SOURCE: TECHNICOLOR

February 18, 2010 09:49 ET

TECHNICOLOR: FY 2009 Results (unaudited)

PARIS--(Marketwire - February 18, 2010) -


--  Full year 2009 revenues down 14.5% at constant currency for continuing
    activities and down 10.9% on new perimeter(1)
    --  In a challenging environment, FY 2009 Group's revenues from
        continuing activities amounted to EUR 3,529 million, down 13.9% at
        current currency compared to FY 2008. Revenues from new perimeter
        activities declined by 10.4% in 2009 at current currency.
    --  4Q 2009 Group's revenues from continuing activities amounted to EUR
        926 million, down 23.7% at constant currency compared to 4Q 2008,
        mainly due to a significant year-on-year drop in Connect volumes
        partly explained by a very strong fourth quarter 2008 with very
        high orders for Digital to Analog adaptors from one US cable
        operator.

--  Full year 2009 adjusted EBITDA(2) at EUR 486 million, or 13.8% of
    sales, up 1.8 points vs. 2008; full year 2009 adjusted EBIT(3) at EUR
    247 million, or 7.0% of sales, up 2.3 points vs. 2008
    --  The increase of 2.3 points in adjusted EBIT margin compared to 2008
        resulted from a 1.8 points improvement in adjusted EBITDA margin
        and from a 0.5 point decrease in Depreciation & Amortization as a
        percentage of sales, mostly related to 2008 asset write-offs and
        impairments.
    --  2H 2009 adjusted EBITDA and adjusted EBIT margins increased
        respectively by 2.8 points and 3.0 points year-on-year, driven by
        an overall improvement in business mix and by efficiency gains in
        most of the Group's activities.

--  Group net result of EUR (342) million and net profit from continuing
    activities of EUR 33 million for the full year 2009
    --  Group net result for 2009 impacted by a EUR (375) million loss
        from discontinued operations, including  EUR (276) million in
        impairment charges on discontinued activities incurred in 1H 2009.
    --  Group net result for 2H 2009 amounted to EUR (17) million, impacted
        by a EUR (46) million loss from discontinued activities primarily
        reflecting a loss from the Grass Valley business.

--  Free cash flow(4) for the year 2009 of EUR (63) million, including a
    positive free cash flow of EUR 177 million in 2H 2009
    --  Group free cash flow at EUR 177 million in the second half, mainly
        driven by lower capex and by improvement in working capital
        resulting from lower activity and from improved inventory
        management.
    --  Net debt of EUR 2,176 million at 31 December 2009 compared to EUR
        2,311 million at 30 June 2009. Cash position of EUR 569 million at
        31 December 2009.

--  Priorities for 2010
    --  While visibility on the overall market environment remains low, the
        Group is focusing on winning new clients to deliver revenue growth
        in 2H 2010. The Group expects 1H 2010 revenue trend to be in line
        with 2H 2009 trend.
    --  The Group will continue to strongly focus on operational
        efficiencies and cash generation in order to finance the capex and
        working capital requirements necessary for expected increased
        business activity in 2H 2010.
    --  The Group intends to progress its divestment and closure program
        already underway, and stem the cash losses related to some of the
        activities it is seeking to divest.

(1) New perimeter refers to all continuing activities except the retail telephony business, classified as Other and exited in 2009

(2) EBITDA from continuing activities minus restructuring and impairment charges, and minus other income and expenses (full details on page 4)

(3) EBIT from continuing activities minus restructuring and impairment charges, and minus other income and expenses (full details on page 4)

(4) Cash from / (used) in operating activities less change in working capital and other assets and liabilities, tax, financial and non current cash out

The Board of Directors of Technicolor (Euronext Paris 18453; NYSE: TCH) met today to review the Group's full year 2009 results.

Comment by Frederic Rose, CEO

"2009 was an extremely challenging year that saw Technicolor achieve significant progress. While the financial restructuring clearly affected our ability to win material new customers, we were able to put 2009 to good use in order to significantly improve our operational profitability and cash generation, despite adverse macro-economic environment. Notwithstanding important operational losses due to Grass valley, the positive net result from our continuing activities in the second half is also encouraging.

The conclusion of our financial restructuring following today's court decision to end the "sauvegarde" proceeding will enable us to compete again effectively for new customers. In this regard, our recently announced contract with Warner Bros., as well as significant awards in the last few weeks from a US satellite provider and a European telco for set top boxes and gateways, provide positive signs for the year to come."

Summary of consolidated full year 2009 results (unaudited)

All figures are preliminary and subject to final audit. The audit process is in progress.

