	a	transnational	nature.	the	european	
                                                                                    into	five	collective	bargaining	agreements.
council	is	informed	of	technicolor’s	european	operations	in	respect	of	
personnel,	finance,	production,	sales,	and	research	and	development,	               In	mexico,	employment	agreements	are	renegotiated	every	year,	and	three	
and	their	impacts	upon	employment	and	working	conditions.	It	is	also	               collective	agreements	were	signed	in	2010.	the	proportion	of	employees	
informed	of	major	structural,	industrial	and	commercial	changes	as	well	as	         belonging	to	a	union	is	55%.	In	brazil,	where	less	than	1%	of	employees	
organizational	transformations	within	the	group.	It	met	11	times	in	2010.           are	unionized,	one	such	agreement	was	signed.
In	accordance	with	applicable	law	in	the	european	union,	technicolor’s	                                                                                      	
                                                                                    In	 australia,	 59%	 of	 employees	 belong	to	a	 union	 and	no	collective	
managers	of	each	european	country	meet	annually	with	labor	organiza-                agreement	was	signed	in	2010.
tions	to	discuss	remuneration	and	working	conditions.
                                                                                    In	singapore	and	in	India,	no	agreement	was	signed	and	none	of	the	
In	accordance	with	domestic	laws,	data	regarding	the	level	of	unionization	         group’s	employees	are	unionized.
is	not	available	in	most	of	european	countries	(the	laws	in	these	countries	



4.3.9	Global	compact	progress
technicolor	has	been	a	member	of	the	united	nations	global	compact	                 interests	of	all	its	stakeholders	as	well	as	the	united	nations	founding	
since	2003.	the	global	compact	is	a	united	nations	initiative	which	                principles	and	each	year	submits	a	communication	on	progress	as	part	
challenges	member	companies	to	align	their	operations	and	strategies	               of	its	support	and	engagement	in	favor	of	the	global	compact.	the	most	
around	10	universally	accepted	principles	in	the	areas	of	human	rights,	            recent	public	communication	on	progress	is	available	on	the	group’s	
labor	 standards,	 environmental	 practices	 and	 anti-corruption	 and	 to	         website	at	the	following	location:	http://www.technicolor.com/uploads/
develop	best	practices	in	these	fields.	technicolor	seeks	to	comply	with	the	       associated_materials/technicolor_ungc_2009_cop.pdf.
highest	ethical	standards,	to	take	into	account	the	legitimate	and	ethical	



4.3.10	 Health	and	safety	management
health and safety                                                                   technicolor	understands	that	each	employee	has	the	ability	to	impact	its	
                                                                                    eh&s	efforts	and	performance,	thus	it	is	critical	that	they	are	provided	with	
an	effective	occupational	health	and	safety	program,	as	defined	by	             	   the	appropriate	tools,	resources	and	knowledge.	eh&s	training	programs	
technicolor,	 looks	 beyond	 specific	 requirements	 of	 law	 to	 address	          develop	awareness	and	skills	that	allow	employees	and	contractors	to	
all	 hazards.	the	 aim	 of	 the	occupational	health	and	 safety	 program	           perform	their	jobs	in	such	a	manner	that	will	not	only	ensure	compliance	
is	 to	 prevent	 injuries	 and	 illnesses,	 whether	 or	 not	 compliance	 is	 at	   with	appropriate	laws,	regulations	and	policies,	but	also	so	that	they	may	
issue.	the	group	believes	that	the	necessary	elements	of	an	effective	              prevent	accidents	which	may	lead	to	injuries	or	harm	to	the	environment.	
program	include,	at	a	minimum,	provisions	for	systematic	identification,	       	   training	programs	are	evaluated	during	the	corporate	audit	process,	and	
evaluation,	 and	 prevention	 or	 control	 of	 general	 workplace	 hazards,	        are	a	core	requirement	in	the	eh&s	performance	measurement	process.
specific	job	hazards,	and	potential	hazards	that	may	arise	from	foreseeable	
conditions.
                                                                                    EHS	training
technicolor’s	health	and	safety	programs	are	designed	to	identify	potential	
risks	and	take	appropriate	prevention	and	severity	reduction	measures.	             In	 2010,	 53,837	 hours	 of	 documented	 training	 on	 a	 wide	 variety	 of	
accident	and	injury	prevention	programs	include	active	local	safety	                environmental	and	safety	compliance	and	protection,	injury	prevention,	
committees	and	specialized	task	forces,	job	safety	analysis,	written	plans	         emergency	preparation	and	response,	and	occupational	health	topics	
and	procedures,	employee	training,	monitoring	for	potential	chemical,	              were	provided	to	employees	and	contractors	throughout	technicolor.
physical,	biological,	and	ergonomic	risks,	inspections	and	audits,	incident	
investigations	and	the	implementation	of	appropriate	corrective	actions.


                                                                                                      technIcolor	–	2010	annual	report                      105
            |	corporate	governance	and workforce
4           EMPLOYEES	AND	wORkFORCE



                                                                                Contents
                                                                      ➜
                                                                                              ➜


    Community	outreach	and	employee	initiatives                                    from	1.87	in	2009	to	1.37	in	2010.	the	work-related	lost	workday	incident	
                                                                                   rate	(number	of	recordable	lost	workday	injuries	per	200,000	hours	
    technicolor	sites	facilitated	a	variety	of	community	outreach	and	employee	    worked)	decreased	similarly,	from	0.64	in	2009	to	0.48	in	2010.
    protection	initiatives	in	2010,	including	medical	exams,	vaccinations,	flu	
    shots,	blood	drives,	wellness	programs,	ergonomic	evaluations,	first	aid	      no	longer	a	company	characterized	by	very	large,	highly	industrialized	
    training,	holiday	adoptions,	food,	clothing,	eyewear	collections	and	other	    manufacturing	sites	with	multiple	full-time	eh&s	staff	professionals,	
    cash,	product,	and	time	donations.                                             today’s	technicolor	comprises	a	network	of	leaner,	quick-response	services	
                                                                                   and	solutions	operations	that	may	not	have	such	eh&s	staff	on	site.	thus,	
                                                                                   the	group	is	designating	highly	attentive	and	skilled	key	business	owners	
    Safety	performance                                                             from	well-established	and	high-performing	sites	to	lead	its	injury	reduction	
    what	follows	are	results	of	key	safety	metrics	that	were	tracked	in	2010:      initiative	and	workplace	safety	programs.

    In	2010,	technicolor	experienced	a	21%	decrease	in	work	related	injury	
    incident	rate	(number	of	recordable	injuries	per	200,000	hours	worked)	


    work	Related	Incident	Rates	for	200,000	hours	worked
                                                                                                        Incident                       Lost	workday
                                                                                                   Injuries            Rate          Injuries   Incident	rate
     2008                                                                                              466              2.12             138             0.63
     2009                                                                                               374             1.87             128             0.64
     2010                                                                                               291             1.37             102             0.48




    2010	Incident	and	Lost	workday	Incident	Rates	for	200,000	hours	worked.
                                                                                                        Incident                       Lost	workday
                                                                                                   Injuries            Rate          Injuries   Incident	rate
     digital	delivery                                                                                    17             0.49               16            0.46
     entertainment	services                                                                             253             1.64              76             0.49
     technology                                                                                           0                0               0                0
     all	other                                                                                           27             0.99              10             0.47




    106      technIcolor	–	2010	annual	report
                                                                            |	corporate	governance	and workforce
                                                                                                      APPENDIx	TO	CHAPTER	4                         4
                                                                        Contents
                                                                 ➜
                                                                                       ➜



appendIx	to	chapter	4

Directorships	held	during	the	past	five	years	by	Directors	whose	term	
of	office	within	the	Company	has	ended
Éric	Bourdais	de	Charbonnière	–	Director	until	                             board	member	of	havas, s.a	chabalier	&	associates	press	agency;
February 17,	2010                                                           chairman	of	the	sas	le	monde	presse;
current Directorships:                                                      chairman	and	chief	executive	officer	of	the	sas	anna	rose	production.
■■   In	france:
                                                                            ■■   outside	france:
chairman	of	the	supervisory	board	of	michelin;
                                                                            board	member	of	Kudelski.
member	of	the	supervisory	board	of	oddo	and	cie;
                                                                            Past Directorships held during the past five years:
board	member	of	associés	en	finance.
                                                                            chairman	of	the	sas	lescure	farrugia	associés.
■■   outside	france:
none                                                                        Paul	Murray	–	Director	until	February 17,	2010
Past Directorships held during the past five years:                         current Directorships:
member	of	supervisory	board	of	Ing	group.                                   ■■   outside	france:
                                                                            board	member	of	tangent	communications	plc,	Knowledge	peers	plc.	
François	de	Carbonnel	–	Director	until	February 17,	2010                    and	royal	mail	holdings	plc.

current Directorships:                                                      Past Directorships held during the past five years:
■■   In	france:                                                             partner	of	tangent	llp;
board	member	of	pages	Jaunes,	cofipar s.a.,	société	du	parc	des	aulnais,	   board	member	of	taylor	nelson	sofres	plc.
and	groupe	foncier	d’Île-de-france	(gfIsa).
■■   outside	france:                                                        Marcel	Roulet	–	Director	from	February	1999	
board	member	of	amgen Inc.	(usa),	f	de	c	services ltd,	quilvest s.a	        to	October	2008	and	advisor	(“censeur”)	from
(lux),	ecofin	global	utilities	hedge	fund ltd,	ecofin	special	situation	    October	2008	to	February 17, 2010
utilities	fund ltd,	ecofin	north	america	utilities	hedge	funds ltd,	and	
nixxis.                                                                     current Directorships:
                                                                            ■■   In	france:
Past Directorships held during the past five years:                         board	member	of	france	telecom	and	hsbc	france;
chairman	of	technicolor’s	board	of	directors	from	april 9,	2008	to	
april 27,	2009.                                                             member	of	the	supervisory	board	of	eurazeo;
                                                                            chairman	of	the	supervisory	board	of	gimar	finance	sca;
Pierre	Lescure	–	Director	until	February 17,	2010                           permanent	representative	of	tsa	to	the	board	of	directors	of	thalès.
current Directorships:
                                                                            Past Directorships held during the past five years:
■■   In	france:
                                                                            board	member	of	technicolor	until	october 12,	2008.
member	of	the	supervisory	board	of	lagardère	sca,	le	monde	and	la	
société	Éditrice	du	monde s.a.;




                                                                                              technIcolor	–	2010	annual	report               107
          |	corporate	governance	and workforce
4
                                                 Contents
                                             ➜
                                                            ➜




    108   technIcolor	–	2010	annual	report
       5
                         Shareholders and Listing
                         Information
5.1	   share	capItal	                                                    110       5.2	   related	party	transactIons	                            115
       5.1.1	 Distribution	of	share	capital	and	voting	rights	               111
                                                                                   5.3	   lIstIng	InformatIon	                                   115
       5.1.2	 Purchases	of	equity	securities	by	the	issuer	and affiliated	
                                                                                          5.3.1	 Market	for	the	Company’s	securities	            115
              purchasers	                                                    112
                                                                                          5.3.2	 Listing	on	Euronext	Paris	                      117
       5.1.3	 Individuals	or	entities	holding	control	of the Company	        113
                                                                                          5.3.3	 Listing	on	the	New	York	Stock	Exchange	         118
       5.1.4	 Shareholders’	agreements	                                      113
       5.1.5	 Modifications	in	the	distribution	of	share	capital	over	the	
              past	three	years	                                              113
       5.1.6	 Potential	modifications	to the	Company's	share	capital	        113
       5.1.7	 Convertible/Exchangeable	bonds/Share	purchase	
              warrants	                                                      114
       5.1.8	 Dividend	policy	                                               115




                                                                                                 technIcolor	–	2010	annual	report          109
           |	shareholders	and listing	Information
5          SHARE	CAPITAL



                                                                               Contents
                                                                       ➜
                                                                                               ➜



    5.1	 share	capItal
    as	of	december 31,	2010,	the	share	capital	was	composed	of	174,846,625	        these	share	capital	transactions,	please	refer	to	chapter 2:	“Information	
    shares	with	a	nominal	value	of	€1.00,	fully	paid-up	(IsIn	fr0010918292).	      of	the	company”,	section 2.1.2:	“historical	background”	of	this	annual	
    there	 remained	 40,691,470	 old	 shares	 (pre-reverse	 split,	 IsIn	          report.
    fr0000184533)	with	a	nominal	value	of	€0.10	(see	“reverse	share	split”	
    below).	at	the	same	date,	the	number	of	american	depositary	shares	
    (“ads”)	in	circulation	was	627,374	(for	more	information	about	ads,	           ReveRse shaRe sPlit
    please	refer	to	paragraph	5.3.3	below).                                        moreover,	the	board	of	directors	on	June 17,	2010,	acting	within	the	scope	
    during	the	2010	financial	year,	the	company	undertook	the	following	           of	the	authority	delegated	to	it	by	the	combined	general	shareholders’	
    transactions:                                                                  meeting	held	on	January 27,	2010,	decided	to	proceed	with	a	reverse	share	
                                                                                   split	of	the	company’s	shares	on	July 15,	2010,	such	that	10	shares	with	
                                                                                   a	nominal	value	of	€0.10	each	were	exchanged	for	one	new	share	with	a	
    Reduction of shaRe caPital                                                     nominal	value	of	€1.00.	at	this	date,	the	share	capital	of	the	company	
                                                                                   was	composed	of	79,649,881	shares	with	a	nominal	value	of	€1.00	each.
    the	combined	general	shareholders’	meeting	of	 January  27,  2010	
    approved	 the	 reduction	 of	 the	 share	 capital	 in	 the	 amount	 of	        as	 of	 march  1,	 2011,	 there	 remained	 8,642,950	 old	 shares	 of	 the	
    €985,098,602.20	by	reducing	the	nominal	value	of	the	share	capital	from	       company.	these	shares	can	be	presented	in	exchange	for	new	shares	
    €3.75	to	€0.10.	the	share	capital	was	reduced	from	€1,012,087,605	to	          (post-reverse	split)	until	the	expiration	of	the	two-year	period	from	the	
    €26,989,002.80	(composed	of	269,890,028 shares	with	a	nominal	value	           date	of	the	reverse	split	transaction,	i.e.	until	July 15,	2012.	as	mentioned	
    of	€0.10).	the	amounts	resulting	from	the	share	capital	decrease	were	         in	the	press	releases	published	by	the	company	on	June 28,	2010	and	          	
    allocated	to	prior	losses	posted	to	the	"retained	earnings"	account,	          July 3,	2011,	upon	expiry	of	this	two-year	period,	the	new	shares	which	
    thereby	allowing	for	a	partial	elimination	of	losses	in	such	account.          remain	 unclaimed	 by	 the	 holders	 will	 be	 sold	 on	 the	 market	 by	 the	
                                                                                   company	and	the	net	proceeds	of	the	sale	will	be	held	for	10	years	in	a	
                                                                                   blocked	account	opened	by	a	financial	institution.	for	information	about	
    shaRe caPital incRease and issuance of nRs                                     the	voting	rights	attached	to	the	old	shares	and	the	rights	to	dividends,	
    and dPn                                                                        refer	to	chapter	6:	“additional	information”,	section 6.1.3:	“voting	rights”.

    In	connection with	its	debt	restructuring,	the	board	of	directors	imple-
    mented	the	resolutions	approved	by	the	combined	general	shareholders’	         RedemPtion of tRanche i of the nRs and
    meeting	held	on	January 27,	2010.	In	the	context	of	the	Sauvegarde	plan	
                                                                                   of the dPn
    approved	by	the	nanterre	commercial	court	on	february	17,	2010,	
    the	company	implemented	a	capital	increase	through	the	issuance	of	            on	december 31,	2010,	in	accordance	with	its	Sauvegarde	plan,	the	
    526,608,781	new	shares	of	the	company	on	may 26,	2010.	at	this	date,	the	      company	 proceeded	 with	 the	 redemption	 of	 a	 total	 of	 313,890,656	
    share	capital	of	the	company	was	composed	of	796,498,809	shares,	with	a	       nrs	I	through	the	issuance	of	45,196,744	new	shares	of	the	company,	as	
    nominal	value	of	€0.10	each.	the	company	also	issued	638,438,133	notes	        well	as	to	the	redemption	of	the	entirety	of	the	dpn	issued	on	may 26,	
    redeemable	in	shares	(“nrs”)	and	2,902,074	disposal	proceeds	notes	            2010	through	the	issuance	of	50	million	new	shares	of	the	company	and	
    (“dpn”)	redeemable	in	cash	from	the	proceeds	of	the	net	sale	price	of	         payment	of	€52 million	in	cash.
    certain	non-strategic	activities	of	technicolor.	for	more	information	about	




    110      technIcolor	–	2010	annual	report
                                                                                        |	shareholders	and listing	Information
                                                                                                                                      SHARE	CAPITAL                        5
                                                                                 Contents
                                                                         ➜
                                                                                                   ➜



5.1.1	 Distribution	of	share	capital	and	voting	rights
the	table	below	shows	the	company’s	shareholding	structure	over	the	past	three years:

                                      at December 31, 2010(1)                        At	December 31,	2009                           At	December 31,	2008
                                                       %	of	         %	of	                            %	of	         %	of                             %	of	         %	of
                                   Number	of	        shares	      voting	        Number	of	         shares	      voting	        Number	of	         shares	      voting	
 Shareholders                      shares	held         held        rights        shares	held          held        rights        shares	held          held        rights
 public(2)                          173,109,152      99,01%       99,36%          252,905,163      93.72%       95.90%          253,982,972        94.11%       95.93%
 employees	and	former	
 employees(3)                           611,563	      0.35%        0.35%            5,542,838       2.05%         2.10%            5,528,274       2.05%         2.08%
 tsa	(french	
 government)(4)                       508,205         0.29%        0.29%           5,264,950         1.95%       2.00%            5,264,950         1.95%        1.99%
 technicolor   (4)
                                       617,705        0.35%              -           6,177,077       2.28%             -            5,113,832       1.89%             -
 ToTal                        174,846,625           100%         100%        269,890,028           100%         100%       269,890,028            100%         100%

 (1) Information provided on the basis of the number of new shares resulting from the reverse share split. As of December 31, 2010, there remained
     40,691,470 old shares (pre-reverse share split) in circulation. One (1) voting right is attached to each old share and 10 (ten) voting rights are attached to
     each of the 174,846,625 new shares.
 (2) Estimate obtained by subtraction.
 (3) Estimate obtained on a quarterly basis.
 (4) Shares in pure nominative form.



shaRe owneRshiP thReshold notified to the comPany in 2010
according	to	article l. 233-13	of	the	french	commercial	code	and	to	the	company’s	knowledge,	the	following	share	ownership	thresholds	were	notified	
to	the	company	or	the	amf	by	the	following	entities	for	the	account	of	their	respective	customers	or	for	their	own	account	in	2010:

                                                        Date	of	crossing	             Share	ownership	                                 Percentage	
                                                        the	share	ownership	          threshold	upwards	or	            Threshold	      of	the	share	        Number	of	
 Shareholder                                            threshold                     downwards                          crossed       capital	held         shares	held
 société	générale                                       december 14,	2010             downwards                             5.00%               4.74%         3,771,890
 société	générale                                       december 2,	2010              upwards                               5.00%               5.14%        4,097,065
 société	générale                                       october	27,	2010              downwards                             5.00%               4.99%         3,975,179
 société	générale                                       september	21,	2010            upwards                               5.00%               5.13%        4,085,580
 société	générale                                       september	2,	2010             downwards                             5.00%               4.97%         3,956,842
 société	générale                                       august	24,	2010               upwards                               5.00%               5.01%         3,994,186
 société	générale                                       July 30,	2010                 downwards                             5.00%               4.98%        3,966,404
 société	générale                                       July 20,	2010                 upwards                               5.00%               5.08%         4,047,129
 rbs                                                    July 9,	2010                  downwards                             5.00%               2.58%        20,584,291
 société	générale                                       July 8,	2010                  downwards                             5.00%               4.96%        39,471,788
 société	générale                                       July 7,	2010                  upwards                               5.00%               5.11%        40,667,739
 goldman	sachs	Int.                                     may 31,	2010                  downwards                             5.00%               4.34%        34,594,341
 goldman	sachs	Int.                                     may 26,	2010                  upwards                               5.00%               6.02%        47,949,320
 rbs                                                    may 26,	2010                  upwards                               5.00%               5.43%        43,234,140
 groupe	société	générale                                april	29,	2010                downwards                             5.00%               4.57%        12,341,775




                                                                                                          technIcolor	–	2010	annual	report                           111
           |	shareholders	and listing	Information
5          SHARE	CAPITAL



                                                                                    Contents
                                                                            ➜
                                                                                                   ➜



    situation as of decembeR 31, 2010                                                   otheR infoRmation RegaRding the
    according	to	article l. 233-13	of	the	french	commercial	code	and	to	the	            comPany’s shaReholdeRs
    company’s	knowledge,	none	of	the	shareholders	of	the	company	holds	
                                                                                        to	the	company’s	knowledge,	the	members	of	the	board	of	directors	
    more	than	5%	of	its	share	capital	and	voting	rights	for	the	account	of	
                                                                                        and	the	executive	committee	hold	less	than	1%	of	the	share	capital	or	
    their	respective	customers	or	for	their	own	account	(which	include	shares	
                                                                                        voting	rights	of	the	company	(for	more	information	about	the	board	of	
    without	voting	rights	according	to	article 223-11	of	the	general	regulation	
                                                                                        directors’	shareholding,	please	refer	to	chapter 4:	“corporate	governance	
    of	the	Autorité des marchés financiers	(“amf”)	as	of	december 31,	2010.
                                                                                        and	workforce”,	section 4.1.3.7:	“directors	shareholdings	in	the	company’s	
                                                                                        registered	capital”	of	this	annual	report).
    situation as of maRch 1, 2011                                                       the	main	shareholders	of	the	company	do	not	hold	voting	rights	that	
    the	royal	bank	of	scotland	group	plc.	notified	the	company	that	it	held,	           are	different	from	those	of	other	shareholders.
    indirectly	through	its	affiliates,	11.04%	of	the	share	capital	and	voting	rights	
    of	the	company	as	of	february 8,	2011.




