Technicolor 2012 Annual Report

ANNUAL REPORT 2012
Corporate Headquarters:
1-5, rue Jeanne d’Arc
92130 Issy-les-Moulineaux – France
E-mail: [email protected]
Tel.: +33 (0)1 41 86 50 00 – Fax: +33 (0)1 41 86 58 59
Technicolor Inc.
6040 Sunset Blvd
Hollywood, CA 90 028
USA
Tel.: +1 (323) 817 6600
www.technicolor.com
ANNUAL REPORT 2012
Technicolor S.A. with a share capital of €335,543,841 – 333 773 174 R.C.S. Nanterre including the Annual Financial Report
1 PRESENTATION OF THE GROUP AND
ITS ACTIVITIES ................................................................................................................................................................................................... 5
1.1 financial data ..................................................................................................................................................................... 6
5 TECHNICOLOR
AND ITS SHAREHOLDERS ...........................................................................................................................93
5.1 Share capital ............................................................................................................................................................................................................. 94
1.2 History and strategy of the Company .................................................................................................. 8 5.2 Listing information ................................................................................................................................................................................100
1.3 Business overview ...................................................................................................................................................................................... 13
2 OPERATING AND FINANCIAL REVIEW

AND PROSPECTS ............................................................................................................................................................................ 23
6 SOCIAL INFORMATION
AND SUSTAINABILITY.................................................................................................................................................103
6.1 Employees and workforce ................................................................................................................................................104
2.1 Overview .......................................................................................................................................................................................................................... 24 6.2 Environmental matters ............................................................................................................................................................ 113
2.2 Trends in the M&E industry ....................................................................................................................................... 24 6.3 Stakeholder relations and local impacts of the
2.3 Summary of results .............................................................................................................................................................................. 25 Company’s activities .................................................................................................................................................................... 123
2.4 Seasonality ................................................................................................................................................................................................................ 26 6.4 Technicolor foundation for cinema heritage ............................................................... 124
2.5 Geographic breakdown of revenues & effect of
exchange rate fluctuations ............................................................................................................................................... 26
2.6 Events subsequent to December 31, 2012 ....................................................................... 27
7
2.7 Notification of interests acquired in the share
capital of French companies in 2012 ................................................................................................ 27 ADDITIONAL INFORMATION .............................................................................................. 125
2.8 Notification of interests acquired in the share 7.1 Property, plant and equipment ..........................................................................................................................126
capital of French companies in 2011 ................................................................................................... 28 7.2 Memorandum and bylaws ................................................................................................................................................. 128
2.9 Results of operations for 2012 and 2011 ............................................................................. 28 7.3 Material contracts ...................................................................................................................................................................................130
2.10 Liquidity and capital resources ............................................................................................................................. 36 7.4 Additional tax information ..............................................................................................................................................130
2.11 Priorities and objectives for 2013 .............................................................................................................. 44 7.5 Organization of the Group ........................................................................................................................................... 131
7.6 Available documents .......................................................................................................................................................................134
7.7 Information on accounting services ........................................................................................................134
7.8 Accounting fees and services .................................................................................................................................... 135
3
7.9 Persons responsible for the Registration
RISK FACTORS ........................................................................................................................................................................................ 45 Document and the Annual Financial Report ................................................................ 136
3.1 Risk related to the debt restructuring ............................................................................................... 46
3.2 Market risks .............................................................................................................................................................................................................. 49
3.3 Risks related to the business ....................................................................................................................................... 50
8
3.4 Other risks ................................................................................................................................................................................................................... 57
3.5 Insurance ........................................................................................................................................................................................................................ 60 FINANCIAL STATEMENTS .................................................................................................................... 137
8.1 Technicolor 2012 consolidated financial
statements ................................................................................................................................................................................................................... 138
8.2 Notes to the consolidated financial statements ....................................................144
4
8.3 Statutory Auditors' report on the Consolidated
CORPORATE GOVERNANCE AND Financial Statements ..................................................................................................................................................................... 221
INTERNAL CONTROL ................................................................................................................................................ 61 8.4 Technicolor SA parent company financial
statements ................................................................................................................................................................................................................. 223
4.1 Board of Directors 62
.................................................................................................................................................................................
8.5 Notes to the parent company financial statements .................................. 226
4.2 Chairman’s report on corporate governance,
internal control and risk management .............................................................................................. 70 8.6 Parent company financial data over the five last
years (under Articles R. 225-81 and R. 225-102
4.3 Statutory Auditors’ report, prepared in accordance of the French Commercial Code) .......................................................................................................... 245
with Article L.225-235 of French company law
(Code de Commerce) on the report prepared by 8.7 Statutory Auditors’ report on the financial
the Chairman of the Board of Directors .................................................................................. 83 statements for the year ended December 31,
2012 .........................................................................................................................................................................................................................................246
4.4 Compensation and benefits of Directors ................................................................................. 84
8.8 Statutory Auditors’ Special report on regulated
4.5 Executive Committee ................................................................................................................................................................... 91 agreements and commitments – general meeting
of shareholders held to approve the financial
statements for the year ended dececember 31,
2012 ....................................................................................................................................................................................................................................... 248
9 REGISTRATION DOCUMENT CROSS

REFERENCE TABLE ............................................................................................................................................................ 249
| TECHNICOLOR | ANNUAL REPORT 2012

anonyme with a share capital of €335,543,841
Registred office: 1-5, rue Jeanne d'Arc
92130 Issy-Les-Moulineaux
Nanterre Register of Commerce and companies No. 333 773 174
ANNUAL REPORT 2012
This Registration document (Document de Référence) was filed with the Autorité des Marchés Financiers (AMF) on April 16, 2013
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.
This registration document can 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 | ANNUAL REPORT 2012 | 1

FORWARD-LOOKING STATEMENTS
In this Annual Report, unless otherwise stated, the “Company” refers to This Annual Report contains certain forward-looking statements with
Technicolor SA and “Technicolor” and the “Group” refer to Technicolor respect to Technicolor’s financial condition, results of operations and
SA together with its consolidated affiliates. business and certain plans and objectives of the Group. These
statements are based on management’s current expectations and beliefs
This Annual Report includes: in light off the information currently available and are subject to a
(i) number off factors and uncertainties that could cause actual results to
the Annual Financial Report (Rapport Financier Annuel) issued
differ materially from those described in the forward-looking
pursuant to Article L. 451-1-2-I and II of the French Monetary
statements. In addition to statements that are forward-looking by reason
and Financial Code (Code monétaire et financier) and referred to
off context, other forward-looking statements may be identified by use
in Article 222-3 of the AMF General Regulation (règlement
off the terms “may”, “will”, “should”, “expects”, “plans”, “intends”,
général de l’AMF) (a cross-reference table is set forth on
“anticipates”, “believes”, “estimates”, “projects”, “predicts” and
page 254 between the documents referred to in Article 222-3
“continue” and similar expressions identify forward-looking statements.
off the AMF General Regulation and the relevant sections of this
By their nature, forward-looking statements involve risk and uncertainty
Registration Document);
because they relate to events and depend on circumstances that are
(ii) the Management Report (rapport de gestion) adopted by the anticipated to occur in the future. Such statements are also subject to
Board of Directors off Technicolor SA pursuant to Article assumptions concerning, among other things, Technicolor’s anticipated
L. 225-100 et seq. of the French Commercial Code (Code de business strategies; its intention to introduce new products and services;
Commerce) (the cross-reference table on page 253 mentions anticipated trends in its business; and Technicolor’s ability to continue to
the elements of this report); and control costs and maintain quality.
(iii) the Chairman’s report on corporate governance, internal control

procedures and risk management issued pursuant to Article
L. 225-37 of the French Commercial Code (this report is
included in Chapter 4: “Corporate governance and internal
control procedures” in section 4.2: “Chairman’s report on
corporate governance, internal control and rise management” on
page 70 and seq).
2 | TECHNICOLOR | ANNUAL REPORT 2012

STATEMENTS REGARDING COMPETITIVE POSITION
This Annual Report contains statements regarding market trends, Futuresource Consulting Ltd. for information on DVD replication
market share, market position and products and businesses. Unless and distribution services;
otherwise noted herein, market estimates are based on the following
outside sources, in some cases in combination with internal estimates: IHS Screen Digest, Generator Research, IDC, Gartner for
information on connected devices (TV, Tablets, smartphones);
Screen Digest, FutureSource Consulting, PwC, Wilkofsky Gruen
Associates, Magna Global, IDATE, IHS, Adams Media Research, Parks Associates, IMS Research for information on set-top boxes;
IMdb, Hollywood Reporter, UBS and Display Search for overall
Dell’Oro Group and Infonetics Research for information on DSL and
market trends in the media & entertainment industry;
cable modems, routers & gateways.

1 PRESENTATION OF THE GROUP
AND ITS ACTIVITIES
1.1 SELECTED FINANCIAL DATA .................................................................................................................... 6 1.3 BUSINESS OVERVIEW .......................................................................................................................................................... 13

1.3.1 Technology .................................................................................................................................................................................. 13
1.2 HISTORY AND STRATEGY OF THE COMPANY .................................. 8
1.3.2 Entertainment Services .................................................................................................................................... 16
1.2.1 Company profile ..................................................................................................................................................................... 8
1.3.3 Connected Home (formerly Digital Delivery) .................................... 20
1.2.2 Historical background ................................................................................................................................................ 8
1.3.4 Other ......................................................................................................................................................................................................... 22
1.2.3 Organization .................................................................................................................................................................................... 9
1.3.5 Discontinued operations ........................................................................................................................... 22
1.2.4 Strategy 11
.......................................................................................................................................................................................................

1 - PRESENTATION OF THE GROUP AND ITS ACTIVITIES
Selected Financial Data
1.1 SELECTED FINANCIAL DATA

The Company has derived the following selected consolidated financial off the consolidated financial statements and the Company’s significant
data from its consolidated financial statements as of and for each of the accounting policies are discussed in note 2 of the consolidated financial
years ended December 31, 2012, 2011 and 2010. These consolidated statements. These selected financial data represent only a summary and,
financial statements have been prepared in accordance with therefore, should be read together with the Company’s consolidated
International Financial Reporting Standards (“IFRS”) as approved by the financial statements and the notes thereto which are included in this
European Union. You should read the following selected consolidated Annual Report. The changes in consolidation scope and discontinued
financial data together with Chapter 2: “Operating and Financial operations are presented in notes 4 and 11, respectively, off the
Review and Prospects” of this Annual Report. The basis off preparation Company’s consolidated financial statements.

PRESENTATION OF THE GROUP AND ITS ACTIVITIES - 1
Selected Financial Data
(in € millions) 2012 2011 2010

Statement of Operations (selected items)(1)
Revenues from continuing operations 3,580 3,450 3,574
Adjusted EBITDA(2) 512 475 505
Profit (loss) from continuing operations before tax and net finance income (expense) 264 (33) 38
Net finance income (expense)(3) ((197)) (187) 116
Income tax ((49)) (83) 2
Net income (loss) from continuing operations 13 (303) 156
Net income (loss) from discontinued operations(4) ((35)) (21) (225)
Net income (loss) ((22)) (324) (69)
Profit (loss) from discontinued operations(4)
Discontinued results related to the Grass Valley and Media Networks businesses 2 (19) (221)
Discontinued results related to the other discontinued businesses ((37)) (2) (4)
Earnings per Ordinary Share
Weighted average number of shares outstanding – (basic net of treasury stock)(5) 275,885,374 211,364,435 107,123,745
Earnings (loss) (Group share) per share from continuing operations (in €)
Basic 0.05 (1.4) 1,3
Diluted(5) 0.05 (1.3) 1,0
Total earnings (loss) (Group share) per share (in €)
Basic (
(0.07) ) (1.5) (0,8)
Diluted(5) ((0.07)) (1.4) (0,5)
Balance sheet (selected items)
Total non-current assets 1,817 1,907 2,299
Total current assets (excluding cash and cash equivalents) 1,023 1,142 1,303
Cash and cash equivalents 397 370 332
TOTAL ASSETS 3,237 3,419 3,934
Total non-current liabilities 1,703 1,940 2,038
Total current liabilities 1,293 1,324 1,391
Share capital 335 224 175
Shareholders’ equity 237 151 503
Non controlling interests 4 4 2
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 3,237 3,419 3,934
Dividends/distributions
Dividends/distributions per share (in €) - - -
(1) Results for 2012, 2011 and 2010 are presented in accordance with IFRS 5 and therefore exclude activities treated as discontinued from profit (loss) from continuing operations.
(2) Please refer to the definition In section 2.9.9: “Adjusted indicators” of Chapter 2: “Operating and Financial Review and Prospects” of this Annual Report.
(3) Comprises “Net interest expense” and “Other net financial income (expense)”. Please refer to note 9 of the Group’s consolidated financial statements for more information.
(4) In 2012, the scope of discontinued operations has not been modified compared to 2011: Grass Valley and Media Network, which comprised Convergent and Screenvision. Other
discontinued activities comprised: Silicon Solutions businesses, Audio-Video and Accessories businesses (AVA), Tubes and CE Partnerships.
In 2012, the loss from discontinued operations mainly corresponds to the fine from the European Union related to Thomson’s former Cathode Ray Tubes (CRT) business for
€38.6 million (please refer to section 2.9.7 “Profit (Loss) from discontinued operations” for more details on this topic).
(5) Average number of shares restated with a ratio of 1.022 for 2010 and 2011 considering the impact of the preferential subscription right element of the share capital increase of August
14, 2012. Please refer to note 28 of the Group’s consolidated financial statements for more information on the dilutive instruments affecting earnings per share on a diluted basis.

History and Strategy of the Company
1.2 HISTORY AND STRATEGY OF THE COMPANY
1.2.1 COMPANY PROFILE 1.2.2 HISTORICAL BACKGROUND

Legal and commercial name: Technicolor has been contributing to the development off video
TECHNICOLOR technologies and services for more than 95 years. Technicolor now
occupies leading positions worldwide in the development of
Registered office address:
1-5, rue Jeanne d’Arc technologies and in the supply of digital production, postproduction and
92130 Issy-les-Moulineaux, France distribution solutions and services for content creators (historically
Tel.: +33 (0)1 41 86 50 00 studios but now also prosumers and consumers), Pay-TV operators and
Fax: +33 (0)1 41 86 58 59
E-mail: [email protected] network service providers.
Twitter: twitter.com/TechnicolorCo
Domicile, legal form and applicable legislation: Technicolor is a French Change in Businesses
corporation ((société anonyme), governed by Title II of the French Over the last ten years, the Company’s scope of activities shifted
Commercial Code pertaining to corporations, by all laws and towards the Media & Entertainment industry through a series of
regulations pertaining to corporations, and its bylaws. acquisitions and disposals.
The Company is registered with the Register of Commerce and In 2009, the Group decided to refocus on technologies, products and
Companies (Registre du Commerce et des Sociétés) of Nanterre under services related to content creation and delivery. Technicolor
No. 333 773 174. Its APE Code, which identifies a company’s type of completed the exit of its Retail Telephony activity and entered into the
business and activities, is 7010Z, corresponding to the business of disposal process of businesses outside its new strategic framework,
corporate administration. namely its Professional Broadcast & Networks business (Grass Valley
activities including broadcast equipment, head-end and transmission)
Date of incorporation and length of life of the Company: Technicolor and its Media Networks business.
(formerly Thomson) was formed on August 24, 1985. It was registered
on November 7, 1985 for a term of 99 years, expiring on November 7, In 2010, the Group sold a majority off its participation in Screenvision
2084. U.S. (part of Media Networks) and sold its broadcast business (part of
Grass Valley).
Fiscal year: January 1 to December 31.
In 2011, Technicolor completed its exit from Grass Valley, by selling
Stock Exchange: The Group is listed on NYSE Euronext Paris (for more the transmission business and head-end business in the first half of the
information, please refer to Chapter 5: “Shareholders and Listings year. Technicolor also continued to optimize its portfolio of assets as the
lnformation”, section 5.2.1: “Market for the Company’s securities” of Group seized an opportunity to monetize its 25.7% stake in
this Annual Report). On March 21, 2011 Technicolor voluntarily ContentGuard, using the proceeds to reduce its debt level.
delisted from the New York Stock Exchange. As a result, its American
Depositary Shares (ADSs) now trade on the over-the-counter (OTC) In 2012, consistent with Technicolor’s strategy to focus on media
market. monetization solutions and new growth businesses, while strengthening
its balance sheet, Technicolor sold the Broadcast Services activity, using
Activity: Technicolor is a technology-driven company supporting its the proceeds to reduce debt. The Group consequently transferred its
Media & Entertainment (M&E) customers in shaping their digital future. digital distribution services to Creative Services within the
Technicolor’s activities are organized into three operating segments, Entertainment Services segment to provide fully integrated digital
namely Technology, Entertainment Services, and Connected Home workflow to content creators. End 2012, the Group also sold the
(formerly Digital Delivery). For a detailed description off the segments, SmartVision business (television-over-IP or IPTV) and entered into an
please refer to section 1.2.3: “Organization”. All other activities and agreement to sell the Cirpack softswitch operations (voice-over-IP or
corporate functions (unallocated) are presented within the “Other” VoIP). As a result, the Digital Delivery segment was renamed
segment. In fiscal year 2012, Technicolor generated €3,580 million of Connected Home consistent with the fact that it was the sole business
consolidated revenues. On December 31, 2012, the Group had to be continued in 2013.
14,639 employees in 25 countries.

2009 Sauvegarde Plan 2012 Capital Increases

On November 30, 2009, the Company filed a Sauvegarde Plan based In May 2012, Technicolor decided to give favorable consideration to the
on the restructuring agreement reached with its senior creditors on offers from international institutions to invest in the share capital of the
July 24, 2009, following the announcement on January 28 and Company, as such a transaction would strengthen the balance sheet,
March 9, 2009 of the breach of certain covenants contained in stabilize the shareholder base and enhance the Company’s capabilities to
financial agreements under which the Company had borrowed implement its strategic roadmap. An offer was made by two U.S.-based
substantially all off its outstanding senior debt, i.e. around €2.8 billion. investment funds, Vector Capital IV, L.P. and Vector Entrepreneur Fund
The Sauvegarde Plan was filed after the Company failed to identify and III, L.P. (hereinafter referred to, together with Vector Capital Corporation,
obtain the unanimous approval off all its senior creditors on the the management company of the funds, as “Vector Capital”) and
restructuring agreement, due principally to the Credit Default Swaps submitted to the approval of the General Shareholders’ Meeting on June
("CDS") auction process organized by the International Swaps and 20, 2012. The offer from Vector Capital was approved by the General
Derivatives Association (ISDA) at the end of October 2009 with Shareholders’ Meeting, which allowed Vector Capital to take a minority
respect to the Company’s senior debt, and due to the fact that the stake in the share capital of the Company, through two capital increases
identity of the new creditors had not been definitively established and that were carried out in the summer 2012.
the debt instruments continued to be sold on the market and were the
subject of new CDS contracts. In practical terms, a reserved capital increase was first launched, with
Vector Capital investing an amount of €94,943,012 (issuance premium
In accordance with French law, the proposed Sauvegarde Plan was included) in Technicolor’s capital. It was followed by a rights issue,
submitted to the vote off the Committees of creditors meetings on enabling existing shareholders to participate in the operation. Both
December 21 and 22, 2009. In addition, on January 27, 2010, the transactions enabled Technicolor to raise gross proceeds of
combined General Shareholders’ Meeting approved the resolutions €191,106,584.96, corresponding to the issue of 109,114,822 new
required to implement the Sauvegarde Plan, authorizing the completion shares.
off the equity issuances contemplated thereby. Finally, on February 17,
2010, the Nanterre Commercial Court approved the proposed Following the transactions, Vector Capital’s shareholding reached 20.87%
Sauvegarde Plan, after ensuring that it protected the interests off all in the share capital (20.70% at December 31, 2012, after redemption of
creditors and offered a “viable solution” (“une possibilité sérieuse pour the NRS). Vector Capital stated it was supportive of Technicolor’s
l’entreprise d’être sauvegardée”). The Sauvegarde Plan, which was management.
implemented on May 26, 2010, is binding upon all creditors of
For more information about the 2012 capital increases, please refer to
Technicolor SA. For more information about the risks related to the
Chapter 4: “Corporate Governance and internal control procedures”,
Sauvegarde Plan, please refer to Chapter 3: “Risk Factors”, section 3.1:
section 4.2.1.3 “Board of Director’s activities in 2012” and Chapter 5:
“Risk related to the debt restructuring”.
“Technicolor and its shareholders”, section 5.1.5 “Modification in the
distribution of the share capital over the past three years”.
1.2.3 ORGANIZATION
As discussed below, the Group is organized around three operating segments: Technology, Entertainment Services, and Connected Home
(formerly Digital Delivery).
Technology Entertainment Services Connected Home

(formerly Digital Delivery)
Research & Innovation Creative Services
Connected Home
Licensing DVD Services
Businesses sold between
2012 and 2013:
IZ-ON Media Broadcast Services
MediaNavi
(formerly PRN) IPTV & VOIP

All other activities and corporate functions (unallocated) are presented DVD Services;
within the “Other” segment.
IZ-ON Media (formerly Premier Retail Networks or PRN).
Technology For more information about the Entertainment Services segment,
(15% of 2012 Consolidated Revenues) please refer to section 1.3.2: “Entertainment Services”.
Technology, which generated consolidated revenues off €515 million
in 2012 (15% of the Group’s consolidated revenues) develops, protects
and monetizes technology, principally through the licensing of
Connected Home - formerly Digital
Technicolor’s Intellectual Property, which represents most of the Delivery - (37% of 2012 Consolidated
segment’s consolidated revenues (€512 million in 2012). Revenues)
Following the sale of the Broadcast Services and the SmartVision
Technology is organized around the following divisions: (television-over-IP or IPTV) businesses in 2012 and the Cirpack soft-
switch operations (voice-over-IP or VoIP) in 2013, Technicolor has
Research & Innovation, which includes the Group’s fundamental
renamed the existing “Digital Delivery” segment to “Connected Home”.
research activities;
The business review is focused on Connected Home activities. Digital
Licensing, which is responsible for protecting and monetizing the Delivery financial indicators are presented for reconciliation purposes.
Group’s Intellectual Property portfolio and generates most of the
Digital Delivery generated consolidated revenues of €1,334 million
Technology revenues;
in 2012 (37% of the Group’s consolidated revenues).
MediaNavi: the Group’s platforms and applications (launched under
Connected Home generated consolidated revenues of €1,244 million
the commercial brand M-GO) aiming at simplifying and enriching
in 2012.
the end-user experience when consuming digital content, should it be
premium content or personal content. Connected Home offers a wide range of solutions to Pay-TV operators
and network service providers for the delivery of digital entertainment,
For more information about the Technology segment, please refer to
data, voice, and smart home services, through the design and supply of
section 1.3.1: “Technology”.
products such as set-top boxes, gateways, managed wireless tablets, and
other connected devices, as well as software solutions for multi-device
Entertainment Services communication (which mostly consist of Qeo, a software framework
(48% of 2012 Consolidated Revenues) announced at CES 2013), applications for the smart home (including
Entertainment Services, which generated consolidated revenues of home automation), and professional services. Connected Home shipped
€1,730 million in 2012 (48% off the Group’s consolidated revenues) a total of 30.1 million products in 2012 (2011: 23.7 million units).
mainly develops and offers creative services for the global
For more information about the Connected Home segment, please
Media & Entertainment industry as well as services related to the
refer to section 1.3.3: “Connected Home (formerly Digital Delivery)”.
manufacturing and distribution of Blu-rayTM and DVDs for studio
clients. In Creative Services, Technicolor has been developing new
technology solutions to support the transition of its customers to digital Other
and has been managing its digital creative services business to capture The "Other" segment comprises all other continuing activities and
growth opportunities, while limiting exposure to fast declining legacy unallocated corporate functions.
activities.
For more information, please refer to section 1.3.4: "Other".
Entertainment Services is organized around the following divisions:
Creative Services, which includes Digital Creative Services (Digital

Production, Digital Postproduction & Distribution Services and
Digital Cinema) and legacy activities (Film Services, Compression &
Authoring, Tape duplication);

1.2.4 STRATEGY leveraging the growing range off connected devices, such as
connected TVs, smartphones, tablets and media platforms which use
Technicolor’s mission is to enhance media creation and media the Group’s technologies, to maintain and develop the Group’s
experience on any screen, in theaters, at home and on the go. The Patent Licensing activity;
Amplify 2015 plan, launched early in 2012, is Technicolor’s new
growth plan designed to achieve its strategic ambition: lead innovation actively participating in standardization bodies to promote the
and develop new monetization models in digital media products, adoption of the Group’s innovative technologies, particularly in audio
technologies and services. and video compression, consumer electronics and home connectivity;
and
The Amplify 2015 plan is built on 3 pillars, with the objective to deliver
profitable growth, cash generation and deleveraging. developing new licensing models such as Technology Licensing to
promote innovative technologies in product enhancements,
The vision is derived from Technicolor’s assessment off key trends in the particularly for consumer electronics manufacturers and digital
Media & Entertainment industry, which provide material opportunities platform providers.
for growth. It is also based on the Company’s assets and identity, in
particular: As an example of Technicolor’s involvement in licensing activities, in
2012, the Group was actively involved in over 10 standardization
world-class innovation, technologies and intellectual property in bodies, including the MPEG and ATSC. Incorporating the Group’s
media-related technologies, especially technologies related to video, technology in key industry standards helps promote the use of its
color, sound and networking; patents in new products and services, which in turn helps generate
artistic talents and high added-value services for content creators and Licensing revenues. In 2012, Technicolor also accelerated its
content owners in visual effects, animation, digital postproduction and Technology Licensing initiative in color fidelity and image enhancement
distribution to theaters, homes and mobile devices; by launching its Color Certification Program, which leverages the
Group’s reputation and experience in the field of color quality content.
leadership in content and delivery solutions for Pay-TV operators and Technicolor is partnering with Portrait Displays, a visual enhancement
network service providers, home networking solutions, digital software provider, to offer a Color Certification Program to
distribution and expertise in related software and services; manufacturers of personal computers (“PC”), laptop and tablet displays,
as potential licensees off this technology. The Group has also developed
trusted relationships with leading content creators (film studios, an image certification program in partnership with Marseille Networks,
broadcasters and advertisers), Pay-TV providers, network service which certifies 4K image quality on any device.
providers and consumer electronics manufacturers.
Develop innovative solutions for media

Boost innovation and expand licensing creation and distribution to address
Technicolor is an innovation-driven company and as such will continue
expanding media experiences and
to dedicate a significant portion of its efforts to develop and bring to the
market innovations that will benefit its customers. The Group actively
monetization opportunities
files patent applications, leading to approximately 2,000 patent grants Over the past decade, Technicolor has successfully managed to
per year; in 2012, 2,300 patents were granted. The Group’s quality accompany the media and entertainment industry in its transition from
intellectual property portfolio is oriented towards promising technology analog to digital media – an evolution that has facilitated the
areas, which will enable the Group to continue developing new patent distribution of media across geographies and consumption platforms or
licensing programs. Technicolor will expand its licensing activities by: via new technologies at a faster rate. In working with its major clients and
industry partners, Technicolor is developing new services and digital
platforms for the creation of entertainment content.