In EUR  million         Second Half                     Full Year
                ---------------------------   ---------------------------
                                    Change,                       Change,
                                    report-                       report-
                  2008      2009       ed       2008      2009       ed
                -------   -------   -------   -------   -------   -------
Group revenues
 from
 continuing
 activities       2,264     1,728     (23.7)%   4,099     3,529     (13.9)%
  Change at
   constant
   rates                    (21.8)%                       (14.5)%
of which
 revenues from
 new perimeter    2,137     1,700     (20.5)%   3,827     3,430     (10.4)%
  Change at
   constant
   rates                    (18.6)%                       (10.9)%
                -------   -------   -------   -------   -------   -------
EBITDA from
 continuing
 activities        (571)      209                (420)      375
  as a % of
   revenues       (25.2)%    12.1 %             (10.2)%    10.6 %
Adjusted EBITDA
 from
 continuing
 activities         305       281      (7.7)%     491       486      (1.0)%
  as a % of
   revenues        13.5 %    16.3 % +2.8 pt      12.0 %    13.8 % +1.8 pt
                -------   -------   -------   -------   -------   -------
EBIT from
 continuing
 activities        (762)       85                (741)      136
  as a % of
   revenues       (33.7)%     4.9 %             (18.1)%     3.8 %
Adjusted EBIT
 from
 continuing
 activities         138       157      13.8 %     195       247      27.0 %
  as a % of
   revenues         6.1 %     9.1 % +3.0 pt       4.7 %     7.0 % +2.3 pt
                -------   -------   -------   -------   -------   -------
Financial
 result            (303)      (58)               (376)      (68)
Share of
 profit/(loss)
 from
 associates          (4)       (0)                 (4)       (0)
Income tax          (85)        2                (104)      (35)
Profit/(loss)
 from
 continuing
 activities      (1,153)       29              (1,225)       33
                -------   -------   -------   -------   -------   -------
Loss from
 discontinued
 operations        (597)      (46)               (708)     (375)
Net income,
 Group share     (1,748)      (17)             (1,930)     (342)
                -------   -------   -------   -------   -------   -------
Operating cash
 flow from
 continuing
 operations(5)      150       192      28.2 %     215       271      26.1 %
Free cash flow     (482)      177                (591)      (63)
                -------   -------   -------   -------   -------   -------
Net financial
 debt             2,116     2,176     +60.0     2,116     2,176     +60.0
                -------   -------   -------   -------   -------   -------


(5) Operating cash flow from continuing activities is defined as adjusted
    EBITDA minus capex and restructuring cash out

Reconciliation of adjusted indicators

Technicolor is presenting, in addition to published results and with the aim to provide a more comparable view of the evolution of its operating performance vs. 2008, a set of adjusted indicators which exclude the following items as per the income statement of our financial statements:

--  Restructuring charges
--  Impairment charges
--  Other income and expenses (other non-current items)

These adjustments, the reconciliation of which is presented in the following table, amount to an impact on the Group EBITDA and EBIT from continuing activities of EUR (111) million for 2009, compared to an impact of EUR (936) million for 2008.

In EUR  million                                    2008     2009   Change
                                                 -------  -------  -------
EBIT from continuing activities                     (741)     136     (877)
                                                 -------  -------  -------
Write-offs included in cost of sales and
 operating expenses                                  (79)       0
Restructuring charges, net                          (166)     (41)
Impairment losses on non-current operating
 assets                                             (666)     (80)
Other income / (expense)                             (25)      10
                                                 -------  -------  -------
Adjusted EBIT from continuing activities             195      247      +52
As a % of revenues                                   4.7%     7.0% +2.3 pt
                                                 -------  -------  -------
Depreciation and amortization (D&A)*                 296      239      (57)
                                                 -------  -------  -------
Adjusted EBITDA from continuing activities           491      486       (5)
As a % of revenues                                  12.0%    13.8% +1.8 pt
                                                 -------  -------  -------
* including impact of provision for risks, litigations and warranties

Summary of second half and full year 2009 divisional indicators (unaudited)


                             Second Half                 Full Year
                      -------------------------  -------------------------
                                        Change                     Change
                                          at                         at
                                        cons-                      cons-
                                        tant                       tant
In EUR  million         2008     2009   rates      2008     2009   rates
                      -------  -------  ------   -------  -------  ------
Group revenues from
 continuing
 activities             2,264    1,728   (21.8)%   4,099    3,529   (14.5)%
of which:
 Entertainment
  Services              1,030      907    (9.8)%   1,845    1,705    (8.2)%
 Connect                  890      595   (31.9)%   1,579    1,329   (16.7)%
 Technology               211      195    (4.4)%     392      390     0.2 %
                      -------  -------  ------   -------  -------  ------
Adjusted EBITDA from
 continuing
 activities               305      281               491      486
as a % of revenues       13.5%    16.3%             12.0%    13.8%
of which:
 Entertainment
  Services                145      149               214      223
 as a % of revenues      14.1%    16.4%             11.6%    13.1%
 Connect                   72       54               111      101
 as a % of revenues       8.1%     9.1%              7.0%     7.6%
 Technology               163      143               287      283
 as a % of revenues      77.2%    73.5%             73.3%    72.5%
                      -------  -------  ------   -------  -------  ------
Adjusted EBIT from
 continuing
 activities               138      157               195      247
as a % of revenues        6.1%     9.1%              4.7%     7.0%
of which:
 Entertainment
  Services                 40       63                27       70
 as a % of revenues       3.9%     7.0%              1.4%     4.1%
 Connect                   38       19                47       23
 as a % of revenues       4.3%     3.2%              3.0%     1.7%
 Technology               153      134               270      266
 as a % of revenues      72.2%    68.7%             68.8%    68.2%
                      -------  -------  ------   -------  -------  ------
Operating Cash Flow
 from continuing
 activities               150      192               215      271
                      -------  -------  ------   -------  -------  ------
Group Free Cash Flow     (482)     177              (591)     (63)
                      -------  -------  ------   -------  -------  ------


