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Technicolor Retreats in First Quarter

Technicolor SA announced financial and production results for its first quarter 2012.

According to the statement, Technicolor’s revenues were €800 million (US $1.051 billion) in the quarter, down 4.2% compared to Q1 2011.

On the optical disc replication front, Technicolor reported that “combined DVD and Blu-ray volumes decreased by 9% in the first quarter of 2012, primarily due to a weaker slate of new release titles compared to an unusually strong first quarter of 2011 that included multiple blockbuster titles such as Harry Potter and the Deathly Hollows: Part 1, Tangled, Tron, and Megamind. North America demonstrated ongoing resiliency as volumes were stable year-on-year, despite the weaker slate of releases. The decline was due solely to the European market, which faced a particularly challenging comparison to the first quarter of 2011, which, in addition to the strong title slate, also included a large number of territory specific multi-disc sets and back catalog promotions. Despite ongoing growth in Blu-ray consumer adoption and title availability, Q1 2012 volumes were slightly down, due to the aforementioned weaker new release slate across key Studio customers. Games volumes grew by a strong 13% in the first quarter of 2012 compared with the first quarter of 2011.”

In terms of raw numbers, the company manufactured roughly 248 million DVDs in the first quarter of 2012 (down 10% from the same period in 2011) as well as 27 million Blu-ray discs (down 4% over Q1 2011).

Disc Replication Services (rounded)

Millions of units Q1 2011 Q1 2012 Change (%)
DVD 275 248 -10%
Blu-ray Disc (BD) 28 27 -4%
Games and Kiosk 23 22 -8%
Total 326 297 -9%

Currency conversion as of May 2, 2012.

For more information visit: www.technicolor.com


Unedited press release follows:

First Quarter 2012 Revenues

Solid revenue performance across activities

Paris (France), 26 April 2012 – The Board of Directors of Technicolor (Euronext Paris: TCH) met yesterday to review the Group’s revenues for the first quarter of 2012.

Q1 2012 revenues highlights

Group revenues from continuing operations amounted to €800 million compared to a strong first quarter of 2011 at €812 million.

• Technology: continued strength in Licensing revenues.

• Entertainment Services: resilient revenue performance almost entirely compensating the rapid decline in photochemical film activities.

• Digital Delivery: stabilization at Connected Home level as the division recorded stable revenues year-on-year.

Revenues of the first quarter of 2012 (ending 31 March)

In € million

Q1 2011

Q1 2012

Change,
reported (%)

Technology

130

121

(6.4)%

Change at constant currency (%)

(8.7)%

Entertainment Services[1]

405

395

(2.3)%

Change at constant currency (%)

(5.6)%

Digital Delivery

277

284

+2.4%

Change at constant currency (%)

+0.3%

Of which Connected Home

238

242

+1.5%

Change at constant currency (%)

(0.8)%

Total revenues from continuing operations

812

800

(1.5)%

Change at constant currency (%)

(4.2)%

[1] Media Services activity, formerly reported in Digital Delivery segment, is now included in Creation Services business within Entertainment Services segment. Media Services revenues amounted to €15 million in the first quarter of 2012, stable compared with the first quarter of 2011.

Q1 2012 highlights

• Entertainment Services started new services to the Studios, in particular with the opening of Sound facilities both in Los Angeles and in France.
• Connected Home won new customers awards in Latin America and Asia-Pacific, strengthening its position in fast growing markets, while maintaining its focus on improving its overall top line with the introduction of new services and new products. The action plan announced at the end of December 2011 has already started to generate some improvements. Technicolor confirms its objective of returning Connected Home to Adjusted EBITDA[1] breakeven in 2012.
• Innovation: Technicolor has launched new research orientations to align technology innovation with its Amplify 2015 strategic roadmap.
• Technicolor signed a binding agreement to sell its Broadcast Services activity to Ericsson.

Update on financial situation: continued focus on improving financial structure

• Estimated gross debt at the end of the first quarter of 2012 decreased both in nominal value and on an IFRS basis compared to year-end 2011, reflecting €47 million of debt repayments split between mandatory prepayments and excess cash flow allocation. As net cash has decreased as expected in the first quarter, net debt was up compared with the end of December 2011.
• Technicolor has signed an amendment to improve terms and conditions of the $125 million Wells Fargo credit facility. The new amendment includes an extension of the credit line from April 2013 to April 2016, a change in the calculation of the borrowing base improving funding availability and a reduction of ongoing costs.

Confirmation of 2012 objectives
Based on a resilient first quarter performance, Technicolor confirms its 2012 objectives:

• Adjusted EBITDA in the range of €475-500 million;
• Continue to generate positive free cash flow[2] despite higher restructuring expenses and investments in growth businesses;
• Operate within the financial covenants of credit agreements.

Frederic Rose, Chief Executive Officer of Technicolor, stated: “Technicolor delivered a solid sales performance in the first quarter of 2012. I am particularly encouraged by the commercial and operational progress of Connected Home, as well as the sustained level of our Licensing revenues. This performance makes me confident that we are well on track to delivering on our 2012 objectives of Adjusted EBITDA of €475-500 million and continued generation of positive free cash flow.”

An analyst conference call hosted by Frederic Rose, CEO and Stéphane Rougeot, CFO and SEVP Strategy will be held on Thursday, 26 April 2012 at 4:00 pm CET.

Financial Calendar
2011 AGM    20 June 2012
H1 2012 Results    26 July 2012
Q3 2012 Revenues    26 October 2012

Warning: Forward Looking Statements
This press release contains certain statements that constitute “forward-looking statements”, including but not limited to statements that are predictions of or indicate future events, trends, plans or objectives, based on certain assumptions and include any statement which does not directly relate to a historical fact or current fact. Such forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the future results expressed, forecasted or implied by such forward-looking statements. For a more complete list and description of such risks and uncertainties, refer to Technicolor’s filings with the French Autorité des marchés financiers.

About Technicolor
Technicolor, a worldwide technology leader in the media and entertainment sector, is at the forefront of digital innovation. Our world class research and innovation laboratories enable us to lead the market in delivering advanced video services to content creators and distributors. We also benefit from an extensive intellectual property portfolio focused on imaging and sound technologies, based on a thriving licensing business. Our commitment: supporting the delivery of exciting new experiences for consumers in theaters, homes and on-the-go. Euronext Paris: TCH – www.technicolor.com

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