    5.1.2	 Purchases	of	equity	securities	by	the	issuer	and affiliated	
           purchasers
    the	following	paragraphs	include	information	required	in	accordance	with	           on	may 22,	2008	expired	on	november 21,	2009.	the	board	of	directors	
    article l. 225-211	of	the	french	commercial	code.                                   on	april 27, 2009	decided	not	to	propose	the	renewal	of	this	authorization	
                                                                                        to	the	annual	general	shareholders’	meeting	held	on	June 16,	2009.	

    shaRe RePuRchase PRogRam                                                            at	december 31,	2010,	the	company	held	617,705	shares	representing	
                                                                                        around	0.35%	of	the	share	capital,	for	a	gross	book	value	of	€100,289,485.71	
    as	of	the	date	hereof,	no	share	repurchase	program	is	in	force.	the	share	          and	a	nominal	value	of	€617,705.
    repurchase	program	approved	at	the	annual	shareholder’s	meeting	held	

    shaRes PuRchased by technicoloR and allocation of tReasuRy shaRes
    as of decembeR 31, 2010

     percentage	of	share	capital	directly	or	indirectly	owned                                                                                               0.35%
     number	of	shares	directly	or	indirectly	owned(1)                                                                                                      617,705
     number	of	shares	cancelled	over	the	last	24 months(1)                                                                                                       0
     book	value	of	shares	owned	(in euros)                                                                                                          100,289,485.71
     fair	market	value	of	shares	owned(2)	(in euros)                                                                                                  2,195	941.275

     (1) Last 24 months preceding December 31, 2010.
     (2) Based on a quoted market price of €3.55 per share on December 31, 2010.

    the	617,705 shares	held	by	the	company	as	of	december 31,	2010	were	                “stock	option	plans	and	free	share	plans/redeemable	share	subscription	
    allocated	to	the	objective	of	employee	option	programs	or	other	alloca-             or	purchase	warrants	(bsaar)”	of	this	annual	report).	In	June 2011,	the	
    tions	of	shares	to	employees	and	officers	of	the	group.                             company	will	deliver	two	shares	per	eligible	employee	pursuant	to	the	
                                                                                        free	share	plan	mentioned	above.	the	number	of	shares	per	employee	
    In	June 2009,	the	company	delivered	142,820 (14,282	shares	post	reverse	
                                                                                        to	be	delivered	was	adjusted	following	the	reverse	share	split	implemented	
    split)	shares	to	employees	eligible	to	participate	in	the	free	share	plan	
                                                                                        on	July 15,	2010	(see	section 5.1:	“share	capital”	above).
    approved	in	June 2007	(for	more	information	about	this	plan,	please	
    refer	to	chapter 4:	“corporate	governance	and	workforce”,	section 4.3.4:	




    112      technIcolor	–	2010	annual	report
                                                                                 |	shareholders	and listing	Information
                                                                                                                            SHARE	CAPITAL                       5
                                                                            Contents
                                                                    ➜
                                                                                            ➜



5.1.3	 Individuals	or	entities	holding	control	of the Company
none.



5.1.4	 Shareholders’	agreements
to	the	company’s	knowledge,	there	are	no	shareholders’	agreements	among	any	of	its	shareholders.



5.1.5	 Modifications	in	the	distribution	of	share	capital	over	the	past	
       three	years
in 2008 and 2009                                                                in 2010
there	were	no	significant	modifications	in	the	distribution	of	technicolor’s	   In	2010,	the	implementation	of	the	company’s	Sauvegarde	plan	resulted	in	
share	capital	in	2008.                                                          the	conversion	of	part	of	the	financial	debt	of	the	company	into	securities	
                                                                                issued	by	the	company	(for	more	information	about	these	share	capital	
the	distribution	of	the	share	capital	changed	in	2009	due	to	the decrease	
                                                                                transactions,	see	chapter 2:	“Information	on	the	company”,	section 2.1.2:	
in	the	participation	of	several	institutional	shareholders	in	technicolor’s	
                                                                                “historical	background”	of	this	annual	report).	upon	completion	of	these	
share	capital.	thus,	the	portion	of	the	share	capital	held	by	retail	share-
                                                                                share	capital	transactions,	the	company	estimates	that	the	portion	of	
holders	grew	from	around	38%	as	of	april	30,	2009	to	around	54%	as	of	
                                                                                the	share	capital	held	by	retail	shareholders	decreased	below	50%	as	of	
december 31,	2009.
                                                                                January 31,	2011.
                                                                                holdings	of	the	institutional	shareholders	in	the	company’s	share	capital	
                                                                                are	noted	above	under	section 5.1.1: “distribution	of	share	capital	and	
                                                                                voting	rights”	of	this	chapter.



5.1.6	 Potential	modifications	to the	Company's	share	capital
as	of	december 31,	2010,	the	company's	share	capital	may	be	further	            ■■   98,401	stock	options	granted	to	employees	and	directors	as	resolved	
increased	as	described	below:                                                        by	 the	 board	 of	 directors	 on	 december  14,  2007	 pursuant	 to	  	
                                                                                                                                                            	
                                                                                     plan	 7	 (for	 more	 information	 about	 this	 plan,	 please	 refer	 to	
■■   32,479	 stock	 options	 granted	 to	 employees	 and	 directors	 as	
                                                                                     chapter 4:	“corporate	governance	and	workforce”,	section 4.3.4:	
     resolved	by	the	board	of	directors	on	october 12, 2001	pursuant	
                                                                                     “stock	option	plans	and	free	share	plans/redeemable	share	subscrip-
                                                                         	
     to	plan	2	(for	more	information	about	this	plan,	please	refer	to	the	
                                                                                     tion	or	purchase	warrants”);
     chapter 4:	“corporate	governance	and	workforce”,	section 4.3.4:	
     “stock	 option	 plans	 and	 free	 share	 plans/ redeemable	 share	         ■■   1,144,490	 stock	 options	 granted	 to	 employees	 and	 directors	
     subscription	or	purchase	warrants”);                                            as	resolved	by	the	board	of	directors	on	June 17, 2010	pursuant	
                                                                                                                                                            	
                                                                                     to	 mIp-sp1	 (for	 more	 information	 about	 this	 plan,	 please	 refer	
■■   464,103	stock	options	granted	to	employees	and	directors	as	resolved	
                                                                                     to	 chapter  4:	 “corporate	 governance	 and	 workforce”,	             	
     by	 the	 board	 of	 directors	 on	 september  22,	 2004	 pursuant	 to	 	
                                                                                     section 4.3.4:	“stock	option	plans	and	free	share	plans/redeemable	
                                                                            	
     plan	 3	 (for	 more	 information	 about	 this	 plan,	 please	 refer	 to	
                                                                                     share	subscription	or	purchase	warrants”).
     chapter 4:	“corporate	governance	and	workforce”,	section 4.3.4:	
     “stock	option	plans	and	free	share	plans/redeemable	share	subscrip-        If	all	the	outstanding	stock	options	issued	under	the	above	stock	option	
     tion	or	purchase	warrants”);                                               plans	were	to	be	exercised	and	new	shares	delivered,	the	company’s	
■■   172,284	stock	options	granted	to	employees	and	directors	as	resolved	      share	capital	would	increase	to	1,911,757	shares,	or	1.09%	compared	to	
     by	 the	 board	 of	 directors	 on	 september  21,	 2006	 pursuant	 to	 	   the	number	of	outstanding	shares	as	of	december 31,	2010.
                                                                            	
     plan	 6	 (for	 more	 information	 about	 this	 plan,	 please	 refer	 to	   for	more	information	about	the	securities	issued	by	the	company	which	
     chapter 4:	“corporate	governance	and	workforce”,	section 4.3.4:	           give	access	to	its	share	capital,	please	refer	to	section 5.1.7	“convertible/
     “stock	 option	 plans	 and	 free	 share	 plans/ redeemable	 share	     	   exchangeable	bonds/share	purchase	warrants”	of	this	chapter.
     subscription	or	purchase	warrants”);	and




                                                                                                  technIcolor	–	2010	annual	report                      113
               |	shareholders	and listing	Information
5              SHARE	CAPITAL



                                                                                 Contents
                                                                         ➜
                                                                                                  ➜



    5.1.7	 Convertible/Exchangeable	bonds/Share	purchase	warrants
    In	accordance	with	the	approval	(visa)	of	the	prospectus	of	the	company	         on	december 31,	2010,	the	company	proceeded	with	the	redemption of:
    by	the	amf	on	april	27,	2010	under	n°10-107	and	dated	may 26,	2010	
                                                                                     ■■   a	total	of	313,890,656	nrs	I,	through	the	issuance	of	45,196,744	new	
    (prospectus),	the	company	proceeded	with	the	issuance	of	the	following	
                                                                                          shares	of	the	company;	as	of	the	date	hereof,	5,328,181	nrs	I	remain	
    securities:
                                                                                          in	circulation	following	a	request	for	deferred	redemption	by	their	
    ■■    638,438,133	notes	redeemable	in	shares	(“nrs”)	allocated	to	its	                holders	and	will	be	redeemed	in	ordinary	shares	of	the	company	on	
          senior	creditors	for	a	total	amount	of	€638,447,918.26.	the	nrs	were	           december 31,	2011;
          divided	into	three	tranches:                                               ■■   the	entirety	of	the	dpn.	this	security	therefore	is	no	longer	in	
          •■   319,218,837	 nrs	 I,	 redeemable	 in	 ordinary	 shares	 of	 the	           circulation.
               company	on	december 31,	2010	for	a	nominal	value	per	nrs	of	   	      In	application	of	paragraph	4.2.10.3	of	the	prospectus,	the	nrs	issued	
               €1.00,	u.s.$1.30	or	£0.91;                                            on	may 26,	2010	were	adjusted	as	follows	in	connection with	the	reverse	
          •■   200,069,100	 nrs	 II,	 redeemable	 in	 ordinary	 shares	 of	 the	     share	split:
               company	on	december 31,	2011	for	a	nominal	value	per	nrs	of	
                                                                                     ■■   ora	I
               €1.00,	u.s.$1.30	or	£0.91;
                                                                                          •■   new	redemption	ratio:	0.131,
          •■   119,150,196	nrs	IIc,	redeemable	in	ordinary	shares	of	the	company	
               on	december 31,	2011,	or	in	cash	at	the	option	of	the	company	with	        •■   new	Interest	payment	ratio	0.013;
               a	nominal	value	per	nrs	of	€1.00,	u.s.$1.30,	or	£0.91;                ■■   ora	II
    ■■    issuance	of	2,902,074	disposal	proceeds	notes	(“dpn”)	redeemable	               •■   new	redemption	ratio:	0.131,
          in	cash	or	in	ordinary	shares,	from	the	net	disposals	proceeds	of	the	          •■   new	Interest	payment	ratio:	0.028;
          sale	of	certain	non-strategic	activities	of	technicolor.	the	dpn	were	
          issued	in	three	tranches:                                                  ■■   ora	IIc
          •■   1,168,446	dpn	with	a	nominal	value	of	€100	per	dpn;                        •■   new	redemption	ratio:	0.131,
          •■   1,703,598	dpn	with	a	nominal	value	of	u.s.$100	per	dpn;	and                •■   new	Interest	payment	ratio	0.028.
          •■   30,030	dpn	with	a	nominal	value	of	£100	per	dpn.


    Including	the	redemption	of	all	outstanding	nrss,	and	assuming	that	tranche	IIc	is	fully	redeemed	in	shares,	the	total	number	of	shares	of	the	company	
    is	expected	to	amount	to	226,369,751	on	december	31, 2011.
                                                                                                                                     Total	number	of	shares
     TOTal NumbER Of shaREs aT dEcEmbER 31, 2009(a)                                                                                              26,989,003
     rights	issue	may 2010    (a)
                                                                                                                                                  52,660,878
     TOTal NumbER Of shaREs aT JuNE 30,2010                                                                                                      79,649,881
     redemption	of	dpn	maturing	december 31,	2010                                                                                                50,000,000
     redemption	of	nrs	I	maturing	december 31,	2010	(conversion	ratio	0.144)                                                                       45,196,744
     TOTal NumbER Of shaREs aT dEcEmbER 31, 2010                                                                                                174,846,625
     nrs	II	and	IIc	maturing	december 31,	2011	(conversion	ratio	0.159)   (b)
                                                                                                                                                   51,523,126
     NumbER Of shaREs iNcludiNg OuTsTaNdiNg NRs REdEmPTiON(b)(c)(d)                                                                             226,369,751

     (a) Adjusted for 10:1 reverse split.
     (b) Including 5,328,181 NRS I deferred to December 31, 2011.
     (c) Assuming the Company does not exercise its option to repay part or all of NRS IIC in cash.
     (d) Assuming the holders of NRS II and NRS IIC do not defer the redemtion until December 31, 2012.




    114         technIcolor	–	2010	annual	report
                                                                                 |	shareholders	and listing	Information
                                                                                                                 LISTING	INFORMATION                               5
                                                                            Contents
                                                                    ➜
                                                                                            ➜



5.1.8	 Dividend	policy
for	a	description	of	rules	applicable	to	the	distribution	of	dividends,	        the	 Internal	 rules	 of	 the	 board	 of	 directors	 (described	 in	          	
refer	to	chapter 6:	“additional	information”,	section 6.2.5:	“dividends	        chapter 4:	“corporate	governance	and	workforce”,	section 4.1.4.2	–	
(article 22	of	the	bylaws).”	dividends	that	remain	unclaimed	for	five	years	    structure	of	board	of	directors’	work	–	Internal	board	rules)	require	the	
after	payment	are	forfeited	by	law	to	the	french	state.                         approval	of	a	qualified	majority	of	2/3	of	the	directors	for	any	decision	
                                                                                relating	to	payment	of	dividends.	In	addition,	the	reinstated	debt	agree-
any	 payment	 of	 dividends	 or	 other	 distributions	 depends	 on	 the	
                                                                                ments	contain	covenants	restricting	the	ability	of	certain	of	its	subsidiaries	
company’s	financial	condition	and	results	of	operations,	especially	net	
                                                                                to	declare	or	pay	dividends	(see	chapter 3:	“management’s	discussion	and	
income,	and	its	investment	policy	at	that	time.	the	company	has	not	
                                                                                analysis	of	financial	condition	and	results	of	operations”,	section 3.16.3:	
distributed	any	dividends	in	respect	of	the	2009,	2008	and	2007	financial	
                                                                                “financial	resources”	for	additional	information).
years.



5.2	 related	party	transactIons
for	a	description	of	the	company’s	related	party	transactions,	see	note 38	to	the	consolidated	financial	statements.



5.3	 lIstIng	InformatIon

5.3.1	 Market	for	the	Company’s	securities
listing on euRonext PaRis                                                       official	 trading	 of	 listed	 securities	 on	 euronext	 paris,	 including	    	
                                                                                technicolor’s	shares,	is	transacted	through	authorized	financial	institutions	
from	november 3,	1999,	technicolor’s	shares	were	listed	on	euronext	            that	are	members	of	euronext	paris.	trading	on	euronext	(Compartiment
paris	(formerly	eurolist	d’euronext	paris)	(Compartiment B)	in	the	form	        B)	takes	place	continuously	on	each	business	day	in	paris	from	9:00	a.m.	
of	ordinary	shares	and	are	eligible	for	the	Système de Règlement Différé	       to	5:30	p.m.,	with	a	pre-opening	session	from	7:15	a.m.	to	9:00	a.m.	and	
(deferred	settlement	service),	each	as	described	below.                         a	post-closing	session	from	5:30	p.m.	to	5:35	p.m.	(during	which	time	
                                                                                trades	are	recorded	but	not	executed)	with	a	final	fixing	at	5:35	p.m.	then,	
as	of	July 15,	2010,	on	which	the	company	effected	a	reverse	share	
                                                                                from	5:35	p.m	to	5:40	p.m.,	the	“trading	at	last”	session	allows	trades	at	
split,	its	new	ordinary	shares	(with	a	par	value	of	€1)	have	been	listed	
                                                                                the	final	fixing	price.	euronext	paris	publishes	a	daily	official	price	list	
on	euronext	paris	under	the	designation	technIcolor,	euroclear	
                                                                                that	includes	price	information	on	each	listed	security.	euronext	paris	
france	 IsIn	 code	 fr0010918292,	 with	 the	 trading	 symbol	 tch.	     	
                                                                                has	introduced	continuous	trading	by	computer	for	most	actively	traded	
technicolor’s	 old	 shares	 were	 transferred	 from	 the	 euronext	 paris	
                                                                                securities,	including	technicolor’s	shares.	euronext	paris	may	reserve	or	
market	to	the	cvrmr	(Compartiment des Valeurs Radiées des Marchés
                                                                                suspend	trading	in	a	security	listed	on	euronext	(Compartiment B)	if	the	
Réglementés)	under	the	designation	technIcolor	nr,	old	euronext	
                                                                                quoted	price	of	the	security	exceeds	certain	price	limits	defined	by	the	
code	IsIn	fr0000184533	with	the	trading	symbol	tchnr.	the	old	
                                                                                regulations	of	euronext	paris.	In	particular,	if	the	quoted	price	of	a	security	
shares	will	remain	listed	on	the	cvrmr	until	July 15,	2011,	at	which	time	
                                                                                varies	by	more	than	10%	from	the	reference	price,	euronext	paris	may	
they	will	be	delisted.
                                                                                restrict	trading	in	that	security	for	up	to	four	minutes	(réservation à la
euronext	paris	s.a.	(“euronext	paris”)	is	a	wholly-owned	french	subsidiary	     hausse	ou à la baisse).	the	reference	price	is	the	opening	price	or,	with	
of	nyse	euronext,	a	delaware	holding	company	created	by	the	combina-            respect	to	the	first	quoted	price	of	a	given	trading	day,	the	last	traded	
tion	of	nyse	group,	Inc.	and	euronext	n.v.,	(“euronext”).	securities	           price	of	the	previous	trading	day,	as	adjusted	if	necessary	by	euronext	
listed	on	any	of	the	stock	exchanges	participating	in	euronext	are	traded	      paris.	euronext	paris	may	also	reserve	trading	for	a	four	minute	period	if	
through	a	common	platform,	with	a	central	clearinghouse,	settlement	and	        the	quoted	price	of	a	security	varies	by	more	than	2%	from	the	last	traded	
custody	structure.	however,	securities	remain	listed	on	their	respective	       price.	however,	subject	to	trading	conditions	and	appropriate	and	timely	
local	exchanges.                                                                information,	euronext	paris	may	modify	the	reservation	period	and	may	
                                                                                accept	broader	fluctuation	ranges	than	above	mentioned.	euronext	paris	
securities	approved	for	listing	by	euronext	paris	are	traded	in	one	of	the	
                                                                                also	may	suspend	trading	of	a	security	listed	on	euronext	(Compartiment
three	compartiments of	euronext:	Compartiment A	(for	capitalizations	over	
                                                                                B)	in	certain	other	limited	circumstances,	including,	for	example,	where	
€1 billion),	Compartiment B	(for	capitalizations	between	€150 million	and	
                                                                                there	is	unusual	trading	activity	in	the	security	(suspension de la cotation).	
€1 billion)	and	Compartiment C	(for	capitalizations	less	than	€150 million).	
                                                                                In	addition,	in	certain	exceptional	cases,	the	amf	and	the	issuer	also	may	
aside	from	these	regulated	markets,	securities	of	certain	other	companies	
                                                                                request	a	suspension	in	trading.
may	be	traded	on	non-regulated	markets	(the	Marché Libre	or	alternext).	
these	markets	are	all	operated	and	managed	by	euronext	paris,	a	market	         trades	of	securities	listed	on	euronext	(Compartiment B)	are	settled	on	a	
operator	responsible	for	the	admission	of	securities	and	the	supervision	       cash	basis	on	the	third	trading	day	following	the	trade	(immediate	settle-
of	trading	in	listed	securities.                                                ment	or	Règlement Immédiat).	market	intermediaries	are	also	permitted	



                                                                                                  technIcolor	–	2010	annual	report                         115
           |	shareholders	and listing	Information
5          LISTING	INFORMATION



                                                                                   Contents
                                                                           ➜
                                                                                                   ➜