Key highlights

Revenues

--  In the fourth quarter 2009, Group revenues from continuing activities
    amounted to EUR 926 million, down 26.5% at current currency compared
    to fourth quarter 2008, and down 23.7% at constant currency. New
    perimeter revenues reached EUR 911 million, down 21.1% at constant
    currency compared to the fourth quarter 2008.
    --  The revenue trend in Entertainment Services activities improved
        sequentially in the fourth quarter 2009 compared to third quarter
        2009, driven by strong growth in Creation and Theatrical Services
        and market share gains, which partly offset continuing pressure on
        DVD volumes, but revenues were lower than in the fourth quarter
        2008.
    --  Connect activities maintained market share vs. the third quarter
        2009, but satellite volumes continued to be impacted in the fourth
        quarter 2009 by high levels of refurbishment in the US. The overall
        volume trend compared to the fourth quarter 2008 is also affected
        by an unfavorable comparison base related to the very significant
        orders placed by a US cable client for Digital to Analog boxes at
        the end of last year.
    --  Technology revenues were lower than in the fourth quarter 2008 due
        to the disposal of the Software and Technology Solutions business
        in July 2009 and to lower licensing revenues due to the absence of
        material new contracts in the fourth quarter 2009. Compared to the
        third quarter 2009, Licensing revenues were stable, with a steady
        contribution from MPEG-LA and from core programs.
--  Following a third quarter 2009 also strongly impacted by a decline in
    Connect sales and by the exit of the residential telephony business,
    second half 2009 Group revenues from continuing activities were down
    23.7% at current currency and 21.8% at constant currency compared to
    the second half 2008.
--  In a challenging environment due to the company's financial
    restructuring and difficult macro-economic conditions, Group revenues
    from continuing activities amounted to EUR 3,529 million in 2009, down
    13.9% at current currency and 14.5% at constant currency.

Operating profitability indicators

--  EBITDA from continuing activities amounted to EUR 209 million in the
    second half 2009 compared to EUR (571) million in the second half 2008.
    Adjusted EBITDA from continuing activities amounted to EUR 281 million
    in the second half 2009, or 16.3% of revenues, an increase of 2.8
    points compared to second half 2008 resulting from efficiency gains in
    most of the Group's businesses and from continuing improvement in
    overall business mix as well as in the revenue mix of Entertainment
    Services and Connect. As a result, the decrease in adjusted EBITDA from
    continuing activities was limited to EUR 24 million compared to second
    half 2008 despite the EUR 536 million drop in revenues.
--  EBIT from continuing activities reached EUR 85 million in the second
    half 2009, compared to a loss of EUR (762) million in the second half
    2008. On an adjusted basis, EBIT reached 9.1% of revenues in the second
    half 2009, a 3.0 points improvement compared to second half 2008,
    driven by mix improvement across Entertainment Services and Connect,
    and by efficiency gains in most of the Group's businesses.
--  Adjusted EBITDA from continuing activities amounted to EUR 486 million
    in 2009 compared to EUR 491 million in 2008. Thus, the drop in revenues
    was partly offset at adjusted EBITDA level owing to the operating
    efficiency plan and an improved business mix.

Net income

--  Net income from continuing activities amounted to EUR 29 million in
    second half 2009, including a financial result of EUR (58) million.
    For the full year 2009, net income from continuing activities
    amounted to EUR 33 million, including a financial result of EUR (68)
    million.
--  Net loss from discontinued activities (mainly Grass Valley, PRN and
    Screenvision) amounted to EUR (46) million in the second half 2009,
    reflecting mostly EBIT losses at Grass Valley. Net loss from
    discontinued activities amounted to EUR (375) million for the full
    year 2009, including EUR (276) million impairment charges recorded
    in the first half 2009.
--  Net income (Group share) amounted to a loss of EUR (17) million in the
    second half 2009 and to a loss of EUR (342) million for the full year
    2009.

Operating Cash Flow from continuing activities

--  In the second half 2009, cash outflow for net capital expenditures
    amounted to EUR 51 million, a EUR 74 million decrease compared to
    second half 2008, driven by tight control over capex spending and
    lower investment requirements in the Entertainment Services, mainly
    due to the volume decrease in DVD replication. In all, the Group was
    able to offset the slight decline in adjusted EBITDA described above
    and the continued spending for restructuring actions while improving
    operating cash flow from continuing activities, which reached EUR 192
    million in the second half 2009 as compared to EUR 150 million in the
    second half 2008.
--  Operating cash flow from continuing activities amounted to EUR 271
    million in 2009, an increase of EUR 56 million compared to 2008.

Debt situation and cash position

--  Group free cash flow reached EUR 177 million in the second half 2009
    compared to EUR (482) million in the second half 2008, which had been
    impacted by a specific negative increase in working capital related to
    the alignment of the supplier payment cycle with contractual terms and
    with a material reduction in factoring. Following the completion of
    this alignment process in the first quarter 2009, working capital
    requirements improved significantly in the second half 2009, mainly as
    a consequence of lower activity in Connect.
--  Group free cash flow amounted to EUR (63) million in 2009, including
    the negative impact of the one-off increase in working capital
    requirements incurred in the first quarter 2009 consecutive to the
    alignment of the
    supplier payment cycle to contractual terms.
--  Net debt amounted to EUR 2,176 million at 31 December 2009, compared to
    EUR 2,311 million at 30 June 2009 and to EUR 2,116 million at 31
    December 2008.
--  Cash position amounted to EUR 569 million at 31 December 2009, compared
    to EUR 511 million at 30 June 2009 and to EUR 769 million at 31
    December 2008. As of 12 February 2009, the company has generated EUR 47
    million proceeds from disposals, mainly from Videocon share sales
    completed in the second half 2009 and early 2010.