For example, in collaboration with Warner Bros. and Technicolor's other adjustment measures when necessary to respond to rapidly evolving
major studio customers, the Group announced in 2012 the launch off a markets. In its Digital Creative Services business, the Group has
multi-year project to develop an end-to-end digital studio platform. The increased the operations off its production facility in Bangalore (India). In
objective of this digital platform is to connect individual studio the DVD Services business, approximately 65% of costs are now
operations and third-party service providers through a single integrated variable and the Group has decreased its cost base by locating facilities
platform to facilitate workflow. This will allow all stages of the digital in low-cost countries. In legacy activities, Technicolor has entered into
content creation process, from VFX to post-production, to be subcontracting agreements with Deluxe for photochemical film
completed seamlessly, thereby facilitating communication and activities and Sony DADC for Compression & Authoring activities. In
increasing the efficient creation of intellectual property. The platform the Connected Home segment, the Group has decreased its costs
will facilitate increased productivity, optimal utilization off equipment relating to purchasing and sourcing of materials, improved operational
and resources so as to decrease related costs, and a reduced time to efficiency in its manufacturing facility in Brazil and implemented a
market for movies and TV series which provides flexibility with respect regional reorganization to create greater efficiencies and cost savings.
to media release windows. Technicolor has also strongly focused on containing capital
expenditures in established businesses, while focusing its research efforts
Technicolor also launched M-GO, a new application aimed at making on areas where it has strong differentiation.
digital entertainment easier for consumers to find, watch, and enjoy.
Currently in beta testing and scheduled for commercial launch in the The Group’s leadership position as well as promising industry trends
US in the second quarter off 2013, M-GO is an application that enables have allowed Technicolor to leverage its existing asset portfolio. In
users to discover, find, rent or purchase and view streaming or Digital Creative Services, the Group hired award-winning talents with
downloaded digital entertainment content on most browsers or strong expertise in digital sound & color grading, increased its capacity
operating systems. M-GO is the result of intensive R&D, market and re-allocated its resources to VFX and now offers new added-value
testing and investment over the past 3 years, which has led to numerous services for content creators and distributors. In DVD Services, the
innovations and patent disclosures. M-GO will allow consumers to rent Group’s strategy is to maintain its position with major studios and
or purchase movies and TV content from M-GO’s library of over further expand its customer base while using its expanded Blu-rayTM
10,000 titles (as of the first quarter off 2013) provided under content production capacities to address expected Blu-rayTM market growth.
licensing agreements with most major studios, including NBC Universal, Technicolor will also continue to implement innovative supply chain
Paramount Pictures, Sony Pictures Home Entertainment, Twentieth solutions to further capture margin opportunities. The Group will build
Century Fox, Warner Brothers, DreamWorks Animation, Relativity upon the successful turnaround of its Connected Home business, by
Media, Lionsgate and Starz Digital. The agreements will enable continuing to invests in projects such as Qeo, a smart home application,
consumers to rent or purchase movies or TV shows and will offer and participate in consolidation to add scale.
consumers the ability to purchase UltraViolet enabled movies, giving
them the ability to watch their purchased movies across multiple
connected devices. Upon commercial launch, M-GO will benefit from a
Drive profitable growth, cash generation
built-in potential audience since it is pre-loaded on a variety of partners’ and deleveraging
connected devices such as Samsung, VIZIO, LG Electronics and RCA The Group's multi-year operational program is aimed at accelerating
and on digital media players on Intel® UltrabookTM devices. In addition, revenue growth, expanding gross margins and operating margins and
M-GO functions on a full spectrum off operating systems, from Android increasing cash flow generation.
to iOS to Windows, and is already available as a free download from the
to increase its revenues, Technicolor will continue to focus on
Google Play app store.
expanding market segments such as Blu-rayTM discs, Digital Services
and new licensing programs, increase market shares in Connected
Leverage existing asset portfolio Home, develop new businesses such as M-GO and focus on research
Technicolor has taken a number of steps to optimize its cost structure, initiatives such as color features, user interface, metadata and
including leveraging its operational excellence program (real estate, IT, discovery, home networks and personalized content
supply chain and quality) and enhancing its ability to take real time cost recommendations.

Business Overview
to expand its gross margins and operating margins, the Group is Technicolor expects these strategic initiatives to provide substantial
focused on improved operational performance across its business profit growth in the upcoming years, proving that it has gone back to a
divisions, including an increased utilization rate in Entertainment sustainable growth path.
Services, greater efficiency in real estate use, IT and supply chain
management and cost structure relating to general corporate Amplify 2015 Goals(1) (at constant scope of activities)(2) are:
expenses.
profit growth: Adjusted EBITDA above €600 million (vs. €452
to increase the Group's free cash flow (calculated as adjusted million in 2011 and €498 million in 2012);
EBITDA less restructuring expenses, net capital expenditures,
free Cash Flow generation: over €400 million generated over
financial, tax and other non-current expenditures, cash from
2012-2015, which will be used to repay debt;
discontinued operations, and changes in working capital and other
assets and liabilities), Technicolor will continue to closely manage significant deleveraging: Technicolor’s Net debt/Adjusted EBITDA
capital expenditures and R&D expenses. ratio to fall below 1.1x (vs. 1.4x in 2012 based on IFRS debt).
1.3 BUSINESS OVERVIEW

The table below sets forth the contribution to the Group’s consolidated revenues of its segments for 2012 and 2011. In accordance with IFRS,
revenues from continuing operations exclude the contribution of discontinued operations.
(in € millions, except percentages) 2012 % of total 2011 % of total

Revenues from continuing operations
Technology 515 15% 456 13%
Entertainment Services 1,730 48% 1,832 53%
Digital Delivery 1,334 37% 1,157 34%
o/w Connected Home 1,244 35% 989 29%
Other 1 - 5 -
TOTAL 3,580 100% 3,450 100%
Please refer to Chapter 2: “Operating and Financial Review and 1.3.1 TECHNOLOGY
Prospects”, section 2.5: “Geographic breakdown of revenues and effect
of exchange rate fluctuation” of this Annual Report, for a breakdown of Technology generated consolidated revenues of €515 million in 2012
the Group’s revenues by geography. (15% of the Group’s consolidated revenues). Technology comprises
Research & Innovation (R&I), Licensing and MediaNavi.
Please refer to Chapter 2: “Operating and Financial Review and
Prospects”, section 2.4: “Seasonality” of this Annual Report, for a Technology develops, protects and monetizes technology, principally
description of seasonal trends in the Group’s business. through licensing Technicolor’s Intellectual Property (IP), which
represents most of the segment’s consolidated revenues (€512 million
in 2012). According to internal estimates, more than 80% of consumer
electronics manufacturers integrate the Group’s IP.
(1) This information does not constitute a forecast from which the likely level of net results can be computed.
(2) At constant scope: excluding Broadcast Services and IPTV sold in 2012, and VoIP sold in January 2013.

Business Overview
Research & Innovation Technicolor’s interests are focused on the physical, transport and

application layer, including audio/video coding.
The main objective of Research & Innovation (R&I) is to develop and
transfer innovative technology to support the services, software and In 2012, Technicolor filed 444 priority applications with respect to new
solutions provided by the Group, in order to develop Technicolor’s inventions. The maintained pace of filings underpins the commitment to
competitive advantage and explore new business opportunities. R&I has focus on high quality patents in targeted technology areas (such as Video
a proven capacity for invention, which results in the generation of and Audio Compression, Image enhancement, Networking, Content
patents that sustain a continuous flow off licensing revenues. security & Privacy), creating long-term monetization opportunities for
Patent Licensing and Technology Licensing.
The division is treated as a cost center within Technology. Total Group
research and development expenses are disclosed in note 7 off the R&I significantly raised its scientific excellence and reputation in 2012.
Group’s consolidated financial statements. Scientific excellence is measured through publications (that in turn lead to
strong Intellectual Property differentiation) and collaboration with the best
R&I employs more than 300 world-class researchers, of which more
academic research institution worldwide. R&I published in 2012 more than
than 100 PhDs at December 31, 2012, responsible for more than
40 articles in top tier scientific events (per the international research
100 publications per year. The teams are based in four research
community ranking). Collaborations have been established with four
centers: Rennes (France), Paris (France), Hanover (Germany) and Palo
among the top six universities (per the Shanghai ranking): Berkeley,
Alto (United States).
Stanford, MIT, and Cambridge. In France, the IP agreement with INRIA, a
Incorporating Technicolor’s technology in key industry standards helps public research institute, has been renewed.
promote the use off the Group’s patents in new products and services,
which in turn helps generate Licensing revenues. Accordingly, in 2012, Licensing
R&I significantly increased its contribution to standards, representing
Technicolor’s Licensing business generated consolidated revenues of
Technicolor in more than 10 standardization bodies, including MPEG,
€512 million in 2012 (approximately 15% of the Group’s consolidated
ATSC, DVB, SMPTE, DVB & VQEG.
revenues). As of December 31, 2012, this business employed 207 people
R&I is actively promoting the use of the Group's technology in High based in 13 locations, principally in France, the United States, Germany,
Efficiency Video Coding (“HEVC”) and MPEG/ITU, in coding sound and Switzerland, Japan, South Korea, China and Taiwan. Technicolor’s strong
image. HEVC is the next generation video compression standard jointly patent portfolio in technologies, combined with its licensing expertise,
developed between MPEG and ITU-T VCEG. Technicolor has constitute significant competitive advantages.
participated from the outset, chairing or co-chairing core experiments
Technicolor’s Licensing business comprises the Patent Licensing and
during development of the standard and contributing innovative
Trademark Licensing businesses as well as the Technology Licensing
technologies. Technicolor was instrumental in the creation of the Main10
activity, which is in its ramp-up phase.
profile for improved video quality, likely to play a key role in Ultra-High
Definition (UHD). A further extension of the standard, Scalable HEVC
Patent Licensing
(SHVC) is at the centre of new activity in R&I, underlining the
As off December 31, 2012, the Technicolor patent portfolio comprised
commitment of Technicolor to the evolution of industry standards.
around 39,600 patents and patent applications worldwide, generating
Similarly, R&I has developed ground-breaking technology to underpin its
licensing income predominantly in the field of digital technologies,
active participation in the MPEG Call for Proposal on 3D Audio Coding.
derived from approximately 5,600 inventions in the fields of
This standard is envisaged to deliver a highly immersive audio experience
compression, video processing, networking, communication,
to home theaters and personal devices, bringing incomparable quality to
interactivity, user interfaces, security, displays, storage and optical
the combined home and Consumer Electronic markets.
technologies. At the end of 2012, around 66% of Technicolor’s patent
Technicolor also significantly increased its investment in ATSC 3.0 portfolio had a remaining lifetime greater than 10 years. In 2012,
(Advanced Television Systems Committee). This project capitalizes on Technicolor filed 444 priority applications in respect of new inventions.
Technicolor’s existing and developing technologies, in which Technicolor was also granted 2,300 patents in 2012 compared to
Technicolor is one of the historical participants. Specifically, 2,000 granted patents in average per year over the period
2004-2011.

Business Overview
Over the past few years, Technicolor has been intensifying its Patent expertise and know-how to other patent holders (such as Xerox-PARC
Portfolio Management Policy to increase the technology relevance and for optical devices with laser diodes), and it has all of the necessary
the quality of its large portfolio while maintaining cost control. A group assets to develop this model, beyond the traditional legacy programs,
off prominent technical experts contributed to the selection of inventions whether patent or brand-related.
and to the reviews of the patent portfolio through worldwide
committees. Specific reviews of identified technology areas were also Trademark Licensing
conducted to eliminate patents off lower licensing value in terms of The Licensing organization manages not only patents, but all of the
monetization before their expiration date. Group’s Intellectual Property assets and has developed a business of
trademark licensing, monetizing valuable brands (such as RCATM and
The Licensing team works closely with Technicolor’s ThomsonTM) which were operated when the Group was active in the
Research & Innovation group and the development centers within retail business. These brands have a strong historical heritage and
businesses, identifying inventions that might be translated into patents. foothold in their respective zones, which allow continuation of the
Leveraging these inventions, the Licensing team is responsible for the recurrent revenue models beyond their traditional relevance and which
creation and the management off the patent portfolio. It also detects has secured the further development of the Trademark Licensing
uses of the Group’s patents by third parties products. business in the transition into the digital world.
The Licensing team detects uses off the Group's patents in third parties' In 2012, Technicolor expanded its Trademark program to two new
products through reverse engineering. Once detected, the Licensing countries (Brazil and Russia) and to two new product categories
team is also responsible for negotiating and granting to third parties the (lighting, home automation).
right to use Technicolor’s patents for manufacturing their products
(within licensing programs; digital television, for example). Rather than
licensing individual patents, the Technicolor licensing policy consists of Technology Licensing
granting the right to use the whole patent portfolio as applicable to the In addition to its Patent and Trademark Licensing activities, the Group
licensed product, including patents which may be filed during the term is developing Technology Licensing as an additional revenue stream.
off the license agreement. This allows the Group, where necessary and Technicolor’s patent licensing approach mainly consists in granting
on a case-by-case basis, to provide customers with patents relevant to licenses for a given application after market adoption of the
the customer’s product, updating a customer’s patent portfolio in case a corresponding family off products and services. The technology licensing
new patent becomes available or an old patent expires. The Licensing approach differs from the former as it is an initiative to bring to the
team manages around 1,100 licensing agreements across 15 licensing market innovations in an implementable form, beyond patents, to
programs. The licensing agreements are typically renewable and have enhance and optimize their solutions, open new markets and pave the
an average duration of five years; royalties are primarily based on sales way for new businesses for the licensees who adopt them. Seeding
volumes. technology early in the market will develop potential opportunities in
the future for patent licensing of products and services embedding
In 2012, the program generating the most revenue was MPEG-2, these technologies.
which is licensed through the MPEG LA pool of which Technicolor is an
important member. This program contributed to 54% of Licensing In the context of the Amplify 2015 new business incubation framework,
revenues in 2012. The Group expects this program to remain a new Technology Licensing initiatives were launched in 2012 in the field
significant contributor to its Licensing revenues until mid-2016, when off Image Fidelity and Enhancement such as Color Certification, Image
Technicolor gets the last proceeds from the patent pool, after it Certification and CineStyle. Color Certification was developed in
dissolves end 2015. In parallel, Technicolor has launched and is active partnership with Portrait Displays to offer a color certification program
in advanced standards, such as HEVC and DVB, which will be to makers of PC, laptop and tablet displays. Image Certification was a
implemented in future products, thereby providing for additional program developed with Marseille Networks, which certifies 4K image
licensing revenues. quality on any device. CineStyle was designed by the Company’s
renowned color experts and is a video color correction and grading
In addition to licensing patents generated by in-house research, software, working in conjunction with popular editing software, such as
Technicolor is also leveraging its expertise through licensing services to Final Cut pro 7 and Adobe Premiere Pro. Those initiatives leverage the
third-party patent holders. The Licensing organization has offered its Group’s color science, for the benefit of prosumers and consumers.

Business Overview
MediaNavi An open beta version off M-GO was launched January 4, 2013, in the
US one last step before an unrestricted launch scheduled in the first half
The MediaNavi business, developed in joint venture with Dreamworks
off 2013.
Animation, consists of M-GO, a new platform aimed at making digital
entertainment easier to find, watch, and enjoy. With a touch on the Although Technicolor believes no other application currently on the
M-GO button, consumers instantly access movies and TV shows on new market offers an experience directly comparable to M-GO’s
devices and the ones they already own. M-GO is starting with a robust personalized interface and search capabilities across media sources, its
and growing library of movies and TV shows, with more than 10,000 closest competitors are content applications such as Apple’s iTunes,
titles available as of the first quarter 2013, and designed to be the go to
Amazon and Vudu which allow consumers to purchase or rent digital
source for consumers to access and enjoy all their media and
entertainment content.
entertainment. When a content is not available on the platform, M-GO
will help the user to find it on other media stores. M-GO leverages
Technicolor’s technology as well as relationships with studios and
consumer electronics manufacturers.
1.3.2 ENTERTAINMENT SERVICES
Entertainment Services, which generated consolidated revenues of
In August 2011, the Group developed “MediaNaviCo” a joint-venture €1,730 million in 2012 (48% off the Group’s consolidated revenues)
with Dreamworks for the research, development, and the licensing of mainly develops and offers Creative Services for the global
content, software and services in connection with M-GO. The Group has Media & Entertainment Industry, services related to the manufacturing
an 89% interest in MediaNaviCo. Technicolor fully consolidates the and distribution of Blu-rayTM and DVD discs for studio clients, as well as,
results of operations of the joint-venture within its financial statements and through its IZ-ON Media division (formerly PRN), digital place-based
recognizes a non-controlling interest in respect of Dreamworks’ 11% stake. media services to retailers.
Under the joint-venture agreement, Technicolor’s ownership interest in
the joint venture could potentially decrease from 89% to 65%, and In 2012, physical media, including DVD Services and legacy activities
Dreamworks’ ownership interest could increase by a corresponding within Creative Services accounted for approximately two thirds of the
amount. The Group currently expects its ownership interest to decrease Entertainment Services segment's consolidated revenues.
from 89% to 80%, and Dreamworks’ ownership interest to increase from
11% to 20%, by June, 2013. The agreement gives Dreamworks and The customer base for this sector is made off a variety of actors, mostly
Technicolor the right (but not the obligation) to purchase the other’s from the M&E industry and with a wide geographic coverage. A number
entire stake in M-GO at fair market value upon certain bankruptcy or off key studio clients accounting for a substantial portion of the
certain default events. The agreement also includes certain transfer businesses and revenues of Entertainment Services are however based
restrictions, rights of first offer, rights of first refusal, tag-along and on the West Coast of the United States resulting in a significant
drag-along rights. geographic concentration for the segment.
M-GO is delivered to consumers in the form off a free application, Although the Group expects DVD Services to remain a significant
pre-loaded on a variety of partner’s connected devices from Samsung, contributor to Entertainment Services revenues and Blu-rayTM volumes
VIZIO, LG Electronics, RCA, digital media players and on Intel® in particular to continue to increase over the next several years, it
UltrabookTM devices. In addition, M-GO will also function on a full supports actively and guides clients through the M&E industry wide
spectrum of operating systems, ranging from Android to iOS to transition to digital formats and services.
Windows, with M-GO already available as a free download from the
Generally speaking, based on its current and targeted client base, the
Google Play app store.
Group believes the transition to digital offers opportunities, in particular
The M-GO service enables consumers to rent or purchase home in the areas of high-end digital production (visual effects and
entertainment titles on their day of release as well as back catalog film & animation), digital postproduction and distribution services, and digital
TV shows and will also offer catch-up television. Content licensing cinema distribution, in both its existing markets (principally the United
agreements have been entered into with leading studios, content creators States and Europe) and in new regions. To continue developing new
and distributors including DreamWorks Animation, NBC Universal, technology solutions for its customers at a lower cost, Technicolor
Paramount Pictures, Sony Pictures Home Entertainment, Twentieth increased its investment in Bangalore, India, to create a state-of-the art
Century Fox, Relativity Media, Warner Bros. Digital Distribution and Creative Services facility. The Group’s also simultaneously limited its
Lionsgate. M-GO also debuted a licensing agreement with Starz Digital. exposure to declining legacy activities (primarily Film Services, but also
These agreements provide that each time a consumer purchases or rents including Compression & Authoring and other legacy activities) through
entertainment content accessed through M-GO, the Group pays the subcontracting and partnership agreements. Agreements with Deluxe
content owner a specified percentage of the revenue collected and retains for Film Services and with Sony DADC for Compression &
the remainder. M-GO will offer consumers the ability to purchase Authoringhave allowed the Group to reduce its fixed costs base and
UltraViolet enabled movies, giving them the ability to watch their close certain of its operations in North America and Europe to mitigate
purchased movies across multiple devices. recent and expected declines in volume.

Business Overview
Creative Services Historically, Technicolor’s key customers on the motion picture side of
the business include all major Hollywood studios. For the advertising
Through its Creative Services business, Technicolor offers a full set of
business, key clients include global advertising networks such as Publicis,
leading services such as digital content production, video and sound
WPP, BBDO/Omnicom, and smaller agencies. Client agreements are
postproduction, versioning and localization services, content distribution
typically project-specific. Technicolor’s main competitors in this area are
as well as media asset management to major and independent film
ILM, Sony Imageworks, Weta, Framestore, Double Negative and
studios, broadcasters, advertisers and video game companies.
The Mill.
Over the past few years, Technicolor has been extending the range and
In 2012, the team completed work on projects such as Life of Pi (Fox),
depth of its product and service offerings, and developing new
Skyfall (Sony), Wrath off the Titans (Warner), Dark Shadows (Warner),
technology solutions to support the transition of its customers to digital,
Prometheus (Fox) and started to work on several new projects such as
while limiting exposure to fast declining legacy activities, The Group is
Maleficent (Disney), The Seventh Son (Warner), The Lone Ranger
managing its Digital Creative Services business to capture growth
(Disney), Man of Steel (Warner). VFX teams won the Oscar and
opportunities and position itself among the top leaders of the market in
BAFTA awards for Life off Pi (Fox). This was another demonstration of
each business category.
Technicolor’s excellence in servicing its studio customers.
Since end 2010, Technicolor is stepping out progressively from its
ANIMATION
legacy activities (mostly Film Services, but also Compression & Technicolor helps customers turn their ideas into reality thanks to the
Authoring and other legacy activities) through subcontracting and talents off its experienced teams in Hollywood (California) and
partnership agreements that allow the Group to downscale its fixed Bangalore (India). Technicolor provides a unique solution for the
costs base to mitigate the volume decline and close its operations in creation of high-quality CGI (computer-generated imagery) animation.
North America and Europe. Major customers include DreamWorks Animation, Nickelodeon, Mattel,
Electronic Arts and Rockstar Games. Main competitors include Reel
Digital Creative Services FX, Prana Studios, DQ Entertainment and CGCG. Customer
The range of services provided includes Visual Effects (VFX) and agreements are typically project-specific, with longer-term contracts
animation, digital dailies, editorial sounds, Digital Intermediate (DI) where possible.
postproduction, sound mixing, and digital deliverables for distribution in
theatres, at home, or on the go. In 2012, Technicolor announced that following a successful partnership
on a number of titles such as L.A Noire, Red Dead Redemption and
Digital Production Max Payne 3, it had established a dedicated team of game artists and
Digital Production consolidates Technicolor’s content creation activities animators to work on Rockstar Games’ future projects leveraging its
related to visual effects and animation for major film studios, content state-of-the-art technology infrastructure in Bangalore (India).
owners, advertising agencies, and commercial production companies.
VISUAL EFFECTS
Digital Postproduction & Distribution Services
Technicolor operates, under the MPC brand, a team of visual effect artists Technicolor supports its clients from the image capture on the
and, supervisors working with state-of-the-art technology and creative production set through creation of final distribution masters. The Group
tools. Its facilities offer pre-visualization, asset building, texturing, offers on-set services, color correction, VFX integration, sound services
animation, rigging, rotoscoping, lighting, match move and compositing. and versioning, as well as digital distribution services. The demand for
Postproduction & Digital Distribution Services is principally driven by
This activity is based in London (UK), Los Angeles (US), New York new theatrical and television productions, commercials, as well as the
(US), Vancouver (Canada), Bangalore (India) and also Beijing (China). exploitation of a content owner’s catalog in new territories or via new
In 2012, the Group continued the expansion of its facilities in technologies/different delivery formats (i.e. electronic sell-through,
Vancouver and Bangalore. VOD, IPTV, mobile, 3D, Blu-rayTM etc.).

Business Overview
Technicolor’s key customers in this activity include major studios, Relativity Media, Paramount, Warner Brothers and The Weinstein
networks, broadcasters and independent producers, for scripted Company. Technicolor’s main global competitor in this activity is
television series and commercials. Technicolor has also expanded its Deluxe.
addressable market by supporting major VOD and OTT
(over-the-top) players, with innovative solution such as an automated Technicolor internal estimates now put digital screen penetration at
workflow solution enabling content owners to manage access and approximately 70% worldwide and 84% in North America by the end of
monetize their content library, as well as to preserve and digitize 2012. At this level of penetration, the strong growth in revenues
deteriorating physical assets. Customer agreements are typically primarily generated over the past seven years by the rapid conversion
project-specific, with longer-term contracts where possible. from analog screens to digital screens is expected to slow down.
Technicolor’s main competitors are Deluxe, numerous boutique
Technicolor has significant market share in Digital Cinema distribution
vendors, as well as the in-house facilities of certain major studios,
with more than 45% of the North American market (source: Technicolor
depending on market segment and geography.
estimates), and operates the largest satellite network in North America
Technicolor believes that it is among the top 2 worldwide vendors in capable of digital cinema distribution (over 1,100 sites as of
postproduction (source: Technicolor estimates), with operations in December 31, 2012).
10 key markets around the globe. To maintain its market share and
keep growing, Technicolor aims to consolidate and expand Legacy activities
geographically as well as develop new added value services. In the full year 2012, legacy activities represented only 5.2% of the
Group's total revenues compared to 8,3% in full year 2011.
After reinforcing its worldwide leadership positions over the past few
years – through greenfield investments, partnerships and acquisitions -
Compression & Authoring
Technicolor reinforced its European position by taking over the
In October 2012, Technicolor entered into a partnership with Sony
activities off ADJ (Auditoriums de Joinville), SIS ((Société Industrielle de
DADC US, Inc. regarding its US-based Compression & Authoring
Sonorisation) and creating a film and television language versioning
(“C&A”) activity. Through this partnership, Technicolor is now
facility in France.
providing Compression & Authoring work exclusively from its Bangalore
In 2012, Technicolor also launched on-set digital capture services and facility while Sony DADC is providing work from its Los Angeles
its end-to-end digital studio platform by leveraging its close operations.
relationships with filmmakers, postproduction executive and studio
customers. The Group’s end-to-end digital platform has been Film Services
developed in collaboration with Warner Brothers and other major studio Following the rapid shift to digital cinema the Company has launched
and broadcast customers to integrate Technicolor, customer and several initiatives in 2011 and 2012 aiming at rightsizing its
third-party service providers on an open digital platform with key photochemical film activities, which at its peak included photochemical
functionality and tools to meet the demands of content creators and film processing (during the film making process), film release printing,
distributors. and physical distribution services to cinemas for theatrical releases.
Technicolor achieved this by subcontracting all of its release printing

Digital Cinema
services in North America and in Europe to Deluxe, resulting in the
Technicolor Digital Cinema offer content owners and distributors a set
closure of four film laboratories in Montreal, London, Rome and
off digital cinema services including mastering, versioning, hard drive and
Madrid. These initiatives enabled the Group to have a flexible cost
electronic distribution and digital key management for theatrical
structure and reduced its exposure to the rapid decline off these
content, all supported by 24/24 hours and 7/7 days customer service.
activities. As a consequence, the Group has also reduced its exposure to
Technicolor’s key customers in this activity include both major and
the price of silver which drives the cost of purchasing raw film stock.
independent studios including The Walt Disney Company, Lionsgate,

Business Overview
DVD Services continue. The Group also anticipates a potential increase in its DVD
Services market share due to regional expansion. With consolidated and
Technicolor manufactures and distributes video and game DVD and
strategically positioned replication facilities located in emerging
Blu-rayTM discs for leading global content producers. Technicolor
countries, a flexible workforce, all combined with a highly variablized
provides turnkey integrated supply-chain solutions that encompass
cost structure particularly in raw materials and freight costs, Technicolor
mastering, replication, packaging, direct-to-retail distribution of new
has one of the most efficient cost bases in the industry. Technicolor’s
release and catalog products, returns handling and freight management,
largest competitors are Sony DADC, Cinram and Arvato, as well as
as well as procurement and retail inventory management services.
independent local replicators.
In 2012, Technicolor sold approximately 1,45 billion DVD and
In 2012, Technicolor made additional investments in Blu-rayTM capacity
Blu-rayTM discs, compared with approximately 1.54 billion discs in 2011.
as well as productivity investments to improve the output off existing
Technicolor’s replication activities are concentrated in two primary
manufacturing and distribution equipment. The Group also
facilities in Guadalajara (Mexico) and Piaseczno (Poland). Packaging
commenced operations in 2012 on a new multi-year distribution
and distribution in the United States and Europe are supported by a
services agreement with Universal Pictures Home Entertainment for the
multi-region/multi-site facility platform, with a concentration off such
Canadian market and in February 2013, the Group acquired Village
activities in the United States in the Group’s Memphis (Tennessee) and
Roadshow's DVD distribution business in Australia.
Livonia (Michigan) facilities.
As off December 31, 2012, Technicolor had annual capacity to produce IZ-ON Media
approximately 2,1 billion DVD and Blu-rayTM discs, allowing the IZ-ON Media (formerly PRN) provides digital place-based media
flexibility to respond to the seasonal demand for packaged media. services that enable retailers, marketers and venue owners to reach over
Operations are supported by approximately 8 million square feet of 300 million consumers on a monthly basis on more than 120,000
dedicated manufacturing and distribution space. strategically placed screens in more than 10,600 locations in the
United States. In 2012, the activity completed its rebranding campaign,
Technicolor’s customers include major film studios such as Warner marking its evolution to a digital media company with extended scope,
Brothers, The Walt Disney Company, Paramount and Universal footprint and capabilities. IZ-ON Media works with leading retailers,
Studios, as well as independent studios and software and games advertisers, content and technology companies to create and deliver
publishers. Most major customers are covered by multi-year contracts place-based media that engages, informs and motivates consumers
(generally, two to four years), which typically contain volume and/or where they shop.
time commitments. Major client relationships typically consist of
multiple contractual arrangements for specific types of services within IZ-ON Media’s customers include leading national advertisers and
particular geographical areas. venue brands such as 7-Eleven, Sam’s Club, Target, Costco, Walmart,
ShopRite, Wendy’s and KFC. IZ-ON Media’s competitors include CBS
Technicolor is the market leader worldwide in DVD production and Outernet, Captivate, and Reach Media Group. In 2012, IZ-ON Media
number two in worldwide Blu-rayTM production, as measured by signed a new multi-year agreement under which it will be the exclusive
manufacturing volume output (source:
( FutureSource Consulting, 2012). advertising sales representative for 7-Eleven® TV. The business also
While shipments of standard DVD discs have declined in recent years divested its Mexico operations, to focus on its growth plans for the U.S.
and are expected to continue to decline, the Group expects the high market.
levels of growth in shipments of Blu-rayTM discs in recent years to