    to	offer	investors	a	deferred	settlement	service	for	a	fee.	securities	eligible	   for	 more	 information	 about	 the	 reverse	 share	 split,	 please	 refer	 to	
    for	the	standard	deferred	settlement	service	must	satisfy	the	following	           chapter 5:	“shareholders	and listings	information”,	section 5.1:	“share	
    2	criteria:	a	daily	trading	amount	of	at	least	€1	million	and	a	market	            capital”	of	this	annual	report.
    capitalization	of	at	least	€1	billion.	securities	already	admitted	to	the	
    standard	deferred	settlement	service	must	keep	a	daily	trading	amount	
    higher	than	€500,000	or	a	market	capitalization	higher	than	€500 million	          listing on the new yoRk stock exchange
    in	order	to	continue	benefiting	from	the	service.                                  from	november 3,	1999,	the	company’s	shares	were	also	listed	on	the	
    technicolor’s	shares	are	eligible	for	the	deferred	settlement	service.	In	         new	york	stock	exchange	in	the	form	of	american	depositary	shares	
    the	deferred	settlement	service,	the	purchaser	may	on	the	determination	           (“ads”).	the	bank	of	new	york	mellon	has	served	as	the	depositary	
    date	(date de liquidation),	which	is	the	fifth	trading	day	prior	to	the	last	      with	respect	to	the	adss	traded	on	the	new	york	stock	exchange	since	
    trading	day	of	the	month	included,	either	(i) 	settle	the	trade	no	later	than	     february 2005.	each	ads	represented	one	ordinary	share.
    the	last	trading	day	of	such	month,	or	(ii) upon	payment	of	an	additional	         technicolor	 has	 applied	 for	 the	 voluntary	 delisting	 of	 its	 american	
    fee,	extend	to	the	determination	date	of	the	following	month	the	option	           depositary	shares	(adss)	from	the	new	york	stock	exchange	(nyse)	
    either	to	settle	no	later	than	the	last	trading	day	of	such	month	or	postpone	     and	the	voluntary	termination	of	the	registration	of	its	securities	under	
    again	the	selection of	a	settlement	date	until	the	next	determination	date.	       the	u.s.	securities	exchange	act	of	1934.	technicolor	filed	its	form	25	
    such	option	may	be	maintained	on	each	subsequent	determination	date	               with	the	sec	to	delist	its	adss	on	march	11,	2011.	the	delisting	has	
    upon	payment	of	an	additional	fee.                                                 become	effective	at	the	close	of	trading	on	march	21,	2011	and	since	       	
    equity	securities	traded	on	a	deferred	settlement	basis	are	considered	            march	22,	2011	the	adss	have	been	traded	in	the	otc.	technicolor	
    to	have	been	transferred	only	after	they	have	been	registered	in	the	              filed	its	form	15-f	to	deregister	with	the	sec	on	march	24,	2011,	and	its	
    purchaser’s	account.	under	french	securities	regulations,	any	sale	of	a	           deregistration	is	expected	to	become	effective	90	days	thereafter.
    security	traded	on	a	deferred	settlement	basis	during	the	month	of	a	              technicolor’s	rationale	for	delisting	and	deregistration	is	based	on	the	
    dividend	payment	date	is	deemed	to	occur	after	the	dividend	has	been	              following:
    paid.	thus	if	the	deferred	settlement	sale	takes	place	during	the	month	of	
    a	dividend	payment,	but	before	the	actual	payment	date,	the	purchaser’s	           ■■   the	primary	market	for	technicolor’s	shares	is	the	nyse	euronext,	
    account	will	be	credited	with	an	amount	equal	to	the	dividend	paid	and	                 where	the	average	trading	volume	has	accounted	for	more	than	99%	
    the	seller’s	account	will	be	debited	by	the	same	amount.                                of	technicolor’s	worldwide	trading	volume	over	the	last	three	years.
    prior	to	any	transfer	of	securities	listed	on	euronext	held	in	registered	         ■■   technicolor’s	ads	trading	volume	has	declined	over	the	past	three	
    form,	the	securities	must	be	converted	into	bearer	form	and	accordingly	                years	and	has	accounted	for	approximately	0.4%	of	the	total	volume	
    recorded	in	an	account	maintained	by	an	accredited	intermediary	with	                   of	shares	traded	over	the	last	year	(adjusted	to	reflect	technicolor’s	
    euroclear	france,	s.a.,	a	registered	central	security	depositary.	trades	               July	2010	ten-for-one	reverse	share	split).
    of	securities	listed	on	euronext	are	cleared	through	l.c.h.	clearnet	and	          ■■   technicolor	is	continuously	seeking	to	optimize	its	operating	costs.
    settled	through	euroclear	france,	s.a.	using	a	continuous	net	settlement	
                                                                                       following	its	delisting	and	deregistration,	technicolor	will	maintain	its	
    system.
                                                                                       american	depositary	receipt	(adr)	program	as	a	“level	one”	program	
    under	french	law,	the	company	may	not	issue	shares	to	itself,	but	it	may	          to	enable	investors	to	retain	their	adrs,	which	they	may	trade	in	the	u.s.	
    purchase	its	shares	in	the	limited	cases	described	in	chapter 6:	“additional	      over-the-counter	market.	the	delisting	and	deregistration	will	have	no	
    information”,	section 6.2:	“memorandum	and	articles	of	association”.               impact	on	technicolor’s	primary	listing	of	its	ordinary	shares	on	euronext	
                                                                                       paris.
    In	france,	technicolor’s	shares	have	been	included	in	the	sbf 80	since	
    June 18,	2007.	technicolor’s	shares	are	also	included	in	the	cac media,	           technicolor	will	continue	to	publish	english	language	financial	reports,	
    cac  consumer	 services,	 cac  It,	 cac  mId&small.  190	 and	                     financial	statements,	press	releases	and	shareholder	information,	which	
    cac mid	100.                                                                       will	be	available	on	its	web	site	(www.technicolor.com)	in	accordance	with	
                                                                                       rule	12g3-2(b)	under	the	u.s.	securities	exchange	act	of	1934.
    the	old	shares	which	have	not	been	exchanged	for	new	shares	(post	
    reverse	split)	will	give	the	right	to	one	(1)	voting	right	and	the	new	shares	     technicolor	considers	that	u.s.	investors	are	an	important	part	of	its	
    will	give	the	right	to	ten	(10)	voting	rights,	so	that	the	number	of	voting	       investor	 base	 and	 will	 maintain	 its	 relationship	 with	 them,	 as	 well	 as	
    rights	attached	to	shares	is	proportional	to	the	portion	of	the	capital	which	     maintaining	and	continuing	to	develop	its	business	operations	in	the	
    they	represent.	In	accordance	with	article 6	of	the	decree	n°048-1683	             united	states.	the	company	will	continue	to	provide	a	high	standard	
    of	october 30,	1948	establishing	certain	characteristics	of	securities,	the	       of	corporate	governance,	information	and	disclosure	for	all	investors,	
    old	shares	not	exchanged	for	new	shares	(post	reverse	split)	at	the	end	           including	 those	 in	 the	 united	 states,	 and	 intends	 to	 maintain	 high	
    of	the	two-year	period	will	lose	their	voting	rights	at	general	shareholder’s	     standards	of	financial	reporting	discipline	and	to	capitalize	on	the	work	
    meetings	and	their	right	to	dividends	will	be	suspended.                           undertaken	to	comply	with	the	sarbanes	oxley	act	embedding	internal	
                                                                                       controls	within	operational	management,	by	keeping	an	annual	program	
                                                                                       to	monitor	the	quality	of	its	internal	control	going	forward.




    116      technIcolor	–	2010	annual	report
                                                                               |	shareholders	and listing	Information
                                                                                                                LISTING	INFORMATION                       5
                                                                         Contents
                                                                  ➜
                                                                                           ➜



5.3.2	Listing	on	Euronext	Paris
the	tables	below	set	forth,	for	the	periods	indicated,	the	high	and	low	quoted	prices	(in	euro)	for	technicolor's	outstanding	shares	on	euronext	paris	
(after	reverse	share	split	adjustment).

                                                                                               Euronext	Paris
                                                                  volume	of	transactions                                  Share	price	(in €)
                                                                         Number	of	          Average	          Average	
 Years	ending	December 31                             in	€	million     Shares	traded          volume      closing	price             High        Low
 2006                                                       9,002         62,351,975.5       244,517.6           143.10            193.20      116.50
 2007                                                      6,357.9       48,452,053.2        190,008.1           129.50            156.00      94.30
 2008                                                      3,016.1       99,755,864.4        389,671.3            36.30             96.50        7.60
 2009                                                      3,446.6       357,370,155.9     1,401,451.6             9.50             18.40       3.60
 2010                                                       1,716.1     170,758,549.9       6,686,057              6.29              11.62       3.55

 Source: NYSE Euronext.


                                                                                               Euronext	Paris
                                                                  volume	of	transactions                                  Share	price	(in €)
                                                                          Number	of	         Average	          Average	
 quarters	for	years	ending	December 31                in	€	million      shares	traded         volume      closing	price             High        Low
 2008
 first	quarter                                             1,274.0       20,695,247.2        333,794.3            63.70             96.50      39.00
 second	quarter                                             683.8         16,513,384.8       258,021.6           40.70              48.00      32.60
 third	quarter                                              579.0         19,579,413.6       296,657.8           29.90              35.80      23.60
 fourth	quarter                                              479.3       42,967,818.8        671,372.2           10.80              25.90        7.60
 2009
 first	quarter                                               747.5        91,927,628.5     1,459,168.7            9.00              18.40       3.60
 second	quarter                                              782.1       88,941,065.5      1,434,533.3            8.50              11.80       5.50
 third	quarter                                              943.2         88,123,018.3      1,335,197.2            9.30             14.90       5.50
 fourth	quarter                                             973.8        88,378,443.6      1,380,913.2           10.80              14.60       8.00
 2010
 first	quarter                                              162.0         155,371,100      7,434,369.6            10.30             11.20        9.20
 second	quarter                                              204.1      324,864,888.7      15,267,774.3            6.70               7.70       5.70
 third	quarter                                                92.1       62,519,280.0      2,841,786.0             4.10              4.50        3.70
 fourth	quarter                                              113.6       26,439,897.6      1,200,299.0            4.30               4.30       3.80

 Source: NYSE Euronext.




                                                                                                technIcolor	–	2010	annual	report                  117
            |	shareholders	and listing	Information
5           LISTING	INFORMATION



                                                                              Contents
                                                                       ➜
                                                                                                ➜



                                                                                                    Euronext	Paris
                                                                       volume	of	transactions                                  Share	price	(in €)
                                                                               Number	of	          Average	         Average	
     Last	six	months                                       in	€	million      shares	traded          volume     closing	price             High           Low
     2010
     september                                                     80.3          19,793,046         899,684            4.02               4.27          3.78
     october                                                      112.8          24,711,106        1,176,719           4.48               4.96          0.94
     november                                                     109.7          25,244,974        1,147,499            4.32              4.70          3.97
     december                                                     118.4          29,363,613        1,276,679            4.13              4.48          3.55
     2011
     January                                                      173.2          42,552,901       2,026,329             4.12              4.33          3.42
     february                                                     273.3          55,181,082       2,759,054            4.76                5.73         0.89

     Source: NYSE Euronext.




    5.3.3	Listing	on	the	New	York	Stock	Exchange(1)
    the	tables	below	set	forth,	for	the	periods	indicated,	the	high	and	low	quoted	prices	in	u.s.	dollar	for	technicolor's	adss	on	the	new	york	stock	
    exchange	(after	reverse	share	split	adjustment).

                                                                                               New	York	Stock	Exchange
                                                                       volume	of	transactions                              ADS	price	(in U.S.$)
                                                               in	u.S.$	       Number	of	          Average	         Average	
     Years	ending	December 31                                   million      shares	traded          volume     closing	price             High           Low
     2006                                                         242.9           1,326,210          5,283.7         179.50             230.60        149.60
     2007                                                         337.5         1,979,756.5          7,856.2         176.60            204.90         135.00
     2008                                                         222.1          4,274,732.1        16,896.2          53.90              137.30         9.40
     2009                                                          30.2         2,359,442.3          9,396.2          12.90              21.50          4.30
     2010                                                           11.4           1,372,311          5,434             8.77             16.30          4.70




    (1) Pursuant to a voluntary request filed by the Company with the SEC and NYSE on March 11, 2011, the Company’s ADSs were delisted from the NYSE effective
        as of the close of trading on March 21, 2011.

    118      technIcolor	–	2010	annual	report
                                                            |	shareholders	and listing	Information
                                                                                          LISTING	INFORMATION                     5
                                                      Contents
                                               ➜
                                                                        ➜



                                                                      New	York	Stock	Exchange
                                               volume	of	transactions                              ADS	price	(in U.S.$)
                                        in	u.S.$	      Number	of	         Average	          Average	
quarters	for	years	ending	December 31    million     shares	traded         volume      closing	price          High        Low
2008
first	quarter                              111.5        1,259,394.9       20,645.8            95.70          137.30       61.80
second	quarter                             70.6         1,264,631.7          14,705           58.70           72.90       39.50
third	quarter                               20.2         465,543.5          11,084.4          44.20           50.20       34.20
fourth	quarter                              18.8          1,285,162       20,080.7            14.40           35.80        9.40
2009
first	quarter                              13.02       1,035,240.9          16,971.2          11.70           19.80        4.30
second	quarter                              5.63         508,154.6          8,065.9           11.20            15.10       7.60
third	quarter                               5.23          374,814.1         5,856.5            13.10          21.50        7.50
fourth	quarter                              6.28         440,232.7           6,987.8          15.70           20.80       12.00
2010
first	quarter                               4.21           296,181            4,673            13.91          16.30       12.40
second	quarter                              2.64           265,403            4,252            9.96           15.70        5.79
third	quarter                               1.93           361,657            5,639            5.36            6.60        4.70
fourth	quarter                              2.67          449,070              7,170           5.87            6.72        4.76

Source: NYSE, Bloomberg.


                                                                      New	York	Stock	Exchange
                                               volume	of	transactions                              ADS	price	(in U.S.$)
                                        in	u.S.$	      Number	of	         Average	          Average	
Last	six	months                          million     shares	traded         volume      closing	price          High        Low
2010
september                                   0.57           106,888            5,090            5.30            5.70        4.93
october                                     1.02           159,663             7,983           6.26            6.72        5.60
november                                    1.01           171,592             8,171           5.90            6.39        5.37
december                                   0.63             117,815           5,355            5.46            5.75        4.76
2011
January                                    0.60            109,713            5,486            5.59            5.93        4.85
february                                   0.34             54,344            3,882            6.24            6.89        5.80

Source: NYSE, Bloomberg.




                                                                             technIcolor	–	2010	annual	report               119
          |	shareholders	and listing	Information
5
                                                   Contents
                                              ➜
                                                              ➜




    120    technIcolor	–	2010	annual	report
       6
                         Additional information


6.1	   share	capItal	and	votIng	rIghts	                                 122   6.3	   materIal	contracts	                                                132
       6.1.1	 Share	capital	(Article 6 of	the	bylaws)	                  122
                                                                              6.4	   addItIonal	tax	InformatIon	                                        132
       6.1.2	 Changes	in	share	capital	and	in	shareholders’	rights	     122
       6.1.3	 voting	rights	                                            123   6.5	   organIzatIon	of	the	group	                                         133
       6.1.4	 Other	rights	of	shareholders	(Article 9	of	the	bylaws)	   123          6.5.1	 Legal	organizational	chart	as	of	December 31,	2010	         133
       6.1.5	 Equity	securities	not	representing	share	capital	         123          6.5.2	 Operational	organization	                                   135
       6.1.6	 Changes	to	share	capital	                                 124
                                                                              6.6	   InformatIon	on	mInorIty	Interests	                                 136
       6.1.7	 Technicolor	shares	subject	to	a	security	interest	        124
       6.1.8	 Delegations	granted	to	the	Board	of	Directors	                  6.7	   documents	on	dIsplay	                                              136
              by the Shareholders’	Meetings	                            125
                                                                              6.8	   payment	terms	wIth	supplIers	                                      137
       6.1.9	 Elements	likely	to	have	an	influence	in	case	
              of a public offer	                                        125
6.2	   memorandum	and	artIcles	of	assocIatIon	126
       6.2.1	 Corporate	purpose	(Article 2	of	the	bylaws)	            126
       6.2.2	 Form,	holding	and	transfer	of	shares	
              (Articles 7 and 8 of the bylaws)	                       126
       6.2.3	 Shareholders’	Meetings	and	voting	rights	
              (Article 19 of the bylaws)	                             127
       6.2.4	 Financial	statements	and	communications	
              with shareholders	                                      129
       6.2.5	 Dividends	(Article 22 of the	bylaws)	                   130
       6.2.6	 Liquidation	rights	                                     130
       6.2.7	 Requirements	for	holdings	exceeding	certain	percentages	130
       6.2.8	 Purchase	of	own	shares	                                 131
       6.2.9	 Trading	in	the	Company’s	own shares	                    131




                                                                                             technIcolor	–	2010	annual	report                     121
            |	additional	information
6           SHARE	CAPITAL	AND	vOTING	RIGHTS



                                                                                  Contents
                                                                         ➜
                                                                                                ➜



    6.1	 share	capItal	and	votIng	rIghts

    6.1.1	 Share	capital	(Article 6 of	the	bylaws)
    number	of	shares:	174,846,625,	all	of	the	same	class.                            i
                                                                                     	nformation”,	section 5.3.2:	“listing	on	euronext	paris”	of	this	annual	
                                                                                     report)	and	keep	their	voting	rights	until	July 15,	2012	(for	information	
    nominal	value:	€1,00.
                                                                                     about	the	voting	rights	attached	to	the	old	shares	of	the	company,	see	
    amount	of	share	capital:	€174,846,625	fully	paid	up.                             section 6.1.3: “voting	rights”	below).

    as	of	march	1,	2011	there	were	8,642,950	remaining	old	pre	reverse-split	        for	 more	 information	 regarding	 technicolor’s	 share	 capital,	 refer	 to	
    shares	 (IsIn	 code	 fr0000184533).	 these	 shares	 remain	 listed	              chapter 5:	“shareholders	and	listings	information”,	section 5.1:	“major	
    on	 euronext	 (please	 refer	 to	 chapter  5:	 “shareholders	 and	 listings	     shareholders”.



    6.1.2	 Changes	in	share	capital	and	in	shareholders’	rights
    any	change	in	the	share	capital	of	the	company	is	subject	to	the	applicable	     when	a	capital	increase	is	decided	(except	when	it	results	from	(i) an	
    french	law.	technicolor’s	bylaws	do	not	provide	specific	requirements	for	       earlier	issue	of	securities	giving	rights	to	shares,	(ii) an	incorporation	of	
    changes	in	share	capital	or	in	rights	associated	to	the	shares.                  reserves	or	(iii) assets	contributed	in	kind),	the	shareholders	must	also	
                                                                                     consider	whether	an	additional	capital	increase	should	be	reserved	for	
                                                                                     employees	participating	in	technicolor’s	saving	plan	(Fonds Communs
    incReases in shaRe caPital                                                       de Placement d’Entreprise	or	“fcpe”);	such	reserved	capital	increase	
    as	provided	by	french	law,	technicolor’s	share	capital	may	be	increased	         need	 not	 be	 approved.	 non-compliance	 with	 this	 requirement	 may	
    only	with	the	shareholders’	approval	at	an	extraordinary	general	meeting	        result	in	the	invalidity	of	the	share	capital	increase.	with	respect	to	the	
    following	the	recommendation	of	the	board	of	directors.	such	approval	           current	authorizations	to	increase	technicolor’s	share	capital,	see	below	
    can	either	constitute	a	decision	of	the	shareholders	to	increase	the	share	      section 6.1.8:	“delegations	granted	to	the	board	of	directors	by	the	
    capital	or	a	delegation	of	power	granted	by	the	shareholders	to	the	board	       shareholders’	meetings”.
    of	directors	to	increase	the	share	capital.	Increases	in	technicolor’s	share	    the	shareholders	may	delegate	the	right	to	carry	out	any	increase	in	
    capital	may	be	effected	by:                                                      share	 capital	 to	 the	 board	 of	 directors,	 provided	 that	 shareholders	
    ■■    issuing	additional	shares;                                                 decide	the	global	threshold	of	the	capital	increase	and	the	duration	of	
                                                                                     the	delegation.	the	board	of	directors	may	further	delegate	this	right	to	
    ■■    increasing	the	nominal	value	of	existing	shares;                           the	chief	executive	officer.
    ■■    creating	a	new	class	of	equity	securities.
    Increases	in	share	capital	by	issuing	additional	securities	may	be	effected	     decReases in shaRe caPital
    through	the	following:
                                                                                     according	to	french	law,	any	decrease	in	technicolor’s	share	capital	
    ■■    for	cash;                                                                  requires	approval	by	the	shareholders	entitled	to	vote	at	an	extraordinary	
    ■■    for	assets	contributed	in	kind;                                            general	meeting.	the	share	capital	may	be	reduced	either	by	decreasing	
    ■■    by	conversion,	exchange,	or	redemption	of	debt	securities	previously	      the	nominal	value	of	the	outstanding	share	capital	or	by	reducing	the	
          issued;                                                                    number	of	outstanding	shares.	the	number	of	outstanding	shares	may	
                                                                                     be	reduced	either	by	an	exchange	of	shares	or	by	the	repurchase	and	
    ■■    by	exercise	of	any	other	securities	giving	rights	to	such	securities;
                                                                                     cancellation	of	shares.
    ■■    by	capitalization	of	profits,	reserves	or	share	premiums;
                                                                                     In	the	case	of	a	capital	reduction,	through	a	reduction	of	the	number	of	
    ■■    subject	to	various	conditions,	in	satisfaction	of	debt	incurred	by	the	
                                                                                     outstanding	shares	other	than	a	reduction	to	absorb	losses	or	a	reduction	as	
          company;	or
                                                                                     part	of	a	program	to	purchase	the	company’s	own	shares,	all	shareholders	
    ■■    any	combination	of	the	above.                                              must	be	offered	the	possibility	to	participate	in	such	a	reduction.	holders	
    decisions	to	increase	the	share	capital	through	the	capitalization	of	           of	each	class	of	shares	must	be	treated	equally	unless	each	affected	
    reserves,	profits	and/or	share	premiums	require	the	approval	of	an	extraor-      shareholder	agrees	otherwise.
    dinary	general	meeting,	acting	under	applicable	quorum	and	majority	
    requirements.	 share	 capital	 increases	 effected	 by	 an	 increase	 in	 the	
    nominal	value	of	shares	require	unanimous	approval	of	the	shareholders,	
                                                                                     PRefeRential subscRiPtion Rights
    unless	effected	by	capitalization	of	reserves,	profits	or	share	premiums.	all	   according	to	french	law,	if	technicolor	issues	new	shares	or	securities	
    other	capital	increases	require	the	approval	of	an	extraordinary	general	        giving	access	to	the	share	capital	of	the	company,	current	shareholders	
    meeting,	acting	under	applicable	quorum	and	majority	requirements.	              will	have	preferential	subscription	rights	to	these	securities	on	a	pro
    refer	to	section 6.2.3:	“shareholders	meetings	and	voting	rights.”               rata	basis.	the	rights	entitle	the	individual	or	entity	that	holds	them	to	




    122       technIcolor	–	2010	annual	report
                                                                                                              |	additional	information
                                                                                             SHARE	CAPITAL	AND	vOTING	RIGHTS                                         6
                                                                               Contents
                                                                       ➜
                                                                                               ➜


subscribe	to	an	issue	of	any	securities	that	may	increase	the	share	capital	       of	the	shares	during	the	three	trading	days	preceding	the	setting	of	the	
of	the	company	by	means	of	a	cash	payment	or	a	set-off	of	cash	debts.	             price	(such	average	market	price	may	be	reduced	by	a	maximum	discount	
preferential	subscription	rights	are	transferable	during	the	subscription	         of	5%).	however,	within	the	limit	of	10%	of	the	share	capital	per	year,	the	
period	relating	to	a	particular	offering.	these	rights	may	also	be	listed	         extraordinary	general	meeting	may	authorize	the	board	of	directors	to	
on	euronext	paris.                                                                 set	the	issuing	price	in	accordance	with	terms	set	by	the	extraordinary	
                                                                                   general	meeting.
the	affirmative	vote	of	shareholders	holding	at	least	two-thirds	of	the	
shares	entitled	to	vote	at	an	extraordinary	general	meeting	may	waive	
the	preferential	subscription	rights	of	all	shareholders	with	respect	to	any	      modification of the Rights of a class
particular	offering	or	a	portion	of	that	offering.	french	law	requires	that	the	
board	of	directors	and	technicolor’s	independent	auditors	present	reports	         of shaReholdeRs
that	specifically	address	any	proposal	to	waive	preferential	subscription	         special	meetings	of	shareholders	of	a	certain	category	of	shares	(such	
rights.	In	the	event	of	a	waiver,	the	issue	of	securities	must	be	completed	       as,	among	others,	preferred	shares)	are	required	for	any	modification	of	
within	the	period	prescribed	by	law.	the	shareholders	may	also	decide	at	          the	rights	derived	from	such	category	of	shares.	the	resolutions	of	the	
an	extraordinary	general	meeting	to	give	the	existing	shareholders,	in	            general	shareholders’	meeting	affecting	these	rights	are	effective	only	
lieu	of	subscription	rights,	a	non-transferable	priority	right	to	subscribe	to	    after	approval	by	the	relevant	special	meeting.	as	previously	noted,	the	
the	new	securities,	during	a	limited	period	of	time	no	shorter	than	three	         ordinary	shares	currently	constitute	the	company’s	only	class	of	capital	
trading	days.	shareholders	also	may	notify	technicolor	that	they	wish	to	          stock,	and	the	company	has	not	issued	any	preferred	shares.
waive,	on	an	individual	basis,	their	preferential	subscription	rights	with	
respect	to	any	particular	offering	if	they	so	choose.                              for	a	special	meeting	of	holders	of	a	certain	category	of	shares,	the	
                                                                                   quorum	requirement	is	33 1/3%	(or	20%	upon	resumption	of	an	adjourned	
In	the	event	of	a	capital	increase	without	preferential	subscription	rights	       meeting)	of	the	shares	entitled	to	vote	in	that	category.	a	two-thirds	
to	existing	shareholders,	french	law	requires	that	the	capital	increase	be	        majority	of	the	shares	entitled	to	vote	in	that	category	is	required	to	
made	at	an	issuing	price	equal	to	or	exceeding	the	average	market	price	           amend	shareholders	rights.