Dividend

The Board proposes no dividend for the fiscal year 2009.

            Fourth quarter and second half 2009 divisional review

In EUR  million                        4Q 2008  4Q 2009  2H 2008  2H 2009
                                       -------  -------  -------  -------
Revenues from continuing activities      1,259      926    2,264    1,728
Change, as reported (%)                           (26.5)%           (23.7)%
Change at constant currency (%)                   (23.7)%           (21.8)%
                                       -------  -------  -------  -------
Revenues from new perimeter activities   1,195      911    2,137    1,700
Change, as reported (%)                           (23.8)%           (20.5)%
Change at constant currency (%)                   (21.1)%           (18.6)%
of which: Entertainment Services           556      486    1,030      907
  Change at constant currency (%)                  (8.3)%            (9.8)%
  Connect                                  529      328      890      595
  Change at constant currency (%)                 (36.6)%           (31.9)%
  Technology                               107       97      211      195
  Change at constant currency (%)                  (7.7)%            (4.4)%
                                       -------  -------  -------  -------
EBITDA from continuing activities                           (571)     209
EBITDA margin (%)                                          (25.2)%   12.1%
                                       -------  -------  -------  -------
Adjusted EBITDA from continuing
 activities                                                  305      281
Change, as reported (%)                                              (7.7)%
Adjusted EBITDA margin (%)                                  13.5%    16.3%
                                       -------  -------  -------  -------
EBIT from continuing activities                             (762)      85
EBIT margin (%)                                            (33.7)%    4.9%
                                       -------  -------  -------  -------
Adjusted EBIT from continuing
 activities                                                  138      157
Change, as reported (%)                                             +13.8%
Adjusted EBIT margin (%)                                     6.1%     9.1%
                                       -------  -------  -------  -------

Entertainment Services (former Technicolor division)

A diagram reconciling the current nomenclature of Entertainment Services activities with the nomenclature detailed in the 2008 annual report is presented in appendix.

Revenues for the quarter are presented in accordance with IFRS, and therefore exclude activities now treated as discontinued. Previously reported revenues for Entertainment Services in the second half 2008 came to EUR 1,149 million, of which EUR 118 million from Media Networks business (principally PRN and Screenvision) now treated as discontinued. Previous EBIT for Entertainment Services in the second half 2008 amounted to EUR (697) million, of which EUR (70) million from activities now treated as discontinued.

Entertainment Services financial indicators

In EUR  million                        4Q 2008  4Q 2009  2H 2008  2H 2009
                                       -------  -------  -------  -------
Revenues                                   556      486    1,030      907
Change, as reported (%)                           (12.6)%           (11.9)%
Change at constant currency (%)                    (8.3)%            (9.8)%
                                       -------  -------  -------  -------
EBITDA                                                      (505)      98
Change, as reported (%)                                                nm
EBITDA margin (%)                                          (49.0)%   10.8%
                                       -------  -------  -------  -------
Adjusted EBITDA                                              145      149
Change, as reported (%)                                               2.6%
Adjusted EBITDA margin (%)                                  14.1%    16.4%
                                       -------  -------  -------  -------
EBIT                                                        (627)      13
EBIT margin (%)                                            (60.9)%    1.4%
                                       -------  -------  -------  -------
Adjusted EBIT                                                 40       63
Adjusted EBIT margin (%)                                     3.9%     7.0%
                                       -------  -------  -------  -------

Market conditions remained challenging in the second half 2009, with continuing pressure on DVD volumes and a weak economic environment which constrained the number of new film releases and advertizing spending. In this difficult environment, Entertainment Services activities managed to maintain or increase market share while continuing to improve their cost base at a faster pace than the overall revenue decline.

As a result, adjusted EBITDA of Entertainment Services was nearly stable compared to the second half 2008, and reached EUR 149 million in the second half 2009 or 16.4% of revenues, an improvement of 2.3 point of sales compared to the same period in 2008. Adjusted EBIT benefited from lower D&A compared to the second half 2008 as a result of the asset write-offs which occurred at the end of 2008.

Second half Entertainment Services EBIT was negatively impacted by a EUR 50 million impairment charge, mostly related to a contract advance made to a US client in 2005.

Operating cash flow generation of Entertainment Services increased materially in the second half 2009 compared to the second half 2008 as a result of stable adjusted EBITDA and lower capex, driven by the volume decrease in DVD replication and by tight control over investments.

--  Creation and Theatrical Services

Creation and Theatrical Services recorded strong growth in the second half of 2009 compared to the second half 2008, mainly driven by market share gains in Creation and improved market conditions in Film. Margins and cash generation in Creation and Theatrical activities increased as a result of mix improvement in Film and higher activity in Digital Production.

Creation Services revenues increased in the second half 2009 compared to the second half 2008, with strong growth in Digital Production activities (visual effects, animation) outstripping the impact of difficult market conditions on Post-Production services.

--  During the fourth quarter 2009, Digital Production benefited from
    increased activity in visual effects for Film resulting from major
    project wins (Clash of the Titans, Percy Jackson, Robin Hood). In a
    weak advertising market, the activity in visual effects for commercials
    improved its market positions over the second half of 2009.
--  Notwithstanding difficult market conditions which affected revenues for
    post-production services in the fourth quarter of 2009, the Company
    believes that the Group's overall market share increased in this
    business.

