Technicolor Cranks Out 152 Million Blu-ray Discs in 2011

Technicolor SA announced financial and production results for its fourth quarter and full year 2011.

According to the statement, Technicolor’s revenues were €1.054 billion (US $1.414 billion) in the quarter, down 8.8% at current currency compared to Q4 2010.

On the optical disc replication front, Technicolor reported that in the fourth quarter of 2011 “combined SD-DVD and Blu-ray volumes increased by 1% compared to the fourth quarter of 2010, which already included the Warner Bros. contract as it started in August 2010. Normalizing prior quarters for the impact of this new business, Technicolor’s fourth quarter of 2011 represented the fifth consecutive quarter of year-on-year volume growth, demonstrating the ongoing resiliency of DVD Services business. A total of 1.5 billion units of DVDs were replicated in 2011, up 22% compared with 2010, the highest level ever recorded by the Group. This growth was driven by a variety of factors, including continued expansion of the Blu-ray disc format, as well as market share gains in the Games segment. Volumes also benefited from a number of major new release titles across all major studio customers, including Walt Disney’s The Help, Paramount’s Kung Fu Panda 2, Universal Pictures’ Cowboys and Aliens, and Warner Bros’ Harry Potter and the Deathly Hallows Part 2.”

In terms of raw numbers, the company manufactured roughly 423 million DVDs in the fourth quarter of 2011 (down 4% from the same period in 2010) as well as 57 million Blu-ray discs (up 22% over Q4 2010).

Disc Replication Services (rounded)

Millions of units Q4 2010 Q4 2011 Change (%) FY 2010 FY 2011 Change (%)
DVD 441 423 -4% 1073 1270 +18%
Blu-ray Disc (BD) 47 57 +22% 94 152 +62%
Games and Kiosk 36 48 +35% 96 118 +23%
Total 524 529 +1% 1263 1540 +22%

Currency conversion as of February 24, 2012.

For more information visit: www.technicolor.com


Edited press release follows:

TECHNICOLOR : Full-Year 2011 Results And New Strategic Roadmap

Full-Year 2011 Results: Resilient Adjusted EBITDA Margin and Return to Positive Free Cash Flow

A New Strategic Roadmap: Amplify 2015

ISSY-LES-MOULINEAUX CEDEX, FRANCE — (- Feb 24, 2012) –

H2 2011 and FY 2011 Results Financial Highlights (unaudited)

—  FY 2011 Adjusted EBITDA[1] of EUR475 million: increase in Technology
and Entertainment Services, partly offsetting decrease in Digital
Delivery.
—  FY 2011 Adjusted EBITDA margin nearly stable at 13.8%.
—  Strong free cash flow[2] generation, reaching EUR81 million for
FY 2011.

+-----------------+ +-----------------------++----------------------------+
|In EUR million   | |          Second Half  ||         Full Year          |
+-----------------+ +-----+------+----------++-----+------+---------------+
|                 | |2010 | 2011 |Change,   ||2010 | 2011 |    Change,    |
|                 | |     |      |reported  ||     |      |   reported    |
+-----------------+ +-----+------+----------++-----+------+---------------+
|Group revenues   | |     |      |          ||     |      |               |
|from continuing  | |     |      |          ||     |      |               |
|operations       | |2,075| 1,891|  (8.9)%  ||3,574| 3,450|         (3.5)%|
|                 | |     |      |          ||     |      |               |
|Change at        | |     |      |          ||     |      |               |
|constant currency| |     |      |          ||     |      |               |
|(%)              | |     |(7.9)%|          ||     |(1.1)%|               |
+-----------------+ +-----+------+----------++-----+------+---------------+
|Adjusted EBITDA  | |     |      |          ||     |      |               |
|from continuing  | |     |      |          ||     |      |               |
|operations       | |  363|   308| (15.1)%  ||  505|   475|         (5.9)%|
|                 | |     |      |          ||     |      |               |
|As a % of        | |     |      |          ||     |      |               |
|revenues         | |17.5%| 16.3%| (1.2)pt  ||14.1%| 13.8%|        (0.3)pt|
+-----------------+ +-----+------+----------++-----+------+---------------+
|Group Free cash  | |     |      |          ||     |      |               |
|flow             | |   16|    49|   +33    ||(100)|    81|           +181|
|                 | |     |      |          ||     |      |               |
|Cash position at | |     |      |          ||     |      |               |
| 31 December,    | |     |      |          ||     |      |               |
|2011             | |     |      |          ||  332|   370|            +38|
|                 | |     |      |          ||     |      |               |
|Net Debt IFRS at | |     |      |          ||     |      |               |
|31 December, 2011| |     |      |          ||  993|   957|           (36)|
|                 | |     |      |          ||     |      |               |
|Net Debt non IFRS| |     |      |          ||     |      |               |
|at 31 December,  | |     |      |          ||     |      |               |
|2011             | |     |      |          ||1,191| 1,130|           (61)|
+-----------------+ +-----+------+----------++-----+------+---------------+

FY 2011 Business Highlights

—  Licensing: Highest revenues since 2003 and significant progress in
launch of new patent licensing programs.
—  Innovation: Significant progress on M-GO, a new platform to help
end-users discover, view and share all forms of media; continued
development of metadata-based solutions and deployment of color
re-alignment technology in special effects.
—  Entertainment Services: Record year in Digital Production’s revenues
and in DVD volumes.
—  Digital Delivery: Revenue decline and turnaround action plan
launched, as announced in December 2011.