Business Overview
1.3.3 CONNECTED HOME (FORMERLY DIGITAL DELIVERY)

Following the sale of the Broadcast Services and of the SmartVision (television-over-IP or IPTV) businesses in 2012, and the disposal of
Cirpack softswitch operations (voice-over-IP or VoIP) in 2013, as well as the transfer of the Media Services activity to the Creative Services
business within the Entertainment Services segment, Technicolor has renamed the existing “Digital Delivery” segment to “Connected Home”.
The business review in this annual report is focused on Connected Home activities and Digital Delivery financial indicators are presented for
reconciliation purposes.
The following diagram reconciles the current nomenclature of the Connected Home segment with the nomenclature presented in the 2011
Annual Report.
2011 2012
Connected Home
Digital Delivery
(formerly Digital Delivery)
Connect
Connected Home
Connected Home
IPTV & VoIP*
Entertainment
Digital Content Services
Delivery
Creative Services
Broadcast
Services** DVD Services
Media
Services IZ-ON Media
(formerly PRN)
* Divestiture completed in October 2012 (IPTV)

and on January 21, 2013 (VoIP)
** Divestiture to Ericsson completed on July 2, 2012
In 2012, the Digital Delivery segment generated consolidated revenues offers professional services. Connected Home shipped a total
off €1,334 million (37% of the Group’s reported consolidated of 30.1 million products in 2012 ( 23.7 million units in 2011).
revenues). Connected Home generated consolidated revenues
€1,244 million in 2012. Connected Home
Connected Home offers a wide range of solutions to Pay-TV operators Solutions
and network service providers for the delivery of digital entertainment, The Connected Home business offers the 3 following sets of solutions:
data, voice, and smart home services, through the design and supply of
products such as set-top boxes, gateways, managed wireless tablets, and gateways, which are access devices deployed by telecom and cable
other connected devices. Connected Home also offers software operators to deliver multiple-play services (video, voice, data, and
solutions for multi-device communication, including Qeo, a software mobility) to their subscribers. The product range includes high-end
application that allows communication between electronic devices, triple-play gateways capable of running rich applications, business
regardless of brand, within the home, as well as applications for the smart gateways for the small and mid-size enterprise market, integrated
home (including home automation). In addition, Connected Home access devices, double-play gateways with VoIP and data, and Wi-Fi
gateways;

Business Overview
set-top boxes which are designed for satellite, cable and telecom In set-top boxes, Technicolor provides solutions ranging from lower-end
operators to enable the delivery off services and video entertainment Digital-to-Analog adaptors (DTAs) to higher-end High-Definition
over broadcast, broadband, or hybrid broadcast/broadband networks. (HD) set-top boxes with Personal Video Recorder (PVR). Introducing
The product range includes set-top boxes in standard and new advanced products is key to Technicolor’s strategy, since it enables
high-definition, which may include hard-drive recording capability, as the Group to improve the product mix. In 2012 HD products
well as media servers, which are able to stream content to multiple represented 40% off set-top boxes shipments in this region. Although
devices in the home, and media gateways, which merge the broadband gateways are a small portion of volumes, the Group has a
functionalities of a gateway and a media server. Products rely on proven technology leadership for high-end gateways, as shown in 2012
modular and flexible system architecture to cover a variety of network by the design and delivery to Comcast of a gateway with higher Wi-Fi
access (cable, terrestrial, satellite, IP) and content media formats (SD, performance than any comparable product. Technicolor is also gaining
HD, MPEG-2, H264, etc.); traction on other solutions such as Home Security Tablets, thus
expanding its addressable market for high-end products.
other connected devices and solutions, which are mostly developed
around new services for the Smart Home, such as Qeo, and include Key customers in this market include DirecTV, Comcast, Time Warner
high quality video distribution over Wi-Fi, portable video cable, Verizon and CenturyLink.
communication solutions, security, monitoring and automation
LATIN AMERICA
control screens.
Latin America is a fast-growing market, as a growing middle class in the
region is fuelling demand for broadband and Pay-TV services. While
Regional Segmentation satellite set-top boxes are representing more than 45% off the market in
Following the re-organization off the business at the end of 2011, which value, broadband gateways for telecom and cable operators are also
led to regrouping all product management forces, centralizing very dynamic segments of the market as broadband internet access is
Research & Development and regionalizing the go-to-market effort spreading across Latin America. In this region, a move up market has
(sales, pre-sales, customization), Technicolor has decided to align its already started in some categories, as shown by the massive shift to
financial communication with its internal organization in 2012. The Wi-Fi, started mid-2011 and continuing through 2012. Although
Group is therefore disclosing a regional segmentation off its activity. standard definition products remain massive in volumes, HD products
are gaining increasing attention and market share.
Americas
In 2012, consolidated revenue in the Americas totaled €815 million, Technicolor is well positioned to benefit from these trends, and is
representing 66% of Connected Home revenue. Of this amount, growing its market share in the region. In 2012, Technicolor’s shipments
consolidated revenues in North America totaled €309 million, in this region were dominated by set-top boxes, which represent 65% of
representing 25% of Connected Home revenues and consolidated total shipments. Gateways represented 35% of total volumes in 2012.
revenues in Latin America totaled €506 million, representing 41% of
The Group is an important player in the market for satellite set-top
Connected Home revenues. Technicolor shipped 20.5 million products
boxes, with High Definition (HD) products representing 23% off the
in the region.
Group’s set-top boxes shipments in Latin America. This proportion is
NORTH AMERICA low compared to more mature markets, showing room for improvement
The North American market is the most advanced market worldwide, in terms of product mix in the years to come. Technicolor is also a
and a frontrunner for set-top box servers/IP client architecture in the leader in the Latin American broadband market and has built over the
home, as well as VDSL bonding. Cable set-top boxes represent an years very strong relationships with major local players.
estimated 50% of the market in value.
The region is host to big satellite and broadband network operators, and
Technicolor is a well-established player in North America with its key customers include DIRECTVLA, SkyBrazil, Telmex, NET-Servicios,
solutions for satellite operators, and is accelerating the development Embratel, Oi, and a number off America Movil affiliates.
with cable operators. In 2012, Technicolor’s shipments in this region
were dominated by set-top boxes, which represented 92% of total
shipments. Gateways represented 6% of total shipments in 2012, while
other products accounted for 2% of shipments.

Business Overview
Europe, Middle-East, Africa Key customers in this region include Astro, Telstra, Tata Sky, Bharti,
In 2012, consolidated revenue in Europe, Middle-East, Africa (EMEA) Austar (now part of Foxtel).
totaled €241 million, representing 19% off Connected Home revenue.
Technicolor shipped 5.4 million products in the region. Competitive Environment
Technicolor’s market position differs depending on market segments
The European market is well balanced among all product categories, and geography. However, Technicolor ranks number one worldwide for
with cable set-top boxes representing around 30% of the market. This the supply of gateways (Sources: internal estimates, Dell’Oro). Key
market has been and remains challenging, with service providers still competitors in gateways include Pace, Arris (including the Motorola
cautious on capital expenditures. Home business), Huawei, ZTE ZyXEL, Cisco, Netgear.
In 2012, Technicolor’s shipments in this region were dominated by For digital set-top boxes, Technicolor was the world’s third largest
broadband gateways to telecom and cable operators, with 90% of total supplier in 2011, based on volume (source: IMS-Research, 2011).
shipments. Set-top boxes represented 10% of total volumes. Although While industry analysts have not yet published market share for 2012,
the sales of set-top boxes remain quite low in volume, the proportion of Technicolor believes its market share and position have strengthened in
HD products in total set-top boxes shipments remains very high at 2012. Key competitors in set-top boxes include Pace, Arris (including
96%. the Motorola Home business), Cisco. The market remains fragmented,
with most top players having less than 10% market share worldwide.
Despite adverse market conditions, Technicolor is trying to regain
ground in the region, and has announced new signings with major In April 2012, Technicolor reached the milestone of 250 million
telecom operators in 2012. The partnership with Telecom Italia for the Customer Premises Equipments (CPEs) for Network Service Providers
next generation Cubovision, an hybrid pay-TV/over-the-top Media (set-top boxes and gateways). In September 2012, Technicolor
Server demonstrates Technicolor’s ability to integrate value added reached the milestone of 150 million digital set top boxes shipped since
video devices, software and services to deliver consumers with a 1994. The 150 millionth set-top box was shipped to Tata Sky, the
leading-edge connected home experience. Technicolor is also providing leading digital TV operator in India.
the MediaAccess Residential Service Gateways to Telecom Italia.
Key customers in this region include Telecom Italia, Telefonica,

Belgacom, Telia, Telekom Austria, UPC (Liberty Global), Kabel
1.3.4 OTHER
Deutschland, HOT, Saudi Arabia Telecom, Maroc Telecom. “Other” operations are as follows:
unallocated Corporate functions, which comprise the operation and

Asia-Pacific management of the Group’s Head Office, together with various
In 2012, consolidated revenue in the Asia-Pacific region (APAC) Group functions centrally performed, such as sourcing, human
totaled €188 million, representing 15% of Connected Home revenue. resources, IT, finance, marketing and communication, corporate legal
Technicolor shipped 4.3 million products in the region. operations and real estate management, and that cannot be strictly
The Asia-Pacific (APAC) market is large, with booming growth across assigned to a particular business within the three operating segments;
the region. The largest segments of this market are cable set-top boxes after-sales service operations and commitments related to former CE
and telecom gateways. The transition to digital is an important growth operations, mainly pension and legal costs.
driver in the APAC region, with some large markets such as India still at
an early stage of this trend.
In 2012, Technicolor’s shipments in this region were dominated by 1.3.5 DISCONTINUED OPERATIONS
set-top boxes, which represented 69% of total shipments. Broadband Technicolor has finalized a number off disposals over the last few years,
gateways represented 26% of total volumes in 2012, while tablets the results of which are, under certain criteria, reported as discontinued
represented the remaining 6%. operations under IFRS. In 2012, the main impact of discontinued
operations on the Group’s results came from a fine from the European
The marked volume increase for Technicolor in 2012 was largely Union, related to a business sold by Technicolor in 2005.
attributable to the strong demand for set-top boxes across the region,
especially in India. The proportion off HD product was 31% of set top For more information about this fine and for a description off the
boxes shipments. The APAC region is also a key market for financial implications of discontinued operations on the Group’s results
Technicolor’s tablets, with solutions - such as managed second screen off operations, please refer to Chapter 2: “Operating and Financial
content delivery or portable video communication solutions at home - Review and Prospects”, section 2.9.7: “Profit (loss) from discontinued
delivered to major regional players. operations”.

2 OPERATING AND FINANCIAL
REVIEW AND PROSPECTS
2.1 OVERVIEW .............................................................................................................................................................................................................. 24 2.9 RESULTS OF OPERATIONS FOR 2012 AND 2011 .................... 28
2.9.1 of revenues ............................................................................................................................................... 28
2.2 TRENDS IN THE M&E INDUSTRY .................................................................................................. 24
2.9.2 Analysis of adjusted EBITDA ....................................................................................................... 30
2.3 SUMMARY OF RESULTS ................................................................................................................................................ 25 2.9.3 Analysis of operating expenses and profit (loss)
from continuing operations before tax and net
2.4 SEASONALITY ........................................................................................................................................................................................... 26
finance costs .............................................................................................................................................................................. 31
2.5 GEOGRAPHIC BREAKDOWN OF 2.9.4 Net finance costs ............................................................................................................................................................ 32
REVENUES & EFFECT OF EXCHANGE RATE 2.9.5 Income tax ..................................................................................................................................................................................... 33
FLUCTUATIONS .................................................................................................................................................................................... 26
2.9.6 Profit (loss) from continuing operations .............................................................. 33
2.6 EVENTS SUBSEQUENT TO DECEMBER 31, 2012 ...................... 27 2.9.7 Profit (loss) from discontinued operations ..................................................... 33
2.7 NOTIFICATION OF INTERESTS ACQUIRED 2.9.8 Net income (loss) of the Group .............................................................................................. 33
IN THE SHARE CAPITAL OF FRENCH COMPANIES 2.9.9 Adjusted indicators .................................................................................................................................................. 34
IN 2012 ..................... ............................................................................................................................................................................................................ 27
2.10 LIQUIDITY AND CAPITAL RESOURCES ............................................................... 36
2.8 NOTIFICATION OF INTERESTS ACQUIRED IN
THE SHARE CAPITAL OF FRENCH COMPANIES 2.10.1 Overview ......................................................................................................................................................................................... 36
IN 2011 ................................................................................................................................................................................................................................... 28 2.10.2 Cash Flows ..................................................................................................................................................................................... 37
2.10.3 Financial resources .................................................................................................................................................... 38
2.11 PRIORITIES AND OBJECTIVES FOR 2013 ...................................................... 44

2 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Overview
2.1 OVERVIEW
Technicolor is an innovation-driven company supporting its Media & (formerly Digital Delivery). All other activities and corporate functions
Entertainment (M&E) customers in shaping their digital future. (unallocated) are presented within the “Other” segment. For more
Technicolor’s activities are organized into three operating segments, information, please refer to section 1.2.3: “Organization”.
namely Technology, Entertainment Services and Connected Home
2.2 TRENDS IN THE M&E INDUSTRY

The Group’s performance and strategy are highly influenced by the way and the decrease in sales of standard DVDs was not as severe as the
Media & Entertainment is created, distributed, sold and viewed. The 16% decrease the Media & Entertainment industry had expected
industry’s accelerated pace for innovation creates demand for ((source: FutureSource Consulting, 2012). Shipments of connected
underlying technologies and intellectual property, including those of the video-enabled devices, such as connected TVs, personal computers,
Group. The Group considers four trends to be crucial in the shift of the Blu-rayTM players, game consoles, tablets, smartphones and OTT boxes
Media & Entertainment industry to digital content and devices: are expected to increase by approximately 45% by 2014 after having
increased by 64% from 2009 to 2012 (source: IHS Screen Digest). In
unprecedented speed off innovations in video-enabled and connected particular, shipments in categories such as smartphones or connected
devices, software, applications and service platforms stimulating TV devices (including Smart TVs, Internet enabled Blu-rayTM players,
digital, on-demand and multi-screen media consumption; games consoles and set-top boxes) are expected to increase by 50%
and 70%, respectively by 2016 (sources: Generator Research, IDC,
innovative distribution channels and business models providing new
Gartner).
market access, monetization opportunities and value for content
owners and content distributors; Due to increased TV watching time and on-demand and mobile
solutions, operators in the free and Pay-TV industry have grown
rapid commoditization of devices and platforms requiring a
primarily by increasing average revenue per user (ARPU) in North
continuous flow of technologies and intellectual property to sustain
America and by attracting new customers in other regions, especially in
market demand and offer differentiation; and
Latin America and the Asia-Pacific region. The Pay-TV industry,
increasing digitization of content creation and distribution, such as including services delivered through internet service providers, has also
computer generated imagery (“CGI”), digital post-production, tried to increase and/or diversify its revenue streams by providing more
collaborative platforms, digital content preparation and content value-added services in the home, including multi-room and
delivery workflows, transforming in depth content creation, multi-screen viewing options extended wireless coverage, customized
production and distribution processes, reducing time to market and user interfaces, TV guides and content recommendations.
increasing creativity and productivity.
Global fixed and mobile broadband penetration increased due to higher
As a result of these trends, the Media & Entertainment industry bandwidth availability, which enabled an increasing number of people to
experienced growth from 2008 to 2012, including a 7% increase in consume bandwidth-intensive content such as videos, whether at home
worldwide box office sales in 2012 compared to 2011 (source: Screen or on mobile devices. The proliferation of new digital platforms and
Digest). Based on internal estimates this trend is expected to continue in consumer electronics devices capable of delivering high quality video
the next few years, driven by demand in emerging countries such as has contributed to this trend. Following the success of game consoles,
China, Russia, India and Brazil. During the same four-year period, personal computers and smartphones, video devices such as connected
viewing time for free and Pay-TV increased, sales of Blu-rayTM discs, TVs and tablets are rapidly becoming mainstream devices.
digital video and digital advertising experienced double digit growth,

OPERATING AND FINANCIAL REVIEW AND PROSPECTS - 2
Summary of results
Innovation in content creation and distribution continues to affect digital Technicolor's Licensing division due to the incorporation of the
processes and platforms improving efficiency and allowing to develop Group’s technologies in an increasing number of consumer electronics
new monetization models. Content creators are increasingly relying on devices, growth in Digital Creation and Distribution Services divisions
visual effects, animation and digital post-production to implement their due to the Group’s long-term relations with global content creators, and
creative visions and improve productivity. growth in the Connected Home segment due to increasing sales in
emerging markets.
These trends have had a positive impact on demand for the Group’s
digital technologies, products and services, resulting in growth in
2.3 SUMMARY OF RESULTS

Technicolor’s revenues from continuing operations amounted to Profit from continuing operations before tax and net finance costs was
€3,580 million in 2012, up 3.8% at current currency compared €264 million in 2012, compared with a loss off €33 million in 2011. For
with 2011, and down 0.2% at constant currency, driven by solid growth more information, please refer to section 2.9.3: “Analysis of operating
in the Technology and the Connected Home segments. expenses and profit (loss) from continuing operations before tax and
net finance costs”.
The Technology segment recorded solid growth in revenues, driven
particularly by the record performance of patent licensing programs and Net financial result was an expense of €197 million in 2012, compared
sustained MPEG LA revenues. Connected Home revenues were also with an expense of €187 million in 2011. For more information, please
sharply up, driven by emerging markets, with shipments topping refer to section 2.9.4: “Net finance costs”.
30 million units (+27% compared to 2011). The performance of
Entertainment Services segment was mixed, with growth in Digital The Group’s total income tax charge was €49 million in 2012,
Creative Services - despite some softness in the second half of the year, compared with €83 million in 2011. For more information, please refer
and a decline in legacy activities. to section 2.9.5: “Income tax”.
For more information, please refer to section 2.9.1: “Analysis of Profit from continuing operations was €13 million in 2012, compared
revenues” of this Chapter. with a loss off €303 million in 2011. For more information, please refer
to section 2.9.6: “Profit (loss) from continuing operations”.
Adjusted EBITDA from continuing operations reached €512 million,
€37 million higher than the level of adjusted EBITDA in 2011. This In 2012, the total loss from discontinued operations was €35 million
improvement in adjusted EBITDA was driven by increased profitability (compared with a loss of €21 million in 2011). For more information,
in the Technology segment, driven by the strong performance of the please refer to section 2.9.7: “Profit (loss) from discontinued
Licensing activities, and the return off Connected Home to positive operations”.
adjusted EBITDA, which offset the weaker performance in
The Group’s consolidated net loss totaled €22 million in 2012,
Entertainment Services segment and an increase in corporate costs in
compared with a loss of €324 million in 2011. For more information,
2012 compared with 2011.
please refer to section 2.9.8: “Net income (loss) off the Group”.
For more information, please refer to sections 2.9.2: “Analysis of
adjusted EBITDA” and 2.9.9: “Adjusted indicators” off this Chapter.

Seasonality
2.4 SEASONALITY
The Group’s revenues have historically tended to be higher in the an increase in the Group's non-studio clients in the segment. In the
second half of the year, as customers’ activity was greater towards the second half of 2012, revenues from continuing operations totaled
end of the year, especially for the Entertainment Services segment. This €1,933 million, or 54% of the Group’s annual revenues, compared with
trend has however seemed less marked in the past few years, reflecting €1,891 million or 55% off annual revenues in the second half of 2011.
2.5 GEOGRAPHIC BREAKDOWN OF

REVENUES & EFFECT OF EXCHANGE RATE
FLUCTUATIONS
The table below shows revenues from continuing operations for the revenues made with European customers can be explained by several
Group in 2012 and 2011 by destination (depending on customer factors, including the fact that Technicolor sold its Broadcast Services,
origin). As shown below, the Group’s most important markets in 2012 which had high exposure to Europe, but also that markets in Rest of
were the United States, followed by Europe, accounting for 45.4% and Americas and Asia-Pacific grew faster on average than other more
22.7% of revenues respectively. For 2012, the drop in Technicolor mature markets, especially in the Connected Home segment.
Revenues of continuing operations by destination
(in percentage) 2012 2011

States 45.4% 44.4%
Rest of Americas 17.7% 14.5%
Europe 22.7% 30.5%
Asia-Pacific 12.4% 9.0%
Other 1.8% 1.6%
The table below shows Group 2012 and 2011 revenues from Europe and the United States, accounting for 40.3% and 40.1%,
continuing operations by origin (location of Technicolor’s invoicing respectively, of revenues in 2012.
entity). As shown below, the Group’s most important markets are
Revenues of continuing operations by origin
2012 2011
United States 40.1% 37.3%
Rest of Americas 13.2% 12.7%
Europe 40.3% 44.2%
Asia-Pacific 6.4% 5.8%

Notification of interests acquired in the share capital of French companies in 2012
Revenues of continuing operations and effect of exchange rate fluctuations
2011 revenues at 2012 revenues 2012 revenues % change at % change at

2011 exchange at 2011 Exchange rate at 2012 constant current exchange
(in millions of euros unless otherwise stated) rates exchange rates impact exchange rates exchange rates rates
Continuing operations 3,450 3,444 136 3,580 (0.2)% 3.8%
Of which:
Technology 456 517 (2) 515 13.5% 12.9%
Entertainment Services 1,832 1,630 100 1,730 (11.0)% (5.6)%
Digital Delivery 1,157 1,296 38 1,334 12.0% 15.3%
Of which Connected Home 989 1,207 37 1,244 22.0% 25.7%
Other 5 1 0 1 (79.4)% (79.1)%
For year-on-year comparisons, the current financial year revenue figures fluctuations had an overall positive impact of €136 million on
are adjusted, by applying the exchange rate used for the consolidated consolidated revenues, due in particular to the 8% appreciation in the
statement of operations in the previous financial year. The Group average rate of the U.S. dollar against the euro in 2012, compared to
believes that this presentation of change in revenues, adjusted to reflect the average rate in 2011.
exchange rate fluctuations, is helpful in analyzing its year-on-year
performance. For more information about average exchange rates, please refer to
note 2.13 “Translation of foreign currency transactions” of the
As the Group has an important part of its activities located in the United consolidated financial statements.
States or in other countries whose currencies are closely linked to the
U.S. dollar, the main exposure to fluctuations in foreign currencies is For more information on exchange rate fluctuations, including an
related to the exchange rate of the U.S. dollar against the euro. analysis of the impact of an appreciation of 10% of the U.S. dollar
Generally, a rise of the dollar against the euro has a positive effect on against the euro on revenues and result from continuing operations
Group revenues, while a decrease of the dollar against the euro has the before taxes and net finance costs, please refer to note 23.1 (f) to the
opposite impact. In 2012, compared with 2011, exchange rate Group’s consolidated financial statements.
2.6 EVENTS SUBSEQUENT TO DECEMBER 31, 2012

On January 21, 2013, Technicolor sold its voice-over-IP (VoIP) As part of the strategic alliance with Village Roadshow Ltd. announced
business to ANL ENTREPRISES for €2 million, subject to working in December 2012, Technicolor finalized in February 2013 the
capital adjustments and with a potential earn-out payment of €1 million. acquisition of the Village Roadshow distribution business in Australia for
VoIP assets and liabilities are classified as held for sale in the Group a fixed amount of 9 million Australian Dollars (equivalent to €7 million
consolidated statements of financial position as of December 31, 2012. at closing exchange rate) and a variable amount dependent on the
This disposal won’t have any significant impact in the Group 2013 future level of activities of the acquired business. This business has
financial statements. responsibilities for Warner Bros. and Paramount Home Entertainment
as well as Roadshow Entertainment.
2.7 NOTIFICATION OF INTERESTS ACQUIRED

IN THE SHARE CAPITAL OF FRENCH COMPANIES
IN 2012
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 company in 2012.

Notification of interests acquired in the share capital of French companies in 2011
2.8 NOTIFICATION OF INTERESTS ACQUIRED IN

THE SHARE CAPITAL OF FRENCH COMPANIES
IN 2011
In compliance with Article L. 233-6 of the French Commercial Code, Technicolor discloses that it acquired 50% of Nagra Thomson Licensing
SA in 2011.
2.9 RESULTS OF OPERATIONS FOR 2012 AND 2011

The Group’s revenues, adjusted EBITDA, operating expenses and The Licensing division also benefited from the steady revenue flow from
profit (loss) from continuing operations before tax and net finance costs MPEG LA, as Technicolor remained an important player off the pool. In
for the years 2012 and 2011 are presented below for each of the the full year off 2012, MPEG LA represented 54% of overall revenues
Group’s operating segments – Technology, Entertainment Services, off Licensing revenues, down from 56% in the full year of 2011.
Connected Home - as well as for the “Other” segment.
Licensing revenues include estimates from license agreements. For the
The Group’s results are presented in accordance with IFRS 5. year ended December 31, 2012, and measured as a percentage of total
Consequently, the contributions of discontinued operations are Licensing revenues, actual revenues exceeded estimated revenues by
presented on one line in the consolidated statements off operations, 2.7%, compared with 2.4% for the year ended December 31, 2011, at
named “Net loss from discontinued operations” and are presented the issuance date of the Registration document.
separately under section 2.9.7: “Profit (Loss) from Discontinued
Operations”. The two other divisions in the Technology segment, namely MediaNavi
(M-GO) and R&I, had no significant impact on the revenues of the
segment.
2.9.1 ANALYSIS OF REVENUES
Technicolor’s revenues from continuing operations amounted to Entertainment Services
€3,580 million in 2012, up 3.8% at current currency compared Consolidated revenues for Entertainment Services amounted to
with 2011, and down 0.2% at constant currency, driven by solid growth €1,730 million in 2012, compared with €1,832 million in 2011, down
in the Technology segment and the Connected Home segment. 5.6% at current currency and 11.0% at constant currency, reflecting
accelerated decline in legacy activities, and a slight decline in DVD
Services revenues, not fully offset by revenue growth in Digital Creative
Technology
Services. Excluding legacy activities, revenues were flat at current
Consolidated revenues for Technology rose to €515 million in 2012,
currency and down 5.8% at constant currency.
compared with €456 million in 2011, up 12.9% at current currency and
13.5% at constant currency, with Licensing revenues recording an Creative Services experienced a decrease in revenues in 2012
all-time high. compared with 2011, with continued weakness in legacy activities partly
offset by slight growth in Digital Creative Services revenues, despite
Consolidated revenues for Licensing amounted to €512 million
some softness in the second half of the year. The activity of Visual
in 2012, compared with €451 million in 2011, up 13.6% at current
Effects (“VFX”) for feature film recorded a weak performance due to
currency and 14.2% at constant currency. This strong growth in
the delay in some sizeable projects, leading to a particularly low level of
revenues was driven by the very positive contribution from patent
VFX activity for feature films in the London facilities.
licensing programs, reflecting the breadth and strength of such
programs. Programs around Digital-TV performed particularly well,
benefitting from additional new contracts and contract renewals in the
second half of the year, along with good volume performances achieved
by some of the Group’s licensees.