Despite the lower performance in Post Production, operating profitability of Creation Services improved significantly in the second half 2009 compared to the second half 2008 due to increased activity in visual effects, ramp-up of both our Indian animation facility and Los Angeles commercials operation, and operational improvement initiatives.

Theatrical Services recorded sustained revenue growth in the second half 2009. Film services activities benefited from a strong release slate in the fourth quarter 2009, which compensated for the weak third quarter 2009 performance. Film reel volumes increased slightly in the second half 2009 compared to the second half 2008, with an improved mix which had a positive impact on profitability and cash generation. Our market position remained stable in Film over the period, whilst our Digital Cinema business continued to expand in the second half 2009.

Theatrical Services volume indicators

KPIs                                   4Q 2008  4Q 2009  2H 2008  2H 2009
                                       -------  -------  -------  -------
Film footage (bn feet)                     0.9      1.1      1.9      2.0
Change (%)                                          +23%               +2%
                                       -------  -------  -------  -------

--  Digital Content Delivery Services

In the second half of 2009, Digital Content Delivery Services activities were affected by weak market conditions.

--  The Media Management Services business suffered from strong pressure on
    volumes resulting from lower orders from studios and broadcasters for
    DVD (fewer catalog and new releases) and TV content management.
--  In a market impacted by the decline in advertising spend, second half
    2009 revenues of our Broadcast Services business were slightly down
    compared to second half 2008 but flat compared to first half 2009,
    with a sequential increase in the fourth quarter over third quarter
    2009 due to recent contract wins with existing customers.

Digital Content Delivery Services margins decreased as a result of lower activity but cash generation continued to improve in second half 2009 compared to second half 2008 as a result of lower capex requirements in Broadcast activities.

--  DVD Services

DVD Services volume indicators
In million units                       4Q 2008  4Q 2009  2H 2008  2H 2009
                                       -------  -------  -------  -------
DVD volumes (million units)                428      341      793      622
Change (%)                                          (20)%             (22%)
  o/w SD DVD                               357      288      663      531
  Change (%)                                        (19)%             (20)%
  o/w BD                                    16       21       26       36
  Change (%)                                        +34%              +38%
  o/w Games and Kiosk                       55       31      104       55
  Change (%)                                        (43)%             (47)%
                                       -------  -------  -------  -------

In the fourth quarter 2009, DVD activities remained negatively impacted by overall weakness in studio new release and catalog volumes. This resulted in strong reduction in volume within DVD Services, in-line with general DVD market trends. Despite lower second half 2009 revenues attributable to such volume weakness, margins and cash generation in DVD activities continued to improve as a result of substantial and ongoing cost reduction actions, efficiency gains and improved product mix year-on-year with strong growth in Blu-ray™, continued reductions in kiosk-related volumes and lower capex in replication activities.

Connect

A diagram reconciling the current nomenclature of Connect activities with the nomenclature detailed in the 2008 annual report is presented in appendix.

Revenues for the quarter and six-month operating profitability are presented in accordance with IFRS, and therefore exclude activities now treated as discontinued. Previously reported revenues for Connect in second half 2008 amounted to EUR 1,271 million, of which EUR 381 million from activities now treated as discontinued or Other continuing, principally the Grass Valley business and the remaining European and Asian Telephony businesses. Previous EBIT for Connect in second half 2008 amounted to EUR (590) million, of which EUR (544) million from activities now treated as discontinued or Other continuing.

Connect financial and volume indicators
In EUR  million                        4Q 2008  4Q 2009  2H 2008  2H 2009
                                       -------  -------  -------  -------
Revenues                                   529      328      890      595
Change, as reported (%)                           (37.9)%           (33.1)%
Change at constant currency (%)                   (36.6)%           (31.9)%
                                       -------  -------  -------  -------
EBITDA                                                        (8)      49
Change, as reported (%)
EBITDA margin (%)                                           (0.9)%    8.2%
                                       -------  -------  -------  -------
Adjusted EBITDA                                               72       54
Change, as reported (%)                                             (24.8)%
Adjusted EBITDA margin (%)                                   8.1%     9.1%
                                       -------  -------  -------  -------
EBIT                                                         (46)      14
EBIT margin (%)                                             (5.2)%    2.3%
                                       -------  -------  -------  -------
Adjusted EBIT                                                 38       19
Adjusted EBIT margin (%)                                     4.3%     3.2%
                                       -------  -------  -------  -------
KPIs
Cable (m)                                  3.5      1.7      4.9      2.9
Satellite (m)                              3.1        2      5.5      3.7
Telecom (m)                                3.4      2.6      5.9      5.0
Total Access Products (m)                   10      6.4     16.4     11.6
Change                                            (36.7)%           (29.2)%
                                       -------  -------  -------  -------

Fourth quarter 2009 revenues for Connect remained impacted by the Group's reduced ability to win major new access product contracts in 2009 due to its overall financial situation, but the group maintained in the fourth quarter 2009 its market positions in line with the previous quarter. Year- on-year volume decline in Digital Home Products resulted from:

--  Low orders for satellite set-top boxes in North America due to higher
    levels of refurbishment of previously deployed boxes; estimated market
    share in satellite was stable and the increased price pressure over
    the last quarter was partly offset by improved mix;
--  Market share loss with one European telecom operator, as previously
    reported in Q3 2009;
--  Strong decline in cable volumes, mostly due to the unfavorable
    comparison base against fourth quarter 2008 volumes which benefited
    from a very high level of orders for Digital to Analog adaptors from
    one US cable operator. Estimated market share in cable was stable and
    the increased price pressure over the last quarter was partly
    compensated by improved mix.