6.1.3	 voting	rights
no	shareholder	holds	voting	rights	that	are	different	from	those	of	other	         one	(1)	vote	and	the	new	shares	will	give	the	right	to	ten	(10)	votes,	so	that	
shareholders.	each	shareholder	is	entitled	to	one	vote	per	share	only.             the	number	of	votes	attached	to	shares	is	proportional	to	the	portion	of	
                                                                                   the	capital	which	they	represent.	In	accordance	with	article 6	of	the	decree	
under	french	law,	treasury	shares	are	not	entitled	to	voting	rights.
                                                                                   n°048-1683	of	october 30,	1948	establishing	certain	characteristics	of	
pursuant	 to	 the	 reverse	 share	 split	 operations	 implemented	 by	 the	        securities,	the	old	shares	not	exchanged	for	new	shares	(post	reverse	split)	
company	on	July 15,	2010	and	until	July 15,	2012,	the	old	shares	which	have	       at	the	end	of	this	two-year	period	will	lose	their	voting	rights	at	general	
not	been	exchanged	for	new	shares	(post	reverse	split)	will	give	the	right	to	     shareholder’s	meetings	and	their	right	to	dividends	will	be	suspended.




6.1.4	 Other	rights	of	shareholders	(Article 9	of	the	bylaws)
In	addition	to	the	right	to	vote	in	shareholders’	meetings,	each	shareholder	      the	holding	of	one	share	implies	ipso jure	the	right	to	approve	changes	to	
has	a	right	to	the	corporate	assets	of	the	company,	its	corporate	benefits	        the	company’s	bylaws	and	to	approve	the	decisions	of	the	shareholders’	
and	any	surplus	assets	upon	liquidation	that	is	proportional	to	such	holder’s	     meetings	and	decisions	made	by	the	board	of	directors	under	a	delegation	
interest	in	the	share	capital	of	the	company.                                      of	powers	granted	at	the	shareholders’	meeting.
when	it	is	mandatory	to	hold	a	certain	amount	of	shares	in	order	to	be	
able	to	exercise	a	right	as	a	shareholder,	shareholders	who	do	not	possess	
the	requisite	amount	have	the	burden	to	procure	such	amount	if	they	seek	
to	exercise	such	right.



6.1.5	 Equity	securities	not	representing	share	capital
none.




                                                                                                     technIcolor	–	2010	annual	report                       123
           |	additional	information
6          SHARE	CAPITAL	AND	vOTING	RIGHTS



                                                                                   Contents
                                                                            ➜
                                                                                                    ➜



    6.1.6	 Changes	to	share	capital
                                                               Number	       Increase	/            Total	     Additional	     value	of	
                                                              of	shares	    decrease	of	      amount	of	         paid-in	    the	share	 Cumulated	
                                                              issued	or	      the	share	       the	share	        capital	  premium	in	 amount	of	 Nominal	
     Transaction	date                                         cancelled         capital          capital       variation balance	sheet     shares   value
                                                                                (in euros)      (in euros)      (in euros)      (in euros)                    (in euros)
     share	capital	as	of	december 2006                                  -                - 1,027,017,360                 -     1,789,317,411    273,871,296        3.75
     may 15,	2007
     reduction	of	share	capital	(cancellation	of	shares)    (2,500,000)      (9,375,000) 1,017,642,360        (38,373,891)   1,750,943,520      271,371,296        3.75
     distribution	paid	on	July 3,	2007,	out	of	
     the additional	paid-in	capital                                     -                - 1,017,642,360      (87,034,125)   1,663,909,395      271,371,296        3.75
     october 17,	2007
     reduction	of	share	capital	(cancellation	of	shares)      (1,481,268)     (5,554,755) 1,012,087,605      (20,506,800)    1,643,402,595 269,890,028             3.75
     december 31,	2009                                                  -                    1,012,087,605               -   1,643,402,595 269,890,028             3.75
     January 27,	2010	reduction	of	share	capital	by	
     reason	of	losses	(reduction	in	the	nominal	value)                  - (985,098,602)        26,989,003 (1,643,402,595)                  - 269,890,028           0.10
     may 26,	2010	Increase	of	capital	by	issuance	of	
     new shares	                                             526,608,781        52,660,878     79,649,881     294,900,917	     294,900,917 796,498,809             0.10
     July 15,	2010	reverse	share	split(*)
                                                                                               79,649,881                -     294,900,917       79,649,881            1
     fees	linked	to	the	issuance	of	shares                                                                    (9,035,399)      285,865,518       79,649,881            -
     december 31,	2010	capital	increase	linked	to	nrs	
     reimbursements                                           45,196,744        45,196,744    124,846,625     300,075,371     585,940,889       124,846,625            1
     december 31,	2010	capital	increase	linked	to	dpn	
     reimbursments                                           50,000,000      50,000,000       174,846,625    162,750,000      748,690,889       174,846,625            1
     december 31,	2010                                                                        174,846,625                    748,690,889 (**)
                                                                                                                                                174,846,625            1

     (*) On July 15, 2010, following the decision of the General Shareholders’ Meeting of January 27, 2010, a reverse share split was implemented with 10 old shares
          with a par value of €0.10 exchanged for each new share with a par value of €1.
     (**) Different from IFRS equity exchanged because Notes Redeemable in Shares (NRS) are considered as an equity component and not as a debt.



    6.1.7	 Technicolor	shares	subject	to	a	security	interest
    to	the	knowledge	of	the	company,	as	of	march	1,	2011,	23,080	shares	of	the	company	were	subject	to	a	pledge	or	other	security	interest.




    124      technIcolor	–	2010	annual	report
                                                                                                                   |	additional	information
                                                                                                 SHARE	CAPITAL	AND	vOTING	RIGHTS                                             6
                                                                                 Contents
                                                                         ➜
                                                                                                    ➜



6.1.8	 Delegations	granted	to	the	Board	of	Directors	
       by the Shareholders’	Meetings
In	accordance	with	article l.	225-100	paragraph	7	of	the	french	commercial	code,	the	table	below	provides	the	delegations	of	power	in	force	granted	
by	the	general	shareholder’s	meeting	to	the	board	of	directors	and	the	use	made	of	these	delegations	during	the	2010	fiscal	year:

                                                  Ordinary	or	
                                                  Extraordinary	
                                                  Shareholders’	          Duration	
                                                  Meeting	(“OSM”	         and	                                                              Amount	
 Type	of	authorization                            or	“ESM”)	date          expiration        Scope                                             used       Amount	due
 delegation	to	the	board	of	directors	of	         esm	January 27,	        26 months,	       3%	of	the	share	capital,	as	it	shall	be	           none       100%	of	the	
 its	capacity	to	effect	a	capital	increase	       2010                    until	            following	the	capital	increase	pursuant	                          scope
 reserved	for	employees	under	the	group	          (11th resolution)       march 27,	        to	the	fifth	resolution,	and	1.35%	of	the	
 savings	plan	(Plan d’Épargne d’Entreprise)                               2012              share	capital	after	redemption	in	shares	
                                                                                            of	all	of	the	nrs	to	be	issued	pursuant	
                                                                                            to	the	sixth	and	seventh	resolutions(1)
 delegation	to	the	board	of	directors	            esm	January 27,	        18 months,	       3%	of	the	share	capital,	as	it	shall	be	           none       100%	of	the	
 of	its	capacity	to	proceed	with	a	capital	       2010                    until	July 27,	   following	the	capital	increase	pursuant	                          scope
 increase	(without	preferential	subscription	     (12th resolution)       2011              to	the	fifth	resolution,	and	1.35%	of	the	
 rights)	reserved	to	certain	categories	of	                                                 share	capital	after	redemption	in	shares	
 beneficiaries	(shareholding	transactions	for	                                              of	all	of	the	nrs	to	be	issued	pursuant	
 employees	outside	savings	plan)                                                            to	the	sixth	and	seventh	resolutions(1)(2)
 delegation	to	the	board	of	directors	of	         esm	January 27,	        18 months,	       €4,500,000(2)                                      none       €4,500,000
 its	capacity	to	issue	(without	preferential	     2010                    until	July 27,	
 subscription	rights)	redeemable	                 (13th resolution)       2011
 subscription	or	purchase	warrants	(bons
 de souscription et/ou d’acquisition d’actions
 remboursables,	or	bsaar)	for	the	benefit	
 of	employees	and	executive	officers	of	the	
 company	and	its	subsidiaries

 (1) The maximum nominal amount of the capital increase that could occur pursuant to the 11th resolution is shared with the 12th resolution.
 (2) The aggregate maximum amount of the share capital increases authorized pursuant to the 12th and 13th resolutions is set at 8.65% of the share capital
     following the capital increase pursuant to the fifth resolution, and representing 3.9% of the share capital after redemption in shares of all of the NRS issued
     pursuant to the 6th and 7th resolutions (General Shareholders Meeting held on January 27, 2010).

during	2010,	the	board	of	directors	used	the	delegations	of	powers	                    expired	on	september	30,	2010	(refer	to	chapter 2	“Information	on	the	
granted	 by	 the	 combined	 general	 shareholder’s	 meeting	 held	 on	                 company”,	section 2.1.2:	“historical	background”	of	this	annual	report).
January 27,	2010	in	accordance	with	the	5th,	6th	and	9th	resolutions,	which	



6.1.9	 Elements	likely	to	have	an	influence	in	case	of a public offer
pursuant	to	article l. 225-100-3	of	the	french	commercial	code,	the	                   on	 these	 agreements	 and	 on	 the	 nrs,	 please	 refer	 to	 chapter  3:	
company	hereby	provides	notice	that	reinstated	debt	agreements	as	                     “management’s	 discussion	 and	 analysis	 of	 financial	 condition	 and	
well	as	the	nrs	contain	a	change	of	control	clause.	for	more	information	              results	of	operations”,	section 3.16.3:	“financial	resources”.




                                                                                                          technIcolor	–	2010	annual	report                             125
            |	additional	information
6           MEMORANDuM	AND	ARTICLES	OF	ASSOCIATION



                                                                                  Contents
                                                                          ➜
                                                                                                  ➜



    6.2	 memorandum	and	artIcles	of	assocIatIon
    below	is	a	summary	of	certain	material	provisions	of	applicable	french	           the	board	of	directors,	acting	in	accordance	with	the	powers	conferred	by	
    law	and	the	company’s	bylaws.	you	may	obtain	copies	of	the	company’s	             the	combined	general	shareholders’	meeting	held	on	January 27,	2010,	
    bylaws	in	french	from	the	Greffe	of	the	registry	of	commerce	and	                 (i)	approved	the	capital	increase	by	issuance	of	526,608,781	new	shares	on	
    companies	of	nanterre,	france.                                                    may 26,	2010,	(ii)	decided	to	implement	the	reverse	share	split	by	exchange	
                                                                                      of	10	old	shares	of	€0.10	nominal	value	for	1	new	share	of	€1.00	nominal	
    technicolor’s	bylaws	were	amended	by	the	combined	general	share-
                                                                                      value	on	July 15,	2010,	and	(iii)	recorded	the	capital	increase	by	issuance	
    holders’	meeting	held	on	January 27,	2010	and	by	the	board	of	directors	
                                                                                      of	95,196,744	new	shares	in	partial	redemption	of	the	notes redeemable	
    acting	in	accordance	with	the	powers	conferred	by	this	general	meeting.
                                                                                      in	shares	(nrs)	and	of	all	of	the	disposal	proceeds	notes (dpn)	on	
    the	combined	general	shareholders’	meeting	held	on	January 27, 2010	              december 30,	2010	(for	more	information	regarding	these	transactions,	
    decided	 namely	 (i)  the	 reduction	 of	 the	 share	 capital	 (see	              refer	to	chapter 5:	“shareholders	and	listing	information”,	section 5.1:	“share	
    chapter 5: “technicolor	and	its	shareholders”,	section 5.1:	“share	capital”	      capital”	of	this	annual	report).
    of	this	annual	report)	and	(ii) the	change	of	the	name	of	the	company	
    to	“technicolor”.



    6.2.1	 Corporate	purpose	(Article 2	of	the	bylaws)
    technicolor’s	corporate	purpose	is:                                               ■■   the	 manufacture,	 purchase,	 importation,	 sale	 and	 exportation,	
                                                                                           anywhere	of	all	manner	of	materials	and	products,	as	well	as	the	
    ■■    the	taking	of	equity	holdings	or	interests	in	any	business	of	any	nature	
                                                                                           rendering	of	all	manner	of	services.
          in	any	form	whatsoever,	whether	in	existence	or	to	be	created;
    ■■    the	 acquisition,	 management,	and	transfer	of	all	manner	of	real	          technicolor	 may	 act	 directly	 or	 indirectly	 for	 its	 own	 account	 or	 for	
          property	rights	and	assets	and	of	all	manner	financial	instruments,	as	     the	account	of	third	parties,	whether	alone	or	by	equity	holding,	under	
          well	as	the	execution	of	all	manner	of	financing	transactions;              agreement,	in	a	joint	venture,	or	in	partnership	with	any	other	legal	entity	
                                                                                      or	individual,	and	may	carry	out,	whether	in	france	or	abroad,	in	any	
    ■■    the	acquisition,	transfer	and	exploitation	of	all	manner	of	Intellectual	
                                                                                      manner	whatsoever,	all	manner	of	financial,	commercial,	industrial,	real	
          property	rights,	licenses	or	processes;
                                                                                      property,	and	personal	property	transactions	within	its	corporate	purpose	
                                                                                      or	involving	similar	or	related	matters.



    6.2.2	Form,	holding	and	transfer	of	shares	
          (Articles 7 and 8 of the bylaws)
    foRm of shaRes                                                                    registered	in	an	account	which	the	intermediary	maintains	with	euroclear	
                                                                                      france	(a	french	clearing	system	which	holds	securities	for	its	participants).	
    technicolor	bylaws	provide	that	the	shares	may	be	held	in	registered	or	          each	financial	accredited	intermediary	maintains	a	record	of	shares	held	
    bearer	form	at	the	holder’s	election.                                             through	it.	shares	held	in	bearer	form	may	only	be	transferred	through	
                                                                                      intermediaries	and	euroclear	france.

    holding of shaRes                                                                 In	order	to	identify	holders	of	bearer	shares,	the	company	has	the	right,	
                                                                                      subject	to	applicable	law	and	regulation,	to	request,	at	any	time	and	subject	
    In	accordance	with	french	law	concerning	dematerialization	of	securities,	        to	the	payment	of	fees,	that	euroclear	france	provide	it	with	the	name,	
    shareholders’	ownership	rights	are	represented	by	book	entries	instead	of	        form,	nationality,	date	of	birth	or	the	date	of	incorporation	or	formation,	
    share	certificates	under	the	conditions	defined	by	applicable	legislation.        as	well	as	the	address	of	the	holders	of	shares	or	other	securities	granting	
    accounts	of	shares	in	registered	form	are	maintained	by	the	company	              immediate	or	future	voting	rights,	in	addition	to	the	number	of	shares	or	
    or	by	an	accredited	intermediary	(currently	société	générale).	each	              other	securities	held	by	such	a	person,	and,	if	applicable,	any	restrictions	
    registered	shareholder	account	shows	the	name	of	the	holder	and	the	              applicable	to	the	shares.	when	a	person	for	whom	information	has	been	
    number	of	shares	held	and,	in	the	case	of	shares	held	through	an	accredited	      requested	does	not	provide	this	information	within	the	time	allowed	
    intermediary,	shows	that	they	are	so	held.	the	company,	or	the	accredited	        by	applicable	law	and	regulation	or	if	the	information	is	incomplete	or	
    intermediary,	issues	confirmations	to	each	registered	shareholder	as	to	          erroneous	with	respect	to	either	legal	capacity	or	the	identity	of	the	owner	
    shares	registered	in	the	shareholder’s	account,	but	these	confirmations	          of	the	securities,	and	the	number	of	shares	held,	the	shares	or	the	securities	
    are	not	documents	of	title.                                                       that	immediately	or	in	the	future	entitle	their	owner	to	receive	shares,	and	
                                                                                      for	which	this	person	was	registered	as	a	shareholder	shall	be	deprived	
    shares	held	in	bearer	form	are	held	on	the	shareholder’s	behalf	in	an	            of	the	right	to	vote	at	all	shareholders’	meetings	that	may	be	held	until	
    account	 maintained	 by	 a	 financial	 accredited	 intermediary	 and	 are	



    126       technIcolor	–	2010	annual	report
                                                                                                             |	additional	information
                                                                           MEMORANDuM	AND	ARTICLES	OF	ASSOCIATION                                                    6
                                                                              Contents
                                                                      ➜
                                                                                              ➜


proper	identification	is	provided,	and	the	payment	of	the	dividends	on	           tRansfeR of shaRes
said	shares	or	securities	shall	be	withheld	until	such	time.
                                                                                  technicolor’s	bylaws	do	not	contain	any	restriction	to	the	transfer	of	shares.
the	company	may	request	any	legal	entity	(personne morale)	who	holds	
more	than	2.5%	of	technicolor’s	shares,	to	disclose	the	name	of	any	person	       registered	shares	must	be	converted	into	bearer	form	before	being	
who	owns,	directly	or	indirectly,	more	than	one	third	of	its	share	capital	       transferred	on	euronext	paris	and,	accordingly,	must	be	registered	in	an	
or	voting	rights.                                                                 account	maintained	by	a	financial	accredited	intermediary.	a	shareholder	
                                                                                  may	initiate	a	transfer	by	giving	instructions	to	the	relevant	financial	
In	accordance	with	french	law,	shares	held	by	any	non-french	resident	may	        accredited	intermediary.
be	held	on	the	shareholders’	behalf	in	a	collective	account	or	in	several	
individual	accounts	by	an	intermediary.	furthermore,	under	french	law,	           for	dealings	on	euronext	paris,	a	fee	or	commission	is	payable	to	the	
any	intermediary	who	acts	on	behalf	of	one	or	more	persons	who	are	               broker	involved	in	the	transaction,	regardless	of	whether	the	transaction	
not	domiciled	in	france	must	spontaneously	declare	that	it	is	acting	as	          occurs	within	or	outside	france.	no	registration	duty	is	normally	payable	in	
an	intermediary	and	technicolor	may	request	to	be	provided	with	the	              france,	unless	a	written	transfer	instrument	has	been	executed	in	france.
identity	of	the	shareholders	on	whose	behalf	it	is	acting.	the	owner	of	
shares	recorded	in	the	collective	account	or	in	several	individual	accounts	
by	an	intermediary	will	be	represented	in	the	shareholders’	meeting	by	
this	intermediary.



6.2.3	Shareholders’	Meetings	and	voting	rights	
      (Article 19 of the bylaws)
geneRal                                                                           two	members	of	the	workers	council	(Comité d’entreprise)	can	attend	
                                                                                  general	meetings.	they	are	also	entitled	to	participate	in	the	discussions	
In	accordance	with	the	french	commercial	code,	there	are	three	types	             related	to	decisions	which	require	unanimous	shareholder	vote.	the	
of	general	shareholders’	meetings:	ordinary,	extraordinary	and	special.           company’s	chief	executive	officer,	or	any	other	person	acting	under	
                                                                                  his	delegation	is	required	to	inform	the	workers	council	of	the	date	and	
ordinary	general	meetings	of	shareholders	are	required	for	matters	
                                                                                  place	of	general	meetings.
such as:
                                                                                  the	chairman	of	the	board	of	directors	or,	if	unavailable,	a	vice	president	
■■   electing,	replacing	and	removing	directors;
                                                                                  of	the	board	of	directors	presides	over	shareholders’	meetings.	If	none	are	
■■   appointing	independent	auditors;                                             available,	the	board	of	directors	may	delegate	a	member	to	preside	over	
■■   approving	the	annual	accounts;                                               the	meeting.	otherwise,	those	present	at	the	meeting	may	elect	a	meeting	
■■   authorizing	the	distribution	and	payment	of	dividends,	etc.                  chairperson.	the	scrutineers’	functions	are	held	by	the	two	members	of	
                                                                                  the	meeting	representing	the	highest	amount	of	voting	rights,	provided	
extraordinary	general	meetings	of	shareholders	are	required	for	amend-            they	accept	such	functions.
ments	to	bylaws,	which	include,	such	matters	as,	but	are	not	limited	to:
■■   changing	the	company’s	name	or	corporate	purpose;
                                                                                  annual oRdinaRy meetings
■■   increasing	or	decreasing	the	share	capital;
                                                                                  the	french	commercial	code	requires	the	board	of	directors	to	convene	
■■   creating	a	new	class	of	equity	securities;
                                                                                  an	annual	ordinary	general	meeting	of	shareholders	for	approval	of	
■■   authorizing	the	issuance	of	investment	certificates,	convertible	or	         the	annual	accounts.	this	meeting	must	be	held	within	six	months	of	the	
     exchangeable	securities;                                                     end	of	each	fiscal	year.	this	period	may	be	extended	by	an	order	of	the	
■■   establishing	any	other	rights	of	equity	securities;                          president	of	the	commercial	court.	the	board	of	directors	may	also	
■■   selling	or	transferring	substantially	all	of	the	company’s	assets;           convene	an	ordinary	or	extraordinary	meeting	of	shareholders	upon	
                                                                                  proper	notice	at	any	time	during	the	year.
■■   the	voluntary	liquidation	of	the	company,	etc.
                                                                                  If	the	board	of	directors	fails	to	convene	a	shareholder’s	meeting,	meetings	
special	 meetings	 of	 shareholders	 are	 held	 with	 holders	 of	 a	 certain	    can	be	convened	by	the	statutory	auditors,	the	majority	shareholder	after	
category	of	shares	(such	as,	among	others,	preferred	shares).	please	also	        a	tender	offer	(“offre publique d’achat ou d’échange”),	after	the	transfer	of	a	
refer	to	section 6.1.2:	“changes	in	share	capital	and	in	shareholders’	rights,	   controlling	block,	or	by	a	court-appointed	agent	upon	request	of:
paragraph	“modification	of	the	rights	of	a	class	of	shareholders”.
                                                                                  ■■   one	or	several	shareholders	holding	at	least	5%	of	the	share	capital;
shareholders’	meetings	are	held	either	at	the	headquarters	of	the	company	
or	at	another	place	as	indicated	in	the	notice	of	the	meeting.	when	the	          ■■   any	interested	party	in	cases	of	urgency;
board	of	directors	decides	to	convene	a	shareholder’s	meeting,	it	may	            ■■   the	workers’	council	(“comité d’entreprise”)	provided	that	there	is	
also	decide	whether	to	broadcast	the	entirety	of	the	general	meeting	by	               an	emergency;	or
video	conference	or	data	transmission	subject	to	conditions	provided	for	         ■■   duly	qualified	associations	of	shareholders	who	have	held	their	shares	
under	applicable	regulations.	any	such	decision	is	to	be	communicated	                 in	registered	form	for	at	least	two	years	and	who	together	hold	at	least	
in	the	announcement	of	the	session	and	in	the	notice	of	the	meeting.                   a	certain	percentage	of	the	voting	rights	of	the	company	as	defined	
                                                                                       in	article l. 225-120,	II	of	the	french	commercial	code.


