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Strong Blu-ray Growth at Technicolor

Technicolor SA announced financial and production results for its third quarter 2011.

According to the statement, Technicolor’s revenues were €837 million (US $1.186 billion) in the quarter, down 9% at current currency compared to Q3 2010.

On the optical disc replication front, Technicolor reported that in the third quarter of 2011 “combined DVD and Blu-ray volumes increased by 22% as compared with the third quarter of 2010. Excluding the impact of the Warner Bros. contract, which started in August 2010, total volumes recorded a fourth consecutive quarter of year-over-year growth. In the context of lower consumer confidence in Europe and in North America, the Group was able to increase its level of activity. This performance was driven by a variety of factors including market share gains, continued growth in the Blu-ray format and ongoing resiliency for Standard Definition DVD. DVD and Blu-ray volume demand also benefited from a strong release slate across key studio customers, with titles such as Walt Disney’s Cars 2, Paramount’s Thor, Universal Pictures’ Bridesmaids, and Warner Bros.’ Green Lantern. Games and Software also contributed to quarterly growth, with combined volumes from these segments up 19% year-over-year.”

In terms of raw numbers, the company manufactured roughly 349 million DVDs in the third quarter of 2011 (up 20% from the same period in 2010) as well as 44 million Blu-ray discs (up 65% over Q3 2010).

Disc Replication Services (rounded)

Millions of units Q3 2010 Q3 2011 Change (%)
DVD 291 349 20%
Blu-ray Disc (BD) 27 44 65%
Games and Kiosk 24 26 6%
Total 342 418 22%

Currency conversion as of October 27, 2011.

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Unedited press release follows:

TECHNICOLOR :Q3 2011 Revenues

• Q3 2011 Group revenues from continuing operations of €837 million, down 7.4% at constant currency
• 9M 2011 Group revenues from continuing operations of €2,396 million, up 2.3% at constant currency
• Consent solicitation request approved by large majorities of Technicolor’s noteholders and lenders

Paris (France), 27 October 2011 – The Board of Directors of Technicolor (Euronext Paris: TCH) met on 26 October 2011 to review the Group’s revenues for the third quarter of 2011.

Q3 2011 revenues

In the third quarter of 2011, Group revenues from continuing operations amounted to EUR837 million, down 9.0% at current currency and down 7.4% at constant currency compared to the third quarter of 2010.

• Technology revenues declined by 25.1% YoY at constant currency in the third quarter of 2011, as Licensing activities were affected by an unfavorable comparison to the third quarter of 2010, which had benefited from strong growth in worldwide consumer electronics market and the outcome of audits of past product volumes for certain MPEG LA licensees.

• Entertainment Services revenues rose 6.2% YoY at constant currency in the third quarter of 2011, reflecting continued growth in Creation Services and Digital Cinema Distribution activities, as well as higher DVD and Blu- ray™ volumes.

• Digital Delivery revenues decreased by 17.6% YoY at constant currency in the third quarter of 2011, as a result of a drop in global shipments of Digital Home Products, due in particular to continued market weakness in Europe partially offset by growth in Latin America and a more favorable overall product mix compared with the third quarter of 2010.

Update on financial situation and objectives

• As a result of seasonal working capital requirements, estimated net financial debt, excluding foreign exchange impact, has slightly increased at the end of the third quarter of 2011.

• To deliver on its objective of a full year 2011 adjusted EBITDA comparable or slightly up compared to 2010, the Group requires a strong Q4 2011 performance in Technology and Entertainment Services which would compensate the deterioration in Digital Delivery. In addition, the Group confirms it expects to generate a positive free cash flow in the second half of 2011.

Comment by Frederic Rose, CEO

“Our overall revenues for the first nine months of 2011 are growing, with Technology and Entertainment Services continuing to deliver solid performances. However, in a difficult market environment, Digital Delivery has performed below our expectations. We have therefore started implementing actions in Digital Delivery in order to return it to profitability in 2012. Finally, we continue to focus on our cash generation, with the objective to achieve positive free cash flow in the second half 2011 and for the full year.”

About Technicolor
Technicolor is home to industry-leading creative and technology professionals committed to the creation, management and delivery of entertainment content to consumers around the world. Propelled by a culture of innovation and underpinned by a dedicated research organization, the company’s thriving licensing business possesses an extensive intellectual property portfolio focused on imaging and sound technologies. Serving motion picture, television, and other media clients, the company is a leading provider of high-end visual effects, animation, and postproduction services. In support of network service providers and broadcasters globally, Technicolor ranks among the worlds’ leading suppliers of digital content delivery services and home access devices, including set-top boxes and gateways. The company also remains a large physical media service provider, being one of the world’s largest film processors and independent manufacturers and distributors of DVDs and Blu-ray™ discs.