Results of operations for 2012 and 2011
In DVD Services, a total of 1.45 billion units were replicated for the full Europe. Blu-rayTM shipments accelerated throughout the year and
year of 2012, a 6% decrease compared to the full year 2011, which had Standard Definition DVD volumes were resilient in the North American
benefited from several successful Harry Potter-related releases in market – despite continued pressure in the TV-DVD category.
DVD/Blu-rayTM volumes
(in millions units) 2012 2011 change

Total Volumes 1,455 1,540 (6)%
o/w SD-DVD (Standard Definition) 1,160 1,270 (9)%
o/w Blu-rayTM 182 152 +19%
o/w Games 88 85 +4%
o/w Software and Kiosk 25 33 (25)%
IZ-ON Media (formerly PRN) experienced a decrease in revenues product categories such as Satellite set-top boxes and
resulting from a weak US advertising market during the course of the digital-to-analog Cable adaptors, despite an improvement in the
year. product mix in the second half of the year, driven by growing
contribution from the introduction of new products, such as
Connected Home higher-end devices in Cable;
(formerly Digital Delivery) in Latin America, overall demand was strong throughout the year,
Following the sale of the Broadcast Services and of the SmartVision with growth in Connected Home product volumes of 53% for the full
(television-over-IP) businesses in 2012, and the disposal of Cirpack year, driven by stronger shipments of Satellite set top boxes,
softswitch operations (voice-over-IP) in 2013, Technicolor has particularly in Brazil, as well as increased deliveries of broadband
renamed the existing “Digital Delivery” segment to “Connected Home”. gateways to Telecom customers, especially in Mexico. Overall
The business review in this Annual Report is focused on Connected product mix was overall little changed year-over-year, despite a lower
Home activities and Digital Delivery financial indicators are presented proportion of HD devices in total volumes in the second half of the
for reconciliation purposes. year;
Consolidated revenues for Digital Delivery amounted to €1,334 million in Europe, Middle-East and Africa, Connected Home product
in 2012, compared with €1,157 million in 2011, up 15.3% at current volumes posted a year-over-year increase of 10% for the full year
currency and 12.0% at constant currency. 2012, driven by improving market conditions throughout the year
and growth in shipments of Telecom broadband gateways and Cable
For the full year 2012, revenues of Connected Home were modems, largely offsetting softer set top box deliveries, due primarily
€1,244 million, up 25.7% at current currency and up 22.0% at constant to the phase-out of some Satellite and Telecom devices. Overall
currency compared to the full year 2011, driven by record product product mix was slightly lower year-over-year, as a result of reduced
volumes of more than 30 million units (+27%), an all-time high. This contribution of HD set-top boxes in total shipments compared to the
performance reflected strong customer demand across emerging full year 2011;
markets, particularly in Latin America and Asia-Pacific, as well as
improved overall product mix in North America. in Asia-Pacific, customer demand drove product volume to almost
double for the full year 2012, driven by the sharp growth in set-top
Total overall volume increase can be explained by the following factors: box shipments to Satellite customers, especially in India and Malaysia.
Overall product mix was however less favorable than for the full year
in North America, Connected Home product volumes decreased by 2011.
12% in 2012 as compared to 2011, reflecting softer shipments of

Connected Home Product Volumes
(in millions of units) 2012 2011 Change (%)

Total Connected Home products 30.1 23.7 27%
North America 6.8 7.7 (12)%
Latin America 13.7 8.9 53%
Europe, Middle-East and Africa 5.4 4.9 10%
Asia-Pacific 4.3 2.2 99%
Other This decrease in adjusted EBITDA was attributable to the following

factors:
Revenues presented in the “Other” segment comprised corporate &
other revenues for €1 million in 2012, compared to €5 million in 2011, Creative Services adjusted EBITDA decreased in 2012 compared
mainly related to services charged to third parties. with 2011, reflecting lower levels of activity in Digital Production due
to the delay in some sizeable VFX projects, and continued weakness
in legacy activities. The Group implemented in the second half of
2.9.2 ANALYSIS OF ADJUSTED 2012 cost reduction measures to mitigate the impact of lower sales
EBITDA on its profitability and further maximize its cost structure.
For the purpose of analyzing the Group’s performance, and in addition
Profitability was progressively improved and in the fourth quarter the
to its published results presented in accordance with IFRS, Technicolor
adjusted EBITDA margin recorded a decrease of 0.5 point, compared
publishes an adjusted EBITDA. This indicator excludes factors the
to the fourth quarter of 2011, despite the softness experienced in the
Group considers to be non-representative of Technicolor’s normal
quarter.
operating performance. For a comprehensive definition of adjusted
indicators and a description of their limitations as performance DVD Services adjusted EBITDA margin remained broadly stable in
indicators please refer to section 2.9.9: “Adjusted Indicators”. 2012, despite a 8% contraction in revenues at constant currency,
compared to 2011 and a slight margin decline in the second half of
Adjusted EBITDA from continuing operations reached €512 million in
2012. This performance was driven by multiple factors, including an
2012, €37 million higher than the level of adjusted EBITDA in 2011.
improved product mix, the positive impact of ongoing cost savings
This improvement was driven by increased profitability in the
initiatives and efficiency improvement programs, and reduction of
Technology segment, driven by the strong performance of the
offload, which offset specific customer price reductions.
Licensing activities and the return of Connected Home to positive
adjusted EBITDA, which offset the weaker performance in IZ-ON Media (formerly PRN) contribution to adjusted EBITDA
Entertainment Services segment. decreased in 2012 compared with 2011 due to a weaker U.S.
advertising market.
Technology
Adjusted EBITDA for Technology was €400 million or 77.8% of Connected Home (formerly Digital
revenues in 2012 (compared with €346 million or 75.9% of revenues Delivery)
in 2011). Following the disposal of the Broadcast Services and of the SmartVision
(television-over-IP) businesses in 2012, and the disposal of Cirpack
Adjusted EBITDA margin for the Technology segment improved by
softswitch operations (voice-over-IP) in 2013, Technicolor has
1.9 points compared to 2011 and was achieved despite some softness in
renamed the existing “Digital Delivery” segment to “Connected Home”.
the addressable Consumer Electronic market and despite additional
costs from new businesses. It reflects a solid performance of the The business review in this Annual Report is focused on Connected
Licensing business, continuing optimization in patent prosecution, filing Home activities and Digital Delivery financial indicators are presented
and annuities costs and a slight decline in Research & Innovation for reconciliation purposes.
expenses.
Adjusted EBITDA for Digital Delivery was a profit of €14 million
in 2012 (compared with a loss of €20 million in 2011).
Entertainment Services
Adjusted EBITDA for Entertainment Services was €199 million For the full year 2012, Connected Home adjusted EBITDA was
in 2012 or 11.5% of revenues (compared with €230 million in 2011 or €1 million, up €44 million compared to a loss of €43 million in the full
12.5% of revenues). year 2011. This performance reflected the effects of the turnaround
plan launched by the Group in December 2011 and was in line with the

Group’s objective to achieve adjusted EBITDA breakeven for the improvement in the Technology segment, with gross margin
Connected Home segment in 2012. amounting to €469 million, or 91.1% of revenues in 2012
(compared with €403 million in 2011, or 88.4% of revenues) driven
Connected Home improvement in margin was the consequence of by Licensing revenue growth and further cost optimization;
higher volumes, driven by customer wins for solutions and services
across most regions, as well as cost savings initiatives, mostly completed improvement in the Connected Home business, with gross margin
in the second half of 2012. Cost savings achieved in full year 2012 amounting to €161 million, or 13.0% of revenues in 2012 (compared
amounted to €27 million, a gap of €5 million compared to the target with €103 million in 2011, or 10.4% of revenues) driven by new
announced in December 2011, mainly due to some delay in the customer wins for solutions and services across all regions and cost
restructuring in Europe. savings initiatives completed in the second half of 2012, including
headcount reductions in Europe and operational improvements in the
Other Group's Brazilian manufacturing facility;
Adjusted EBITDA for “Other” was a charge of €101 million in 2012,
a slight deterioration in the Entertainment Services segment, with
compared with a charge of €81 million in 2011. This increase reflected
gross margin amounting to €171 million, or 9.9% of revenues in
the increase in corporate costs compared to 2011, as the reduction in
2012 (compared with €194 million in 2011, or 10.6% of revenues)
costs of transversal functions was offset by higher incentive program
due to lower activity levels for Digital Creative Services in the second
costs related to the strong financial improvement recorded
half off the year and continued decline in legacy activities, not fully
year-on-year, increased costs for growth initiatives and a negative
offset by cost reduction actions undertaken by the Group, including
comparison base versus 2011 which included several positive
the re-allocation of work to lower-cost locations, headcount
non-recurring impacts (a health insurance refund for €2.5 million and
reductions in the film business in Europe and an increased use of
an indemnity received from the Company’s landlord relating to its
freelancing in VFX.
headquarters at Issy-les-Moulineaux for €2 million).
Selling and Administrative Expenses

2.9.3 ANALYSIS OF OPERATING Selling and marketing expenses amounted to €120 million in 2012, or
EXPENSES AND PROFIT (LOSS) 3.4% of revenues (compared with €127 million in 2011, or 3.7% of
FROM CONTINUING revenues), a 5.3% decrease compared with 2011 due to the
OPERATIONS BEFORE TAX implementation of cost reduction measures.
AND NET FINANCE COSTS General and administrative expenses amounted to €277 million in
2012, or 7.7% of revenues (compared with €249 million in 2011, or
Cost of Sales 7.2% of revenues). This increase reflects expenses relating to the
Cost of sales amounted to €2,750 million in 2012, or 76.8% of development of M-GO as well as the positive impact in 2011 of certain
revenues, compared with €2,714 million in 2011 or 78.7% of revenues. non-recurring items (related primarily to a health insurance refund for
Cost of sales in absolute terms were little changed in 2012, compared €2.5 million and a €2 million indemnity received from the Company’s
with 2011, despite a quite material growth in volume for the Connected landlord relating to its headquarters in Issy-les-Moulineaux)
x as compared
Home segment. The principal components of the Group's cost of sales to 2011. Despite successful efforts to reduce costs off general corporate
were raw materials (mostly in the DVD Services business of the functions, overall corporate costs increased due to higher incentive
Entertainment Services segment and in the Connected Home program costs and increased costs for growth initiatives.
segment), the costs of finished goods for resale (mainly in the
Connected Home segment), labor costs in our manufacturing In the context of a Group-wide cost reduction plan, Technicolor has
operations (mainly in the Entertainment Services segment), as well as implemented various initiatives to create efficiencies in IT management
costs related to real estate and fixed assets amortization (mainly for the and a streamlined cost structure relating to general corporate expenses.
Entertainment Services segment). For more information, please refer to note 6 of the Group’s
Gross margin from continuing operations reached €830 million, or consolidated financial statements.
23.2% of consolidated revenues in 2012 (compared with €736 million
in 2011 or 21.3% of revenues). This increase in gross margin reflected
the following trends:

Research and Development Expenses Profit (loss) from continuing operations

before tax and net finance costs
amounted to €132 million in 2012, or 3.7% of revenues (compared Profit from continuing operations before tax and net finance costs
with €128 million in 2011, or 3.7% of revenues). Of the total R&D amounted to €264 million in 2012, sharply up compared with a loss of
spending in 2012, 25% was spent in Technology, which includes the €33 million in 2011.
Research & Innovation business and the remainder was attributed to
development costs and the amortization of research and development By segment, the profit from continuing operations before tax and net
intangible assets in the Connected Home segment. finance costs was €403 million for Technology in 2012 (compared
with €342 million in 2011). For Entertainment Services, the profit from
For more information, please refer to note 7 of the Group’s continuing operations before tax and net finance costs was €12 million
consolidated financial statements. in 2012 (compared with a loss of €29 million in 2011). For Digital
Delivery, the loss from continuing operations before tax and net finance
Restructuring Costs costs was €55 million in 2012 (compared with a loss of €251 million
in 2011) and for Connected Home, the loss from continuing operations
In 2012, the Group continued its efforts to reduce costs through facility
before tax and net finance costs was €56 million in 2012 (compared
closures and headcount reductions, which generated restructuring costs.
with a loss off €242 million in 2011). For “Other”, the loss from
Restructuring costs for continuing operations amounted to €29 million
continuing operations before tax and net finance costs was €96 million
in 2012 or 0.8% of revenues, down from an exceptionally high level of
in 2012 (compared with a loss of €95 million in 2011).
restructuring costs in 2011 (€83 million in 2011 or 2.4% of revenues).
Restructuring costs in 2012 related primarily to the closure off Thomson
Angers, headcount reductions in Creative Services (mainly in North
2.9.4 NET FINANCE COSTS
American Digital Postproduction operations) and cost optimization in The net financial result was an expense of €197 million in 2012
DVD Services in North America. (compared with an expense of €187 million in 2011), and breaks down
as follows:
In 2011, the level of restructuring cost primary reflected provisions for
the cost of the headcount reductions announced in December 2011, for
a total amount of €83 million, concerning mainly the Connected Home Net interest expense
business, European Film Services activities as well as the Group’s The net interest expense for continuing operations amounted to
transversal functions. €145 million in 2012, compared with €149 million in 2011. For further
information, please refer to note 9 off the Group’s consolidated financial
statements. The interest expense has been computed using the
Net Impairment Losses on Non-Current effective interest rate on the Reinstated Debt.
Operating Assets
In 2012, Technicolor recorded a net impairment charge of €10 million,
compared with €188 million in 2011, which included goodwill
Other financial income (expense)
impairment off €147 million mainly in the Connected Home business, as Other financial expense for continuing operations totaled €52 million
well as net asset write-offs (excluding goodwill) amounting to in 2012, compared with €38 million in 2011.
€41 million. The 2012 early repayments off the debt, linked mainly to the capital
For more information, please refer to notes 8, 12 and 13 of the Group’s increases and the disposal of Broadcast Services, triggered a partial
consolidated financial statements. reversal of the IFRS gain (resulting from the 2010 debt restructuring),
which led to a €20 million charge, booked in “other financial income
Other Income (Expense) (expense)”. Additional to this charge, 2012 other financial expense
include the financial component off the pension plan for €13 million,
Other income (expense) amounted to €2 million in 2012, compared
€6 million exchange losses and €12 million off bank fees and €1 million
with €6 million in 2011. For further information, please refer to note 6
off discount losses. In 2011, other financial expenses mainly included the
to the Group’s consolidated financial statements.
financial component off the pension plan for €15 million and a
depreciation off a financial asset. For more information, please refer to
note 9 off the Group’s consolidated financial statements.

2.9.5 INCOME TAX 2.9.6 PROFIT (LOSS) FROM

In 2012, the Group total income tax expense on continuing operations, CONTINUING OPERATIONS
including both current and deferred taxes, amounted to €49 million, Profit from continuing operations was €13 million in 2012, compared
compared to €83 million in 2011. The current tax charge is notably the with a loss off €303 million in 2011.
result of taxes due in France, the UK, Mexico, Poland, Australia and
India, as well as withholding taxes on income earned by our licensing
activities, which were partially credited against taxes payable in France, 2.9.7 PROFIT (LOSS) FROM
but not in the USA. The €28 million current income tax charge in DISCONTINUED OPERATIONS
France is due to the limitation off the usage off tax losses carried forward,
In 2012, the total loss from discontinued operations was €35 million
withholding taxes and the local tax “CVAE”.
(compared with a loss of €21 million in 2011).
The 2011 current tax charge was notably the result off current taxes due
in France (€12 million charge reflecting mainly withholding taxes on In 2012, the loss from discontinued operations mainly corresponds to
the €38.6 million fine from the European Union related to Thomson’s
licensing activities and “CVAE”), Thailand, Australia, Mexico and Italy.
former Cathode Ray Tubes (CRT) business. On December 5, 2012,
In 2011, the use of tax loss carry-forward was limited to only 60% of the European Commission has fined a cartel in the CRT industry
yearly taxable profit instead of 100% previously. As a consequence, and including Technicolor (Thomson at the time of the facts), Samsung,
with updated forecasts within the French tax group, French deferred tax Philips, LG, Panasonic and Toshiba. The European Commission’s main
assets were partially impaired by €63 million, compared to the deferred reproach is that these electronic manufacturers had an understanding to
tax assets recognized as at December 31, 2010 (of which €55 million fix prices between 1999 and 2005. Technicolor was notified by the
in the consolidated statement of operations and €8 million in Equity). European Union off its decision to impose a fine of €38.6 million to
Technicolor. This amount is included in the “Loss from discontinued
In 2012, French tax rules were further amended: i) the use of tax loss operations” caption of our consolidated statements off operations as it
carry-forward is now limited to only 50% of yearly taxable profit instead, relates to a business discontinued by the Group in 2005.
ii) the deductibility of net interest expenses is limited to 85% (in 2012
and 2013) and to 75% (from 2014) and iii) a surtax of 5% was In 2011 the loss from discontinued operations was mainly related to the
extended up to 2014. As a consequence, and taking into account Grass Valley businesses, including a €5 million impairment loss on
updated forecasts and the 2012 consumption, French deferred tax discontinued operations to adjust the held for sale businesses at their fair
assets remained stable compared to the deferred tax assets recognized value less costs to sell. For more information, please refer to note 11 to
as at December 31, 2011. The remaining deferred tax assets the Group’s consolidated financial statements.
correspond to a usage by 2026, which represents the estimated
Licensing activity’s predictable taxable income period based on existing
licensing programs. 2.9.8 NET INCOME (LOSS)
OF THE GROUP
As per the Group’s current interpretation off the U.S. Tax rules, namely
Section Code 382, the May 26, 2010 share capital increase of Technicolor consolidated net loss was €22 million in 2012 (compared
Technicolor SA and NRS issuance under the Sauvegarde Plan leads to with a loss off €324 million in 2011). The net loss attributable to non
an “ownership change” of the U.S. Group off subsidiaries. Such controlling interests in 2012 is €2 million in 2012 (compared to a loss
“ownership change” severely restricts the use of tax losses carried off €1 million in 2011). Accordingly, the net loss attributable to
forward of the U.S. subsidiaries. The Group is lobbying against such a shareholders of Technicolor SA totaled €20 million (compared with a
severe application of the Section 382. loss of €323 million in 2011). Net loss per non-diluted share was
€0.07 in 2012, compared with a net loss per non-diluted share off €1.5
For more information, please refer to note 10 of the Group’s in 2011.
consolidated financial statements.

2.9.9 ADJUSTED INDICATORS finance costs, plus depreciation and amortization (adjusted EBITDA)
and adjusted profit from continuing operations before tax and net
In addition to its published results presented in accordance with IFRS finance costs (adjusted EBIT) are not indicators recognized by IFRS and
and with the aim of providing a more comparable view of the changes in are not representative off cash generated by these activities for the
its operating performance, the Group presents a set of adjusted periods indicated. In particular, adjusted EBITDA does not reflect the
indicators, which exclude impairment charges, restructuring charges and Group’s working capital needs for its operations, interest charges
other income and expenses with respect to adjusted EBIT, and incurred, payment of taxes, or capital expenditures necessary to replace
amortization charges as well as the impact of provisions for risks, depreciated assets. Adjusted EBITDA and adjusted EBIT indicators do
warranties and litigation with respect to adjusted EBITDA (in addition not have standard definitions and, as a result, Technicolor’s definition of
to adjustments included in adjusted EBIT). Technicolor considers that adjusted EBITDA and adjusted EBIT may not correspond to the
this information may help investors in their analysis of the Group’s definitions given to these terms by other companies. In evaluating these
performance by excluding factors it considers to be non-representative indicators, please note that Technicolor may incur similar charges in
off Technicolor’s normal operating performance. future periods. The presentation of these indicators does not mean that
Technicolor uses adjusted EBIT and adjusted EBITDA to evaluate the Technicolor considers its future results will not be affected by
results of its strategic efforts. This definition of adjusted EBITDA exceptional or non-recurring events. Due to these limitations, these
compares to the definition as per Technicolor’s credit agreements and is indicators should not be used exclusively or as a substitute for IFRS
used in calculating applicable financial covenants. measures.
These adjustments for 2012 and 2011 are directly identifiable in the These adjustments, off an amount of €37 million for the year 2012, are
Group’s consolidated financial statements, with the exception of the added back to the Profit (Loss) from continuing operations before tax
heading “Depreciation and Amortization” (D&A). and net finance costs (EBIT) to compute the adjusted EBIT from
continuing operations. The same adjustments had an impact of
The additional indicators have inherent limitations as performance €265 million for the year 2011.
indicators. Adjusted profit from continuing operations before tax,
Reconciliation of adjusted indicators
(in € million unless otherwise stated) 2012 2011 Change

Profit (Loss) from continuing operations before tax and net finance costs/EBIT (a) 264 (33) +297
Total adjustments on EBIT (b) ((37)) (265) +228
Restructuring costs, net ((29)) (83) +54
Net impairment losses on non-current operating assets ((10)) (188) +178
Other income/(expense) 2 6 (4)
Adjusted EBIT from continuing operations (a)-(b) 301 232 +69
As a% of revenues 8.4% 6.7% +1.7 pt
Depreciation and amortization (D&A)(1) 211 243 (32)
Adjusted EBITDA from continuing operations 512 475 +37
As a% of revenues 14.3% 13.8% +0.5 pt
Adjusted EBITDA of discontinued activities - (11) +11
Adjusted EBITDA used for covenants 512 464 +48
(1) Including impact of provisions for risks, litigation and warranties.

Profit from continuing operations before tax and net finance costs and adjusted indicators by segment
(in € million unless otherwise indicated) 2012 2011 Change

Profit (Loss) from continuing operations before tax and net finance costs 264 (33) +297
As a % of revenues 7.4% (0.9)% +6.5 pts
of which:
Technology 403 343 +60
As a % of revenues 78.3% 75.2% +3.1 pts
Entertainment Services 12 (29) +41
Digital Delivery ((55)) (251) +196
As a % of revenues ((4.1)%) (21.7)% +17.6 pts
Of which Connected Home ((56)) (242) +186
As a % of revenues ((4.5)% ) (24.4)% +19,9 pts
Adjusted EBIT from continuing operations 301 232 +69
of which:
Entertainment Services 26 53 (27)
As a % of revenues 1.5% 2.9% (1.4) pts
Digital Delivery ((20)) (73) +53
As a % of revenues ((1.5)%) (6.3)% +4.8 pts
Of which Connected Home ((34)) (81) +47
As a % of revenues ((2.7)% ) (8.2)% +5.5 pts
Adjusted EBITDA from continuing operations 512 475 +37
of which:
Entertainment Services 199 230 (31)
As a % of revenues 11.5% 12.5% (1.0) pts
Digital Delivery 14 (20) +34
Of which Connected Home 1 (43) +44

Liquidity and capital resources
2.10 LIQUIDITY AND CAPITAL RESOURCES

This section should be read in conjunction with Chapter 3: “Risk 2.10.1.2 Key liquidity resources
Factors”, section 3.2: “Market Risk” off this Annual Report and notes 20,
To meet its cash requirements, the Group’s main sources of liquidity
22 and 23 to the consolidated financial statements.
consist of:
cash and cash equivalents: the amount of Cash and cash equivalents
2.10.1 OVERVIEW was €397 million at December 31, 2012. Of this amount,
€42 million held by TCE Taiwan Television can be used only for the
2.10.1.1 Principal cash requirements payment of local expenses. In addition to the €397 million in cash
The principal cash requirements of the Group arise from the following: and cash equivalents, €45 million in cash collateral and security
deposits was outstanding at December 31, 2012 to secure credit
working capital requirements from continuing operations: the working facilities and other Group obligations;
capital requirements of the Group are based in particular on the level
off inventories, receivables and payables; cash generated from operating activities: as part of the restructuring
under the Sauvegarde Plan, the Group is required to dedicate 80% of
losses relating to discontinued operations: the Group must also fund its excess cash to repaying debt. For more information, please refer to
the losses and cash requirements off its discontinued operations. For section 2.10.3: “Financial Resources”;
more information on the risks associated with the sale of these
activities please refer to: Chapter 3 “Risk Factors” section 3.4: “Other proceeds from sales of assets: as part of the restructuring under the
Risks” of this Annual Report; Sauvegarde Plan, the cash flow generated from the sale of certain
discontinued activities in periods beyond 2010 must be used to
capital expenditures: the new financing contracts in place as part of repay debt;
restructuring under the Sauvegarde Plan impose limitations on the
amount of capital expenditures spent by the Group; committed credit lines: under the debt restructuring, the Group
negotiated two lines of credit secured by receivables, for an amount
repayment or refinancing of debt: at each debt maturity date, the up to €195 million. The availability of these credit lines varies
Group must either repay or refinance the maturing amounts; depending on the amount of receivables.
dividends: no dividends were paid in 2012 for 2011 and no dividend The Board of Directors considered the Group’s cash flow projections,
is planned in 2013 for 2012. The financing documentation which support the operating performance, with the sensitivities
implemented as part of the restructuring off the Group’s debt imposes highlighted in note 13 off the consolidated financial statements and
restrictions on the Group’s ability to pay dividends. For more believes that the Group can meet its expected cash requirements,
information, please refer to section 2.10.3: “Financial Resources”. address potential financial consequences of ongoing litigation until at
least December 31, 2013.