2012 Objectives

—  Adjusted EBITDA in the range of EUR475-500 million reflecting:

—  Continued strength in Technology and Entertainment Services;

—  Return  to  Adjusted  EBITDA  breakeven  in  Connected  Home, with
positive Adjusted EBITDA in the second half;

—  An  increase  in  operating  expenses  to  support  the  ramp-up  of
growth businesses, including M-GO;

—  An uncertain macroeconomic environment.

—  Continue   to   generate   positive  free  cash  flow  despite  higher
restructuring expenses and investments in growth businesses.

—  Operate within the financial covenants of credit agreements.

Technicolor’s Strategic Roadmap: Amplify 2015

Technicolor’s mission is to enhance media experience on any screen, in theaters, at home or on the go through innovative technologies and solutions in imaging and sound.

The Amplify 2015 plan will put Technicolor on a new growth path to achieve its strategic ambition: lead innovation in media monetization solutions.

Amplify 2015 is built on three pillars:

1. Boost our innovation pipeline and expand in licensing:

While continuing to file patent applications, leading to about 2,000 patent grants per year in promising technology areas and launching new patent licensing programs, Technicolor will also expand its licensing activities by:

—  Leveraging the growing range of connected devices in patent
licensing programs;
—  Broadening our presence in growing markets, such as Extended Home
Applications;
—  Entering new geographies, such as China, India and Brazil;
—  Developing new licensing models such as Technology Licensing.

The combination of new applications and services, new geographies and new licensing models is expected to generate an adjusted EBITDA of at least EUR40 million in 2015.

2. Develop innovative solutions to address expanding digital markets:

Technicolor will expand its presence in digital media monetization platforms, deriving new revenues from a broad array of media. For example, M-GO is the result of intensive R&D, market testing and investment over the past 3 years. It aims at providing end-users with a seamless experience for media consumption. M- GO will be preloaded as of Q2 2012 on most U.S. connected devices of Samsung and Vizio and on Intel Ultrabooks™.

3. Consolidate and expand geographically to gain scale or access broader ecosystems:

Technicolor will leverage its asset portfolio and seize external growth opportunities to consolidate and expand geographically in Innovation and Licensing, Media Creation and Media Distribution.

—  Innovation and Licensing: the Group aims to seize opportunities to
add complementary patents to its existing portfolio and carry out
targeted technology acquisitions.
—  Media Creation and Distribution: the Group aims to consolidate and
expand geographically as well as develop new added value services for
its studio customers.
—  Packaged Media: Technicolor will continue to focus on cash flow
generation by expanding its client base, extending its Blu-ray™
capacity, lowering its cost structure and innovating in Supply Chain
solutions.
—  Connected Home: Technicolor will implement the turnaround plan
announced in December 2011, deploy its digital home software suite
for smart home applications and participate in consolidation to
gain scale.

Amplify 2015 Goals[3]

—  Profit growth: Adjusted EBITDA above EUR600 million
(vs. EUR475 million in 2011).
—  Free Cash Flow generation: over EUR400 million generated over 2012-2015
which will be used to repay debt.
—  Significant deleveraging: Technicolor’s Net debt/Adjusted EBITDA ratio
to fall below 1.2x (vs. 2.4x in 2011 based on nominal debt).

Frederic Rose, Chief Executive Officer of Technicolor, stated:

“I am very pleased with Technicolor’s 2011 performance, in particular our return to positive free cash flow. Technicolor is now poised to seize opportunities in an increasingly digitized world. With our Amplify 2015 plan, we have a clear roadmap to achieve our strategic ambition: lead innovation in media monetization solutions. Technicolor is on track to grow profits and generate strong cash flow while significantly deleveraging its balance-sheet.”

A meeting hosted by Frederic Rose, CEO and Stéphane Rougeot, CFO and SEVP Strategy will be held on Friday, 24 February, 2012 at 11:00 CET. The meeting will also be available via webcast at: http://www.technicolor.com/financial-results

————————————————————————— —–

[1] EBIT from continuing operations excluding other income (expense), and Depreciation & Amortization (including impact of provisions for risks, litigations and warranties).

[2] Free Cash Flow from both continuing operations and discontinued operations.

[3] At constant scope of activities.