                                                                                                    technIcolor	–	2010	annual	report                        127
            |	additional	information
6           MEMORANDuM	AND	ARTICLES	OF	ASSOCIATION



                                                                                   Contents
                                                                           ➜
                                                                                                   ➜


    In	the	case	of	a	liquidation,	shareholders’	meeting	are	convened	by	               the	board	of	directors	must	submit	these	resolutions	to	a	vote	of	the	
    liquidators.                                                                       shareholders.
                                                                                       from	the	date	of	the	publication	of	the	final	notice	in	the	balo	and	
    notice of shaReholdeRs’ meetings                                                   until	the	fourth	business	day	preceding	a	meeting	of	shareholders,	any	
                                                                                       shareholder	may	submit	written	questions	to	the	board	of	directors	
    the	company	must	announce	general	meetings	at	least	35 days	in	                    relating	to	the	agenda	for	the	meeting.	the	board	of	directors	must	
    advance	(or	15 days	in	advance	in	the	event	of	general	meetings	convened	          respond	to	these	questions	either	during	the	meeting,	either	by	posting	
    in	the	situation	where	the	company	is	subject	to	a	tender	offer	in	order	          the	board	of	directors’	answers	on	the	company’s	website.
    to	approve	defensive	measures	against	such	tender	offer)	by	means	of	a	
    preliminary	notice	(avis de réunion)	which	is	published	in	the	Bulletin des        moreover,	the	board	of	directors	must,	twenty-one	calendar	days	before	a	
    annonces légales obligatoires,	or	“balo”.	the	preliminary	notice	must	             meeting,	make	available	relevant	documents	–	as	defined	by	decree	–	that	
    be	sent	to	the	amf	prior	to	publication.	It	must	contain,	among	other	             will	enable	the	voting	shareholders	to	make	an	informed	decision.
    things,	the	time,	date	and	place	of	the	meetings,	the	agenda,	a	draft	             attendance	and	voting	at	shareholders’	meetings
    of	the	resolutions	to	be	submitted	to	the	shareholders,	a	description	of	
    the	procedures	which	holders	of	bearer	shares	must	follow	to	attend	the	           each	shareholder	is	entitled	to	one	vote	per	share	at	any	general	meeting.
    meeting	and	the	procedure	for	voting	by	mail	or	by	data	transmission.	             If	a	shareholder	fails	to	properly	notify	the	company	on	passing	specific	
    the	amf	also	recommends	that	simultaneously	with	the	publication	of	               thresholds	in	the	manner	described	below	under	section 6.2.7:	“requirements	
    the	preliminary	notice	in	the	balo,	a	summary	of	the	preliminary	notice	           for	holdings	exceeding	certain	percentages”	of	this	chapter,	the	shares	
    should	be	published	in	a	newspaper	of	national	circulation	in	france,	             exceeding	that	threshold	may	be	deprived	of	voting	rights.
    which	contains	the	time,	date	and	place	of	the	meeting	and	indicates	
    how	investors	can	obtain	documents	relating	to	the	meetings.                       under	the	french	commercial	code,	shares	of	a	company	held	by	entities	
                                                                                       controlled	directly	or	indirectly	by	that	company	are	not	entitled	to	voting	
    at	 least	 fifteen	 days	 (or	 six	 days	 in	 the	 event	 of	 general	 meetings	   rights	and	do	not	count	for	quorum	or	majority	purposes.
    convened	in	the	situation	where	the	company	is	subject	to	a	tender	offer	
    in	order	to	approve	defensive	measures	against	such	tender	offer)	prior	           shareholders	may	attend	ordinary	general	meetings	and	extraordinary	
    to	the	date	set	for	the	meeting	on	first	call,	and	at	least	ten	days	(or	four	     general	meetings	and	exercise	their	voting	rights	subject	to	the	conditions	
    days	in	the	event	of	general	meetings	convened	in	the	situation	where	             specified	in	the	french	commercial	code	and	our	bylaws.	there	is	no	
    the	company	is	subject	to	a	tender	offer	in	order	to	approve	defensive	            requirement	that	a	shareholder	have	a	minimum	number	of	shares	in	
    measures	against	such	tender	offer)	before	a	second	call,	the	company	             order	to	attend	or	to	be	represented	at	an	ordinary	or	extraordinary	
    must	send	a	final	notice	(avis de convocation)	containing	the	final	agenda,	       general	meeting.
    place,	date	and	other	information	for	the	meeting.	the	final	notice	must	
                                                                                       under	article r.	225-85	of	the	french	commercial	code,	participation	
    be	sent	by	mail	to	all	registered	shareholders	who	have	held	shares	for	
                                                                                       in	 general	 meetings	 is	 subject	 to	 the	 entry	 of	 registration	 either	 in	
    more	than	one	month	prior	to	the	date	of	the	final	notice	and	published	
                                                                                       company’s	pure	registered	account,	or	in	bearer	shares	accounts	held	by	
    in	a	newspaper	authorized	to	publish	legal	announcements	in	the	local	
                                                                                       an	authorized	intermediary,	under	the	conditions	set	forth	in	applicable	
    administrative	area	(département)	in	which	the	company	is	registered	
                                                                                       legislation,	in	each	case	by	12:00	a.m.	(paris	time)	on	the	third	trading	
    as	well	as	in	the	balo,	with	prior	notice	having	been	sent	to	the	amf.	
                                                                                       day	preceding	the	general	meeting.	for	holders	of	registered	shares,	
    In	general,	shareholders	can	only	take	action	at	shareholders’	meetings	           entry	in	registered	shares	account	no	later	than	on	the	third	trading	
    on	matters	listed	on	the	agenda	for	the	meeting.	as	an	exception	to	this	          day	preceding	the	general	meeting	enables	them	to	participate	in	the	
    rule,	shareholders	may	take	action	with	respect	to	the	appointment	and	            meeting.	for	owners	of	bearer	shares	the	registration	is	evidenced	by	
    dismissal	of	directors	even	though	these	actions	have	not	been	included	           a	certificate	of	participation	(attestation de participation)	issued	by	the	
    on	the	agenda.	additional	matters	or	resolutions	may	be	included	in	the	           authorized	intermediary.
    agenda	from	the	publication	of	the	preliminary	notice	in	the	balo	up	
    to	twenty-five	days	prior	to	the	date	on	which	the	shareholders’	meeting	
    is	scheduled,	by:                                                                  PRoxies and votes by mail
    ■■    one	or	several	shareholders	holding	a	specified	percentage	of	shares;	       oR videoconfeRence
          or                                                                           all	shareholders	who	have	duly	registered	their	shares	or	presented	a	
    ■■    a	duly	qualified	association	of	shareholders	who	have	held	their	shares	     certificate	 of	 participation	 from	 their	 authorized	 intermediary	 may	
          in	registered	form	for	at	least	two	years	and	who	together	hold	at	          participate	in	general	meetings	in	person,	or	be	represented	by	a	any	
          least	a	certain	percentage	of	the	company’s	voting	rights	as	defined	        person	of	their	choice.	technicolor’s	bylaws	provide	for	the	possibility	
          by	articles	l. 225-105,	paragraph	2	and	r.	225-71,	paragraph	2	of	the	       of	participating	or	voting	in	shareholders’	meetings	by	videoconference	
          french	commercial	code;	or                                                   or	by	data	transmission,	pursuant	to	applicable	law	and	regulations.	a	
    ■■    the	workers’	council.                                                        holder	of	bearer	shares	who	is	not	a	french	resident	may	be	represented	
                                                                                       at	shareholders’	meetings	by	an	appointed	intermediary	as	described	in	
    however,	if	the	preliminary	notice	in	the	balo	was	published	more	than	            the	paragraph	“attendance	and	voting	at	shareholders’	meetings”	of	the	
    forty-five	days	prior	to	the	date	on	which	the	shareholders’	meeting	              present	chapter.
    is	scheduled,	such	additional	resolutions	may	be	proposed	only	within	
    twenty	days	following	such	publication.	In	the	event	of	general	meetings	          proxies	will	be	sent	to	any	shareholder	on	request.	In	order	to	be	counted,	
    convened	in	the	situation	where	the	company	is	subject	to	a	tender	offer	in	       such	proxies	must	be	received	at	the	company’s	registered	office,	or	at	
    order	to	approve	defensive	measures	against	such	tender	offer,	additional	         any	other	address	indicated	on	the	notice	convening	the	meeting,	three	
    resolutions	may	be	proposed	only	within	five	days	following	the	publication	       days	prior	to	the	date	of	the	meeting.	a	legal	entity	shareholder	may	
    of	the	preliminary	notice	in	the	balo.                                             grant	proxies	to	a	legal	representative.	alternatively,	the	shareholder	may	
                                                                                       send	a	blank	proxy	without	nominating	any	representative.	In	this	case,	

    128       technIcolor	–	2010	annual	report
                                                                                                           |	additional	information
                                                                         MEMORANDuM	AND	ARTICLES	OF	ASSOCIATION                                                  6
                                                                            Contents
                                                                    ➜
                                                                                           ➜


the	chairman	of	the	meeting	will	vote	the	blank	proxies	in	favour	of	all	       an	ordinary	meeting	or	for	an	extraordinary	general	meeting	where	an	
resolutions	proposed	or	allowed	by	the	board	of	directors	and	against	          increase	in	share	capital	is	proposed	through	incorporation	of	reserves,	
all	others.                                                                     profits	or	share	premium.	In	the	case	of	any	other	reconvened	extraordinary	
                                                                                general	meeting	or	special	meeting	of	holders	of	a	certain	category	of	
with	respect	to	votes	by	mail,	the	company	or	its	intermediary	must	
                                                                                shares,	the	quorum	required	is	20%	of	the	shares	entitled	to	voting	rights.	
send	shareholders	a	voting	form.	the	completed	form	must	be	returned	
                                                                                however,	only	questions	that	were	on	the	agenda	of	the	adjourned	meeting	
to	the	company	at	least	three	days	prior	to	the	date	of	the	shareholders’	
                                                                                may	be	discussed	and	voted	upon.	If	a	quorum	is	not	present,	the	reconvened	
meeting.
                                                                                meeting	may	be	adjourned	for	a	maximum	of	two	months.	no	deliberation	
under	conditions	established	by	law	and	regulations	and	upon	decision	          by	the	shareholders	may	take	place	without	a	quorum.
of	the	board	of	directors,	the	shareholders	may	also	send	their	proxy	
                                                                                when	the	board	of	directors	has	decided	to	broadcast	the	entirety	of	
and	voting	forms	via electronic	transmission.	In	this	case,	the	address	of	
                                                                                the	general	meeting	by	video	conference	or	data	transmission,	the	
the	website	must	be	mentioned	in	the	preliminary	notice	and	the	notice	
                                                                                shareholders	who	attend	the	general	meeting	by	video	conference,	or	
of	meeting.
                                                                                by	any	means	of	telecommunication	allowing	them	to	be	identified,	are	
                                                                                deemed	to	be	present	for	the	quorum	and	majority	calculation.
quoRum                                                                          under	french	law,	treasury	shares	are	not	counted	for	quorum	purposes	
the	french	commercial	code	provides	that	shareholders	having	at	                and	are	not	entitled	to	voting	rights.
least	20%	of	the	shares	entitled	to	voting	rights	be	present	in	person,	
vote	 by	 proxy,	 by	 mail	 or	 by	 videoconference,	 or	 by	 any	 means	 of	
telecommunication	allowing	them	to	be	identified	to	fulfil	the	quorum	
                                                                                majoRity
requirements	for:                                                               a	simple	majority	of	the	shareholder	votes	cast	may	pass	a	resolution	(i) at	
                                                                                an	ordinary	general	meeting,	(ii) an	extraordinary	general	meeting	
■■   an	ordinary	general	meeting;	or
                                                                                concerning	only	a	capital	increase	by	incorporation	of	reserves,	profits	or	
■■   an	extraordinary	general	meeting	where	an	increase	in	share	capital	is	    share	premium	or	(iii) an	extraordinary	general	meeting	convened	in	the	
     proposed	through	incorporation	of	reserves,	profits	or	share	premium;	     situation	where	the	company	were	ever	subject	to	a	tender	offer	in	order	
     or                                                                         to	approve	an	issuance	of	warrants	allowing	the	subscription,	at	preferential	
■■   an	extraordinary	general	meeting	convened	where	the	company	is	            conditions,	of	shares	of	the	company	and	the	free	allotment	of	such	
     subject	to	a	tender	offer	to	approve	an	issuance	of	warrants	allowing	     warrants	to	existing	shareholders	of	the	company,	the	implementation	
     the	subscription,	at	preferential	conditions,	of	shares	of	the	company	    of	which	would	be	likely	to	cause	such	tender	offer	to	fail.
     and	the	free	allotment	of	such	warrants	to	existing	shareholders	of	
                                                                                at	any	other	extraordinary	general	meeting	or	special	meeting	of	holders	
     the	company,	the	implementation	of	which	would	be	likely	to	cause	
                                                                                of	a	certain	category	of	shares,	a	two-thirds	majority	of	the	shareholder	
     such	tender	offer	to	fail.
                                                                                votes	cast	is	required,	including	abstentions	by	shareholders	present,	or	
the	quorum	requirement	is	25%	of	the	shares	entitled	to	voting	rights,	on	      represented	by	proxy,	voting	by	mail	or	by	videoconference,	or	by	any	
the	same	basis,	for	any	other	extraordinary	general	meeting.                    means	of	telecommunication	allowing	them	to	be	identified.

for	a	special	meeting	of	holders	of	a	certain	category	of	shares,	the	          a	 unanimous	 shareholder	 vote	 is	 required	 to	 increase	 liabilities	 of	
quorum	requirement	is	33 1/3%	of	the	shares	entitled	to	vote	in	that	           shareholders.
category,	in	person,	vote	by	mail,	proxy	or	by	videoconference,	or	by	any	
                                                                                abstention	from	voting	by	those	present	or	represented	by	proxy	or	voting	
means	of	telecommunication	allowing	them	to	be	identified.
                                                                                by	mail	or	data	transmission	(if	applicable)	is	counted	as	a	vote	against	
If	a	quorum	is	not	present	at	a	meeting,	the	meeting	is	adjourned.	when	        the	resolution	submitted	to	a	shareholder	vote.
an	adjourned	meeting	is	resumed,	there	is	no	quorum	requirement	for	



6.2.4	Financial	statements	and	communications	with shareholders
In	connection	with	any	shareholders’	meeting,	the	company	must	provide	         to	the	ordinary	shareholders’	meeting	such	as	stock	options	authorized	
a	set	of	documents	including	its	annual	report	and	a	summary	of	the	            and/or	granted	by	the	company	or	the	purchase	by	the	company	of	its	
results	of	the	five	last	fiscal	years	to	any	shareholder	who	so	requests.	      own	shares.
the	french	commercial	code	requires	that	special	reports	be	provided	




                                                                                                  technIcolor	–	2010	annual	report                      129
           |	additional	information
6          MEMORANDuM	AND	ARTICLES	OF	ASSOCIATION



                                                                                 Contents
                                                                         ➜
                                                                                                ➜



    6.2.5	Dividends	(Article 22 of the	bylaws)
    Income	available	for	distribution	consists	of	net	income	for	the	fiscal	year,	   reserves	cannot	be	used	and,	in	particular,	may	only	be	distributed	to	
    less	any	prior	losses	and	the	amounts	to	be	allocated	to	reserve	accounts	       shareholders	upon	liquidation	of	the	company.	this	restriction	on	the	
    as	stipulated	by	law,	plus	any	retained	earnings.                                payment	of	the	dividends	also	applies	on	an	unconsolidated	basis	to	each	
                                                                                     of	the	company’s	french	subsidiaries	organized	as	a	société anonyme,	
    from	this	amount,	the	annual	general	meeting	may	then,	upon	a	proposal	
                                                                                     société en commandite par actions,	société par actions simplifiée	or	société
    submitted	by	the	board	of	directors,	set	aside	as	much	as	it	deems	appro-
                                                                                     à responsabilité limitée.
    priate	to	allocate	to	any	ordinary	or	extraordinary	discretionary	reserves	
    or	to	the	retained	earnings	account.
    any	remainder	is	then	divided	up	between	the	shares	in	proportion	to	            distRibution of dividends
    their	paid-up	and	unredeemed	value.                                              dividends	are	distributed	to	shareholders	pro rata	according	to	their	
    the	board	of	directors	may	decide	to	pay	interim	dividends	in	the	cases	         respective	holdings	of	shares.	outstanding	dividends	are	payable	to	
    and	under	the	terms	provided	for	by	law.                                         shareholders	from	the	date	of	the	shareholders’	meeting	at	which	the	
                                                                                     distribution	of	dividends	is	approved.	In	the	case	of	interim	dividends,	
    for	more	information	regarding	the	company’s	dividend	distribution	              distributions	are	made	to	shareholders	from	the	date	of	the	board	of	
    policy,	 see	 chapter  5:	 “shareholders	 and	 listings	 information”,	          directors’	 meeting	 in	 which	 the	 distribution	 of	 interim	 dividends	 is	
    section 5.1.8: “dividend	policy”	of	this	annual	report.                          decided.	the	dividend	payment	date	is	decided	by	the	shareholders	in	
                                                                                     an	ordinary	general	meeting,	or	by	the	board	of	directors	in	the	absence	
                                                                                     of	such	a	decision	by	the	shareholders.
    legal ReseRve
    the	french	commercial	code	provides	that	french	sociétés anonymes	
    such	as	the	company	must	allocate	5%	of	their	unconsolidated	statutory	          timing of Payment
    net	profit	for	each	year	to	their	legal	reserve	fund	before	dividends	may	       according	to	the	french	commercial	code,	the	company	must	pay	any	
    be	paid	with	respect	to	that	year.	funds	must	be	allocated	until	the	amount	     dividends	within	nine	months	of	the	end	of	its	fiscal	year,	unless	otherwise	
    in	the	legal	reserve	is	equal	to	10%	of	the	aggregate	nominal	value	of	the	      authorized	by	court	order.	dividends	on	shares	that	are	not	claimed	within	
    issued	and	outstanding	share	capital.	the	legal	reserve	of	any	company	          five	years	of	the	dividend	payment	date	revert	to	the	french	state.
    subject	to	this	requirement	may	only	be	used	to	offset	losses	when	other	



    6.2.6	Liquidation	rights
    If	the	company	were	to	be	liquidated,	any	assets	remaining	after	payment	        surplus	will	be	distributed	pro rata	among	shareholders	in	proportion	to	
    of	its	debts,	liquidation	expenses	and	all	of	its	remaining	obligations	will	    the	nominal	value	of	their	shareholdings.	shareholders	only	bear	losses	
    be	distributed	first	to	repay	in	full	the	nominal	value	of	its	shares.	any	      up	to	the	amount	of	their	contributions.



    6.2.7	Requirements	for	holdings	exceeding	certain	percentages
    requirements	for	holdings	exceeding	certain	percentages	are	set	forth	           listed	company.	these	persons	must	file	a	report	(“déclaration d’intention”)	
    by	article l. 233-7	of	the	french	commercial	code.                               with	the	company	and	the	amf	within	five	trading	days	of	the	date	they	
                                                                                     cross	the	threshold.	In	the	report,	the	acquirer	must	specify	whether	it	is	
    the	french	commercial	code	provides	that	any	individual	or	entity,	acting	
                                                                                     acting	alone	or	in	concert	with	other	entities	or	persons	and	indicate	its	
    alone	or	in	concert	with	others,	that	becomes	or	ceases	to	be	the	owner,	
                                                                                     intentions	for	the	following	6-month	period,	including	whether	or	not	it	
    directly	or	indirectly,	5%,	10%,	15%,	20%,	25%,	33 1/3%,	50%,	66	2/3%,	90%	or	
                                                                                     intends	to	continue	its	purchases,	to	acquire	control	of	the	company	in	
    95%,	as	applicable,	of	the	outstanding	shares	or	voting	rights	of	a	french	
                                                                                     question	or	to	seek	nomination	to	the	board	of	directors.	the	amf	makes	
    company	listed	on	a	regulated	market	of	the	european	economic	area	
                                                                                     the	report	public.	the	acquirer	must	also	publish	a	press	release	stating	its	
    or	that	increases	or	decreases	its	shareholding	or	voting	rights	above	or	
                                                                                     intentions	in	a	financial	newspaper	of	national	circulation	in	france.	the	
    below	any	of	those	percentages,	must	notify	the	company	and	the	amf	
                                                                                     acquirer	may	amend	its	stated	intentions,	provided	that	it	does	so	on	the	
    within	four	trading	days	of	the	date	it	crosses	such	threshold,	of	the	number	
                                                                                     basis	of	significant	changes	in	its	own	situation	or	shareholding	(or	in	the	
    of	shares	it	holds	(directly	or	in	the	form	of	adss	or	by	an	intermediary	
                                                                                     ones	of	the	entities	or	persons	acting	in	concert	with	it).	upon	any	change	
    as	described	in	section 6.2.2:	“form,	holding	and	transfer	of	shares”,	
                                                                                     of	intention,	it	must	file	a	new	report.
    paragraph	“holding	of	shares”	of	the	present	chapter),	their	voting	rights	
    and	the	number	of	securities	giving	access,	directly	or	indirectly,	to	shares	   under	the	amf’s	regulations,	and	subject	to	limited	exemptions	granted	
    and/or	voting	rights.	the	amf	makes	this	information	public.                     by	the	amf,	any	person	or	persons	acting	in	concert	owning	in	excess	
                                                                                     of	33 1/3%	of	the	share	capital	or	voting	rights	of	a	french	listed	company	
    french	law	and	the	general	regulation	of	the	amf	impose	additional	
                                                                                     must	initiate	a	public	tender	offer	for	the	balance	of	the	share	capital,	
    reporting	requirements	on	persons	who	are	increasing	their	ownership	
                                                                                     voting	rights	and	securities	giving	access	to	such	share	capital	or	voting	
    above	10%,	15%,	20%	or	25%	of	the	outstanding	shares	or	voting	rights	of	a	
                                                                                     rights	of	such	company.