2.10.2 CASH FLOWS

(in € millions) 2012 2011
CASH AND CASH EQUIVALENTS AT JANUARY 1 370 332
Net operating cash generated from continuing activities 259 265
Net operating cash used in discontinued operations ((6)) (19)
Net cash from operating activities (I) 253 246
Net investing cash used in continuing activities ((137)) (138)
Net investing cash used in discontinued operations ((5)) (20)
Net cash used in investing activities (II) (142) (158)
Net financing cash used in continuing activities ((73)) (57)
Net financing cash used in discontinued operations - -
Net cash used in financing activities (III) (73) (57)
Net increase in cash and cash equivalents (I+II+III) 38 31
Exchange gains (losses) on cash and cash equivalents (11) 7
CASH AND CASH EQUIVALENTS AT DECEMBER 31 397 370
Net cash generated from operating activities

Net cash generated from operating activities was €253 million in 2012, compared with €246 million generated from operating activities
in 2011.
Continuing operations
In 2012, net income from continuing operations improved significantly (compared with €265 million generated in continuing operations
compared to 2011 reaching €13 million, compared to a net loss of in 2011), as the loss from 2011 reflected a very high level of non-cash
€303 million in 2011. Net operating cash generated from continuing items, such as the significant impairment of Connected Home assets in
operations was however broadly stable at €259 million in 2012 2011.
The variations between 2011 and 2012 are analyzed in the table below:
(in € millions) 2012 2011 Variation Comments on variations

Profit (loss) from continuing operations 13 (303) +316
Summary adjustments to reconcile profit from continuing operations
to cash generated from continuing operations
Non-cash depreciation, amortization and impairment of assets 235 452 (217) Mainly explained by significant impairment of
Connected Home assets in 2011 and the sale of
Broadcast Services in 2012
Profit from continuing operations prior to depreciation, 248 149 +99
amortization and impairment of assets
Cash payments of the period related to provisions (102) (104) +2 Mainly pension and
restructuring payments in 2011 and 2012
Non-cash P&L impact of the period of provisions 27 105 (78) Decrease explained by pension curtailment gain in
2012 for €45 million and less restructuring
accruals for €57 million, compensated by higher
accruals for other provisions for €24 million
Transfer of the gain on asset disposals to investing activities - (8) +8 In 2011, corresponds mainly to the gain on the
disposal of ContentGuard
Other various adjustments 248 249 (1) Various adjustments include net interest
expense, changes in working capital and
other non-cash items
Cash generated from continuing operations 421 391 +30
Net interest paid and received (113) (119) +6
Income tax paid (49) (7) (42) Mainly explained by higher payments in France
(income taxes payable due to the limitation of the
usage of tax losses carried forward, withholding
taxes and the local tax “CVAE”)
NET OPERATING CASH GENERATED FROM 259 265 (6)
CONTINUING ACTIVITIES

Discontinued operations Discontinued Operations

Net operating cash used in discontinued operations was €6 million Net investing cash used in discontinued operations was €5 million
in 2012 (compared with €19 million in 2011). in 2012 (compared with €20 million of cash used in 2011).
Net cash used in investing activities Net cash used in financing activities
Net cash used in investing activities was €142 million in 2012 Net cash used in financing activities amounted to €73 million in 2012
(compared with €158 million in 2011). (compared with €57 million used in 2011).
Continuing operations Continuing operations

Net financing cash used in continuing activities was €73 million in 2012
Net investing cash used in continuing activities was €137 million
(compared with €57 million used in 2011). The net cash used in 2012
in 2012 (compared with €138 million in 2011), and included:
was primarily to repay borrowings for €255 million, of which
net capital expenditures amounted to €147 million in 2012 €187 million of debt mandatory prepayments from 2012 Group capital
(compared with €165 million in 2011) due to cash expended relating increases and disposal of businesses and 2011 excess cash flow. These
to tangible and intangible capital expenditures of €149 million in payments were offset in part by the €179 million off net proceeds from
2012 (compared with €170 million in 2011), net off cash received the Group’s capital increases.
from tangible and intangible asset disposals of €2 million in 2012
The net financing cash used in continuing activities in 2011 was
(compared with €5 million in 2011). Since 2010, Group’s capital
primarily to repay borrowings for €55 million.
expenditures have included investments in new equipment to
significantly expand the Blu-rayTM disc replication capabilities in
anticipation of the growth in this market, investments in new Discontinued operations
state-of-the-art production facilities in Creative Services and No financing cash was used by discontinued operations in 2012 and
investments to improve operational efficiencies in the Connected 2011.
Home segment. In 2012, gross capital expenditure was €20 million
in the Technology segment, which included the development of the
projects and initiatives mentioned above, €80 million in the 2.10.3 FINANCIAL RESOURCES
Entertainment Services segment reflecting Group’s investments in Gross financial debt totaled €1,115 million (IFRS value) at the end
Creative Services production facilities and DVD Services replication of 2012 (compared with €1,327 million at the end of 2011). At
facilities and €48 million in the Connected Home segment mainly December 31, 2012, financial debt consisted primarily of €435 million
due to capitalized R&D projects; off notes and €659 million of term loans. At December 31, 2011,
financial debt consisted primarily of €520 million of notes and
cash outflow for the acquisition off equity holdings in subsidiaries (net
€776 million off term loans, both issued in May 2010 as part of the
off cash acquired), amounting to €10 million in 2012 (compared with
Group’s debt restructuring. Financial debt due within one year
€12 million in 2011). In 2012, it corresponded mainly to the
amounted to €96 million at the end of 2012 (compared with
acquisition of assets from Quinta, the acquisition from Indoor Direct
€85 million at the end of 2011).
interests and in 2011, it included business acquisition from Laser
Pacific; The private placements and the borrowings drawn under the Group’s
credit lines were restructured in 2010 in accordance with the
proceeds received from sales off equity holdings, amounting to
Sauvegarde Plan, with the impact of reducing the amount off debt and
€17 million in 2012 (compared with €14 million in 2011), net of the
extending its maturity.
cash off companies disposed of. In 2012, it corresponded to the
disposal of Broadcast Services and in 2011 it included the disposal of
ContentGuard;
net variation of cash collateral and security deposits (to secure the
Group’s obligations) generated a net cash inflow of €4 million
in 2012 (compared with a net cash inflow of €24 million in 2011).

At December 31, 2012 the Group had €397 million off cash and For more detailed information on the restructuring and the Group’s
deposits of which €42 million was restricted, for an available amount of debt, please refer to note 22 to the Group’s consolidated financial
€355 million (compared to €370 million at December 31, 2011 of statements.
which €45 million was restricted, for an available amount of
€325 million).
The table below summarizes Technicolor’s net financial debt at December 31, 2012.
Amount at
December 31, 2012
Type of interest rate (in € millions) First maturity(1) Existence of hedges
Term Loans (Non-amortizing tranche) Floating 475 2017 Yes
Term Loans (Amortizing tranche) Floating 184 2013 Yes
Notes (Non-amortizing tranche) Fixed 315 2017 No
Notes (Amortizing tranche) Fixed 120 2013 No
Other non-current debt Various 5 2014 No
Other current debt Various 16 2013 No
TOTAL DEBT 1,115
Available cash and deposits(2) Floating 355 0 to 1 month No
Committed credit facilities(3) Floating 195
TOTAL LIQUIDITY 550
(1) Please refer to note 22.3 for a maturity schedule of the Group’s debt.
(2) Cash and deposits net of restricted cash.
(3) Availability varies depending on the amount of receivables (please refer to note 22.3 (f)).
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
amount of up to €641 million), with the Company’s existing
when the 2008 audited consolidated financial statements would
shareholders having the opportunity to purchase such NRS up to
become available, it would be in breach of certain covenants contained
an amount of approximately €75 million pursuant to warrants to
in financial agreements under which the Company had borrowed
purchase NRS (subject to rules relating to public offerings that
substantially all of its outstanding senior debt, i.e. approximately
restrict participation by investors in certain countries including the
€2.8 billion (the senior debt).
United States),
The Group then entered into discussions to restructure its senior debt.
the issuance of notes redeemable in cash or shares of the Company
On November 30, 2009, the Company requested that the
(Disposal Proceeds Notes, or the DPN), linked to the disposal
Commercial Court of Nanterre open a Sauvegarde proceeding. On
proceeds of certain non-core assets of the Company, reserved to
February 17, 2010, the Commercial Court of Nanterre approved the
the senior creditors up to an aggregate principal amount of
Sauvegarde Plan. The principal characteristics of the debt restructuring
€300 million, which was reduced by €48 million of disposal
as contemplated by the Sauvegarde Plan were as follows:
proceeds received before the closing of the restructuring;
a conversion of up to an aggregate principal amount of
the execution of a new term loan facility and the issuance of new
€1,289 million (on the basis of the exchange rate set out in the
notes which would allow the repayment of up to an aggregate
Sauvegarde Plan, i.e. U.S. $1.30/€1.00 and €1.1/£1.00) of the
principal amount of €1,550 million of senior debt (on the basis of the
senior debt into securities by way of:
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 shares, and €1.1/£1.00).
while maintaining the preferential subscription rights (droits
The principal characteristics of the new shares, the NRS, the DPN and
préférentiels de souscription) of shareholders (subject to rules
the Reinstated Debt (as defined below) implemented in accordance
relating to public offerings that restrict participation by investors in
with the Sauvegarde Plan are described below under “Description of
certain countries including the United States) in up to a maximum
indebtedness” and “New Shares, NRS and DPN”, as well as in notes
amount of approximately €348 million (including share premium).
22.2 and 22.3 to the Group’s consolidated financial statements.
The capital increase was fully backstopped pursuant to a
subscription commitment by the senior creditors,

Description of indebtedness New Term Loan Facilities

The following contains an overview of the terms of the Group’s Pursuant to the Credit Agreement, and on the settlement date, the
Reinstated Debt which was put in place in connection with the closing of Company put in place term loans for €965 million(1) (the New Term
the capital markets transactions pursuant to the Sauvegarde Plan on Loan Facilities), that were used to pay by way off set-off a portion of the
May 26, 2010. due and payable existing debt claims against the Company. This
amount of €965 million was divided into two tranches:
Overview one amortizing tranche for an amount off €311 million with a six-year
Pursuant to the Sauvegarde Plan described above, the Company maturity (2016), carrying interest payable each quarter at the rate of
prepared documentation relating to its reinstated senior debt, EURIBOR/LIBOR (subject to a floor of 2%) plus an initial margin of
comprising a Credit Agreement, a Note Purchase Agreement and an 500 basis points which reduces as the Company’s leverage
Intercreditor Agreement as defined below (collectively, the Reinstated decreases;
Debt) prior to the launch of the capital markets transaction described
below. The Reinstated Debt was advanced by way of set-off against the one tranche, payable at maturity, for an amount of €654 million with
amounts due under existing debt claims on the settlement date of the a seven-year maturity (2017), carrying interest payable each quarter
capital markets transactions on May 26, 2010. at the rate of EURIBOR/LIBOR (subject to a floor of 2%) plus an
initial margin of 600 basis points which reduces as the Company’s
In particular, the Company entered into the following contractual leverage decreases.
documentation related to the Reinstated Debt:
(i) a loan agreement between the Company as borrower, certain New Notes
subsidiaries as guarantors, a facility agent and the lenders Pursuant to the Note Purchase Agreement, and on the settlement date
thereunder (the Credit Agreement); off the capital markets transactions, the Company issued new notes in a
principal amount of €628 million(1) (the New Notes), which was placed
(ii) a note purchase agreement between the Company as issuer, in private transactions with the Company’s existing noteholders and was
certain subsidiaries as guarantors and the noteholders thereunder subscribed by way of set-off against a portion of the due and payable
(the Note Purchase Agreement); debt claims against the Company held by the noteholders.
(iii) an Intercreditor Agreement (as defined below). The New Notes were substituted for the relevant existing notes in their
corresponding currencies, i.e. in Euros, U.S. dollars or pounds sterling.
A security package consisting of share pledges, pledges of certain The issue off the New Notes was divided into two tranches:
receivables under material customer contracts, pledges off material
intra-group loans and pledges of material cash-pooling accounts secures one amortizing tranche for an amount off €203 million with a 6-year
the borrower’s and each guarantor’s obligations under the Credit maturity (2016), carrying an annual interest payment off 9% for the
Agreement and Note Purchase Agreement. notes in Euros, 9.35% for the notes in U.S. dollars and 9.55% for the
notes in pounds sterling;
In October 2011, the Credit Agreement, the Note Purchase
Agreement and the Intercreditor Agreement were modified following one tranche, payable at maturity, for an amount of €425 million with
agreement from the required majorities of noteholders and lenders. The a 7-year maturity (2017), carrying an annual interest rate of 9% for
modifications related principally to the restrictions concerning disposals, the notes in Euros, 9.35% for the notes in U.S. dollars and 9.55% for
joint ventures and acquisitions. the notes in pounds sterling.
The Company also entered into two committed receivables facilities Mandatory prepayments
(the Committed Receivables Facilities) in 2010, as contemplated under The Company is required to prepay the outstanding Reinstated Debt in
the Reinstated Debt documents. The Sauvegarde Plan provides, and the certain circumstances, including the following:
Reinstated Debt permits, that the Group may borrow up to
approximately €200 million under the Committed Receivables asset disposals: the net proceeds in respect of any disposal of any of
Facilities. its assets to an unaffiliated third party will be applied to repay the
outstanding Reinstated Debt, subject to a minimum threshold, on the
Reinstated Debt understanding that this undertaking will not apply to the disposal of
The nominal value of the Reinstated Debt at the exchange rates certain assets, the proceeds off which will be used during the year to
prevailing on the settlement date of the capital markets transactions of finance capital expenditures;
May 26, 2010 amounted to €1,593 million.
(1) Nominal amounts issued and converted at the exchange rates as of May 26, 2010.

equity issuances: at least 80% of the net proceeds received in respect In accordance with the terms of the Group’s credit agreements, 80% of
off any new equity issuances (other than any share issuances permitted the net proceeds of these capital increases and 100% of the net disposal
under the share capital increase that maintains the preferential proceeds were used to repay the Reinstated Debt. These prepayments,
subscription rights (droits préférentiels de souscription) of shareholders without penalty, took place during the third quarter of 2012. The
under the terms of the Sauvegarde Plan, shares issued in redemption prepayments reduced debt by €145 million (€162 million on a nominal
off the DPN and the NRS) will be applied to repay the outstanding basis) and resulted in a financial charge of €17 million representing the
Reinstated Debt. partial cancellation of the gain recognized when the Reinstated Debt was
determined initially at its fair value in 2010. The savings in nominal
In addition, the Company may opt to use the proceeds received in interest expense will be about €13 million per year on a full year basis
respect of any new equity issuances to prepay a portion of the and about €4 million in 2012.
NRS IIC (following the December 31, 2012 redemption there are no
longer any NRS outstanding); In 2011, the only disposal that triggered a mandatory prepayment was
the sale of the Group’s stake in ContentGuard for $25 million, which
excess cash flow: in respect of 2011 and subsequent financial years, resulted in a mandatory prepayment in the amount of €19 million of
80% of the excess cash flow (defined as the aggregate of net cash which €17 million was recorded as a reduction of balance sheet debt
from operating and investing activities, subject to certain and €2 million was recorded as a financial charge, representing the
adjustments) will be applied to prepay the Reinstated Debt; partial cancellation of the gain recognized when the Reinstated Debt
was determined initially at its fair value in 2010.
change of control: upon the occurrence of a change off control in the
Company, all advances under the Credit Agreement and the In 2011, the Group generated excess cash flow as defined above in the
outstanding principal amount of the New Notes, together with any amount of €25 million which was used to prepay Reinstated Debt
other outstanding amounts under the Reinstated Debt, will become in 2012 and resulted in a financial charge of €3 million, representing
immediately due and payable. In addition, the NRS will become the partial cancellation of the gain recognized when the Reinstated
immediately redeemable in the form off shares at the option of the Debt was determined initially at its fair value in 2010.
holders thereof (following the December 31, 2012 redemption there
are no longer any NRS outstanding); Voluntary prepayments
other: net proceeds in respect of any payment or claim under any Under the terms off the Credit Agreement, Note Purchase Agreement
insurance policy or issuance off subordinated debt in connection with and Intercreditor Agreement, the Company may, at its election, prepay
any refinancing, shall in each case be applied to the repayment of the all or part of its advances under the Credit Agreement and any principal
Reinstated Debt (in the latter case a customary “make whole” amount amount of the New Notes, including any make whole payment, under
must be paid to noteholders). the Note Purchase Agreement.
As described in note 19 off the Group’s consolidated financial Summary of repayments

statements, two capital increases occurred in July and August 2012, for The table below summarizes the payments as described above on the
a total amount of €191 million. In addition the Group completed on Reinstated Debt by type of payment:
July 2, 2012 the disposal of its Broadcast Services activity for
€19 million.

Start of period (cumulative) 81 30
Normal scheduled principal repayments 58 32
Payments following 2011 excess cash flow 25 -
Mandatory prepayments from disposals 17 19
Mandatory prepayments from capital increases 145 -
End of period (cumulative) 326 81
Covenants (ii) total net debt be not more than a certain multiple of EBITDA on a
The Credit Agreement and the Note Purchase Agreement contain trailing twelve month basis (“leverage covenant”) on June 30 and
certain customary representations and warranties. They also contain December 31 of each financial year, and (iii) capital expenditure be not
certain affirmative and financial covenants including covenants that in more than a certain amount for each financial year. Each of the interest
particular require that (i) EBITDA be not less than a certain multiple of cover covenant and leverage covenant will become stricter over time.
net total interest on a trailing twelve month basis (“interest cover The exact levels of these covenants are given in note 22.3 (g) to the
covenant”) on June 30 and December 31 of each financial year, Group’s consolidated financial statements.

In addition to certain information provision covenants, the Credit issue, attribute or allot any shares or redeem or repurchase any shares
Agreement and Note Purchase Agreement include certain negative previously issued (other than resulting from the capital increase
covenants that restrict the ability off the Company and certain off its provided for by the Sauvegarde Plan and the redemption in shares of
subsidiaries to undertake various actions. These restrictions were the NRS and DPN and certain other contractual arrangements);
modified in October 2011 following agreement from the required
majorities of noteholders and lenders. The modifications relate for Group Members other than the Company, declare or pay any
principally to the restrictions concerning disposals, joint ventures and dividends or make any other distribution in respect of any class of its
acquisitions. In particular, main modifications consisted of eliminating share capital or apply any sum for any such purpose.
the annual limit on disposals of €100 million as well as the limits on the
disposals off the Connected Home and Entertainment Services divisions, Events of Default
eliminating the limit on non-cash contributions to joint ventures and The Credit Agreement and the Note Purchase Agreement also contain
increasing the annual limit on acquisitions. These negative covenants, as certain events of default, the occurrence off which provide creditors with
modified in October 2011, restrict the ability of the Company and the ability to immediately demand payment of all or a portion of the
certain of its subsidiaries, subject in each case to certain exceptions and outstanding amounts under the Reinstated Debt. If the creditors
limitations to (among other things): exercise their enforcement rights pursuant to the Reinstated Debt, the
NRS will be prepaid, in shares (following the December 31, 2012
create or grant security interests that secure financial indebtedness on redemption there are no longer any NRS outstanding).
any of its present or future assets;
The events off default pursuant to the Reinstated Debt include, among
incur additional financial indebtedness in excess of €40 million other things, and subject to certain exceptions and grace periods:
excluding certain permitted financial indebtedness including, among
others, the refinancing of the Reinstated Debt and Committed non-payment of any amount due under the Reinstated Debt or any
Receivables Facilities; permitted hedging agreements;
grant guarantees; failure by the Company or any of the guarantors to comply with its
material obligations and undertakings under the Reinstated Debt;
grant loans for an aggregate amount greater than €20 million except
in certain cases related to deferred compensation related to disposals; certain events of insolvency;
enter into derivatives contracts, interest rate or currency hedging or any auditor’s report qualification made to either the Company’s ability
treasury transactions other than as required by the Credit Agreement to continue as a going concern or the accuracy of the information
and Note Purchase Agreement and other than for hedging given;
transactions arising in the ordinary course of business;
failure by the Company or any guarantor to comply with the material
amalgamate, merge or consolidate with or into any other person; obligations under the Intercreditor Agreement;
substantially change the general scope of its business; non-payment of any financial indebtedness off any Group Member in
excess off €25 million;
enter into material transactions or arrangements with affiliates unless
in the ordinary course of business and on an arm’s length basis; acceleration of any financial indebtedness of any Group Member in
excess off €25 million under the committed receivables facilities or
invest in joint ventures or partnerships where the total cash investment default under any other financial indebtedness of any Group Member
is in excess of €25 million in cash per year; in excess of €25 million that gives the relevant creditor or creditors
the right to accelerate the date for payment of such indebtedness;
acquire any companies, businesses, shares or securities in excess of
€50 million in cash or €200 million in shares per year;

creditors’ proceedings for any assets in excess of €25 million that are The subscription price off the New Shares was paid by the senior
not discharged within 60 days; creditors by way of set-off against their due and payable debt claims
against the Company.
any security enforcement in excess of €25 million that is not set aside
within 30 days;
NRS
any event which has a material adverse effect on the ability of the On May 26, 2010, the Company issued NRS for an amount of
Company or its guarantors, taken as a whole, to perform their €638 million, entitling their holders to receive approximately 97 million
material obligations under the Reinstated Debt. shares of the Company taking into account the 10 for 1 reverse share
split that occurred on July 15, 2010.
Committed Receivables Facilities
Pursuant to the Sauvegarde Plan, and as permitted under the Reinstated The NRS were redeemed in ordinary shares of the Company on
Debt, the Company entered into two committed receivables facilities December 31, 2010 (NRS I), December 31, 2011 (NRS II and
pursuant to which it can borrow up to €195 million. For more NRS IIC and remaining portion of NRS I subject to a deferral request)
information about these credit facilities, please refer to note 22.3 (f) to and December 31, 2012 (remaining portions of NRS II and IIC subject
the consolidated financial statements. to a deferral request), in accordance with the timetable and terms
communicated at issuance.
Intercreditor Agreement
For more information about the NRS, please refer to note 19.1 to the
To establish the relative rights of certain off their creditors under the
Reinstated Debt, the Company and the guarantors entered into an
intercreditor agreement with the lenders under the Credit Agreement,
the holders of the New Notes, each holder of the DPN, certain DPN
intra-group lenders, certain intra-group debtors and a security trustee On May 26, 2010, the Company issued DPN redeemable in cash or
(the Intercreditor Agreement). shares of the Company on December 31, 2010 for a net amount of
€261 million (€309 million, converted at the May 26, 2010 exchange
rate, net of the €48 million of existing disposal proceeds).
New shares, NRS, DPN
On December 31, 2010, the DPN (including interest) were fully
New shares redeemed through a cash payment of €52 million (including the
On May 26, 2010, the Company proceeded with a capital increase proceeds from the disposal of Screenvision U.S.) and through the
with shareholders’ preferential subscription rights, in an amount issuance of 50 million new shares.
(including the share premium) of €348 million through the issuance of
526,608,781 new shares at a subscription price off €0.66 per share,
corresponding to an issue premium of €0.56 per share. On July 15, Deeply subordinated perpetual notes
2010 the Company effected a 10 for 1 reverse share split and thus the The Group’s financial debt of €1,115 million (IFRS value) as of
number off these new shares was reduced by a factor of 10 to December 31, 2012, excludes the 5.75% (5.85% yield to first call date)
52,660,878. €500 million deeply subordinated perpetual notes (“TSS”) issued in
September 2005. Because of their perpetual and subordinated nature
The subscription for the new shares was reserved in priority to the and the optional nature of the coupon, these notes are recorded in
Company’s existing shareholders and to third parties having purchased shareholders’ equity under IFRS for the net value received of
preferential subscription rights in the market from the Company’s €492 million (representing the issue price minus the offering discount
existing shareholders. The new shares could be subscribed on a pro-rata and fees).
and over-subscription basis (à titre irréductible et à titre réductible) on
the basis of two new shares for one existing share held in the Company. The notes are perpetual and have no stated maturity date; they may,
€203 million of the €348 million capital increase was subscribed by however, be redeemed at the Company option under certain
shareholders on exercise off their preferential subscription rights. conditions, in particular (i) on or after September 25, 2015, (ii) at any
time in the event of a change of control of Technicolor or (iii) as a result
All off the new shares which were not subscribed by the Company’s off certain tax reasons. These notes provide that if there is a change of
existing shareholders or third parties having purchased preferential control and as a result, the rating for the Company’s senior unsecured
subscription rights on the market were subscribed by the Senior obligations is downgraded by one full notch by either Moody’s Investors
Creditors in accordance with a subscription agreement as stipulated in Services Inc. (Moody’s), or Standard and Poor’s (S&P) such that the
the Sauvegarde Plan, pro-rata to the amount of their debt claims against reduction results in a rating below Baa3 by Moody’s or BBB- by S&P,
the Company. Technicolor may redeem the notes without penalties.

2.11 Priorities and objectives for 2013
Pursuant to the terms of the Sauvegarde Plan, Technicolor paid Liquidity risk
€25 million to the holders of the deeply subordinated perpetual notes
For more information about the Group’s liquidity risk, please refer to
in definitive redemption of their interest claims under the notes.
note 23.3 off the Group’s consolidated financial statements.
On February 17, 2010 the Nanterre Commercial Court approved the
proposed Sauvegarde Plan after ensuring it protected the interests of all Ratings
creditors and offered a “viable solution” for the continuation of the The Group uses the services of rating agencies to help investors
Group. The Court judgment was appealed before the Versailles Court evaluate the credit quality of the Group’s debt.
off Appeal on February, 23, 2010 by a number of the holders of the
Company’s TSS. The Versailles Court of Appeal, on November 18, Standard & Poor’s (S&P) attributes the following ratings to the Group: a
2010, and the French Supreme Court (Cour de cassation), on long-term corporate rating, a senior debt rating and a short-term credit
February 21, 2012, dismissed the claims of the TSS holders and rating. Until the Group’s debt restructuring, S&P also attributed a
confirmed the validity of Technicolor’s Sauvegarde Plan. For more specific rating covering the Group’s syndicated credit facility and a
information about the TSS instruments, please refer to note 19.3 of the specific rating covering the TSS issued in September 2005.
Group’s consolidated financial statements. Moody’s attributes a Corporate Family Rating (corporate rating). Until
the restructuring a specific rating covered the TSS.
Provisions for pensions and assimilated
benefits On August 23, 2012, S&P raised the Group’s long-term corporate and
In addition to the debt position as described above, the Group also has senior debt ratings to B from B- and affirmed the short-term rating of B,
reserves for post-employment benefits that it provides to its employees, with all ratings having a stable outlook. On September 26, 2012
which amounted to €388 million at December 31, 2012 compared Moody’s upgraded the outlook on the Group’s B3 corporate rating to
with €386 million at December 31, 2011. For more information on the stable from negative.
Group’s reserves for post-employment benefits, please refer to note 24
Neither the Reinstated Debt, the NRS nor the Committed Receivables
off the Group’s consolidated financial statements.
Facilities have clauses referring to the Group’s credit ratings.
2.11 PRIORITIES AND OBJECTIVES FOR 2013

Growth of adj. EBITDA between 5% to 10% compared to FY 2012 continued increase in operating expenses for M-GO and new growth
adj. EBITDA at constant scope (€498 million): initiatives.
Licensing adj. EBITDA broadly stable vs. FY 2012 assuming another Strong growth in Free Cash Flow, above 30%, before one-off payments
year of strong contracts; for legacy litigation (mainly the EU antitrust fine for €38.6 million).
continued improvement of Connected Home adj. EBITDA and Net debt to adj. EBITDA ratio (as per Group’s covenants) below 1.25x
return to positive free cash flow generation in this segment; at end December 2013.
improved profitability in Entertainment Services reflecting cost

actions implemented in H2 2012;

3 RISK FACTORS
3.3.6 Risk related to product defects or product or

3.1 RISK RELATED TO THE DEBT RESTRUCTURING ................... 46
service quality defects ......................................................................................................................................... 54
3.1.1 Risks relating to the Sauvegarde plan ......................................................................... 46
3.3.7 Risks related to acquisitions and partnerships .......................................... 55
3.1.2 Risks related to indebtedness of the Group ............................................... 46
3.3.8 Risks related to changes in market, technologies
3.2 MARKET RISKS ........................................................................................................................................................................................ 49 and consumer demand ....................................................................................................................................... 55
3.2.1 Risk of interest rate fluctuations .............................................................................................. 49 3.3.9 Risks related to the security of assets .......................................................................... 56
3.2.2 Risk of exchange rate fluctuation .......................................................................................... 49 3.4 OTHER RISKS ................................................................................................................................................................................................... 57
3.2.3 Risks related to liquidity ............................................................................................................................. 50 3.4.1 Risks related to Human Resources ......................................................................................... 57
3.2.4 Fair value of financial instruments ....................................................................................... 50 3.4.2 Risks related to economic and social conditions ................................. 57
3.3 RISKS RELATED TO THE BUSINESS .................................................................................... 50 3.4.3 Risks related to the environment .............................................................................................. 58
3.3.1 Risks related to commercial activity ................................................................................ 50 3.4.4 Risks related to the impairment of certain tangible
and intangible assets, including goodwill .................................................................59
3.3.2 Risks related to the capacity to develop products
and services that respond to customers’ 3.4.5 Litigation ........................................................................................................................................................................................... 59
technological choices ........................................................................................................................................... 51 3.5 INSURANCE ........................................................................................................................................................................................................... 60
3.3.3 Risks related to changes in the Licensing business ...................... 52
3.3.4 Competition ............................................................................................................................................................................... 53
3.3.5 Risks related to supply chain, manufacturing and
dependence on suppliers ............................................................................................................................ 53

3 - RISK FACTORS
Risk related to the debt restructuring
This section describes the main risks identified by the Group that could (please refer to Chapter 4: “Corporate Governance and Internal
affect its businesses, financial situation or sustainability. Additional risks Control Procedures”, section 4.2 “Chairman’s report on Corporate
which are either not identified or which are considered as not significant Governance, Internal Control and Risk Management” of this Annual
may also have a significant impact on the Group’s performance. Report) and notes 3.1, 3.3, 12, 13, 16, 22, 23, 24, 25, 26 and 32 to the
This section should be read in conjunction with the Chairman’s report
on Corporate Governance, Internal Control and Risk Management
3.1 RISK RELATED TO THE DEBT RESTRUCTURING
3.1.1 RISKS RELATING TO Notwithstanding the foregoing, any material modification of the
Sauvegarde Plan within the meaning off Article L. 626-26 off the French
THE SAUVEGARDE PLAN Commercial Code would require the prior consent off the creditors’ and
noteholders’ Committees, and the subsequent approval of the French
Risk of termination of the Sauvegarde Commercial Court.
Plan and reduced flexibility throughout
the duration of the Sauvegarde Plan
The Group is required to comply with the terms of the Sauvegarde Plan 3.1.2 RISKS RELATED TO
until February 17, 2017, including the repayment schedules and other INDEBTEDNESS OF THE
terms of the Group’s principal debt agreements (as amended). For GROUP
further information, see “Risks related to indebtedness”, below.
Risks related to indebtedness principally result from:
If the Group fails to comply with the terms of the Sauvegarde Plan, the
the substantial level of indebtedness of the Group;
Commercial Court of Nanterre could terminate the Plan (on the
recommendation of the public prosecutor’s office and the administrator the financial and operational covenants set out in the Reinstated Debt
charged with execution off the Plan). If at such time the Group is in agreements; and
cessation des paiements (insolvency), the court could institute
bankruptcy (redressement) proceedings if a restructuring were certain mandatory prepayment provisions in the Reinstated Debt
determined to be possible, failing which the court would order judicial agreements, which provisions require the Group to use a large portion
liquidation. off any excess cash flow to prepay outstanding Reinstated Debt.
In addition, changes in the business or the markets in which the Group The Group’ substantial debt could adversely affect its financial
operates could necessitate certain modifications to the Sauvegarde Plan condition, due to the significant interest and principal payments,
during the course of the next four years. and prevent the Group from fulfilling its obligations under the
Reinstated Debt and the Committed Receivables Facilities.
To the extent that such modifications are not considered material
modifications in the objectives or means of the Plan within the meaning The Group has a substantial amount of debt and significant debt
off Article L. 626-26 off the French Commercial Code, the Group servicing obligations. In 2012 however, a portion of the proceeds of the
could make such modifications without requiring any prior approval, capital increases of July and August 2012 have allowed Technicolor to
except in the case off the financing agreements, for which the consent of reduce the debt amount and to strengthen its balance sheet (please
the contractually required majority off creditors who are party to such refer to Chapter 2: “Operating and Financial Review and Prospects”,
agreements is required. In October 2011, the Group obtained creditor section 2.10.3: “Financial Resources” off this Annual Report). At
consent to make certain amendments to the Reinstated Debt contracts. December 31, 2012, the Group had €1,236 million off total nominal
debt (€1,115 million of balance sheet debt, taking into account the fair
value adjustment under IFRS).