Fourth quarter 2009 revenues of the Software Service Platform business recovered their previous year level following three very weak quarters. This inflection in trend was mainly due to the positive performance of our Voice over IP platform.

Despite the substantial drop in second half 2009 revenues for Connect, the activity remained profitable over the period with a EUR 54 million adjusted EBITDA due to:

--  An improvement in mix, specifically in satellite set-top boxes;
--  A material decrease in costs of non-quality resulting from the launch
    in the third quarter 2009 of a program to overhaul portfolio
    management and development processes.

In addition, Cash flow generation improved in the second half 2009 compared to the same period last year due to:

--  Slightly lower capital expenditure and cash restructuring charges;
--  Significant working capital requirements improvement resulting from
    lower activity, sharp reduction in inventory levels and to key
    components supply chain improvement.

Technology

A diagram reconciling the current nomenclature of Technology activities with the nomenclature detailed in the 2008 annual report is presented in appendix.

Technology financial indicators

In EUR  million                         4Q 2008  4Q 2009  2H 2008 2H 2009
                                        ------- --------  ------- -------
Revenues                                    107      97       211     195
Change, as reported (%)                            (9.3)%            (7.8)%
Change at constant currency (%)                    (7.7)%            (4.4)%
Of which Licensing revenues                  105     96       206     194
Change, as reported (%)                            (8.0)%            (5.5)%
Change at constant currency (%)                    (6.3)%            (2.0)%
                                        -------- ------   -------  ------
EBITDA                                                        138     120
Change, as reported (%)                                             (12.9)%
EBITDA margin (%)                                            65.4%   61.8 %
                                        -------- ------   -------  ------
Adjusted EBITDA                                               163     143
Change, as reported (%)                                             (12.2)%
Adjusted EBITDA margin (%)                                   77.2%   73.5 %
                                        -------- ------   -------  ------
EBIT                                                          128     111
EBIT margin (%)                                              60.4%   57.0 %
                                        -------- ------   -------  ------
Adjusted EBIT                                                 153     134
Adjusted EBIT margin (%)                                     72.2%   68.7 %
                                        -------- ------   -------  ------

Second half 2009 revenues from the Technology business were impacted by the sale of the Software and Technology Solutions (STS) business to Civolution in July 2009. In the fourth quarter 2008, the STS business generated revenues of about EUR 2 million.

In the second half 2009, Licensing activities benefited from a stable revenue stream from the MPEG-LA pool and from the sustained performance of the other licensing programs. Fourth quarter 2009 revenues from Licensing were stable compared to the previous quarter, but below fourth quarter 2008 due to the absence of material new contracts in the fourth quarter 2009.

Adjusted EBITDA for the Technology business was negatively impacted in the second half 2009 by:

--  Lower revenues from Licensing in the fourth quarter 2009;
--  Costs related to the launch of the Advanced Design Center within
    Corporate Research, partly offset by research sites rationalization;
--  A slight increase in patent filing, prosecution and maintenance costs.
    The company has taken action to optimize its patent portfolio
    management costs.

--  Other continuing activities

Total EBIT from other continuing activities amounted to EUR (14) million in the second half 2009 compared to EUR (153) million in the second half 2008. This EBIT loss was largely related to expenses related to activities being exited, mainly the retail telephony business in North America. The improvement since 2008 is mainly due to the closing of the remaining Genlis plant and Silicon activities and the sale of Tuners, all during 2008.

--  Discontinued activities

Total EBIT from discontinued activities amounted to EUR (26) million in the second half 2009. This EBIT loss was largely related the loss of Grass Valley.

An analyst conference call hosted by Frederic Rose, CEO and Stephane Rougeot, CFO will be held today at 15:00 CET. The presentation document will be made available on the Technicolor website prior to the call.

This press release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration.

Technicolor is a company listed on NYSE Euronext Paris and NYSE stock exchanges, and this press release contains certain statements that constitute "forward-looking statements" within the meaning of the "safe harbor" of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current expectations and beliefs and are subject to a number of risks, uncertainties, assumptions and other factors beyond Technicolor's control that could cause actual results to differ materially from the future results expressed, forecasted or implied by such forward-looking statements due to changes in global economic and business conditions, risks related to its debt restructuring, and risks related to its operations in general. For a more complete list and description of such risks and uncertainties, refer to Technicolor's Form 20-F (formerly Thomson) and other filings with the U.S. Securities and Exchange Commission and Technicolor's Rapport Annuel and other filings with the French Autorité des marchés financiers.

About Technicolor

With more than 95 years of experience in technological innovation, Technicolor is a leading provider is a leading provider of production, postproduction, and distribution services to content creators and distributors. Technicolor is one of the world's largest film processors; the largest independent manufacturer and distributor of DVDs (including Blu-ray™ Disc); and a leading global supplier of set-top boxes and gateways. The company also operates an Intellectual Property and Licensing business. For more information: www.technicolor.com


Press contacts: +33 1 41 86 53 93
technicolorpressoffice@technicolor.com

Investor relations: +33 1 41 86 55 95
investor.relations@technicolor.com

NOMENCLATURE RECONCILIATION

The following diagram reconciles the current nomenclature of Entertainment Services activities with the nomenclature presented in the 2008 annual report.