    130      technIcolor	–	2010	annual	report
                                                                                                            |	additional	information
                                                                          MEMORANDuM	AND	ARTICLES	OF	ASSOCIATION                                                   6
                                                                             Contents
                                                                     ➜
                                                                                             ➜


If	any	person	fails	to	comply	with	the	legal	notification	requirement,	the	      conditions	when	the	equity	holding	or	the	voting	rights	fall	below	the	
shares	or	voting	rights	in	excess	of	the	relevant	threshold	will	be	deprived	    thresholds	mentioned	above.
of	voting	rights	for	all	shareholder’s	meetings	until	the	end	of	a	two-year	
                                                                                 each	shareholder	who	does	not	comply	with	the	requirements	above	may,	
period	following	the	date	on	which	the	owner	thereof	complies	with	
                                                                                 under	the	conditions	and	limitations	specified	by	french	law,	be	deprived	
the	notification	requirements.	In	addition,	any	shareholder	who	fails	to	
                                                                                 of	the	right	to	vote	pertaining	to	the	shares	exceeding	the	threshold	at	
comply	with	these	requirements	may	have	all	or	part	of	its	voting	rights	
                                                                                 issue.
suspended	for	up	to	two	years	by	the	commercial	court	at	the	request	
of	the	chairman	of	the	board,	any	shareholder	or	the	amf,	and	may	be	            under	french	law,	any	listed	company	must	publish	monthly	the	total	
subject	to	a	fine.                                                               number	of	shares	and	voting	rights	composing	its	share	capital,	if	such	
                                                                                 number	varied	as	compared	to	those	previously	published,	in	compliance	
In	addition,	the	company’s	bylaws	provide	that	any	individual	or	entity,	
                                                                                 with	the	amf’s	regulations.
acting	alone	or	in	concert,	who	becomes,	directly	or	indirectly,	the	owner	
of	0.5%	or	any	multiple	thereof,	of	the	total	number	of	shares	or	voting	        In	order	to	facilitate	compliance	with	the	notification	requirements,	ads	
rights	of	the	company	must	notify	the	company	within	four	trading	days	          holders	 may	 deliver	 any	 such	 notification	 to	 the	 depositary	 and	 the	
of	exceeding	the	threshold	by	registered/certified	letter	with	return	receipt	   depositary	shall,	as	soon	as	practicable,	forward	such	notification	to	the	
requested,	by	fax,	or	by	telex	indicating	whether	the	shares	or	voting	rights	   company	and	to	the	amf.
are	or	are	not	held	for	the	account	of,	under	the	control	of,	or	in	concert	
with	other	legal	entities	or	individuals.	this	duty	applies	under	the	same	



6.2.8	Purchase	of	own	shares
under	french	law,	the	company	may	not	issue	shares	to	itself.	however,	it	       the	company	may	not	cancel	more	than	10%	of	its	outstanding	share	
may,	once	listed,	either	directly	or	through	a	financial	intermediary	acting	    capital	over	any	24-month	period.	Its	repurchase	of	shares	also	may	not	
on	its	behalf,	acquire	up	to	10%	of	its	share	capital	within	a	maximum	          result	in	the	company	holding,	directly	or	through	a	person	acting	on	its	
period	of	18 months	following	the	shareholder’s	meeting	authorization.	to	       behalf,	more	than	10%	of	its	outstanding	share	capital,	or	if	it	has	different	
acquire	shares	for	this	purpose,	the	company	must	release	a	description	of	      classes	of	shares,	10%	of	the	shares	in	each	class.
the	share	buy-back	program	(descriptif du programme)	before	its	launching	
                                                                                 the	company	must	hold	any	repurchased	shares	in	registered	form.	these	
date.	the	description	of	the	program	must	contain	certain	information,	
                                                                                 shares	also	must	be	fully	paid	up.	shares	repurchased	by	the	company	are	
including	the	date	of	the	shareholders’	meeting	which	authorized	it	and	
                                                                                 deemed	outstanding	under	french	law	but	are	not	entitled	to	dividends	
the	main	terms	and	conditions	of	such	program	(e.g.,	its	objectives,	the	
                                                                                 or	voting	rights,	and	the	company	may	not	exercise	the	preferential	
maximum	number	of	securities	that	may	be	acquired	under	the	program	
                                                                                 subscription	rights	attached	to	them.
and	the	maximum	repurchase	price).	the	company	does	not	need	to	
publish	such	a	description,	if	the	required	disclosure	is	already	included	in	   the	shareholders,	at	an	extraordinary	general	meeting,	may	decide	not	to	
its	french	Document de Référence	or	herein.	see	chapter 5:	“shareholders	        take	these	shares	into	account	in	determining	the	preferential	subscription	
and	listings	information”,	section 5.1.2:	“purchases	of	equity	securities	by	    rights	attached	to	the	other	shares.	If	the	shareholders	decide	to	take	them	
the	issuer	and	affiliated	purchasers”	of	this	annual	report.                     into	account,	the	company	must	either	sell	the	rights	attached	to	the	
                                                                                 shares	it	holds	on	the	market	before	the	end	of	the	subscription	period	or	
shares	can	be	purchased	on	the	market	or	otherwise,	such	as	the	purchase	
                                                                                 distribute	them	to	the	other	shareholders	on	a	pro rata	basis.
of	blocks	of	shares.



6.2.9	Trading	in	the	Company’s	own shares
pursuant	to	european	and	the	amf’s	regulations,	the	company	may	                      the	month	of	public	disclosure	of	the	program	and	fixed	on	that	basis	
not	trade	in	its	own	shares	for	the	purpose	of	manipulating	the	market.	              for	the	authorized	period	of	the	program.	where	the	program	makes	
pursuant	to	these	regulations,	trades	that	do	not	comply	with	the	following	          no	reference	to	that	volume,	the	average	daily	volume	figure	must	
requirements	are	prohibited:                                                          be	based	on	the	average	daily	volume	traded	in	the	20	trading	days	
                                                                                      preceding	the	date	of	purchase.
■■   the	issuer	may	not,	when	executing	trades	under	a	share	repurchase	
     program,	purchase	shares	at	a	price	higher	than	the	highest	price	of	       In	addition,	in	order	to	benefit	from	the	exemption	provided	by	european	
     the	last	independent	trade	or	the	highest	current	independent	bid	on	       and	amf	regulations,	the	company	shall	not,	during	its	participation	in	a	
     the	trading	venues	where	the	purchase	is	carried	out;                       share	repurchase	program,	engage	in	the	following	trading:
■■   when	the	issuer	carries	out	the	purchase	of	its	own	shares	through	         ■■   selling	of	its	own	shares	for	the	duration	of	the	program;
     derivative	financial	instruments,	the	exercise	price	of	such	derivative	
                                                                                 ■■   trading	where	the	company	becomes	aware	of	information	that,	if	
     financial	instruments	shall	not	be	above	the	higher	of	the	price	of	the	
                                                                                      disclosed,	would	have	a	significant	impact	on	the	market	price	of	its	
     last	independent	trade	or	the	highest	current	independent	bid;	and
                                                                                      securities;
■■   the	issuer	may	not	purchase	more	than	25%	of	the	average	daily	
                                                                                 ■■   trading	during	a	15-day	period	before	the	date	on	which	the	company	
     volume	of	the	shares	in	any	one	day	on	the	regulated	market	on	which	
                                                                                      makes	 it	 consolidated,	 annual,	 interim	 and	 quarterly	 financial	
     the	purchase	is	carried	out.	the	average	daily	volume	figure	is	to	be	
                                                                                      statements	public.
     based	on	the	average	daily	volume	traded	in	the	month	preceding	


                                                                                                   technIcolor	–	2010	annual	report                        131
            |	additional	information
6           MATERIAL	CONTRACTS



                                                                                  Contents
                                                                          ➜
                                                                                                 ➜


    however,	these	requirements	do	not	apply	if:                                      the	company	has	established	“black-out	periods”	during	which	shares	
                                                                                      must	not	be	sold	or	purchased	by	it.	these	periods	include	half-year	
    ■■    the	issuer	has	in	place	a	time-schedule	share	repurchase	program;
                                                                                      “black-out	periods”	from	June 25	to	the	second	business	day	following	
    ■■    the	share	purchase	program	is	lead-managed	by	an	investment	firm	           the	announcement	of	the	first	half	results	and	from	december 25	to	the	
          or	a	credit	institution	which	makes	its	trading	decisions	in	relation	to	   second	business	day	following	the	announcement	of	the	full	year	results.	
          the	issuer’s	shares	independently	of,	and	without	influence	by,	the	        the	company	has	also	established	quarterly	“black-out	periods”	from	
          issuer	with	regard	to	the	timing	of	the	purchases.                          march 25	to	the	second	business	day	following	the	announcement	of	
    pursuant	to	the	general	regulation	of	the	amf	and	its	instruction,	the	           the	first	quarter	sales	and	from	september 25	to	the	second	business	day	
    company	must	publicly	disclose	any	transactions	carried	out	pursuant	             following	the	announcement	of	the	third	quarter	sales.
    to	an	ongoing	share	repurchase	program	by	way	of	a	release	posted	on	
    its	website,	no	later	than	the	seventh	trading	day	following	the	date	of	
    execution	of	said	transactions	and	declare	the	transactions	to	the	amf	
    on	a	monthly	basis.




    6.3	 materIal	contracts
    please	refer	to	the	description	of	our	reinstated	debt	contained	in	chapter 2:	“Information	on	the	company”,	section 2.1.2:	“historical	background”	
    and	chapter 3:	“management’s	discussion	and	analysis	of	financial	condition	and	results	of	operations”,	section 3.16.3:	“financial	resources”	of	this	
    annual	report.




    6.4	 addItIonal	tax	InformatIon

    total amounts, by categoRy of                                                     total amount of ceRtain non-deductible
    exPendituRe, Reinstated in the taxable                                            exPenses undeR aRticles 39-4 and 223
    PRofits following a definitive tax                                                quater of the tax code
    adjustment undeR                  aaRticle 223 quinquieS                          the	non-deductible	expenses	referred	to	in	article	39-4	of	the	tax	code	
    of the tax code                                                                   amounted	to	€186,961.73	in	2010	for	the	company	and	correspond	to	
                                                                                      the	non-deductible	rents	on	tourism	cars.
    not	applicable.




    132       technIcolor	–	2010	annual	report
                                                                                                                                           |	additional	information
                                                                                                                                ORGANIzATION	OF	THE	GROuP                                               6
                                                                                                 Contents
                                                                                          ➜
                                                                                                                        ➜



6.5	 organIzatIon	of	the	group

6.5.1	 Legal	organizational	chart	as	of	December 31,	2010
at	december 31,	2010,	the	group	included	148	consolidated	subsidiaries:	126	were	located	abroad,	and	22	were	located	in	france	(see	notes 5	and	40	
to	the	group’s	consolidated	financial	statements).

                                                                                     Main legal Entities
                                                                                        EUROPE
                                                                                          TECHNICOLOR SA


                100%                               100%                                                                                                                                       99.99%
        Thomson Multimedia                  Technicolor International                                                    100%                                        Technicolor R&D
        Distribution (Netherlands)                                                                                                Gallo 8 SAS (France)               France SNC (France)
        BV (The Netherlands)                SAS (France)

        (Subsidiaries in Asia
                                                                                            100%                                    100%                                                      99.99%
        & Europe)                                            52.34%                                                              Technicolor                         Technicolor R&D
                                                                                          SOFIA SA (France)                      Holdings Ltd.(UK)                   Paris SNC (France)
   100% NOB N.V.                                    Thomson Telecom              47.66%
        (The Netherlands)                           SAS (France)                            99.99%                                                                                            100%
                                                                                                                                                           100%
                                                   (Subsidiaries in Australia,            Deutsche Thomson                      Thomson Broadband                    Thomson Licensing SAS
                                                   Belgium, Canada,                       OHG (Germany)                         UK Ltd                               (France)
                                                                                                                      0,01%
                                                   Hong Kong, Mexico)
                                                                                                                                                           100%      (Subsidiaries in Japan
                                            100% Thomson Video                                                                                                       & in Switzerland)
                                                                                                                                 Technicolor Network                                          100%
                                                    Networks (France) SAS                                                        Services UK Ltd.                    Thomson Angers SAS
                                                                                                                                                                     (France)
                                                                                                                                                           100%
                                            100% Thomson Broadcast
                                                                                                                                Thomson Multimedia                                            100%
                                                    (France) SAS                                                                Sales UK Ltd.
                                                                                                                                                                     Technicolor Trademark
                                                                                                                                                                     Management (France)
                                                                                                                                                           100%
                                            100%                                                                        100%
                                                    Thomson Sales Europe                  Technicolor Ltd. (UK)                  Technivision Ltd. (UK)                                       100%
                                                    (France) SAS
                                                                                                                                                                     Thomson Sales
                                                                                              100%                                                                   Scandinavia AB (Sweden)
                                                                                                                                                           50%
                                            100% Technicolor Entertainment                Technicolor Media                      Screenvision Holdings
                                                   Services Spain, S.A.                   Services Ltd. (UK)                     (Europe) Ltd. (UK)
                                                   (Spain)
                                                   (Subsidiaries in Spain)                                                      (Subsidiaries in Europe)
                                                                                          Technicolor Disc Services
                                                                                          International Ltd. (UK)
                                                    Thomson Holding
                                                    Italy S.p.A. (Italy)
                                                                                          Technicolor Video
                                                    (Subsidiaries in Italy)               Services (UK)

                                                          100%                                                                                             100%
                                                    Technicolor S.p.A.                    Technicolor                   100%     Technicolor Europe
                                                    (Italy)                               Polska Sp Z.o.o.(Poland)               Ltd. (UK)
                                                                                                                                                           100%   100%
                                                                                                                                 Technicolor Broadcast               Technicolor Network
                                                                                                                                                                     Services France SAS
                                                                                                                                 Services (UK)                       (France)

                                                                                                                                                           100%   100%
                                                                                                                                 The Moving Picture                  Thomson Broadcast AG
                                                                                                                                 Company Ltd.(UK)                    (Switzerland)


  SEGMENTS:
   Services Entertainment            Digital Delivery                 Technology                 Corporate                      Other
                                                                                                 (Corporate, Holding
                                                                                                 or belonging
                                                                                                 to several segments)

              Indirect holding




                                                                                                                                technIcolor	–	2010	annual	report                                  133
             |	additional	information
6            ORGANIzATION	OF	THE	GROuP



                                                                                                        Contents
                                                                                                 ➜
                                                                                                                                 ➜



                                                                                      Main legal Entities
                                                                                    ASIA AND AMERICAS
                                                                                                 TECHNICOLOR SA


                                                           100%                                                                                                                       100%
                                                     Technicolor International
                                                                                                                         100%                                                Technicolor USA
                                                                                                                                    Gallo 8 SAS (France)
                                                     SAS (France)                                                                                                            Inc. (USA)

                                                          100%                                              99.99%
                                            100%                                                                                                              100%                                         100%
                                                                                            Technicolor Brasil Midia E                                                       Thomson Licensing LLC
             Technicolor Asia Pacific                                                        entretenimento Ltda.                  Technicolor Holdings
             Investments Pte Ltd.                    Sofia SA (France)                                                                                                        (USA)
                                                                                            (Brazil)                              of Canada,Inc. (Canada)
             (Singapore)
                                                                                52.34%                                          (Subsidiaries
                                            100%          47.66%                                                                 in Canada)
                                                                                                                                                100%
                                                                   Thomson Telecom                                                                                                                         100%
             Beijing Thomson                                                                                                                                                 Premier Retail Networks,
             Commerce Co. Ltd.                                     SAS (France)                                                   Technicolor Canada, Inc.                   Inc. (USA)
             (China)                                                                                                              (Canada)
                                                                   (Subsidiaries in Australia,
                                                                   Canada, Hong-Kong,                                                                         100%                                         100%
             Technicolor (China)            100%                                                                                  Technicolor Australia                      Technicolor Videocassette
                                                                   Mexico)
             Technology Co. Ltd.                                                                                                  Investments Ltd. (UK)                      of Michigan, Inc. (USA)
             (China)                                      100%
                                                                   Thomson Multimedia
                                                                   Ltd. (Canada)                                                      100%
                                            100%                                                                                                                             Technicolor Home              100%
                                                          99.95%                                                                  Technicolor Pty Ltd.                       Entertainment Services,
             Thomson Holdings
                                                                   Thomson Telecom de                                             (Australia)                                Inc. (USA)
             (India) Private Ltd. (India)
                                                                   Mexico (Mexico)                                                                                              (Subsidiaries in Mexico,
                                                                                                                                                                      100%      in USA & UK)
                                            100%                                                                                  Thomson Telecom
             Technicolor Asia Pacific                                                                                              Australia Pty (Australia)
             Holdings Pte Ltd.                                                                                                                                100%           Technicolor Home
             (Singapore)                                                                                                                                                     Entertaiment Services
                                                                                                                    100%                                                     de Mexico (Mexico)
          99.99%                                                                           Technicolor Home                       Technicolor (Thailand)
                                                                                           Entertainment Services
             Technicolor India                                                             of America LLC (USA)                   Ltd. (Thailand)
                                                                                                                                                              100%
             Private Ltd. (India)
    0.003%                                                                                 (Subsidiaries in Mexico)
                                                                                  99.99%                            0.01%
                                                                                           Technicolor Export                     SV Holdco, LLC (USA)
                                                                                           de Mexico, S de R.L.
                                                                                           de C.V. (Mexico)
                                                                                                                                (Subsidiaries                 8.16%
                                                                                  99.99%                            0.01%       in USA)
                                                                                                                                              10.66%                                                       100%
                                                                                           Technicolor Mexicana,                                                             Technicolor, Inc. (USA)
                                                                                           S. de R.L.
                                                                                           de C.V. (Mexico)
                                                                                                                    100%                                                        (Subsidiaries in USA)
                                                                                           Thomson Grass Valley
                                                                                           Hong Kong Ltd.
                                                                                           (Hong Kong)




    SEGMENTS:
      Services Entertainment           Digital Delivery                   Technology                     Corporate                         Other
                                                                                                         (Corporate, Holding
                                                                                                         or belonging
                                                                                                         to several segments)

                   Indirect holding




    At December 31, 2010, the Group had 170 consolidated subsidiaries, of witch 139 were located outside France and 31 in France
    (see Notes 5 and 40 to the Group’s consolidated financial statements).




    134        technIcolor	–	2010	annual	report
                                                                                                                             |	additional	information
                                                                                                                  ORGANIzATION	OF	THE	GROuP                                  6
                                                                                         Contents
                                                                               ➜
                                                                                                          ➜



6.5.2	Operational	organization
the	 group’s	 organizational	 chart	 below	 contains	 the	 group’s	 main	                   services	and	digital	delivery	segments	and	also	for	the	entities	classified	
operating	subsidiaries,	classified	by	segments.	these	subsidiaries	are	                     as	held	for	sale	activities.	they	are	based	on	workforce	for	the	entities	
directly	held	or	indirectly	held	through	technicolor	as	of	december 31,	                    belonging	to	technology.	revenues	from	these	subsidiaries	represent	90%	
2010.	they	have	been	selected	based	on	their	contribution	to	the	group’s	                   of	the	group’s	revenues	(external	and	intra-group)	in	2010.
revenues	(external	and	intra-group)	for	the	entities	of	entertainment	

the	list	of	main	consolidated	subsidiaries	is	described	in	note 40	to	the	group’s	consolidated	financial	statements.	a	summary	table	sets	forth	the	list	
of	group’s	subsidiaries	broken	down	by	the	geographic	location	of	the	entity	(please	refer	to	note 5	to	the	consolidated	financial	statements).


                                                                            TECHNICOLOR SA

               Technology                               Digital Delivery                         Entertainment Services                   Discontinued perimeter

  France       → Thomson R&D France SNC                 → Thomson Telecom                        → Technicolor Distribution Services      → Thomson Broadcast
               → Thomson Licensing SAS                  → Thomson Angers                           France SARL                            → Thomson Video Networks
                                                        → Technicolor Network Services
                                                          France SAS (3)

  Europe
    excl.       Services de Film                        →Services deBroadband UK Ltd
                                                          Thomson Film                           → Technicolor Polska sp.zo.o.              Thomson Film
                                                                                                                                          →Services deBroadcast GmbH
                                                                                                 → Technicolor Disc Services
  France                                                → Technicolor Network Services             International Ltd (Hammersmith)
                                                          UK Ltd
                                                                                                 → Technicolor SpA
                                                        → NOB NV                                 → MPC The Moving Picture Company
                                                                                                   Limited
                                                                                                 → Technicolor Video Serv.(UK) Ltd
                                                                                                 → Technicolor Media Services UK Ltd.
                                                                                                 → Technicolor Entertainment Services
                                                                                                   Spain

Americas       → Thomson Licensing LLC                                                           → Tech. Video Serv.de Mexico S.A.
                                                        → Technicolor USA Inc (2)
               → Thomson Technology LLC
                                                                                                   de CV
                                                        → Technicolor Brasil Midia E             → Technicolor Export de Mexico,
                                                          Entretenimento LTDA                      S. de R.L.
                                                        → Thomson Telecom Mexico,                → Technicolor Mexicana, S. de R.L.
                                                          S.A. de C.V.                             de C.V.
                                                                                                 → Technicolor Creative Service
                                                                                                   of Canada
                                                                                                 → Technicolor Laboratory Canada Inc
                                                                                                 → Technicolor Digital Cinema LLC
                                                                                                 → Technicolor Home Entertainment
                                                                                                   Services Inc
                                                                                                 → Technicolor Videocassette
                                                                                                   of Michigan, Inc
                                                                                                 → Technicolor Creative Services US Inc
                                                                                                 → Technicolor Inc
                                                                                                 → Technicolor Canada Inc
                                                                                                 → Premier Retail Networks, Inc

    Asia
               → Technicolor (China) Technology         → Thomson Asia Pacific Holdings            → Technicolor India Private Ltd         → Thomson Video Networks
                 Co., Ltd.                                Pte Ltd (1)                             → Technicolor, Pty, Ltd
                                                                                                                                            Asia Pacific Pte. Ltd
                                                        → Thomson Telecom Australia Pty
                                                          Ltd.                                    → Technicolor (Thailand) Ltd
                                                        → Techncicolor Holdings India
                                                          Pvte Ltd


            Unless otherwise
                                 all the entities listed above are are owned directly indirectly at 100% by Technicolor.
Unless otherwise specified,specified,all the entities listed above owned directly oror indirectly at 100% by Technicolor.
            (1) this entity also hosts some operations of the Technology segment.
            (2) this hosts some operations of the Technology segment.
(1) this entity alsoentity also hosts some operations of the Entertainment Services segment.
            (3) this hosts some operations of the Entertainment Services.
(2) this entity alsoentity also hosts some operations of Entertainment Services segment.

main	financial	data	(revenues,	profit	(loss)	from	continuing	and	discontinuing	activities,	geographic	breakdown	of	assets	and	liabilities)	as	well	as	goodwill	
and	trademarks	are	broken	down	for	each	division	in	the	group’s	consolidated	financial	statements	in	notes 6	and	14,	respectively.