RISK FACTORS - 3
The debt principally consists of debt under a credit agreement, trailing twelve month basis on June 30 and December 31 of each
note purchase agreement and intercreditor agreement (the “Reinstated financial year;
Debt”), under which the Group had €1,215 million of senior debt
outstanding at December 31, 2012 (€1,094 million off senior balance leverage covenant: total net debt is not more than a specified multiple
sheet debt, taking into account the fair value adjustment under IFRS) off EBITDA on a trailing twelve month basis on June 30 and
(on the basis of the exchange rates as of December 31, 2012). The December 31 off each financial year; and
Group has two committed receivables facilities (the “Committed
capital expenditure covenant: capital expenditure is not more than a
Receivables Facilities”) under which it may borrow up to €195 million
specified amount in each financial year.
on the basis of the amount of receivables available. For further
information on the terms of these debt facilities and instruments, see Each off the interest cover covenant and leverage covenant becomes
Chapter 2: “Operating and Financial Review and Prospects”, stricter over time. For further information, see Chapter 2: “Operating
section 2.10.3: “Financial Resources” off this Annual Report. and Financial Review and Prospects”, section 2.10.3: “Financial
Resources” and the note 22.3 (g) off consolidated financial statements
The level of the debt may have significant negative consequences for
off this Annual Report.
the Group and its shareholders. For example, the level of the debt:
A large number of factors, many of which are outside the control off the
requires the Group to dedicate a large portion of any excess cash flow
Company (including a downturn in the industries in which the Group
towards repayment of outstanding Reinstated Debt, thereby reducing
operates, a general economic downturn, or any of the other risks
the availability of cash flow to fund working capital requirements
identified in this document), could cause the Group to fail to comply
(please refer to the risk factor below entitled “The terms of the
with such covenants.
Reinstated Debt require the Group to use a large portion off any
excess cash flow and the proceeds of certain transactions to repay In addition, the terms of the Reinstated Debt and the Committed
outstanding Reinstated Debt.”). The amount of Reinstated Debt as Receivables Facilities include provisions which significantly limit the
well as the covenant provisions have been determined on the basis of Group’s flexibility in operating its business. In particular, the Group is
their compatibility with the operating and financial performance subject to restrictions on its ability to, among other things and subject to
prospects of the Group at the time of the Reinstated Debt certain exceptions:
negotiations;
pay dividends and make other distributions on its shares;
increases the Group’s vulnerability to adverse general economic
conditions and industry developments; incur additional debt;
may limit the Group’s flexibility in planning for, or reacting to, invest in joint ventures;
changes in the business and the industries in which the Group
acquire new businesses or assets; and
operates;
dispose off businesses or assets.
limits the Group’s ability to raise additional debt or equity capital;
For joint ventures, acquisition and disposals, see the amendments to the
may limit the Group’s ability to make strategic acquisitions and take
terms of the Reinstated Debt increasing the Group’s strategic flexibility;
advantage of business opportunities; and
see Chapter 2: “Operating and Financial Review and Prospects”,
may place the Group at a competitive disadvantage compared to section 2.10.3: “Financial Resources” off this Annual Report.
competitors with less debt.
Failure to comply with any of the covenants described in this risk factor
Any off the foregoing could severely limit the Group’s ability to operate may (in certain cases following the expiration off a grace period)
and grow the business. constitute an event of default under the Reinstated Debt which, absent
a waiver from the senior creditors, would provide the senior creditors
The Reinstated Debt contains covenants that require the Group with the right to declare the Reinstated Debt that is outstanding at the
to meet certain financial tests and impose limitations and time off any default (plus accrued interest, fees and other amounts due
restrictions on its ability to operate its business. hereunder) immediately due and payable. Such breach of covenants
could also constitute a breach off the Sauvegarde Plan which, if
The terms of the Reinstated Debt require compliance with certain
substantial, could trigger the termination off the Plan (see “Risk of
covenants, including the following:
termination of the Sauvegarde Plan and reduced flexibility throughout
interest cover covenant: EBITDA (as defined in the Reinstated Debt the duration off the Sauvegarde Plan”).
contracts) is not less than a specified multiple off net total interest on a

3 - RISK FACTORS
A breach of the obligations under the Committed Receivables Facilities equity issuances: at least 80% off the net proceeds received in respect
may (in certain cases following the expiration off a grace period) off any new equity issuances must be applied to repay outstanding
constitute a default hereunder. Reinstated Debt;
Upon the occurrence of a change of control in the Group (see excess cash flow: 80% off excess cash flow (which is defined as the
Chapter 2: “Operating and Financial Review and Prospects”, aggregate off net cash from operating and investing activities, subject
section 2.10.3: “Financial Resources – Sauvegarde Plan – Change of to certain adjustments) must be applied to repay outstanding
Control Provisions”), any outstanding amounts under the Reinstated Reinstated Debt; and
Debt would become immediately due and payable.
other: subject to certain exceptions, the net proceeds received from
The Group cannot assure that it would have sufficient liquidity to repay any payment or claim under any insurance policy or issuance of
or the ability to refinance all or any off the amounts outstanding under subordinated debt in connection with any refinancing must, in each
the Reinstated Debt and/or the Committed Receivables Facilities if case, be applied to repay outstanding Reinstated Debt (in the event
they were to become payable following the occurrence of an event of off a refinancing, a customary “make whole” amount must be paid in
default hereunder. respect of amounts due to the note holders pursuant to the
note purchase agreement).
The terms of the Reinstated Debt require the Group to use a
large portion of any excess cash flow and the proceeds of certain Complying with these obligations significantly reduces the amount of
transactions to repay outstanding Reinstated Debt. funds the Group has available to fund its working capital requirements
and, together with the limitations contained in the covenants described
Under the terms off the Reinstated Debt documentation, the Group is above, also limits the Group’s investment capacity. The ability of the
required to apply funds towards the repayment off outstanding Group to successfully maintain its market position and grow its
Reinstated Debt in certain circumstances, including the following: businesses, particularly in the context of a changing technological
environment that may require additional investment to capitalize on
asset disposals: the net proceeds in respect of the disposal off any
business opportunities (see “Risks related to changes in market,
assets of the Group to an unaffiliated third party must be applied to
technologies and consumer demand”) may be severely limited while the
repay outstanding Reinstated Debt, subject to certain exceptions,
Reinstated Debt remains outstanding. In addition, these requirements
including a minimum threshold and the disposal off certain assets
are limiting severely the funds the Group has to pay dividends or to
where the proceeds thereof will be used within a year to fund capital
make other distributions, on its shares or to buy back its shares.
expenditure;

RISK FACTORS - 3
Market risks
3.2 MARKET RISKS
3.2.1 RISK OF INTEREST RATE €20 million on the Group’s profit/(loss) from continuing operations
before tax and net finance costs, in part due to a depreciation of the
FLUCTUATIONS U.S. dollar compared to the euro. Foreign exchange rate fluctuations
Interest rate fluctuations mayy lead to decreases in the Group’s have had and may in the future continue to have an adverse impact on
financial results. the Group’s operating results and financial condition, especially when
the euro appreciates significantly against the U.S. dollar or other foreign
Technicolor is mainly exposed to interest rate risk on its deposits and
currencies.
indebtedness. Failure to manage interest rate fluctuations effectively in
the future, or changes in interest rates, may have a material adverse Foreign exchange rate fluctuations can affect the Group’s
impact on the Group’s financial charges. See note 23.2 to the operating results due to revenues generated and expenses
consolidated financial statements off this Annual Report for more incurred in different currencies, particularly the U.S. dollar.
information about this risk.
To the extent that the Group incurs costs in one currency and have
3.2.2 RISK OF EXCHANGE RATE sales in another, the Group incurs foreign currency transaction risk and
FLUCTUATION its profit margins may be affected by changes in the exchange rates
between the two currencies. Most of Technicolor’s sales are in U.S.
Foreign exchange rate fluctuations can affect the Group’s dollars and in euro; however, certain expenses are denominated in other
operating results as a significant portion of its revenues are currencies. In particular, some of the sales in U.S. dollars and the euro
denominated in currencies other than the euro. have related expenses in the Mexican peso and the Polish zloty
A significant part off the Group’s consolidated revenues as well as a respectively, due to the Group’s production facilities in Mexico and
portion off its assets are in subsidiaries that use currencies other than the Poland. Moreover, the Group also has sales in Europe in euro where a
euro, and in particular which U.S. the dollar as their functional currency. portion off the expenses, related to the purchase of products from Asian
This reflects the Group’s strong presence in the United States, suppliers, is in U.S. dollars. The subsidiaries in the United Kingdom also
particularly in the Entertainment Services and Connected Home have transactional exposures to both the U.S. dollar and the euro.
operating segments. In 2012, 45.4% off the Group’s consolidated Although the Group may hedge against currency risk, given the
revenues came from the United States. The majority of sales by the volatility of currency exchange rates and the occasional illiquidity in
subsidiaries are in their domestic currencies. With limited exceptions, some emerging market currencies, together with the potential for
the subsidiaries prepare their income statements in their domestic changes in exchange control regulations in such emerging markets, the
currency, and the income statements are then translated into euro at a Group cannot ensure that it will be able to manage these risks
monthly average currency exchange rate, as the Group’s consolidated effectively. Volatility in currency exchange rates may generate losses,
financial statements are denominated in euro. As a result, fluctuations in which could have a material adverse effect on the Group’s financial
exchange rates, and particularly in the U.S. dollar/euro exchange rate, condition or results of operations.
have a significant translation impact on the Group’s revenues. In 2012,
exchange rate fluctuations of all currencies had a negative impact of See also note 23.1 to the consolidated financial statements.

3 - RISK FACTORS
Risks related to the business
3.2.3 RISKS RELATED TO LIQUIDITY 3.2.4 FAIR VALUE OF FINANCIAL

Contractual restrictions limit the Group to finance or refinance INSTRUMENTS
its financial obligations coming due. The fair value of forward exchange contracts and currency swaps is
computed by discounting the difference between the contract and the
Technicolor’s access to financial markets was significantly impacted by
market forward rate and multiplying it by the nominal amount. For the
the deterioration off its financial situation, the subsequent debt
fair value off interest rate caps, the marked-to-market value determined
restructuring negotiations, and the Sauvegarde proceeding. The debt
by independent financial institutions is used. The fair value of all current
restructuring then the capital increase in 2012 allowed the Group to
assets and liabilities (trade accounts receivable and payable, short-term
improve its financial structure and, as a result, the Group was able to put
loans and debt, cash, bank overdrafts) is considered to be equivalent to
in place two committed receivables-backed credit facilities in 2010 and
the net book value, due to their short-term maturities. For the long-term
renew one off them in 2012 until 2016. Nevertheless, due to the
portion off the Reinstated Debt, the Group uses the observed market
restrictions in its Reinstated Debt documentation, the Group’s access to
trading levels of this debt to determine the fair value.
financial markets is limited. See note 23.3 to the consolidated financial
statements. For a tabular presentation of the fair value of the derivative financial
instruments as of December 31, 2012, see note 21 to the consolidated
For additional discussion on the Group’s liquidity position and certain
financial statements. See also note 23.6 to the consolidated financial
related risks, please refer to Chapter 2: “Operating and Financial
statements for information on the fair value off the financial assets and
Review and Prospects”, section 2.10: “Liquidity and Capital Resources”,
liabilities. For other information on the borrowings and the financial
notes 20, 22 and 23 to the consolidated financial statements of the
instruments and market-related exposures, see notes 22 and 23 to the
Group, and section 3.1: “Risks related to the debt restructuring” off this
Chapter.
3.3 RISKS RELATED TO THE BUSINESS
3.3.1 RISKS RELATED TO relationships with a number off major motion picture studios, with which
the Group generally negotiates multi-year contracts. The top five studio
COMMERCIAL ACTIVITY customers accounted for approximately 63% of the revenues of the
The Group’s businesses depend on long-term maintenance of Entertainment Services segment and 30% off the Group’s consolidated
relationships and contractual arrangements with a limited revenues in 2012. A large proportion off the revenue off the Connected
number of significant customers within the media and Home segment is generated from long term contracts with various
entertainment industry. A failure to maintain such relationships network operators. The top five customers in the Connected Home
could materially affect the Group’s results of operations. segment accounted for approximately 60% off the segment’s revenues
in 2012 and approximately 23% of the Group’s consolidated revenues
The Group’s businesses operate in the media and entertainment
in 2012. Overall the Group’s 10 largest customers accounted for 59%
industry, a concentrated market with a limited number of significant
off the Group’s consolidated revenues in 2012. If the Group fails to
customers, and where customer relationships have historically played an
maintain and strengthen these relationships, its significant customers
important role. As a result, several of the Group’s businesses depend on
may be less likely to purchase and use its technologies, products, and
a small number off major customers and the long-term relationships and
services, which could have a material adverse effect on results of
contractual arrangements with them. For example, the DVD Services
operations, business and prospects.
businesses within the Entertainment Services Segment depend on

RISK FACTORS - 3
Although the Group has signed multi-year contracts with many off its 3.3.2 RISKS RELATED TO THE
customers, the main part of the major customer relationships include
multiple contractual arrangements with varying terms and conditions
CAPACITY TO DEVELOP
and expiration dates, and certain contracts come up frequently for PRODUCTS AND SERVICES
renewal across each of the business lines. If the Group’s customers THAT RESPOND
decide to terminate these contractual arrangements in accordance with TO CUSTOMERS’
their terms, if the Group is unable to renew them when they expire or if TECHNOLOGICAL CHOICES
it is only able to renew them on significantly less favorable terms, the
If the Group does not continue to develop innovative products,
Group’s operating results could be adversely affected.
services and technologies in response to industry changes, or if
The Group’s results depend on the customers’ demand for its the Group does not correctly anticipate future developments, its
technologies, products and services. A decrease in demand could business mayy be materially adversely affected.
materially adversely affect the Group’s results of operation.
The media and entertainment industry is characterized by rapid change
The demands of the Group’s customers to purchase its technologies, and technological evolution. The markets for the Group’s technologies,
products and services may depend on a variety of factors, including products and services are defined by improvements in technology and
consumer preferences, macroeconomic trends or technologies adopted new product introductions, changing consumer preferences, evolving
as industry standards. The Group’s operating results depend in part industry standards and technology and product obsolescence.
upon industry participants selecting to adopt the Group’s technologies,
The Group has oriented its strategy and investment plans based on its
products and services instead off those of the Group’s competitors.
expectations regarding the development off the Group’s markets, such
In order to anticipate and prevent the deterioration of major customer as the speed of development of Blu-rayTM technology in the DVD
relationships, the Group closely and continuously monitors its sales and Services business as compared with standard DVD technology, the
marketing process and, in particular, the renewal and renegotiation of increasing prevalence of digital media in cinema and in the production
key contracts. Each segment has devised account and marketing and postproduction of entertainment content, including, among others,
strategies for major customers and formulated plans for new client animation, visual and audio effects and color enhancement, and the
development. All such plans, along with the evolution of sales and development of on-demand and multiscreen media consumption.
marketing activity, are regularly reviewed by management. The Group These trends will determine the rate of transition from certain existing
has implemented a systematic formal review process for offers prior to and/or mature activities toward new activities. The Group’s expectations
their submission to clients, according to strategic and financial criteria and predictions may not be accurate, which may require adjustments in
and tiered approval levels. its strategy, relationships with suppliers and customers and the
development of the Group’s products, services and technologies. Since
The most significant commercial proposals made to customers are the future growth off the Group’s business will in part depend upon the
subject to prior approval by the Investment Committee, chaired by the growth of, and the Group’s successful participation in, new and existing
CEO (please refer to Chapter 4: “Corporate Governance, and Internal markets for the Group’s technologies, products and services, such as
Control”, section 4.2.2: “Internal Controls Procedures” of this Annual digital entertainment content and online and mobile media distribution,
Report). Among the financial criteria, the analysis of the impact of each if the Group’s products, services and technologies do not adequately
project on cash flow and the demand for working capital receives meet the demands of consumers and of the Group’s customers, there
particular attention, as does the return on investment. may be no or limited market acceptance of the products, services and
technologies the Group offers.

3 - RISK FACTORS
The Group’s expectations regarding industry developments will also In addition, licensing agreements typically have an average duration of
affect the way in which the Group adapts its business, investment policy five years and are renewed at their renewal date. If the Group is unable
and cost structure particularly given that certain off our business lines are to renew license agreements either at all or on equally favorable terms,
expected to experience declining demand in the future. If the Group’s the Group’s Licensing revenues may be negatively affected.
predictions regarding future trends or the pace of change are inaccurate
or if the Group is unable to develop new products, services, and If the Group is unable to replace revenues derived from expiring
technologies that adequately or competitively address the needs off the patents or dissolving patent pools, the revenues and substantial
changing marketplace in a timely manner, this could have a material profits generated by the Group’s Licensing business would
adverse effect on the Group’s business results of operations and substantially decrease.
financial condition.
Revenues in the Group’s Licensing business are derived from licensing
In an effort to manage this risk and keep up to date on market trends the Group’s patents or a portfolio off patents that belong to a pool of
and influence the industry, the Group invests and participates in licensors to third parties; revenues from these licenses therefore depend
organizations that set technology standards. The Group also in large part upon the life of the licensed patents. As of December 31,
emphasizes customer relationship management as a mean to mitigate 2012, the Group’s patent portfolio included approximately 39,600
this risk. patents and applications worldwide and approximately 66% of this
patent portfolio had a remaining term of over 10 years. In general, the
Group maintains its right to receive royalties under patents until the
3.3.3 RISKS RELATED TO CHANGES expiration of the last patent applicable to a particular technology.
IN THE LICENSING BUSINESS Revenues from the Motion Picture Experts Group (MPEG) LA
The Group depends on the sale by its licensees of products that Licensing pool in respect off MPEG-2 technology contributed 54% of
incorporate its technologies and any reduction in these sales Licensing revenues in 2012, compared with 56% in 2011. Revenues
would materially adversely affect revenues from the Group’s derived from this Licensing pool are recorded in the Technology
Licensing activities. segment. The Group expects to receive its final royalties from the
MPEG LA pool in 2016 once the patent pool is dissolved at the end of
The Group derives significant revenues and profits from the licensing of 2015. If the Group is unable to replace expiring patents with new
various technologies to product manufacturers that incorporate the patents in its patent portfolio or if the Group is unable to enter licensing
Group’s patents in their products. The Group’s Licensing revenues agreements to replace existing sources of revenues derived from
accounted for 15% of the Group’s consolidated revenues in 2012 and expiring patents, including those held by dissolving patent pools, the
the Technology segment, which primarily reflects the Group’s Licensing Group’s results of operations will be materially adversely affected.
activities, accounted for 78% of the Group’s adjusted EBITDA from
continuing operations in 2012. Revisions to patent laws and regulations in the U.S. and abroad
mayy adversely impact the Group’s ability to obtain, license, and
Since the Group does not control sales by licensees of products enforce its patent rights.
incorporating its patents, if licensees were to sell fewer products
incorporating the Group’s patents due to decreased marketing efforts, The Group’s Licensing business depends in part on the uniform and
significant economic difficulties, changes in consumer tastes or trends or consistent treatment of patent rights in the U.S., Europe and elsewhere.
for any other reason, the Group’s Licensing revenues could be adversely Changes to these patent laws and regulations may limit the Group’s
affected, thereby materially affecting the Group’s results of operations ability to obtain, license, and enforce its rights. Additionally, court and
and financial condition. administrative rulings may interpret existing patent laws and regulations
in ways that adversely affect the Group’s ability to obtain, license, and
enforce its patents.

RISK FACTORS - 3
For example, recent rulings by the U.S. Supreme Court concerning Furthermore, rapid technological innovation and changing business
injunctions may make it more difficult, under some circumstances, for models may allow new participants to enter into certain markets, who
the Group to obtain injunctive relief against a party that has been found may in turn offer alternative products, technologies and services,
to infringe one or more of its patents, and rulings regarding patent thereby decreasing the market share of current market participants.
challenges by licensees could potentially make it easier for its licensees While the Group seeks to innovate and differentiate its products and
to challenge the Group’s patents even though they have already agreed services, as well as to design, build and source its products and their
to license a patent from the Group. Any inability to obtain or enforce components in such a way as to minimize the effects of these risks, there
the Group’s patents could result in an adverse effect on the Group’s can be no assurance that the Group will not be adversely affected by
Licensing revenues, and therefore on the Group’s operating results and new or existing competitors.
financial condition.
In order to identify changing market conditions and minimize the
Decisions of industry standards-setting bodies mayy adversely exposure to related risks, the Group develops models to identify trends
affect the Group’s Licensing revenues. and key factors to summarize trends and risks to map the industry and
Technicolor’s position therein, to create options for each scenario, and
In the future, standards-setting bodies in the media and entertainment generate a series of indicators to manage and adapt the strategy and
industry may require the use of “open standards,” meaning that the priorities.
technologies necessary to meet those standards are freely available
without payment off a licensing fee. The use of open standards may 3.3.5 RISKS RELATED TO SUPPLY
therefore reduce the Group’s opportunity to generate Licensing
revenue, thereby negatively affecting the Group’s financial condition or
CHAIN, MANUFACTURING
prospects. AND DEPENDENCE ON
SUPPLIERS
3.3.4 COMPETITION The Group faces quality, operational and reputational risks
The Group faces intense competition in many of its businesses associated with its reliance on third-party suppliers and
and if the Group is unable to compete successfully, its manufacturers.
businesses would suffer.
The Group outsources extensive operational activities, including
The Group’s products and services are subject to intense price procurement, manufacturing, logistics and other services, such as
competition and, although the Group has leading positions in many of research and development, to its external suppliers. For example, the
its market segments, competing businesses are sometimes part of Group relies on external partners for manufacturing certain of its
groups which are significantly larger than Technicolor, and thus may finished products, particularly in the Connected Home segment.
have greater resources, including greater financial, technical, marketing Reliance on external suppliers and manufacturing partners reduces the
and other resources. These groups may include customers who already Group’s ability to prevent products from incorporating defective
have, or may develop, in-house capabilities to supply the products or technology or components, and the Group may be exposed to the
services which Technicolor offers, such as studio customers who have effects of production delays or other performance failures of its
content services capabilities or broadcasters who have equipment suppliers. Any defects in the production, quantity or delivery of these
design capabilities. If the Group’s competitors or customers use their products could adversely affect the Group’s reputation or operating
greater size and resources to place additional competitive pressure on performance. Reliance on external suppliers and manufacturers may also
Technicolor, the Group’s operations may be materially adversely expose Technicolor to the effects of suppliers’ and manufacturers’
affected. non-compliance with applicable regulations or third-party Intellectual
Property rights.

3 - RISK FACTORS
The Group purchases more than 80% off its direct materials, including 3.3.6 RISK RELATED TO PRODUCT
raw materials, components and finished products from its top
10 suppliers. In addition, certain raw materials such as DVD casings or
DEFECTS OR PRODUCT OR
Set-Top Box components come from a limited number of significant SERVICE QUALITY DEFECTS
suppliers. Any change, delay or disruption in supply by a significant The Group’s products and services mayy experience quality
supplier could cause material delays in the Group’s production or problems that can result in decreased sales and higher operating
operations and increase its production costs. The Group manages its expenses.
inventory on a just-in-time basis, which exposes it to performance risks
by its suppliers, as well as to certain force majeure risks. As a result, in The Group’s products and services are generally technologically
addition to delays or other performance failures off its suppliers, the complex and may contain undetected errors, including software or
Group’s operations may be disrupted by external factors beyond the hardware errors, particularly when first introduced or when new versions
Group’s control. The Group’s results of operations could be adversely are released. In addition, to the extent the Group engages contract
affected in the event of any severe or prolonged disruption. manufacturers for finished products, as the Group does particularly in
the Connected Home segment and the DVD Services business, the
The Group’s inability to obtain timely delivery of key products or Group is less able to exercise product quality control. As a result, the
sub-components of acceptable quality could result in material delays, Group may experience problems with the quality of its products or
increased costs, and reductions in shipments of the Group’s products, services, large-scale product recalls, or a decrease in purchases by a
any of which could increase its operating costs, harm customer major customer following quality issues or defective performance, which
relationships, or materially and adversely affect the Group’s business in turn may have a negative impact on its reputation and results of
and results of operations. operations.
In order to mitigate the risks inherent to its suppliers, the Sourcing In addition, if the Group’s products contain defects, the Group could be
Department has established detailed procedures for operational and required under warranty claims to replace them, which would increase
contractual monitoring of principal suppliers, including Contract the Group’s operating expenses. Moreover, if any such errors cause
Electronic Manufacturer in Asia and Latin America, and suppliers of key unintended consequences, the Group could incur substantial costs in
components such as integrated circuits or memory chips as well as defending and settling product liability claims. Although the Group
suppliers of raw materials used in the production of DVDs and generally maintains insurance to limit products and service liability and
Blu-rayTM. make provisions in the Group’s financial statements with respect to
warranties, if these contract provisions are not enforced, if its provisions
Operations at the Group’s production and distribution facilities are insufficient, if the Group cannot obtain or maintain adequate
are subject to disruption. insurance or if liabilities arise that are not effectively limited, the Group
could incur substantial costs in defending and settling product liability
The Group operates various production and distribution facilities
claims.
globally. These facilities are subject to operational risk, including
mechanical and IT system failure, work stoppage, transportation The centers for product development or implementation of services
disruption, customs blockage and natural disasters. Any interruption of include quality assurance functions that are responsible for establishing
activity in the Group’s production, manufacturing or distribution and measuring suitable quality indicators and developing action plans to
facilities due to these or other events could result in the disruption to the improve the quality of the products and services. These quality
operation of the Group’s activities, which could have an adverse effect programs include short- and medium-term improvement plans
on the Group’s business, financial condition and/or results of operations. developed from quality studies with customers. These programs are also
developed with the Group’s main solutions and component suppliers
and their effectiveness is assessed through quality audits.