The following diagram reconciles the current nomenclature of Connect activities with the nomenclature presented in the 2008 annual report.

The following diagram reconciles the current nomenclature of Technology activities with the nomenclature presented in the 2008 annual report.

                  CONSOLIDATED STATEMENTS OF OPERATIONS



                                                Year ended December 31,
                                              --------  --------  --------
(EUR inmillions)                                2009      2008      2007
                                              --------  --------  --------
Continuing operations
Revenues                                         3,529     4,099     4,681
Cost of sales                                   (2,747)   (3,355)   (3,652)

                                              --------  --------  --------
Gross margin                                       782       744     1,029
                                              --------  --------  --------

Selling and administrative expenses               (382)     (459)     (463)
Research and development expenses                 (153)     (169)     (182)
Restructuring costs                                (41)     (166)      (79)
Net impairment losses on non-current
 operating assets                                  (80)     (666)       (1)
Other income (expense)                              10       (25)      114
                                              --------  --------  --------
Profit (loss) from continuing operations
 before tax and net finance costs                  136      (741)      418
                                              --------  --------  --------

Interest income                                      8        16        20
Interest expense                                   (51)      (91)     (101)
Other financial income (expense)                   (25)     (301)        4
                                              --------  --------  --------
Net finance costs                                  (68)     (376)      (77)
                                              --------  --------  --------

Share of profit (loss) from associates               -        (4)        1
Income tax                                         (35)     (104)      (26)
                                              --------  --------  --------
Profit (loss) from continuing operations            33    (1,225)      316
                                              --------  --------  --------


Discontinued operations
Net loss from discontinued operations             (375)     (708)     (339)
                                              --------  --------  --------
Net income (loss)                                 (342)   (1,933)      (23)
                                              ========  ========  ========
Attributable to:
- Equity Holders                                  (342)   (1,930)      (23)
- Minority interests                                 -        (3)        -

                                     -------------------------------------
                                            Year ended December 31,
                                     -------------------------------------
(in euro, except number of shares)       2009         2008         2007
                                     -----------  -----------  -----------

Weighted average number of shares
 outstanding  (basic net of treasury
 stock)                              263,089,971  262,940,152  262,787,361
                                     -----------  -----------  -----------

Earnings(loss) per share from
 continuing operations
- basic                                     0.13        (4.72)        1.13
- diluted                                   0.13        (4.72)        0.99
Earnings (loss) per share from
 discontinued operations
- basic                                    (1.43)       (2.69)       (1.29)
- diluted                                  (1.43)       (2.69)       (1.18)
Total earnings (loss) per share
- basic *                                  (1.30)       (7.41)       (0.16)
- diluted *                                (1.30)       (7.41)       (0.19)
                                     -----------  -----------  -----------

* The dividends on the subordinated perpetual notes (whenever they do not impact the net result) are taken as a reduction of earnings for the purpose of calculating earnings per share.

                        CONSOLIDATED BALANCE SHEETS



                                              December  December  December
(EUR inmillions)                              31, 2009  31, 2008  31, 2007
                                              --------  --------  --------
ASSETS

Non-current assets:
 Property, plant and equipment                      431       541       693
 Goodwill                                           746       926     1,645
 Other intangible assets                            456       673       938
 Investments in associates                            7         7        10
 Investments and available-for-sale financial
  assets                                             42        52       397
 Derivative financial instruments                     -         -        16
 Contract advances and up-front prepaid
  discount                                           60       131       122
 Deferred tax assets                                426       515       503
 Income tax receivable                               20        21        67
 Other non-current assets                            37        41        53
 Cash collateral                                     13         -         -
                                               --------  --------  --------

                                               --------  --------  --------
Total non-current assets                          2,238     2,907     4,444

Current assets:
 Inventories                                         97       270       332
 Trade accounts and notes receivable                555       968       918
 Current accounts with associates and joint
  ventures                                            5         4        12
 Derivative financial instruments                     7        85        17
 Income tax receivable                               15        32        10
 Other current assets                               316       485       464
 Cash collateral                                     82        38         -
 Cash and cash equivalents                          569       769       572
 Assets classified as held for sale                 436        33         1
                                               --------  --------  --------

                                               --------  --------  --------
Total current assets                              2,082     2,684     2,326
                                               --------  --------  --------

                                               --------  --------  --------
Total assets                                      4,320     5,591     6,770
                                               ========  ========  ========

                        CONSOLIDATED BALANCE SHEETS



                                              December  December  December
(EUR inmillions)                              31, 2009  31, 2008  31, 2007
                                              --------  --------  --------
EQUITY AND LIABILITIES

Shareholders' equity:
 Common stock (269,890,028 shares at December
  31, 2009 with nominal value of  EUR 3.75
  per share)                                     1,012     1,012     1,012
 Treasury shares                                  (156)     (159)     (154)
 Additional paid in capital                      1,643     1,643     1,539
 Subordinated perpetual notes                      500       500       500
 Other reserves                                    112       139       282
 Retained earnings (accumulated deficit)        (3,340)   (2,998)     (932)
 Cumulative translation adjustment                (226)     (272)     (202)
                                              --------  --------  --------