                                                                                                                  technIcolor	–	2010	annual	report                     135
           |	additional	information
6          INFORMATION	ON	MINORITY	INTERESTS



                                                                                   Contents
                                                                           ➜
                                                                                                   ➜



    PaRent comPany                                                                     main cash flows between the PaRent
    as	 of	 december  31,	 2010,	 technicolor	 sa	 (“the	 parent	 company”)	           comPany and the subsidiaRies
    comprised	448	employees.	It	hosts	mainly	the	activities	of	group	trea-
                                                                                       the	parent	company	ensures	the	financing	of	divisions	by	loans	and	
    sury,	group	management	and	part	of	the	divisions	digital	delivery	and	
                                                                                       current	accounts	(net	position	of	€2,298 million	at	december 31,	2010)	
    technology.	the	profit	and	loss	account	of	parent	company	(as	presented	
                                                                                       and	 equity	 instruments	 and	 consequently	 has	 received	 €314	 million	
    in	statutory	accounts)	shows	a	loss	of	€500 million	in	2010	(compared	
                                                                                       of	dividends	and	€233	million	of	other	financial	income	in	2010.	the	
    to	a	net	loss	of	€572	million	in	2009)	(for	more	information	regarding	
                                                                                       company	has	organized	a	system	of	centralization	of	the	treasury	in	the	
    the	parent	company,	refer	to	technicolor	sa’s	statutory	accounts	and	
                                                                                       main	countries	where	it	operates	and	implements	hedge	transactions	for	
    notes	to	the	financial	statements	in	chapter 9:	“technicolor	financial	
                                                                                       the	group,	in	accordance	with	defined	management	rules.
    statements”,	section 9.4:	“technicolor	sa’s	statutory	accounts”	and	9.5:	
    “notes	to	technicolor	sa	statutory	accounts”	of	this	annual	report).               the	parent	company	also	provides	services	to	companies	affiliated	to	
                                                                                       the	group	in	computing,	purchases,	management,	treasury,	people	and	
                                                                                       various	counsels.	these	services	are	invoiced	either	on	the	basis	of	a	
                                                                                       percentage	of	the	income	or/and	on	the	subsidiaries	result,	or	by	a	fixed	
                                                                                       fee,	or	at	the	delivery.
                                                                                       for	more	details,	refer	to	chapter 9:	“technicolor	financial	statements”,	
                                                                                       section 9.4:	“technicolor	sa	parent	company	financial	statements”,	
                                                                                       note 21.




    6.6	 InformatIon	on	mInorIty	Interests
    technicolor	 sold	 all	 its	 shares	 in	 videocon	 Industries	 during	 the	 second	 semester	 2010	 (for	 more	 information	 about	 this	 holding,	 refer	 to	
    chapter 2: “Information	on	the	company”,	section 2.2.5:	“discontinued	operations”	of	this	annual	report).




    6.7	 documents	on	dIsplay
    the	following	documents	(or	copies	of	those	documents)	are	available:              these	documents	are	available	at	the	company’s	headquarters:
    (a)	 the	company’s	bylaws;                                                         technicolor
    (b)	 all	reports,	letters	or	other	documents,	historical	financial	information,	   1-5,	rue	Jeanne	d’arc
         evaluations	and	declarations	rendered	by	an	expert	at	the	company’s	          92130	Issy-les-moulineaux
         request	included	in	this	annual	report;                                       tel. :	00	33	(0)1	41	86	50	00
                                                                                       fax :	00	33	(0)1	41	86	56	15
    (c)	 the	consolidated	historical	financial	information	for	each	of	the	two	
         fiscal	years	preceding	the	publication	of	this	annual	report.                 paper	versions	of	this	annual	report	are	available	free	of	charge.	this annual	
                                                                                       report	is	also	available	on	the	company’s	website	(www.technicolor.com).




    136      technIcolor	–	2010	annual	report
                                                                                                            |	additional	information
                                                                                             PAYMENT	TERMS	wITH	SuPPLIERS                               6
                                                                       Contents
                                                               ➜
                                                                                            ➜



6.8	 payment	terms	wIth	supplIers
according	to	article l.441-6-1	of	the	french	commercial	code,	the	chart	below	contains	the	average	payment	terms	with	suppliers	of	technicolor	sa	
(except	for	property,	plant	and	equipment)	during	the	course	of	the	2010	and	2009	fiscal	years.

                                                                Not	falling	      0	to	30	      30	to	60      60	to	90	    Above	90	
 As	of	December	31,	2010                                               due           days           days          days         days            Total
 Invoices	having	been	impacted	by	the	Sauvegarde	
 proceeding                                                               0             0               0            0     1,416,075       1,416,075
 french	suppliers                                                                                                           1,264,218       1,264,218
 non	french	suppliers                                                                                                         151,857         151,857
 Invoices	not	impacted	by	the	Sauvegarde	proceeding	
 (including	provisions)                                         17,390,459       350,850         406,044       176,458       301,643      18,625,455
 french	suppliers                                                12,155,006       309,603         259,914       68,335        75,957       12,868,815
 non	french	suppliers                                             5,235,453        41,247         146,131       108,123      225,686       5,756,640
 ToTal                                                       17,390,459        350,850       406,045         176,458      1,717,718     20,041,530


                                                               Not	falling	      	0	to	30	      30	to	60	     60	to	90	    Above	90	
 As	of	December	31,	2009                                              due            days           days          days         days            Total
 Invoices	having	been	impacted	by	the	Sauvegarde	
 proceeding                                                     8,359,091      5,204,985         375,152     (348,608)     2,370,246      15,960,866
 french	suppliers                                               7,052,945      4,011,622        223,972      (369,301)      1,155,331     12,074,569
 non	french	suppliers                                           1,306,146       1,193,363        151,180       20,693       1,214,915      3,886,297
 Invoices	not	impacted	by	the	Sauvegarde	proceeding	
 (including	provisions)                                        14,329,894       356,808      1,106,224           (144)     (993,479)      14,799,303
 french	suppliers                                                8,463,331       348,690        500,509          (144)      (387,764)      8,924,622
 non	french	suppliers                                           5,866,563           8,118        605,715                   (605,715)        5,874,681
 ToTal                                                      22,688,985 5,561,793 1,481,376 (348,752)                      1,376,767     30,760,169


due	to	the	sauvegarde	proceeding	opened	for	the	benefit	of	the	company	on	november	30,	2009	(see	chapter	2:	“Information	on	the	company”,	
section	2.1.2:	“historical	background”),	all	accounts	payable	existing	prior	to	the	opening	date	were	frozen.
In	2010,	payments	authorized	by	the	court	have	gradually	decreased	the	balance	of	frozen	accounts	payable.	as	of	december	31,	2010,	they	amount	
to	€1	million,	compared	to	€16	million	as	of	december	31,	2009.
In	2010,	the	average	number	of	days	for	the	payment	of	suppliers	is	53	days,	compared	with	59	days	in	2009.




                                                                                                 technIcolor	–	2010	annual	report                 137
          |	additional	information
6
                                                  Contents
                                              ➜
                                                             ➜




    138    technIcolor	–	2010	annual	report
        7
                           Internal and external controls
                           and procedures
7.1	   Internal	control	procedures	                                        140   7.2	   statutory	audItors’	report	on	the	
       7.1.1	   Objectives	of	internal	control	procedures	                 140          chaIrman's	report	on	corporate	
       7.1.2	   General	control	environment	                               140          governance	and	Internal	control	                 145
       7.1.3	   Internal	Audit	                                            142   7.3	   InformatIon	on	accountIng	servIces	              146
       7.1.4	   Information	Technology	Security	Procedures	                142
                                                                                        7.3.1	 Statutory	Auditors	                       146
       7.1.5	   Security	of	people,	assets	and	Intellectual	Property	      143
                                                                                        7.3.2	 Substitute	Statutory	Auditors	            146
       7.1.6	   Internal	control	procedures	relating	to	the	preparation	
                and treatment	of	accounting	and	financial	information	     143   7.4	   accountIng	fees	and	servIces	                    147




                                                                                                technIcolor	–	2010	annual	report   139
           |	Internal	and	external	controls	and procedures
7          INTERNAL	CONTROL	PROCEDuRES



                                                                                 Contents
                                                                         ➜
                                                                                                 ➜



    7.1	 Internal	control	procedures
    this	section	7.1:	“Internal	control	procedures”,	constitutes	the	second	part	    the	authority	to	implement	the	decision	to	delist	and	deregister,	which	
    of	the	report	on	corporate	governance,	on	internal	control	procedures	and	       decision	was	communicated	on	february	28,	2011.
    risk	management	issued	under	article	l.	225-37	of	the	french	commercial	
                                                                                     the	company	filed	a	form	25	with	the	nyse	and	the	securities	exchange	
    code.	the	first	part	of	this	report	is	contained	in	chapter	4:	“corporate	
                                                                                     commission	(sec)	on	march	11,	2011,	and	the	delisting	was	effective	as	
    governance	and	workforce”	section	4.1.4:	“preparation	and	organization	of	
                                                                                     of	march	21,	2011.	on	march	24,	2011,	the	company	filed	a	form	15-f	
    the	board	of	directors’	work”	of	this	annual	report.	for	the	establishment	
                                                                                     with	the	sec,	thereby	initiating	the	deregistration	process.	upon	filing	the	
    of	this	report,	the	chairman	tasked	the	different	departments	of	corporate	
                                                                                     form	15-f,	the	company’s	exchange	act	obligations	were	immediately	
    finance	(controlling,	treasury,	accounting,	Internal	audit,	Internal	control)	
                                                                                     suspended	(including	the	requirement	to	file	a	form	20-f	with	the	sec	
    as	well	as	the	legal	and	It	departments	with	preparing	the	internal	control	
                                                                                     and	to	provide	management’s	and	auditor’s	reports	on	internal	controls	
    part	of	the	report.	
                                                                                     over	financial	reporting	pursuant	to	section	302	and	404	of	the	sarbanes-
    the	internal	control	procedures	mentioned	in	the	present	chapter	apply	          oxley	act,	respectively).	the	company	expects	the	deregistration	to	be	
    to	the	company	and	all	its	subsidiaries.                                         effective	within	90	days	following	the	filing	of	the	form	15-f,	at	which	time	
                                                                                     the	company’s	exchange	act	obligations	will	be	terminated.
    the	major	components	underlying	the	preparation	over	financial	reporting	
    are	(i)	the	sarbanes-oxley	(sox)	compliance	program	which	includes	an	           given	the	timing	of	delisting,	the	company	decided	to	maintain	its	sox	
    assessment	of	internal	control	covering	approximately	75%	of	the	value	          framework	for	2010	and	carried	out	its	2010	sox	campaign	through	its	
    of	the	group’s	assets,	(ii)	the	group’s	compliance	with	french	law,	and	         full	term.
    (iii)	the	work	of	internal	audit.
                                                                                     following	the	delisting,	technicolor	intends	to	maintain	high	standards	of	
    In	late	december 2010,	the	board	of	directors	of	technicolor	approved	           financial	reporting	discipline	and	to	capitalize	on	the	work	undertaken	to	
    the	principle	of	a	voluntary	delisting	of	its	american	depositary	shares	        comply	with	the	sarbanes-oxley	act	embedding	internal	control	within	
    (adss)	from	the	new	york	stock	exchange	(nyse),	and	the	voluntary	               operational	management,	by	keeping	an	annual	program	to	monitor	the	
    termination	of	the	registration	of	its	securities	under	the	u.s.	securities	     quality	of	its	internal	control.
    exchange	act	of	1934.	the	board	of	directors	delegated	to	the	ceo	



    7.1.1	 Objectives	of	internal	control	procedures
    the	internal	control	procedures	implemented	by	the	group	have	two	               within	this	control	framework,	the	group	seeks	to	achieve	“reasonable	
    overall	objectives:                                                              assurance”	regarding:
    ■■   to	verify	that	the	actions	undertaken	by	the	group	and	its	employees	       ■■   the	effectiveness	and	efficiency	of	its	operations;
         are	in	conformity	with	applicable	regulations	and	the	group’s	values	       ■■   the	reliability	of	its	financial	reporting;	and
         and	 are	 consistent	 with	 the	 framework	 defined	 by	 the	 group’s	
                                                                                     ■■   its	compliance	with	applicable	laws	and	regulations.
         management	bodies;	and
    ■■   to	verify	that	the	accounting	and	financial	information	communicated	       one	of	the	objectives	of	the	internal	control	system	is	to	prevent	and	
         to	the	management	bodies	and	to	shareholders	accurately	reflects	           control	any	risks	arising	from	the	group’s	conduct	of	business	and	risks	
         the	group’s	operations	and	financial	situation.                             of	error	or	fraud,	in	particular	in	areas	of	accounting	and	finance.	as	with	
                                                                                     every	control	system,	it	cannot	provide	an	absolute	guarantee	that	these	
    In	order	to	comply	with	the	requirements	of	section	404	of	the	sarbanes-         risks	are	totally	eliminated.
    oxley	act,	the	group	implemented	in	2005	the	internal	control	framework	
    proposed	by	the	committee	of	sponsoring	organizations	of	the	treadway	           to	attain	these	objectives,	internal	controls	must	be	implemented	at	the	
    commission	(“coso”).                                                             level	of	each	legal	entity	and	for	different	categories	of	transactions	carried	
                                                                                     out	by	the	group.



    7.1.2	 General	control	environment
    the ethical values and PRinciPles                                                Code	of	Ethics
    of conduct foR the gRouP’s manageRs                                              created	in	1999	and	updated	in	2006,	the	code	of	ethics	establishes	
                                                                                     the	foundation	of	the	group’s	core	values	and	requires	all	employees	to	
    the	values	and	principles	of	conduct	for	the	group’s	managers	are	defined	       observe	high	standards	of	business	and	personal	ethics	in	the	conduct	
    in	two	of	the	group’s	principal	internal	documents:	the	group’s	code	of	         of	their	duties	and	responsibilities.	the	code	of	ethics	has	four	basic	
    ethics	and	the	financial	ethics	charter.                                         principles:	respect	for	people,	respect	for	the	environment,	valuing	
                                                                                     Integrity,	and	valuing	creativity.	the	group	is	committed	to	offering	equal	
                                                                                     employment	opportunity,	developing	its	employees	and	ensuring	health	
                                                                                     and	safety.	the	group	also	aims	to	apply	consistent	policies	and	programs	


    140      technIcolor	–	2010	annual	report
                                                                      |	Internal	and	external	controls	and procedures
                                                                                              INTERNAL	CONTROL	PROCEDuRES                                        7
                                                                             Contents
                                                                     ➜
                                                                                            ➜


to	protect	the	environment.	finally,	protection	of	Intellectual	property	        gRouP management and decision-making
and	inventions	is	integral	to	continuing	innovation	in	the	media	chain.
                                                                                 PRocesses
the	group	also	created	an	ethics	compliance	committee	in	2006,	which	
is	responsible	for	all	ethical	issues	related	to	technicolor’s	activities	and	   at	december 31,	2010,	the	group	management	was	organized	around	
which	is	governed	by	the	code	of	ethics	and	the	charter	for	the	ethics	          four	principal	bodies:
compliance	committee.	this	includes	implementing	any	new	policies	if	            ■■   the	executive	committee;
needed,	training	on	existing	policies,	and	investigating	any	and	all	reports	
of	unethical	behavior.	It	meets	at	least	quarterly	and	more	frequently	          ■■   the	management	committee;
when	required.                                                                   ■■   the	senior	leadership	team;
beginning	in	2008	and	continuing	through	2010,	the	group	deployed	               ■■   the	technicolor	country	heads.
ethics	training	programs.	several	online	training	sessions	were	launched	        placed	under	the	authority	of	the	group’s	chief	executive	officer,	the	
to	educate	employees	on	various	ethical	rules	and	obligations.	some	             executive	committee	currently	comprises	seven	members	consisting	
dedicated	training	sessions	were	also	organized	on	specific	sites	or	for	        of	senior	executive	vice	presidents	and	executive	vice	presidents	in	
specific	functions.	these	training	sessions	involved	around	4,000	people	        charge	of	technicolor’s	major	businesses	and	of	the	principal	corporate	
in	2008	and	2009	and	around	8,000	employees	in	2010.                             functions	(finance,	human	resources,	general	secretary,	etc.).	the	
finally,	the	group	implemented	a	whistleblower	policy	in	2006,	which	            executive	committee	meets	every	week	or	every	two	weeks	to	analyze	and	
enables	employees	and	other	holders	of	relevant	information	to	report	           evaluate	the	financial	performance	(sales,	operating	income	and	cash	flow)	
suspected	financial,	accounting,	banking	and	bribery	activities	to	the	ethics	   of	the	group’s	various	businesses	compared	with	the	budget,	strategic	
compliance	committee.	In	2010,	the	group	provided	to	u.s.	employees	             developments	and	major	events	affecting	the	group	(sales	contracts,	
the	ability	to	submit	a	whistleblower	report	through	an	independent	third	       partnerships,	investments,	etc.).
party.	the	third	party’s	telephony	and	web-based	hotline	solution	enables	       In	2010,	a	management	committee	was	created	and	includes	executive	
employees	to	easily	and	confidentially	submit	whistleblower	reports.             committee	members	as	well	as	leaders	of	technicolor’s	main	functions	
the	code	of	ethics	(in	french	and	in	english),	the	whistleblower	policy	         and	business	operations.	Its	responsibilities	are	to	ensure	achievement	of	
(in	french	and	in	english),	and	the	related	policies	are	available	to	all	       the	group’s	ojectives	and	to	provide	leadership	across	technicolor.	the	
group	personnel	via	the	group’s	internal	website.                                management	committee	meets	monthly.
                                                                                 the	senior	leadership	team	(slt),	whose	members	reflect	the	diversity	
Financial	Ethics	Charter                                                         of	the	corporation	in	terms	of	business	and	organizations,	serves	as	the	
                                                                                 operational	arm	of	the	management	committee.	senior	vice	presidents,	
to	reinforce	awareness	of	the	ethical	dimension	of	finance	activities,	          appointed	 by	 the	 ceo,	 are	 members	 of	 the	 slt	 which,	 along	 with	
technicolor	has	published	an	ethics	charter	specific	to	finance	personnel	       executive	committee	and	management	committee	members,	form	a	
and	activities.	It	is	an	extension	of	the	company’s	code	of	ethics,	which	       group	of	leaders	of	around	50	people.	the	slt	also	aims	to	provide	a	
applies	to	all	employees.                                                        strong	forum	for	presenting	proposals,	generating	new	ideas	and	further	
                                                                                 enabling	understanding	and	communication	within	the	company.	the	
the	financial	ethics	charter	was	first	published	in	december 2005,	is	
                                                                                 slt	meets	at	least	twice	a	year.
signed	by	the	chief	executive	officer	and	the	chief	financial	officer,	
and	is	distributed	to	key	persons	within	the	finance	organization.	since	        together,	 the	 three	 senior	 management	 bodies	 help	 ensure	 rapid,	
2006,	the	financial	ethics	charter	has	been	signed	annually	by	the	key	          responsive	decision-making	as	well	as	smooth,	efficient	implementation	
finance	managers	and	their	teams.                                                of	such	decisions.
this	 policy	 promotes	 the	 following	 rules:	 acting	 honestly	 and	 with	     In	several	countries	where	the	company	operates	(typically,	the	significant	
integrity	and	avoiding	conflicts	of	interest,	providing	accurate,	complete	      countries	other	than	france	and	the	usa),	senior	managers	are	appointed	
and	objective	information,	compliance	with	all	rules	and	regulations,	           as	technicolor	country	heads.	their	first	priority	is	to	drive	an	in-country	
public	and	private,	to	which	the	group	is	subject,	acting	in	good	faith	         “one	company”	approach	for	employees,	local	customers	and	support	
without	misrepresenting	material	facts	or	allowing	one’s	judgment	to	be	         function	structures.	they	are	also	responsible	for	technicolor’s	local	
unduly	influenced,	respecting	confidentiality	of	information,	sharing	and	       representation	efforts.
maintaining	appropriate	knowledge	and	skills,	promoting	ethical	behavior	
in	one’s	environment,	using	and	controlling	responsibly	assets	under	one’s	      the	group	holds	quarterly	business	reviews	for	each	business,	during	
supervisions	and	reporting	known	or	suspected	violations	of	the	charter.         which	the	management	reviews	the	performance	of	the	business,	the	
                                                                                 progress	of	the	key	programs	in	each	business,	key	performance	indicators,	
a	copy	of	the	code	of	ethics	and	the	financial	ethics	charter	is	available	      and	any	specific	operational	topic	which	requires	management	attention.	
on	the	company’s	website	at	www.technicolor.com	or	upon	request	to	              these	programs	cover	key	customer	issues,	new	product	introduction,	
the	company.                                                                     operational	performance,	transformation	programs,	cost	reduction	and	
                                                                                 hr-related	programs.
although	the	group	will	no	longer	be	subject	to	the	"sox"	requirements	
following	its	nyse	delisting	and	sec	deregistration	(as	described	above),	       In	addition,	the	group	established	an	Investment	committee	in	2010	
the	financial	ethics	charter	has	been	maintained	in	2010	and	is	planned	         to	drive	prioritization	and	optimization	of	resource	allocation	across	the	
to	be	maintained	in	the	coming	years.                                            organization.	the	Investment	committee	is	composed	of	the	ceo,	
                                                                                 senior	 executive	 vice	 presidents	 and	 the	 company	 secretary.	 the	
                                                                                 Investment	committee	decides	on	all	significant	investment	decisions	
                                                                                 including	material	customer	opportunities,	capital	expenditures,	restruc-
                                                                                 turing,	m&a	and	joint	ventures,	asset	disposals,	pension	contributions,	
                                                                                 large	procurement	contracts,	leases	and	financing	commitments.	the	


                                                                                                   technIcolor	–	2010	annual	report                      141
            |	Internal	and	external	controls	and procedures
7           INTERNAL	CONTROL	PROCEDuRES



                                                                                  Contents
                                                                          ➜
                                                                                                  ➜


    Investment	committee	ensures	compliance	with	the	board	governance	                is	in	charge	of	producing	and	following	an	action	plan	for	mitigating	and	
    rules	and	debt	agreement	obligations	and	is	a	key	part	of	the	group’s	            monitoring	the	risk.
    internal	control	procedures.	It	meets	on	a	weekly	basis.
                                                                                      In	2009,	following	the	group’s	strategic	realignment	and	management	
                                                                                      changes,	the	risk	assessment	approach	was	revised.	as	a	consequence	
    Risk management                                                                   risk	identification	and	assessment	are	now	performed	by	the	executive	
                                                                                      committee	on	behalf	of	the	group.	In	2010,	risk	owners	were	appointed	in	
    In	2005,	the	group	launched	the	enterprise	risk	assessment	(era),	                respect	of	the	group’s	most	significant	risks.	the	risk	owner	is	a	member	of	
    a	worldwide	program	to	evaluate	corporate	risks.	the	goal	of	the	era	             the	executive	committee	or	a	direct	report.	the	risk	owner	is	in	charge	of	
    process	is	to	identify,	assess,	validate	and	monitor	risks	that	may	impact	       analysing	the	risk	and	defining	and	implementing	action	plans	to	mitigate	
    the	group’s	ability	to	achieve	its	near	and	long-term	objectives.                 it.	the	risk	owner	also	ensures	the	monitoring	of	the	risk.
    the	overall	risk	assessment	allows	for	identification	operational	risks	listed	   the	technicolor	risk	management	process	is	subject	to	status	reports	
    under	chapter 1:	“Key	Information	and	risk	factors”,	section	1.3:	“risk	          presented	to	the	executive	committee	and	the	audit	committee.	this	
    factors”.	after	the	assessment,	the	group	moves	from	the	risk	identification	     process	is	supported	and	facilitated	by	internal	audit	department.
    process	to	the	risk	management	process	which	consists	of	identifying	who	



    7.1.3	 Internal	Audit
    the	 internal	 audit	 department	 reports	 its	 results	 to	 the	 group’s	        the	internal	audit	department	completes	audits	covering	the	following	
    management.	the	audit	committee	reviews	and	approves	the	audit	plan	              domains:	 operational	 processes,	 financial	 audits,	 transversal	 or	 local	
    twice	a	year	and	is	informed	of	the	main	audit	results.	the	internal	audit	       financial	processes,	review	of	contracts	or	projects,	compliance	audits	
    department	provides	support	in	the	risk	assessment	and	management	                and	follow-up	audits.	In	2010,	37	audit	engagements	were	performed	
    process.                                                                          (both	assurance	and	assistance	types),	compared	to	43	completed	in	
                                                                                      2009.	most	of	the	segments	and	support	functions	are	covered,	through	
    the	internal	audit	department	consists	of	around	12	auditors	located	in	
                                                                                      a	risk-based	approach.
    three	key	sites	for	the	group:	Issy-les-moulineaux	(france),	Indianapolis,	
    Indiana	(u.s.)	and	burbank,	california	(u.s.).	the	chief	audit	officer	is	
    located	in	Issy-les-moulineaux.