RISK FACTORS - 3
3.3.8 RISKS RELATED TO CHANGES

3.3.7 RISKS RELATED IN MARKET, TECHNOLOGIES
TO ACQUISITIONS AND CONSUMER DEMAND
AND PARTNERSHIPS The Group faces risks relating to a decline in sales of optical disc
Acquisitions, joint ventures and partnerships entered into by the media.
Group could result in operating difficulties, Intellectual Property
infringement, or other adverse consequences. Historically, movies have been distributed through optical disc media,
such as DVD and, more recently, Blu-rayTM discs. However, the growth
The Group operates in a dynamic market and as a result, the Group off the internet and home computer usage, connected televisions,
regularly considers possible strategic transactions, including Set-Top Boxes, tablets, smartphones, and other devices, accompanied
investments, acquisitions, joint ventures and commercial partnerships to by the rapid advancement of online and mobile content delivery, has
expand the Group’s offering of products, technologies, and services or resulted in a recent and increasing trend toward the use of downloading
to expand the geographic scope of its business. Areas of specific focus and streaming services. Although the Group expects that sales of
in this respect currently may include, without limitation, increasing the Blu-rayTM discs will continue to increase in the near-to medium-term and
patent portfolio in the Technology segment, developing targeted offset in part the expected continued decline in overall sales of standard
complementary sales opportunities in the Entertainment Services DVD discs, an acceleration off the shift to online and mobile media
segment and participating in industry consolidation in the Connected content consumption may well result in a significant decline in revenues
Home segment. The benefits of an acquisition, investment, joint in the Group’s DVD Services activity. In addition, the sales of optical
venture or partnership may take considerable time to develop, and the disc media in any given year may be affected by the number of movies
Group cannot be certain that any particular transaction will produce the released by the Group’s studio customers and the success of such
intended benefits. movies at the box office. Any decrease in such released movies number
or success could negatively affect the revenues off the Group’s DVD
Such transactions may give rise to a variety of risks, including, among Services activity. Any such decrease could negatively affect the Group’s
others: continued protection of the Group’s Intellectual Property rights; operating results.
information security vulnerabilities; diversion off management time and
focus from operating the Group’s business to transaction execution and Conditions in the film industry may negatively affect the
integration challenges; unanticipated or unknown liabilities relating to business of the Entertainment Services segment.
acquired businesses or business partners; integration off new personnel,
operations and technology systems; restructuring charges or integration In 2012, the Entertainment Services segment accounted for 48% of the
costs; conflicts of interest with strategic partners; and an inability to Group’s consolidated revenues. While customers in the Entertainment
exert sufficient control over the joint venture or strategic investment Services segment include broadcasters, advertisers, video game and
due to a minority shareholding or other contractual provisions. OTT companies, a significant proportion of revenues is generated with
major and independent film studios. Revenues in the Entertainment
Services segment are dependent on the underlying trends in the film
industry. For example, the Group believes that major film studios will
increasingly concentrate their resources on a limited number of large
budget movies, resulting in greater competition between media service
providers such as Technicolor for fewer projects.

3 - RISK FACTORS
As another example, the Group often sees a corresponding increase in 3.3.9 RISKS RELATED TO
sales of its products and services used in the film industry, such as visual
effects and animation in Digital Production, color correction and sound
THE SECURITY OF ASSETS
in Digital Postproduction or distribution in Digital Cinema when the The Group’s reputation and business mayy be harmed and the
number off film productions of our major studio customers increase. In Group mayy be subject to legal claims if there is a loss, disclosure,
addition, the number off movies released by the Group’s studio misappropriation or unauthorized access to its customers, its
customers and the box office success of these movies may affect the business partners or its own information, or other breaches of
Group’s sales of optical disc media, including Blu-rayTM and standard the Group’s information systems.
DVD discs. Any adverse changes in the film industry may reduce
The secure maintenance and transmission of customer information is an
revenues in the Entertainment Services segment and thereby
essential element off the Group’s operations, as the Group is entrusted
potentionally have a material adverse effect on the Group’s results of
with the creation and distribution of highly sensitive content on behalf of
operations and financial condition.
its customers and business partners. The Group relies on internal and
The Group mayy need to expand significant resources to continue external information and technological systems (managed both by the
meeting the demands of its customers. Group and by third parties) that maintain and transmit this information,
and the security of this information may be compromised as a result of
To maintain the Group’s position within an industry characterized by system or control failures, inadequate or failed processes, human error,
constant and rapid technological evolution, the Group may need to willful breaches and business interruptions. These events could lead to a
incur significant research and development expenses to continue to breach in the Group’s global security protocols and customer
design and deliver innovative products, services and technologies for its information may be lost, disclosed, misappropriated, altered or accessed
customers, including technologies that the Group may license to without consent.
consumer electronics manufacturers and to other third parties.
Although the Group actively monitors compliance with its security
New products, services, and technologies may be subject to delays in standards, the Group cannot guarantee that the information entrusted
development and may fail to operate as intended. The return on the to it will be adequately protected or that no security breach will occur.
Group’s investments in new development projects including, but not Any loss, disclosure, misappropriation or alternation of, or access to
limited to M-Go, MagicRuby, CineStyle Color Assist or end-to-end customers, business partners or other information, or other breaches of
digital studio platforms may be less than anticipated and the Group may the Group’s information security, including that relating to its
fall to recover any or all of its investments in these projects. Competitors technologies, products and services, could result in legal claims or legal
may innovate more quickly or more effectively than the Group does, proceedings, including regulatory investigations and actions, harm the
hindering the Group's ability to successfully market the new Group’s relationships with its customers, lead to loss of revenues or
technologies, products and services its develops. In addition, if new result in reputational damage, thereby materially adversely affecting the
technologies were developped more quickly than anticipated, the Group’s results of operations and financial condition.
Group may be required to increase its investments beyond the limits
that apply under the Group’s then-applicable debt documentation or Technicolor security standards are continuously reviewed and updated
the Group may not have sufficient financial resources to make such to stay ahead of the industry. Internal and external audits are conducted
investments. Furthermore, if technology from which the Group derives to monitor compliance with those standards and to continuously
a significant portion of its revenues were to become obsolete more improve processes to be more secure throughout the workflow.
quickly than anticipated, the Group may have difficulty committing Technicolor hosts audits from various industry associations including the
resources to fund new technology and product developments. MPAA and CDSA, along with the Group’s premiere customers to
exceed their standards. These audit experiences are utilized not only for
The inability to commit the resources necessary to develop new security compliance verification but also to ensure Technicolor security
products, services, and technologies could cause a material adverse standards meet and exceed customer requirements.
effect on the Group’s businesses and results off operations.

RISK FACTORS - 3
Other risks
3.4 OTHER RISKS
3.4.1 RISKS RELATED TO HUMAN adverse effect of any such work slowdown, stoppage or strike on its
sales. Work slowdowns, stoppages or other labor-related developments
RESOURCES could have a material adverse effect on the Group’s business, financial
The Group depends on key personnel, and the loss of any of its condition, results of operations or prospects.
key employees could have a material adverse effect on the
Group.
The Group’s success depends on the continued involvement of its

3.4.2 RISKS RELATED TO
management team in the operations and on the skills, technical ECONOMIC AND SOCIAL
knowledge and industry familiarity of key employees in many of the CONDITIONS
Group’s businesses. A limited number off individuals have primary General economic conditions mayy have an adverse effect on the
responsibility for managing various aspects of the Group’s business, Group’s revenues and financial condition.
including relationships with key customers and licensees. The loss off a
key member off the Group’s management team or a key employee, The Group’s revenues depend in part on the general economic
whether as a result of retirement, a competing employment offer or for environment in which the Group operates, as economic conditions
any other reason, could prevent the Group from executing its business affect demand for its technologies, products and services. The Group’s
strategy, cause the Group to lose key customer or licensee relationships business could be affected by decreasing consumer demand, as many of
and have a material adverse effect on the Group’s operations, financial the Group’s products, such as DVD and Blu-rayTM disks or Set-Top
condition and prospects. Boxes and gateways (including modems and routers), services, and the
products in which its patents are incorporated, particularly by consumer
In order to limit the impact that these risks might have, the Group has electronics manufacturers including TVs, smartphones and other
established a set of human resource management programs, such as an portable media devices, are discretionary goods for end-users. The
annual Talent Review and succession planning process for key people in difficult macroeconomic environment globally in recent periods has
each segment, and development programs for high potential profiles. adversely affected consumer confidence, disposable income and
These different programs are regularly monitored by the Executive spending, resulted in decreased volumes for certain of the Group’s
Committee. products and resulted in increased demand for lower-end products at
the expense of higher-end products. Furthermore, continued weakness
Labor disruptions could affect the Group’s results of operations.
in general economic conditions may result in an increasing number of
In certain countries in which the Group operates, a significant number of the Group’s licensees or customers becoming delinquent on their
its employees are covered by collective bargaining agreements with obligations to the Group or being unable to pay, which in turn could
labor unions. There can be no assurance that a work slowdown, or a result in a higher level of write-offs of receivables. Any prolonged global
work stoppage or strike as a result of political or economic conditions or economic downturn may therefore have adverse effects on the Group’s
for other reasons, will not occur prior to or upon the expiration of the operating results or financial condition.
Group’s labor agreements, and the Group is unable to estimate the

3 - RISK FACTORS
Other risks
The Group mayy be vulnerable to political, macroeconomic, 3.4.3 RISKS RELATED

regulatory environments or circumstances specific to the
countries in which the Group operates and in which its
TO THE ENVIRONMENT
technologies, products and services are sold, particularly in The costs of complying with environmental protection and
emerging markets. health and safety laws and any liabilities arising thereunder, may
increase and adversely affect the Group’s business or financial
The Group sources and produces a significant number of goods from or condition.
in emerging markets and sells its technologies, products and services in
these markets. In 2012, the Group generated approximately 20% of its The Group is subject to various environmental protection,
consolidated revenues in emerging markets, predominantly in Latin manufacturing and health and safety laws and regulations governing
America and the Asia-Pacific region. As such, the Group is subject to among other things the generation, storage, handling, use, remediation,
risks associated with doing business internationally. Such risks include disposal and transportation of materials, the emission and discharge of
currency fluctuations, economic, political and social instability, capital materials into the ground, air or water, and the health and safety of the
and exchange controls, expropriation or nationalization of assets, Group’s employees. A certain number off the Group’s current and
compliance with different legal and regulatory requirements and tax previously-owned manufacturing sites have an extended history of
regimes, GDP volatility, inflation, currency fluctuations and industrial use. Soil and groundwater contamination, which have occurred
devaluations, restrictions on repatriation of funds, requirements relating at some sites, may occur or be discovered at other sites in the future.
to withholding taxes on remittances and other payments by subsidiaries Industrial emissions at sites that the Group has constructed or acquired
and potentially negative consequences from changes in tax laws or their expose it to remediation costs, and the Group has identified certain sites
interpretation. These risks could disrupt the Group’s production in the at which chemical contamination has required or will require remedial
relevant countries and negatively affect the Group’s ability to produce measures.
and procure goods for sale in its North American and European
Environmental laws are complex, change frequently and have tended to
markets. The Group’s future results may therefore be adversely affected
become more stringent over time. While the Group seeks to maintain
by any of these factors. In addition, the Group may face increasing
compliance with these laws and regulations and while the Group
difficulty in protecting its Intellectual Property rights in emerging market
believes that the provisions the Group has set aside and the contractual
countries. See “The Group’s inability to protect its Intellectual Property
guarantees from which the Group benefits provide reasonable coverage
rights could materially adversely affect the Group’s operating results”.
for its environmental obligations, the Group could be subject to fines,
Risks concerning the economic and social environment are managed by site closures or other restrictions on its ability to operate and provisioned
each business, either in decentralized form for risks specific to a given amounts may not be adequate. Any of these events or circumstances
activity, or through support functions. They are regularly reviewed in could have an adverse impact on the Group’s financial condition.
detail by Group Management as part of the monthly or quarterly Moreover, future events, such as changes in laws on safety, the
business review meetings. environment, or health, or the discovery off new risks, could create
additional costs which could have adverse effects on the Group’s
business, results off operations, or financial condition.
For further details of environmental actions conducted by Technicolor,

see Chapter 6: “Social Information and Sustainability”, section 6.2:
“Environmental matters” off this Annual Report. See also note 32 to the

RISK FACTORS - 3
Other risks
3.4.4 RISKS RELATED 3.4.5 LITIGATION

TO THE IMPAIRMENT The Group is, and mayy become subject to, legal and regulatory
OF CERTAIN TANGIBLE AND proceedings.
INTANGIBLE ASSETS, In the ordinary course of business activities, the Group has been
INCLUDING GOODWILL involved, and in the future might become involved, in legal and
Adverse changes in management’s estimates or market regulatory proceedings and is subject to tax, customs and administrative
conditions could result in asset impairment and mayy adversely audits. The fines, damages, settlement amounts or amounts otherwise
affect the Group’s operating results or financial condition. due in connection with these legal proceedings, may be significant. For
example, in December 2012, we were fined €38.6 million by the
The Group periodically reviews assets with finite useful lives using European Commission on an antitrust matter relating to a discontinued
certain key assumptions, including budget and cash flow projections and business. There can be no assurance that any off the legal proceedings
growth rate projections. If management’s estimates change or market and audits in which the Group is involved or become involved in the
conditions adversely evolve, the estimate of the recoverable value of future will not result in payments being made by the Group, including
these assets could decrease significantly and result in impairment, possibly in excess of amounts provisioned, or that any such payments
resulting in a non-cash expense in the Group’s consolidated statement will not have a material adverse effect on our results of operation and
off operations, which could have a material adverse effect on the financial condition.
Group’s results of operations or financial position. At December 31,
2012, the Group had €478 million of goodwill, €350 million of The principal legal proceedings and governmental investigations in
tangible assets and €433 million of intangible assets. Based on the progress or envisaged, including certain claims and investigations
Group’s 2012 impairment review, the Group booked a €6 million relating to alleged anti-competitive conduct in connection with the
impairment on intangible assets and a €7 million impairment on Group’s former cathode ray tube business, are described in note 32 to
tangible assets. the Group’s consolidated financial statements in this Annual Report.
Of the €478 million of goodwill at December 31, 2012, €353 million Except for the litigation described in note 32 to the consolidated
relate to DVD Services, for which any significant change in assumptions financial statements, there are no other governmental, judicial or
as described in note 13 to the 2012/2011 Financial Statements could arbitration proceedings, including any proceedings of which the Group
have an immediate impact on impairment calculations and lead to is aware, that are currently pending or threatened, which could have, or
further impairments. Worse than anticipated market conditions could have had over the past 12 months, a material effect on the financial
result in additional impairment charges in the Group’s consolidated situation or profitability off the Company and/or the Group.
statement of operations. We may experience significant further
impairment charges in future periods, particularly in the event the
markets for the Group's products and Services experience further
deterioration. For additional information on the impairment tests, see
notes 3.3, 12 and 13 to the Group’s consolidated financial statements.

3 - RISK FACTORS
Insurance
3.5 INSURANCE
The Group has a “Corporate Risk & Insurance” Department in charge The Group’s insurance policies are issued on an “all risks” basis, but with
off insurance and associated risk management. Through this department, standard market exclusions. The deductible levels are determined and
Technicolor arranges global insurance programs covering the major applied according to the assets and operational risks of the business
risks related to its activities that are underwritten with well-known units. Insurance policies are purchased whenever required by law or
insurers via global brokers. These programs, established on behalf off its when activities or circumstances render them necessary. Thus, the
subsidiaries worldwide, are implemented through a “Master” insurance Group has established insurance covering motor vehicles and personal
policy that strengthens the coverage offered by local policies, and liability, in countries where such insurance is required.
provides “difference in conditions” and “difference in limits” over these
policies. In addition, in partnership with its insurers, Technicolor has developed a
loss prevention program in order to reduce its exposure to its assets and
These programs cover risks such as general and professional liability, operating losses that may occur in case such risks should materialize.
property and business interruption (the Group carries exposures in high Thanks to this program, several key sites have obtained the “Highly
risk, natural hazard areas and has purchased adequate specific insurance Protected Risk” status, which is the best grade in the assessment
coverage in this regard), and country-specific risks such as Employer’s implemented by the Group’s insurer. The Corporate Legal Department
Liability in the U.K. and Workers’ Compensation insurance in the U.S. has established procedures and rules in order to manage contractual
For risks considered non-strategic, subsidiaries are allowed to subscribe risk. It ensures, in conjunction with the Corporate Risk & Insurance
to additional insurance policies in their local market. team, that these rules are applied throughout the world.
These insurance programs also cover the risk of damage to goods in The Group intends to continue its policy of comprehensive coverage
transit, where such insurance is required, as well as the environmental for all its exposure to major risks, expand its coverage when necessary,
damage caused by pollution. In addition, Technicolor has insurance for and reduce costs through self-insurance when it is deemed appropriate.
the risks associated with the liability of its Directors and executive The Group does not foresee difficulties in setting up insurance policies
officers. in the future. To date, the Group does not have a captive insurance or
reinsurance company.

4 CORPORATE GOVERNANCE
AND INTERNAL CONTROL
4.1 BOARD OF DIRECTORS .............................................................................................................................................. 62 4.4 COMPENSATION AND BENEFITS OF DIRECTORS ......... 84
4.1.1 Corporate governance structure ............................................................................................. 62 4.4.1 Compensation and benefits of Mr. Remy Sautter,
4.1.2 Composition and expertise of the Board Chairman of the Board of Directors .............................................................................. 84
of Directors ................................................................................................................................................................................... 62 4.4.2 Compensation and benefits of Mr. Frederic Rose,
4.1.3 Other information about members of the Board Chief Executive Officer ............................................................................................................................ 84
of Directors ................................................................................................................................................................................... 64 4.4.3 Compensation and benefits of Mr. Denis Ranque,
Chairman of the Board until June 20, 2012 .......................................... 86
4.2 CHAIRMAN’S REPORT ON CORPORATE
GOVERNANCE, INTERNAL CONTROL AND RISK 4.4.4 Overview of compensation, benefits, options
MANAGEMENT ..................................................................................................................................................................................... 70 and performance shares attributed to the Executive
4.2.1 Preparation and organization of the Board Directors .......................................................................................................................................................................................... 87
of Directors’ work .................................................................................................................................................... 70 4.4.5 Directors’ fees and other compensation .............................................................. 87
4.2.2 Internal control procedures .................................................................................................................... 76 4.4.6 Stock options awarded to Executive Directors –
Free Shares ................................................................................................................................................................................... 88
4.3 STATUTORY AUDITORS’ REPORT, PREPARED IN
ACCORDANCE WITH ARTICLE L.225-235 OF 4.5 EXECUTIVE COMMITTEE .................................................................................................................................. 91
FRENCH COMPANY LAW (CODE DE
COMMERCE) ON THE REPORT PREPARED BY 4.5.1 Members of the Executive Committee ................................................................. 91
THE CHAIRMAN OF THE BOARD OF DIRECTORS ............ 83 4.5.2 Executive Committee compensation 92
..........................................................................

4 - CORPORATE GOVERNANCE AND INTERNAL CONTROL
Board of Directors
4.1 BOARD OF DIRECTORS
4.1.1 CORPORATE GOVERNANCE Companies issued by the Association Française des Entreprises Privées
(AFEP) and the Mouvement des Entreprises de France (MEDEF) of
STRUCTURE April, 2010 (the “AFEP-MEDEF Corporate Governance Code”) to
The Company is governed by a Board of Directors and a Chief which the Company adheres (see paragraph 4.2.1.1 below). According
Executive Officer. The Board of Directors has been chaired by to this Code, “a Director is independent when he does not maintain a
Mr. Rémy Sautter since June 20, 2012. Mr. Rémy Sautter was relationship of any kind whatsoever with the Company, its group or its
appointed as Chairman by the Board of Directors on June 20, 2012, at management that may compromise the exercise of his free judgment”.
the expiration off the term of Mr. Denis Ranque. Mr. Frederic Rose, who
is also a Director, has been Chief Executive Officer since September 1, Of the nine Directors, six are considered independent: Ms. Catherine
2008. Guillouard, Messrs. Rémy Sautter, Lloyd Carney, Bruce Hack, Hugues
Lepic and Didier Lombard. The Board of Directors considered that the
In accordance with French law, the Chairman off the Board off Directors shareholding of M. Hugues Lepic (please refer to section 4.1.3.5
organizes and directs the activities of the Board of Directors, and “Directors’ shareholdings in the Company’s registered capital” of this
reports thereon to the Shareholders’ Meeting. He ensures the proper Chapter) does not hamper his free judgment. Those Directors not
functioning off the Company’s management bodies and in particular that considered independent are Mr. Frederic Rose, Chief Executive Officer
the Directors are capable of performing their duties. and Messrs. Alexander Slusky and David Fishman, who are both
partners off Vector Capital, the main shareholder off the Company since
The Chief Executive Officer is vested with the broadest possible powers
July 16, 2012 (please refer to section 4.1.3.4. “Arrangements or
to act in any circumstances on behalf of the Company, subject to
agreements made with major shareholders, customers, suppliers or
limitations imposed by the corporate purpose and those matters
others pursuant to which the Board Members and Executive Committee
expressly reserved by law to the General Shareholders’ Meeting and the
members were selected” of this Chapter).
Board of Directors. However, as an internal order measure, his powers
are limited by the Internal Rules off the Board off Directors, which are
described in paragraph 4.2.1.2 below. Expertise of Board members
Messrs. Frederic Rose, Lloyd Carney, Didier Lombard and Alexander
Slusky have acquired, through their professional experience in high
4.1.2 COMPOSITION AND technology companies, wide experience in technology and research.
EXPERTISE OF THE BOARD Messrs. Rémy Sautter and Bruce Hack share a high degree of
OF DIRECTORS professional experience in the Media & Entertainment sector.
Ms. Catherine Guillouard has significant financial experience in
As off the date of this Annual Report, the Board of Directors comprises
international groups and Messrs. David Fishman and Hugues Lepic
nine directors, including one woman. Four Directors are non-French
have considerable experience in business financing. Finally, Mr.
Directors and one has dual French/US citizenship. Mr. Didier Lombard
Desmouceaux has been a Group employee since 1988 and has a deep
is Lead Independent Director. In this capacity, Mr. Lombard chairs the
knowledge off both the Company and the Media, Technology and
Board in the event off the absence of the Chairman, as well as any
Entertainment industry. The biographies setting forth the professional
meeting of the Board deciding matters relating to the Chairman
experience off the members of the Board are presented in
(remuneration, evaluation of his performance, or renewal of his term of
paragraph 4.1.3.1 below.
office) and directs the prevention of conflicts of interest. Mr. Loïc
Desmouceaux, Director until December 19, 2012, was appointed as an The duration off the Directors’ term off office is defined by the
Observer (censeur);r he participates in Board meetings in an advisory Company’s bylaws and is set at three years. Directors may be re-elected
capacity and represents employee shareholders. and can be dismissed at any time by the Ordinary Shareholders’
Meeting. Article 16 off the Company’s bylaws provides that the term of
Independence of Directors office of the Chairman will automatically terminate when he reaches
70 years of age.
At its meeting on December 19, 2012, the Board of Directors reviewed
the independence of its members according to the definition and The Members of the Board of Directors have no family relationship with
criteria set forth in the Corporate Governance Code off Listed one another.

CORPORATE GOVERNANCE AND INTERNAL CONTROL - 4
Board of Directors
Composition of the Board of Directors as of the date of the present Annual Report
Present Remuneration,
position Start Expiration Nomination and Amplify
Main within the Other of term of term Audit Governance Technology 2015
Name Age business address Company positions of office of office Committee Committee Committee Committee
Director President of the
EDIRADIO/RTL Chairman of Supervisory
Rémy 22 rue Bayard 75008 the Board of Board of January AGM*
(1)
Sautter 68 Paris Directors Ediradio/RTL 2006 2014 Member
Director
Technicolor Chief
Frederic 1-5 rue Jeanne d’Arc, Executive October AGM*
(2)
Rose 50 92130 Issy-les-Moulineaux Officer - 2008 2015 Member
Brocade
Lloyd San Jose, CA CEO of AGM*
Carney(1) 51 USA Director Brocade June 2010 2013 Chairman
Vector Capital Corporation Managing
1209 Orange Street, Director,
David Wilmington, Vector Capital AGM*
(3)
Fishman 42 DE 19801, USA Director Corporation June 2012 2015 Member Member
Rexel
Catherine 189-193, bd Malesherbes, CFO, February AGM*
Guillouard(1)(5) 48 75017 Paris Director Rexel(5) 2010 2014 Member
151 Central Park West
10C, New York, NY Director of February AGM*
Bruce Hack(1) 64 10023 Director companies 2010 2013 Chairman Member Member
Aleph Capital Partners LLP
14 St George Street, 3rd CEO,
Hugues Floor, Aleph Capital December AGM*
Lepic(1)(4) 47 London W1S 1FE Director Partners LLP. 2012 2014
c/o Technicolor
Didier 1-5 rue Jeanne d’Arc, Director of AGM*
Lombard(1) 71 92130 Issy-les-Moulineaux Director companies May 2004 2013 Member Chairman
Vector Capital Corporation Founder and
1209 Orange Street, CEO of Vector
Alexander Wilmington, Capital June AGM*
Slusky(3) 45 DE 19801, USA Director Corporation 2012 2015 Chairman Member
Market
Business
Technicolor 1-5 rue Jeanne Intelligence,
Loïc d’Arc, 92130 Employee December June
Desmouceaux(4) 50 Issy-les-Moulineaux Observer Shareholding 2012 2014(4) Member
* Annual General Shareholders’ Meeting.
(1) Independent Director.
(2) The directorship of Mr. Frederic Rose was renewed by the Combined Shareholders' Meeting of June 20, 2012 for a term of three years.
(3) For information about the conditions of Messrs. Fishman’s and Slusky’s appointments, see section 4.1.3.4 “Arrangements or agreements made with major shareholders, customers,
suppliers or others pursuant to which the Board Members and Executive Committee members were selected” of this Chapter.
(4) Since the governance agreement entered into with Vector Capital (see section 4.1.3.4 below) provided for the appointment of a new independent Director to replace a
non-independent director, Mr. Hugues Lepic was appointed Director in replacement of Mr. Loïc Desmouceaux by the Board of Directors on December 19, 2012. Mr. Loïc
Desmouceaux was appointed Observer (censeur) for a renewable term of 18 months.
(5) Mrs. Guillouard was appointed as Group Senior Vice President, Chief Financial Officer and Group General Counsel of Rexel, effective at the latest May 6, 2013.-

Board of Directors
4.1.3 OTHER INFORMATION ABOUT From 2007 to 2008, he was President of Alcatel-Lucent’s Europe,
Asia and Africa region. He was also President of the Asia Pacific Region
MEMBERS OF THE BOARD and held the position of President of Alcatel Shanghai Bell,
OF DIRECTORS Alcatel-Lucent’s flagship joint venture in China. Mr. Frederic Rose is a
graduate off the Georgetown University School off Foreign Service and
4.1.3.1 Biographies of Directors, the Georgetown University Law Center.
functions and directorships held
during the past five years Current Directorships:
This section contains the biographies and information about the OUTSIDE FRANCE:
Directors and their directorships as of February 21, 2013. Director and Vice-Chairman of Technicolor SFG Technology
Co. Ltd.**,
Rémy Sautter Director of MediaNaviCo LLC.**,
Mr. Rémy Sautter has been Chairman off the Supervisory Board of Chairman of Technicolor USA, Inc**.
Ediradio/RTL since 2000. From 1996 to 2000, he was Chief ** Companies belonging to Technicolor Group
Executive Officer of CLT Multi Media and then of CLT-UFA Group
(Luxembourg). From 1985 to 1996, he served as Vice-Chairman and
Directorships held during the past five years:
Chief Executive Officer of Ediradio/RTL. From 1983 to 1985, he was
Director of Logica Plc,
Chief Financial Officer of Havas. Mr. Sautter graduated from the
Director of the Weinstein Company Holding LLC.,
Institut d’Études Politiques of Paris and the École Nationale
Chairman of the Board of Directors of Technicolor SA from April 27,
d’Administration.
2009 to February 17, 2010,
Director of Alcatel-Lucent Teletas Telekomunikasyon A.S., Alcatel
Current Directorships: Integracion y Servicios SA, Alcatel-Lucent China Investment Co. Ltd.,
IN FRANCE:
Alcatel Japan Ltd., Alcatel-Lucent Singapore Pte Ltd., Alcatel
Chairman of the Supervisory Board of Ediradio/RTL* Korea Ltd., Alcatel-Lucent Japan Ltd., Alcatel-Lucent Australia
Chairman and Chief Executive Officer of Société Immobilière Bayard Limited, Taiwan International Standard Electronics Limited,
d’Antin*, Alcatel-Lucent New Zealand Limited, Alcatel Shanghai Bell Software
Member of the Supervisory Board of Métropole Télévision – Groupe Co. Ltd., Alcatel Shanghai Bell Co. Ltd.,
M6, Vice-Chairman and Member of the Supervisory Board of
Director of PagesJaunes Groupe, SERC/FUN Radio*, Alcatel-Lucent Austria AG.,
SODERA/RTL2*, IP and IP Régions*. Vice-Chairman of the Board of Directors of Zhejiang Bell Technology
Co. Ltd., Alcatel (Chengdu) Communication System Co. Ltd., Alcatel
OUTSIDE FRANCE:
Shanghai Bell Software Co. Ltd.,
Director of PARTNER Reinsurance Ltd. and TVI SA Belgique*. Vice-Chairman and Chief Executive Officer of Alcatel-Lucent Shanghai
Bell Co. Ltd.,
* Companies belonging to RTL Group
Chairman of the Board of Directors of Alcatel-Lucent Philippines Inc.,
Directorships held during the past five years: Alcatel-Lucent China Investment Co. Ltd.
Chairman of the Board of Directors of FIVE and of SICAV
Multimedia & Technologies,
Director of Taylor Nelson Sofres Ltd.,
Lloyd Carney
Mr. Lloyd Carney has been Chief Executive Officer of Brocade since
Member of the Supervisory Board of Navimo.
January 2013. From 2007 to 2012, he was a Director and Chief
Executive Officer of Xsigo Systems, which he sold in July 2012. Prior to
Frederic Rose that, he managed the Netcool division at IBM. This division provides IT
Mr. Frederic Rose is a Director and has been Chief Executive Officer and telecom infrastructure management tools to a variety of customers in
since September 1, 2008. He also served as Chairman of the Board of enterprise computing, transportation, and wireless networking. When IBM
Directors from April 27, 2009 to February 17, 2010. acquired Micromuse, Mr. Carney was appointed Chairman and CEO of
this company. Mr. Carney was COO at Juniper Networks, where he
Prior to joining Technicolor, Mr. Frederic Rose held various positions oversaw the sales, marketing, engineering, manufacturing, and customer
within Alcatel-Lucent, and was a member of that company’s Executive service organizations. He also supervised three Nortel Networks divisions
Committee. (Core IP Division, Wireless Internet Division, and Enterprise Data
Division). Mr. Lloyd Carney is Chairman of the Lloyd and Carole Carney
Foundation.