Shareholders' equity (deficit)                    (455)     (135)    2,045
                                              --------  --------  --------

 Minority interests                                  2         1        10

                                              --------  --------  --------
Total equity (deficit)                            (453)     (134)    2,055
                                              --------  --------  --------

Non-current liabilities:
 Borrowings                                         16        22     1,078
 Retirement benefits obligations                   310       332       352
 Restructuring provisions                           16        17        25
 Derivative financial instruments                    -         -        11
 Other provisions                                   92       103        50
 Deferred tax liabilities                          198       284       204
 Other non-current liabilities                      60        45        59

                                              --------  --------  --------
Total non-current liabilities                      692       803     1,779
                                              --------  --------  --------

Current liabilities :
 Borrowings                                     2 ,727     2,862       745
 Derivative financial instruments                    4        46        35
 Retirement benefits obligations                    60        71        51
 Restructuring provisions                           48       115        75
 Other provisions                                   68       102        89
 Trade accounts and notes payable                  435       968     1,160
 Accrued employee expenses                         128       155       168
 Income tax payable                                  7        32        58
 Other current liabilities                         345       548       547
 Payables on acquisition of companies                2         1         7
 Liabilities classified as held for sale           257        22         1

                                              --------  --------  --------
Total current liabilities                        4,081     4,922     2,936
                                              --------  --------  --------
Total liabilities                                4,773     5,725     4,715
                                              --------  --------  --------

                                              --------  --------  --------
Total equity (deficit) and liabilities           4,320     5,591     6,770
                                              ========  ========  ========

                  CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                    Year ended December 31
(EUR inmillions)                                   -----------------------
                                                    2009    2008    2007
                                                   ------- ------- -------
Net income (loss)                                     (342) (1,933)    (23)
Loss from discontinued operations                     (375)   (708)   (339)
Profit (loss) from continuing operations                33  (1,225)    316
                                                   ------- ------- -------
 Summary adjustments to reconcile profit from
  continuing operations to cash generated from
  continuing operations
 Depreciation and Amortization (1)                     270     452     300
 Impairment of assets (2)                               82     711      15
 Net changes in provisions (3)                         (80)     94    (129)
 (Profit) / loss on asset sales                        (12)     (1)    (55)
 Interest (Income) and Expense                          43      57      81
 Other non cash items (including tax)                   43     185      15
 Changes in working capital and other assets and
  liabilities                                         (120)   (335)     36
 Cash generated from / (used in) continuing
  operations                                           259     (62)    579
 Interest paid                                         (51)    (71)    (73)
 Interest received                                       7       5       8
 Income tax paid                                       (36)    (30)    (63)
 Net operating cash generated from / (used in)
  continuing activities                                179    (158)    451
 Net operating cash used in discontinued operations    (81)   (160)   (170)
                                                   ------- ------- -------
Net cash from / (used in) operating activities (I)      98    (318)    281
                                                   ------- ------- -------

 Acquisition of subsidiaries, associates and
  investments, net of cash acquired                     (4)    (14)    (48)
 Net cash impact  from sale of investments              23       5      42
 Purchases of property, plant and equipment (PPE)     (121)   (164)   (148)
 Proceeds from sale of PPE and intangible assets        17       3     109
 Purchases of intangible assets including
  capitalization of development costs                  (44)    (65)    (49)
 Cash collateral granted to third parties              (59)    (35)      -
 Cash collateral reimbursed by third parties             3       -       -
 Loans (granted to) / reimbursed by third parties       (8)     (3)      -
 Net investing cash generated used in continuing
  activities                                          (193)   (273)    (94)
 Net investing cash generated from / (used in)
  discontinued operations                              (35)    (78)    (45)
                                                   ------- ------- -------
Net cash used in investing activities (II)            (228)   (351)   (139)
                                                   ------- ------- -------

 Purchases of treasury shares and others                 -       1      (7)
 Repayment of convertible bonds                          -    (367)      -
 Proceeds from borrowings                                3   1,611     165
 Repayments of borrowings                              (50)   (338)   (890)
 Fees paid  linked to the debt and capital
  restructuring                                        (27)      -       -
 Dividends and distributions paid to Group's
  shareholders                                           -     (29)   (117)
 Net financing cash generated from/ (used in)
  continuing activities                                (74)    878    (849)
 Net financing cash used in discontinued operations     (1)     (8)    (12)
                                                   ------- ------- -------
Net cash provided by / (used) in financing
 activities (III)                                      (75)    870    (861)
                                                   ------- ------- -------
                                                   ------- ------- -------
Net (decrease) / increase in cash and cash
 equivalents (I+II+III)                               (205)    201    (719)
                                                   ------- ------- -------
Cash and cash equivalents at beginning of year         769     572   1,311
                                                   ------- ------- -------
Exchange losses on cash and cash equivalents             5      (4)    (20)
                                                   ------- ------- -------
Cash and cash equivalents at end of year               569     769     572
                                                   ------- ------- -------

(1) Including EUR 151 million of depreciation of our investment in Videocon Industries in 2008 and EUR 7 million of depreciation of non- quoted shares in 2009

(2) Including EUR 2 million and EUR 45 million of impairment of assets as part of restructuring plans in 2009 and 2008 respectively

(3) Including non cash impact of EUR (62) million in 2007 corresponding to the net gains on the medical plan curtailments

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