    7.1.4	 Information	Technology	Security	Procedures
    the	technicolor	chief	Information	officer	(cIo)	leads	the	It	organization	        ■■   implementing	 standard	 processes	 and	 controls	 to	 comply	 with	
    with	 dedicated	 teams	 per	 segment	 (entertainment	 services,	 digital	              the	motion	picture	association	of	america	(mpaa)	and	specific	
    delivery	and	technology)	supplemented	by	teams	that	support	share	                     customer’s	security	requirements	for	protecting	customer	content	
    services	It	functions	and	worldwide	applications	(corporate	functions	                 and	intellectual	property.	these	processes	and	controls	have	been	
    applications,	corporate	services	and	applications,	global	infrastructure)	             successfully	implemented	at	technicolor’s	dvd	services	facilities	
    and	protect	and	safeguard	global	It	assets	(such	as	internal	It	standards	             in	the	americas	and	are	being	expanded	throughout	europe	and	
    and	best	practices,	project	and	project	portfolio	management	processes).               asia	pacific;
    the	It	department	has	developed	and	applied	a	governance	framework	               ■■   installing	full	disk	encryption	software	on	high-risk	laptops	to	reduce	
    which	defines	rules	and	procedures	regarding	application	and	infrastruc-               the	risk	of	data	loss	when	equipment	is	lost	or	stolen;
    ture	planning,	deployment,	operation	and	maintenance.	the	framework	              ■■   evolving	 the	 Infrastructure	 security	 baseline	 which	 elaborates	
    defines	best	practices	and	guidelines	in	areas	such	as	development	of	                 minimum	 It	 security,	 risk	 management	 and	 compliance	 “best	
    the	information	technology	strategic	plan,	acquisition	and	divestiture	                practices”	for	management	of	data	centers;
    planning,	It	tool	selection	and	usage,	access	to	data,	programs	and	              ■■   continuing	deployment	of	formal	It	project	management	processes	
    applications,	management	of	It	projects	and	the	It	project	portfolio,	                 and	common	reporting	tools;
    and	for	ensuring	the	confidentiality,	integrity	and	availability	of	those	
                                                                                      ■■   deploying	an	It	policies,	standards	and	procedures	repository	and	
    assets.	the	framework’s	rules	and	procedures	are	reviewed	annually	by	
                                                                                           notification	process;
    the	cIo	and	It	general	managers,	and	updated	as	required.
                                                                                      ■■   deploying	formal	policies	governing	the	purchase,	use	and	protection	
    within	 this	 general	 framework,	 the	 company	 continued	 in	 2010	 to	              of	cell	phones,	pdas,	iphones	and	ipads;
    enhance	the	It	protection	level	through	the	following:
                                                                                      ■■   launching	 a	 records	 retention	 program	 to	 enforce	 proper	
    ■■    implementing	 an	 asset	 management	 tool	 to	 manage	 and	 track	               management	and	disposal	of	It	documents;	and
          hardware	and	software	assets	worldwide;                                     ■■   continuing	 formal	 security	 steering	 committees	 enabling	 the	 It	
    ■■    selecting	and	deploying	an	identity	and	access	management	tool	and	              security	organization	to	remain	tightly	linked	to	the	business	ensuring	
          supporting	processes	to	manage	the	identities	and	system	access	                 security	solutions	are	mitigating	business	information	security	risks.
          rights	of	technicolor’s	human	resources;




    142       technIcolor	–	2010	annual	report
                                                                       |	Internal	and	external	controls	and procedures
                                                                                                 INTERNAL	CONTROL	PROCEDuRES                                       7
                                                                              Contents
                                                                      ➜
                                                                                                ➜



7.1.5	 Security	of	people,	assets	and	Intellectual	Property
due	to	the	importance	of	protecting	the	security	of	technicolor’s	people,	        the	establishment	of	an	efficient	incident	response,	crisis	management	
assets,	and	its	Intellectual	property	in	addition	to	the	Intellectual	property	   and	business	continuity	processes.	the	cso	is	under	the	responsibility	
entrusted	to	the	group	by	its	customers,	technicolor	decided	at	the	end	of	       of	the	executive	vice	president	of	human	resources.
2009	to	hire	a	chief	security	officer	(cso)	to	oversee	all	of	the	group’s	
                                                                                  the	core	security	team	will	build	up	the	convergence	of	physical	and	It	
security	activities.	the	cso	chairs	a	core	team	of	security-related	profes-
                                                                                  security	and	reach	out	to	the	ethics	compliance	committee	to	assist	it	in	
sionals	selected	from	the	segments	and	central	functions.
                                                                                  its	investigations’	and	support	Internal	audit	to	mitigate	risks.
the	core	security	team,	under	the	leadership	of	the	cso,	is	responsible	
                                                                                  beyond	 ensuring	 the	 continuity	 of	 the	 business,	 security	 can	 be	 a	
for	ensuring	that	the	security	priorities	are	identified	and	developing	the	
                                                                                  competitive	advantage	for	technicolor	through	sharing	best	practices	with	
appropriate	policies	and	processes	to	address	them.	these	priorities	will	
                                                                                  technicolor’s	clients	to	ensure	the	protection	of	their	intellectual	property.
include	raising	the	level	of	security	awareness	across	the	group	as	well	as	



7.1.6	 Internal	control	procedures	relating	to	the	preparation	
       and treatment	of	accounting	and	financial	information
the	 internal	 control	 related	 to	 the	 preparation	 and	 treatment	 of	             analysis,	suppliers	and	capex	needs.	It	includes	also	key	strategic	
accounting	and	financial	information	relies	on	the	controlling	organization	           initiatives	and	their	financial	impact	in	the	budget	(and	going	forward)	
with	its	processes	and	controls	(budgetary	process,	monthly	reporting	                 and	a	risk	and	opportunities	analysis;
and	forecasting,	quarterly	reporting	of	financial	and	operational	perfor-         ■■   in	november	and	december,	review	and	approval	by	senior	executive	
mance	review)	as	well	as	the	internal	audit	department	and	the	group’s	                management	and	corporate	finance	teams	of	proposed	action	plans	
accounting	department	(regrouping	accounting	standards	and	methods	                    and	budgets	prepared	at	the	business	level;
and	share	services	centers	teams).
                                                                                  ■■   approval	of	the	budget	by	the	board	of	directors	at	the	latest	at	the	
under	the	authority	of	the	group’s	chief	financial	officer,	the	dedicated	             beginning	of	the	following	year;
teams	are	responsible	for:                                                        ■■   split	of	the	budget	into	monthly	periods	to	serve	as	a	reference	for	
■■   the	establishment	of	the	group’s	consolidated	financial	statements	               the	group’s	monthly	reporting.
     and	technicolor	sa’s	statutory	accounts;                                     In	the	context	of	the	budgetary	procedure,	KpIs	are	presented	by	business,	
■■   the	preparation	of	the	budget	and	the	analysis	of	its	execution	through	     and	analyzed	and	monitored	on	a	monthly	basis.
     monthly	management	and	performance	reporting;	and
     the	 implementation	 of	 the	 group’s	 accounting	 and	 controlling	
■■
     methods,	procedures	and	standards	(and	their	adaptation	thereof	in	
                                                                                  7.1.6.2 PeRiodic PeRfoRmance Review
     accordance	with	changes).                                                    the	controlling	organization	is	reviewing	the	group	financial	performance	
                                                                                  periodically:
the	group’s	financial	organization	follows	its	operational	organization,	
based	on	three	segments	(entertainment	services,	digital	delivery	and	            ■■   on	a	monthly	basis:
technology),	comprising	eleven	businesses,	organized	in	several	activities.	           •■   the	reporting	on	actual	performance	is	managed	by	the	controlling	
one	further	segment	(corporate	and	other)	completes	this	organization.	                     organization	and	a	detailed	review	performed	during	the	closing	
each	one	of	these	businesses	and	activities	is	under	the	responsibility	of	a	               period	of	the	financial	accounts	(analysis	of	variance	vs.	budget	
controller	and	controlling	supporting	teams,	in	charge	of	budget,	reporting	                and	last	year)	is	presented	to	management;
follow-up,	performance	analysis	and	estimates.	accounting	operations	
within	the	legal	entities	are	for	the	most	part	managed	through	two	                   •■   the	forecasting	of	the	current	and	next	quarter	is	performed	by	
internal	shared	services	centers.	the	accounting	teams	work	according	to	                   each	business	and	also	presented	to	management;
group	accounting	standards	and	methods	and	liaise	with	the	controlling	           ■■   on	a	quarterly	basis:
organization	through	services	level	agreement.                                         •■   reporting	of	operational	performance	through	a	business	review	
                                                                                            (review	of	major	KpIs,	risks	and	opportunities,	market	trend	and	
                                                                                            competition,	customer	portfolio	analysis,	strategic	programs	and	
7.1.6.1 budgetaRy PRocess                                                                   key	initiatives)	with	management	and	closing	of	financial	state-
the	budgetary	process	is	mandatory	for	all	of	the	group’s	segments	and	                     ments;
businesses.	the	principal	stages	in	the	budgetary	process	are	the	following:           •■   the	forecasting	of	the	current	and	next	three	quarters	is	performed	
                                                                                            at	the	beginning	of	each	quarter	by	each	business	(including	main	
■■   in	september	and	october,	preparation	by	each	entity	of	a	budget	
                                                                                            income	statement	indicators	such	as	revenue	and	adjusted	ebItda	
     for	each	quarter	of	the	following	year,	based	on	market	analysis	and	
                                                                                            as	well	as	free	cash	flow	items)	and	reviewed	at	group	level.
     projections,	analyses	trends:	costs	base	structure,	customers	base	




                                                                                                      technIcolor	–	2010	annual	report                     143
            |	Internal	and	external	controls	and procedures
7           INTERNAL	CONTROL	PROCEDuRES



                                                                                      Contents
                                                                              ➜
                                                                                                     ➜



    7.1.6.3 accounting and management                                                     after	each	monthly	closing,	the	group’s	financial	results	for	the	month	and	
                                                                                          the	current	quarter	are	presented	to	the	executive	committee.	then	after	
                  RePoRting and closing PeRiod woRk                                       each	quarterly	closing,	the	quarterly	financial	results	(as	well	as	half-year	
                  at the      gRouP level                                                 and	annual	results)	are	presented	to	the	audit	committee.	these	results	
                                                                                          are	also	presented	to	the	board	of	directors.
    the	group	accounting	and	financial	data	are	consolidated	into	one	group	
    reporting	system	called	magnitude.                                                    the	group’s	accounting	principles	are	defined	in	a	set	of	documents	
                                                                                          entitled	“technicolor	accounting	principles	and	methods”,	which	are	
    at	the	end	of	each	month,	the	group’s	entities	report	their	financial	data	           available	on	the	company’s	intranet	site	and	provided	to	all	the	group’s	
    into	this	system.	the	group	reporting	system	uses	a	common	chart	of	                  finance	departments.	these	documents	outline	the	accounting	treatment	
    accounts,	which	is	regularly	updated.	the	principal	accounting	and	financial	         of	such	items	as	tangible	and	intangible	assets,	inventories,	provisions,	
    figures	of	the	operational	and	functional	departments	consolidated	at	the	            intercompany	transactions	and	acquisitions.
    group	level	are	analyzed	by	the	group’s	financial	controlling	team	and	
    reviewed	by	the	group’s	executive	committee.                                          In	addition,	the	group	publishes	and	distributes	procedures	that	accoun-
                                                                                          tants	and	corporate	controllers	must	respect	in	terms	of	purchasing,	
    the	closing	process	for	the	half-year	and	annual	consolidated	financial	              management	of	inventories,	sales,	payments,	cash	flow	or	taxes.
    statements	occurs	in	two	steps.	the	first	step	consists	of	a	“hard	close”	
    completed	for	the	may	and	october	closings.	this	review	is	initiated	
    by	the	circulation	of	instructions	prepared	by	the	group’s	accounting	                7.1.6.4 PRePaRation of financial
    department.	procedures	define	the	controls	and	actions	which	must	be	
                                                                                                       infoRmation
    undertaken	at	the	entity	level	(entries	in	accounting	books,	reconciliations,	
    etc.)	and	the	persons	authorized	to	implement	them.                                   the	group’s	financial	information	is	prepared	jointly	by	the	finance	
                                                                                          department	and	the	general	secretary	of	the	company.	It	is	based	on	
    this	step	leads	to	a	first	review	by	the	statutory	auditors,	completed	
                                                                                          information	reported	through	the	annual	reporting	and	accounting	
    initially	at	the	subsidiary	level	within	a	majority	of	the	group’s	legal	entities,	
                                                                                          consolidation	processes	and	on	operational	and	market	information,	
    then	at	the	group	level.	this	“hard	close”	allows	for	the	identification	of	the	
                                                                                          which	is	specifically	centralized	for	the	preparation	of	the	company’s	
    most	complex	issues,	which	may	be	reported	to	the	senior	management	
                                                                                          annual	report.
    team.
                                                                                          the	quarterly,	half-yearly	and	annual	financial	information	is	reviewed	by	
    the	second	step	occurs	in	July	and	in	January/february	and	involves	the	
                                                                                          the	group’s	audit	committee	and	the	board.
    finalization	of	half-year	and	annual	consolidated	financial	statements	under	
    International	financial	reporting	standards	(“Ifrs”).                                 prior	to	being	published,	the	above	financial	information	is	also	reviewed	
                                                                                          by	members	of	the	management	team	and	senior	managers	within	the	
                                                                                          corporate	finance	and	legal	departments.




    144       technIcolor	–	2010	annual	report
                                                                        |	Internal	and	external	controls	and procedures
                            STATuTORY	AuDITORS’	REPORT	ON	THE	CHAIRMAN'S	REPORT	ON	CORPORATE	
                                                           GOvERNANCE	AND	INTERNAL	CONTROL
                                                                                                                                                                  7
                                                                              Contents
                                                                       ➜
                                                                                                ➜



7.2	 statutory	audItors’	report	on	the	
     chaIrman's	report	on	corporate	
     governance	and	Internal	control

This is a free translation into English of a report issued in French and is provided solely for the convenience of English-speaking readers. This report should
be read in conjunction with, and is construed in accordance with, French law and professional auditing standards applicable in France.
to	the	shareholders,

In	our	capacity	as	statutory	auditors	of	technicolor	sa,	and	in	accordance	with	article	l. 225-235	of	the	french	commercial	code	(“code	de	
commerce”),	we	hereby	report	on	the	report	prepared	by	the	chairman	of	your	company	in	accordance	with	article	l. 225-37	of	the	french	commercial	
code	for	the	year	ended	december	31,	2010.
It	is	the	chairman’s	responsibility	to	prepare,	and	submit	to	the	board	of	directors	for	approval,	a	report	on	the	internal	control	and	risk	management	
procedures	implemented	by	the	company	and	containing	the	other	disclosures	required	by	article	l. 225-37	particularly	in	terms	of	the	corporate	
governance	measures.
It	is	our	responsibility:
■■   to	report	to	you	on	the	information	contained	in	the	chairman’s	report	in	respect	of	the	internal	control	and	risk	management	procedures	relating	
     to	the	preparation	and	processing	of	the	accounting	and	financial	information,	and
■■   to	attest	that	this	report	contains	the	other	disclosures	required	by	article	l. 225	of	the	french	commercial	code	(“code	de	commerce”),	it	being	
     specified	that	we	are	not	responsible	for	verifying	the	fairness	of	these	disclosures.
we	conducted	our	work	in	accordance	with	professional	standards	applicable	in	france.


infoRmation on the inteRnal contRol and Risk management PRoceduRes Relating to
the PRePaRation and PRocessing of accounting and financial infoRmation
these	standards	require	that	we	perform	the	necessary	procedures	to	assess	the	fairness	of	the	information	provided	in	the	chairman’s	report	in	respect	
of	the	internal	control	and	risk	management	procedures	relating	to	the	preparation	and	processing	of	the	accounting	and	financial	information.	these	
procedures	consisted	mainly	in:
■■   obtaining	an	understanding	of	the	internal	control	and	risk	management	procedures	relating	to	the	preparation	and	processing	of	the	accounting	
     and	financial	information	on	which	the	information	presented	in	the	chairman’s	report	is	based	and	existing	documentation;
■■   obtaining	an	understanding	of	the	work	involved	in	the	preparation	of	this	information	and	existing	documentation;
■■   determining	if	any	significant	weaknesses	in	the	internal	control	procedures	relating	to	the	preparation	and	processing	of	the	accounting	and	financial	
     information	that	we	would	have	noted	in	the	course	of	our	engagement	are	properly	disclosed	in	the	chairman’s	report.
on	the	basis	of	our	work,	we	have	nothing	to	report	on	the	information	in	respect	of	the	company’s	internal	control	and	risk	management	procedures	
relating	to	the	preparation	and	processing	of	accounting	and	financial	information	contained	in	the	report	prepared	by	the	chairman	of	the	board	in	
accordance	with	article	l. 225-37	of	the	french	commercial	code	(“code	de	commerce”).


otheR disclosuRes
we	hereby	attest	that	the	chairman’s	report	includes	the	other	disclosures	required	by	article	l. 225-37	of	the	french	commercial	code	(“code	de	
commerce”).
                                                                      the	statutory	auditors
                      paris-la	défense,	march 30,	2011                                                    courbevoie,	march 30,	2011
                                  Kpmg	audit                                                                      mazars
                           a	division	of	Kpmg	s.a.
                           French original signed by                                                       French original signed by
                 Isabelle	allen																						grégoire	menou                            Jean-louis	simon																							simon	beillevaire




                                                                                                      technIcolor	–	2010	annual	report                    145
          |	Internal	and	external	controls	and procedures
7         INFORMATION	ON	ACCOuNTING	SERvICES



                                                                Contents
                                                            ➜
                                                                             ➜



    7.3	 InformatIon	on	accountIng	servIces

    7.3.1	 Statutory	Auditors
    kPMG	Audit	–	Division	of	kPMG	S.A.                             duRation and exPiRation date
    1,	cours	valmy
    92923	paris	la	défense	cedex                                   of statutoRy auditoRs’ mandate
    represented	by	Isabelle	allen	and	grégoire	menou               Kpmg	audit:	nominated	by	the	ordinary	shareholders’	meeting	held	on	
    Mazars                                                         may 12,	2006;	their	mandate	will	expire	upon	the	shareholders’	meeting	
    61,	rue	henri-regnault	–	tour	exaltis                          to	be	held	in	2012	for	the	approval	of	2011	annual	accounts.
    92400	courbevoie                                               mazars:	renewed	by	the	annual	general	shareholders’	meeting	held	on	
    represented	by	Jean-louis	simon	and	simon	beillevaire          June	17,	2010;	their	mandate	will	expire	upon	the	shareholders’	meeting	
                                                                   to	be	held	in	2016	for	the	approval	of	2015	annual	accounts.
    staRting date of statutoRy auditoRs’ fiRst
    mandate
    Kpmg	audit:	2006.
    mazars:	1985.



    7.3.2	 Substitute	Statutory	Auditors
    SCP	Cabinet	jean-Claude	André	et	Autres                        duRation and exPiRation date of
    les	hauts-de-villiers
    2	bis,	rue	de	villiers                                         substitute statutoRy auditoRs’ mandate
    92309	levallois-perret	cedex                                   scp	cabinet	Jean-claude	andré	et	autres:	nominated	by	ordinary	
    Mr.	Patrick	de	Cambourg                                        shareholders’	meeting	held	on	may 12,	2006;	their	mandate	will	expire	
    1,	rue	andré	colledebœuf                                       upon	the	shareholders’	meeting	to	be	held	in	2012	for	the	approval	of	
    75016	paris                                                    2011	annual	accounts.
                                                                   mr.	patrick	de	cambourg:	renewed	by	the	annual	general	shareholders’	
                                                                   meeting	held	on	June	17,	2010;	his	mandate	will	expire	upon	the	share-
                                                                   holders’	meeting	to	be	held	in	2016	for	the	approval	of	2015	annual	
                                                                   accounts.




    146     technIcolor	–	2010	annual	report
                                                                      |	Internal	and	external	controls	and procedures
                                                                                                   ACCOuNTING	FEES	AND	SERvICES                                      7
                                                                              Contents
                                                                      ➜
                                                                                                ➜



7.4	 accountIng	fees	and	servIces

                                                                                                           Mazars                             kPMG
(in € thousands)                                                                                        2010             2009              2010             2009
audiT fEEs    (1)
                                                                                                       3,682            3,407             3,659            6,068
technicolor	sa                                                                                          1,430             1,363            1,367            1,688
subsidiaries                                                                                            2,252            2,044             2,292            4,380
audiT-RElaTEd fEEs(2)                                                                                    164                62              124                84
technicolor	sa                                                                                              3                 -                -                 -
subsidiaries                                                                                              161               62               124               84
Tax fEEs(3)                                                                                                 -                 -              84               261
technicolor	sa                                                                                              -                 -                -                 -
subsidiaries                                                                                                -                 -               84              261
OThER fEEs                                                                                                  -                 -                8                 -
technicolor	sa                                                                                              -                 -                -                 -
subsidiaries                                                                                                -                 -                8                 -
ToTal                                                                                                 3,846            3,469             3,875             6,412

(1) Audit Fees are the aggregate fees billed by KPMG and Mazars for professional services in connection with the audit of the Company’s consolidated annual
    financial statements and services normally provided by these auditors in connection with statutory and regulatory filings or engagements, including reviews of
    interim financial statements, as well as audits of statutory financial statements of the Company and its subsidiaries.
(2) Audit-Related Fees