Board of Directors
Current Directorships: Current Directorships:

OUTSIDE FRANCE: Director, Aéroports de Paris.
CEO of Brocade,
Directorships held during the past five years:
Director off Cypress Semiconductor. Member of the Supervisory Board of Atria Capital Partners.
Directorships held during the past five years: Bruce Hack

Director off Xsigo Systems, Micromuse and BigBand Networks. Mr. Bruce Hack is a Director of several companies and is the Chairman
off the Audit Committee of Demerx, Inc. Mr. Hack was Vice-Chairman
David Fishman off the Board off Directors and Chief Corporate Officer of Activision
Mr. David Fishman has been a Managing Director off Vector Capital Blizzard until 2009. From 2004 to 2008, Mr. Hack was Chairman
Corporation since 2008. He managed the investments in SafeNet, and Chief Executive Officer of Vivendi Games. Mr. Hack also served as
Aladdin Knowledge Systems, Teletrac, Inc. et RAE Systems. Before Executive Vice President, Development and Strategy, Vivendi
joining Vector Capital Corporation, Mr. Fishman worked for ten years Universal, from 2001 to 2003. From 1998 to 2001, he was
at Goldman Sachs & Co., where he held the position of Managing Vice-Chairman of the Board of Directors of Universal Music Group,
Director in Mergers & Acquisitions, concentrating on transactions in and from 1995 to 1998, he was Chief Financial Officer of Universal
technologies and media. During his work at Goldman, he managed or Studios. He joined the Seagram Company Ltd. in 1982 after serving as
participated in transactions involving Microsoft, eBay, Adobe, IBM, a trade negotiator at the U.S. Treasury in Washington, D.C. Among his
Oracle and PeopleSoft. Prior to joining Goldman Sachs, Mr. Fishman roles at Seagram were Chief Financial Officer off Tropicana Products,
worked at J.P. Morgan, where he was responsible for debt fundraising Inc. and Director, Strategic Planning, at The Seagram Company Ltd.
on behalf off corporate clients. Mr. Fishman holds an MBA (with honors) Mr. Hack earned a BA at Cornell University and an MBA in finance at
from the J.L. Kellogg School off Management at Northwestern the University of Chicago.
University and a B.A. in Economics (with honors) from Duke University.
Current Directorships:
OUTSIDE FRANCE:
Current Directorships:
OUTSIDE FRANCE: Director off MiMedx Group, Inc. and Demerx, Inc.
Director off SafeNet Inc., Teletrac, Inc. (formerly Trafficmaster) and
RAE Systems. Directorships held during the past five years:
Chairman and Chief Executive Officer of Vivendi Games,
Director and Vice Chairman of Activision Blizzard,
Catherine Guillouard Director of Jagex Limited and Jagex Management Inc.,
Ms. Catherine Guillouard was appointed as Chief Financial Officer and Director off iSuppli Corporation.
Group General Counsel of Rexel, effective at the latest May 6, 2013.
Until that date, she was Chief Financial Officer and Member of the
Executive Committee of Eutelsat, which she joined on Hugues Lepic
September 2007. Prior to joining Eutelsat, Ms. Guillouard held various Mr. Hugues Lepic is the founder and CEO off Aleph Capital Partners
positions within Air France. From 2005 to September 2007, she was LLP, an investment firm based in London. From 2009 to August
Senior Vice President off Finance at Air France. Prior to that, at Air 2012, he was head of the Merchant Banking Division of The Goldman
France, she was Senior Vice President of Human Resources, Senior Vice Sachs Group, Inc. in Europe, the Middle East and Africa (EMEA)
President of Flight Operations, and Deputy Vice President of where he spent most off his career. Mr Lepic was also a member of
Corporate Control. She began her career in 1993 at the Treasury off the Goldman Sachs’ European Management Committee between 2008
Ministry of Finance in the CFA Zone off the Africa Department and and 2012. From 2006 to 2012, he was head off the Principal
then in the Banking Affairs Department. Ms. Guillouard graduated from Investment Area of The Merchant Banking Division of Goldman Sachs
the Institut d’Etudes Politiques of Paris and the École Nationale in Europe. Prior to that, he was responsible for investing in the Telecom,
d’Administration. She also holds a post-graduate degree (DESS) in Media and Technology (TMT) sectors in Europe. He was promoted to
European Union Law. Managing Director in 1998 and to Partner of Goldman Sachs in 2000.
Mr. Lepic joined Goldman Sachs in New York in 1990. He holds an
MSc from École Polytechnique in France and an M.B.A. from the
Wharton School of the University of Pennsylvania.

Board of Directors
Current Directorships: Directorships held during the past five years:

IN FRANCE:
Chairman and Chief Executive Officer of France Telecom,
Chief Executive Officer of Aleph Capital Partners LLP, Chairman of the Board of Directors of Orange.
Director off Groupe Eurotunnel SA.
Alexander Slusky
Directorships held during the past five years: Mr. Alexander Slusky is the founder and CEO of Vector Capital
Participating Managing Director of The Goldman Sachs Group, Inc., Corporation. His areas of expertise include infrastructure and
Director off Eutelsat Communications SA, Cablecom GmbH, applications software, internet services, corporate spinouts, and
Cablecom Luxembourg GP Sarl, Prysmian SpA, Iliad SA, Mediannuaire technology buyouts. Prior to Vector, Mr. Slusky led the technology
Holding, PagesJaunes Groupe, Edam Acquisition Holding I equity practice at Ziff Brothers Investments, managing a portfolio of
Cooperatief U.A. and non-voting Director of Neuf Cegetel SA, public and private technology investments. Before joining Ziff Brothers,
he was at New Enterprise Associates, focusing on venture investments
Chairman of the Supervisory Board of Autodis SA and of in software, communications, and digital media. Prior to NEA, he was a
Autodistribution SA. consultant at McKinsey & Company and a product manager at
Microsoft Corporation. Mr. Slusky earned a B.A. in Economics, summa
Didier Lombard cum laude from Harvard University, and an MBA with high distinction
Mr. Didier Lombard is Chairman off the Supervisory Board of (Baker Scholar) from the Harvard Business School.
STMicroelectronics since spring 2011. He was also Chief Executive
Officer of France Telecom from March 2005 to March 2010 and Current Directorships:
OUTSIDE FRANCE:
Chairman of the Board from March 2005 to February 2011.
From 2003 to 2005, he was Executive Vice President of France Chief Executive Officer of Vector Capital Corporation;
Telecom in charge of the technologies, partnership and new services Director off Corel Corporation, WatchGuard Technologies, SafeNet
mission. From 1999 to the beginning of 2003, Mr. Lombard served as Inc., RAE Systems and Cambium Networks.
Ambassador in charge of foreign investment and Chief Executive
Officer of the French Agency for International Investment. From 1991 Directorships held during the past five years:
to 1998, he was Chief Executive Officer of Industrial Strategy in the Director off Register.com.
Ministry of Economy, Finance and Industry. From 1988 to 1990, he
served as Technical and Scientific manager in the Ministry of Research
and Technology.
Loïc Desmouceaux (Observer)
Mr. Loïc Desmouceaux has been Vice President Market Business
Mr. Lombard graduated from École Polytechnique and École Nationale Intelligence for Technicolor since November 2006. In the Group
Supérieure des Télécommunications. since 1988, he has held various management positions in Marketing,
Strategy and Technology. In 2006 he was Prospective Marketing
Current Directorships: manager and Strategic Development. From 2001 to 2005, he was
IN FRANCE: Research and Innovation Marketing manager. From 1996 to 2001, he
served as Marketing manager, User Interface and Consumer
Member of the Supervisory Board of Radiall,
Experience. From 1993 to 1996, he was Product manager Europe,
Director off Thales.
Video Division. From 1988 to 1993, he held the position of Market
OUTSIDE FRANCE: Research manager and Product manager in the Television Division
Europe. Mr. Desmouceaux graduated from the Institut d’Études
Chairman of the Supervisory Board of STMicroelectronics.
Politiques of Bordeaux and from the École Supérieure de Commerce et
d’Administration des Entreprises off Bordeaux.

Board of Directors
Current Directorships: To the Company’s knowledge, there is no potential conflict off interest
IN FRANCE: between the Directors and Company managers’ duties towards
Technicolor and their private interests and/or other duties.
Chairman of the Supervisory Board of FCPE Technicolor Gestion
and Technicolor Epargne (Technicolor Employee Mutual Funds), In accordance with the Company’s bylaws, a Member off the Board of
Permanent representative of Sovemarco Europe SA on the Board of Directors must hold a minimum of 200 shares during his term of office
Directors of Sellenium SA, (see also the investment commitment made by the Directors under the
Permanent representative of YB Holding SAS on the Board of Internal Board Rules at section 4.1.3.5: “Directors’ shareholdings in the
Directors of Yvan Béal SA, Company’s registered capital” of this Chapter). Other than the above
Director off Desamais Distribution SA. obligations, Members off the Board off Directors are not subject to any
contractual restriction regarding the shares they hold in the Company’s
Directorships held during the past five years: share capital. The Company’s “Corporate Policy on the Purchase and
Director off Technicolor from May 6, 2003 to December 19, 2012, Sale of Company Shares, Insider Trading and Protection of
Material Non-public Information” set out the rules applicable to
Permanent representative of Sellenium SA at the Supervisory
transactions in Technicolor securities and defines “black-out periods”
Committee of YB Holding SAS,
during which transactions are prohibited. This policy also provides that
Director off Yvan Béal SA. corporate officers holding stock options and/or free shares (i) are not
authorized to carry out risk hedging transactions in accordance with the
4.1.3.2 Statement on the absence of AFEP-MEDEF Corporate Governance Code and (ii) are subject to
convictions for fraud, bankruptcy blackouts on the exercise off options.
and incrimination during the past
five years 4.1.3.4 Arrangements or agreements
To the Company’s knowledge, no Member of the Board of Directors made with major shareholders,
has been: (i) convicted of fraud, (ii) associated with a bankruptcy, customers, suppliers or others
receivership or liquidation, (iii) sanctioned by any statutory or regulatory pursuant to which the Board
authorities (including professional organizations), or (iv) disqualified by Members and Executive
a court decision from (a) acting as a Member of the administrative, Committee members were
management or supervisory bodies of a public company or (b) acting in
selected
the management or conduct of the affairs off a public company during
The Combined Shareholders' Meeting off June 20, 2012 adopted the
the past five years.
amended resolutions submitted by two US-based investment funds,
Vector Capital IV, L.P. and Vector Entrepreneur Fund III, L.P.,
4.1.3.3 Regulated agreements – absence hereinafter referred to, together with Vector Capital Corporation, the
of conflicts of interest management company of the funds, as “Vector Capital” (see section
French law governs agreements known as “regulated agreements”. 4.2.1.3: “Board of Directors’ activities in 2012” of this Chapter), and
These agreements are entered into directly or through an intermediary thus approved the appointment of Messrs. Alexander Slusky and David
between a Company and its Chief Executive Officer, one of its Deputy Fishman as new members of the Board of Directors. These
Chief Executive Officers, if any, or one of its Directors or certain appointments came into effect on July 16, 2012, the date on which the
shareholders (shareholders holding more than 10% of the voting rights reserved capital increase approved by that same Meeting was
or, in the case of a company shareholder, the parent company completed (see Chapter 5: “Technicolor and its shareholders”, section
controlling it) that do not affect current transactions and are not 5.1.5: “Modifications in the distribution of share capital over the past
concluded under normal conditions. three years”).
These agreements must be approved by the Board of Directors before On July 10, 2012, the Company and Vector Capital entered into a
their execution, reviewed by the Statutory Auditors, who issue a special governance agreement (“Governance Agreement”) the provisions of
report on the transaction, and submitted to the Shareholders’ Meeting which superseded the commitments on governance and transfers of
for approval pursuant to Articles L. 225-38 et seq. off the French Company securities contained in the improved offer submitted by Vector
Commercial Code. See Chapter 8: “Financial statements”, section 8.8: Capital on June 13, 2012. Under the terms of that agreement, Vector
“Statutory Auditors’ Report on Regulated Agreements and Capital was granted minority representation on the Board of Directors
Commitments” of this Annual Report. (see section 4.1.2: “Composition and expertise of the Board of Directors”
of this Chapter).

Board of Directors
These rights were granted in return for certain commitments by Vector (vi) an undertaking (with certain exceptions), for a period of
Capital, in particular: 30 months from the settlement date off the Reserved Capital
(i) an undertaking not to participate in a tender offer by a third party Increase, not to vote, at the Shareholders’ Meeting, in an
that has not been recommended by the Board of Directors; unreasonable manner (x) against resolutions which have been
approved by the Board of Directors or (y) in favor of resolutions
(ii) an undertaking not to transfer its shares in the Company (with
proposed by other shareholders which have not been approved
certain exceptions) for a period of one year from the
by the Board of Directors; and
settlement-delivery date of the Reserved Capital Increase;
(vii) an undertaking to make all transfers of securities in an orderly
(iii) an undertaking not to acquire, directly or indirectly, alone or in
manner, to avoid, to the extent practicable, any adverse effects
concert, 30% or more of the capital of the Company (with
on such securities in the market.
certain exceptions) for a period of 18 months (which may be
increased to 30 months pursuant to certain conditions specified This agreement was amended on December 20, 2012 to allow the
appointment of Mr. David Fishman as a member of the Audit
in the Governance Agreement) from the settlement date of the
Committee (see section 4.2.1.4: “Composition and activities of the
Reserved Capital Increase; Board Committees” of this Chapter).
(iv) an undertaking (with certain exceptions), for a period of As of the date hereof, there are no other arrangements or agreements
30 months from the settlement date off the Reserved Capital with the major shareholders, customers, suppliers or other parties, by virtue
Increase, not to submit draft resolutions to the Shareholders’ of which a Member of the Board of Directors or a member of the
Executive Committee has been selected.
Meeting proposing to: (x) dismiss any Director of the Company,
(y) appoint directors off the Company (other than those Vector is
4.1.3.5 Directors’ shareholdings in the
entitled to appoint pursuant to the Governance Agreement) or
Company’s registered capital
(z) change the number off directors on the Board off Directors;
Article 11.2 of the Company’s bylaws provides that Directors are each
(v) an undertaking (with certain exceptions), for a period of required to hold at least 200 shares of Technicolor stock during their
term of office. Moreover, according to the Internal Board Rules as
30 months from the settlement date off the Reserved Capital
modified by the Board of Directors of March 27, 2013, each Director
Increase, to discuss in good faith with the Company all draft has committed to invest the equivalent of one year's attendance fees
resolutions to be submitted to the Shareholders’ Meeting; (gross amount) for each three-year term with a maximum of two terms.
To the Company’s knowledge, the Directors’ shareholdings in the Company’s registered capital as of February 21, 2013 are as follows:
Directors present as of the date hereof Technicolor shares/Shares held through FCPE(1)
Sautter 20,000(2)
Frederic Rose 103,420(2)
Lloyd Carney 30,000
David Fishman 200
Catherine Guillouard 800
Bruce Hack 5,000
Hugues Lepic 5,071,545
Didier Lombard 641
Alexander Slusky 200
(1) Employee Mutual Funds
(2) Those amounts include acquisitions carried out in February 2013
Observer Technicolor shares/Shares held through FCPE

Loïc Desmouceaux 5,000
Details regarding stock options granted to Executive Directors are set forth in paragraph 4.4.6 “Stock options awarded to Executive Directors –
Free Shares”.

Board of Directors
The table below shows the transactions in Technicolor’s securities carried out during 2012 by the members of the Board of Directors as well as
by other persons listed in Article L. 621-18-2 of the French Monetary and Financial Code:
Description of Number of
Date of Type of the financial securities/ Transaction
First name and last name transaction transaction instrument instruments Unit price amount
David Fishman 11/14/2012 Purchase Shares 200 €1.736 €347.20
Alexander Slusky 11/14/2012 Purchase Shares 200 €1.736 €347.20
Rémy Sautter 08/14/2012 Subscription Shares 10,170 €1.56 €15,865.20
Frederic Rose 08/14/2012 Subscription Shares 5,820 €1.56 €9,079.20
Loïc Desmouceaux 08/14/2012 Subscription Shares 830 €1.56 €1,294.80*
Preferential
Rémy Sautter 07/27/2012 Purchase subscription rights 44,000 €0.041 €1,804.00
Preferential
Rémy Sautter 07/30/2012 Purchase subscription rights 10 €0.037 €0.37
* This transaction has not been declared with the AMF because it was below €5,000.
Description of Number of
Date of Type of the financial securities/ Transaction
Name of entity* transaction transaction instrument instruments Unit price amount
VECTOR CAPITAL IV, L.P. 08/14/2012 Subscription Shares 303,140 €1.56 €472,898.40
VECTOR ENTREPRENEUR FUND III, L.P. 08/14/2012 Subscription Shares 3,685 €1.56 €5,748.60
VECTOR TCH (Lux) I SARL (formerly PETALITE
INVESTMENTS S.à R.L.) 08/14/2012 Subscription Shares 20,332,988 €1.56 €31,719,461.28
VECTOR TCH (Lux) I SARL (formerly PETALITE Preferential
INVESTMENTS S.à R.L.) 08/02/2012 Purchase subscription rights 499,990 €0.0406 €20,299.59
VECTOR TCH (Lux) I SARL (formerly PETALITE Preferential
INVESTMENTS S.à R.L.) 08/01/2012 Purchase subscription rights 8,021,522 €0.0321 € 257,490.86
Preferential
VECTOR TCH (Lux) I SARL (formerly PETALITE subscription
INVESTMENTS S.à R.L.) 07/31/2012 Purchase rights 5, 105,405 €0.0381 € 194,515.93
Preferential
INVESTMENTS S.à R.L.) 07/30/2012 Purchase rights 5 ,472,682 €0.0329 € 180,051.24
Preferential
INVESTMENTS S.à R.L.) 07/27/2012 Purchase rights 3, 422,235 €0.0386 € 132,098.27
Preferential
INVESTMENTS S.à R.L.) 07/26/2012 Purchase rights 500,000 €0.032773 €16,386.50
VECTOR TCH (Lux) I SARL (formerly PETALITE
INVESTMENTS S.à R.L.) 11/19/2012 Purchase Shares 1,656,825 €1.8800 €3,114,831
* Corporate entity related to A. Slusky and D. Fishman
4.1.3.6 Service and other contracts 4.1.3.7 Loans and guarantees granted
between Board Members to Board Members
and the Group None.
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
contracts.
Mr. Loïc Desmouceaux, Observer, is bound to the Company by an

employment contract.

Chairman's report on corporate governance, internal control and risk management
4.2 CHAIRMAN’S REPORT ON CORPORATE

GOVERNANCE, INTERNAL CONTROL AND RISK
MANAGEMENT
This report was prepared by Mr. Rémy Sautter, Chairman of the Board 4.2.1.2 Structure of Board of Directors’
off Directors, pursuant to Article L. 225-37 of the French Commercial
work – Internal Board rules
Code. For the establishment of the Corporate governance sections of
The preparation and organization of the Board of Directors’ work are
this report, the Chairman tasked the Legal Department; for the
described in the Board off Directors’ Internal Board Rules. These rules
establishment of the Internal control sections, the Chairman tasked the
were amended on June 20, 2012 and July 24, 2012 in order to
different departments of Corporate Finance (Controlling, Treasury,
comply with the undertakings made by the Company under the
Accounting, Internal audit, Internal Control) as well as the Legal and IT
Governance Agreement (see section 4.1.3.4: “Arrangements or
Departments. It was reviewed by the Audit Committee and the
agreements made with major shareholders, customers, suppliers or
Remuneration, Nomination and Governance Committee. It was
others pursuant to which the Board Members and Executive Committee
approved by the Board of Directors during its meeting of February 21,
members were selected” of this Chapter) and on March 27, 2013 to
2013.
make provision for a higher minimum investment commitment by
Information relating to the composition of the Board of Directors directors than that referred to in the bylaws. The main provisions of the
appears in section 4.1.2: “Composition and expertise of the Board Internal Rules are summarized below.
of Directors”.
Board of Directors’ powers and missions
The Board of Directors determines the Group’s strategic direction and
4.2.1 PREPARATION AND ensures its implementation. It examines all questions relating to the
ORGANIZATION OF proper functioning of the Company, subject to the powers explicitly
THE BOARD attributed to the Shareholders’ Meetings.
OF DIRECTORS’ WORK
Limitations imposed by the Board of Directors
4.2.1.1 Compliance with AFEP-MEDEF on the powers of the Chief Executive Officer
Corporate Governance Code Chief
Pursuant to the Law of July 3, 2008, the Company now adheres to the Executive Officer is vested with the broadest possible powers to act in
AFEP-MEDEF Corporate Governance Code of April 2010 in the any circumstances on behalf of the Company. He exercises these
preparation of the report contemplated by Article L. 225-37 of the powers subject to the limitations imposed by the Company’s corporate
French Commercial Code. purpose and those matters expressly reserved by law to the
Shareholders’ Meeting and the Board of Directors. Moreover, the Chief
In accordance with Article L. 225-37 off the French Commercial Code, Executive Officer must obtain Board approval for the decisions listed
the Company declares that it has not followed the recommendation of below and falling within its areas of responsibility.
the AFEP-MEDEF Corporate Governance Code to exclude from the
Remuneration Committee any executive Director (dirigeant mandataire In accordance with the Sauvegarde Plan and the Governance
social).
l On June 20, 2012, the Board off Directors decided that Mr. Agreement, the Internal Board Rules were amended in order to require
Rémy Sautter would continue to serve on the Remuneration, that the following strategic decisions of the Company be approved by a
Nomination and Governance Committee after June 20, 2012, stating qualified majority of two-thirds of the Directors:
that Mr. Rémy Sautter’s expertise in matters of governance is a real
advantage for the Committee. It was moreover decided that Mr. Rémy (i) approval of the annual budget;
Sautter (an independent director) would not serve on the Committee (ii) the acquisition or, if necessary, the funding or transfer of any
for any questions regarding the Chairman of the Board of Directors,
whether concerning his term of office, evaluation or compensation. It is entity, activity or asset whatsoever by any Member of the
further noted that the functions of Chairman off the Board off Directors Technicolor group, including the Company or its subsidiaries as
and Chief Executive Officer are separate. defined in Article L. 233-1 of the French Commercial Code

(hereinafter “Group”), for an amount of more than €25 million, (xii) the removal of the Chief Executive Officer of the Company;
either per operation or per series of related operations;
(xiii) the appointment and removal of the Chief Financial Officer of
(iii) the acquisition by the Company of its own ordinary shares (with the Company;
the exception off the acquisition of shares conducted in the
(xiv) any proposal modifying the number off directors serving on the
context of plans giving executive or salaried employees rights to
Board of Directors;
shares, or stock-option plans, or in the context of a liquidity
contract concluded by the Company); (xv) any decision concerning the liquidation or dissolution of the
Company (or off one of its main subsidiaries), or any decision to
(iv) any decision relating to the payment of dividends or other
proceed with a restructuring;
distributions;
(xvi) any decision to implement protective mechanisms for NRS
(v) any anticipated merger aimed at the absorption off the Company
holders in the event of any operation on capital as set out in
(or one off its main subsidiaries) by another corporation;
Articles L. 228-98 et seq. off the French Commercial Code or in
(vi) any decision modifying the Company’s Articles off Incorporation, compliance with the specific terms applicable to the NRS by
and specifically, any modification designed to change the virtue off the note agreement;
number off Directors of the Company currently provided for in
(xvii) the appointment off a Statutory Auditor who is not part of a
the by-laws;
network of international repute;
(vii) the issuance or the authorization of the issuance of any new
(xviii) any decision, by any Member of the Group, to settle litigation
shares (ordinary or preferred) or any equity-linked securities in
underway where such settlement would result in a payment of
the Company or one off its main subsidiaries, by way of
more than €10 million to the relevant counterparty;
redemption, conversion, exchange, or any other means;
(xix) the commencement of any litigation where the amount at issue is
(viii) the modification of the terms of the main finance contracts or the
more than €10 million;
conclusion of new finance contracts increasing the Technicolor
group’s level of indebtedness; (xx) any decision to modify the business plan having the effect of
reducing the EBITDA of the Company by more than
(ix) the granting of any security or guarantee to any of the creditors
€50 million on an annual basis; and
for a financial debt of the Technicolor group of more than
€20 million, or any modification of any such security or (xxi) any significant changes to accounting principles applicable to
guarantee; Technicolor SA or to any subsidiary of the Technicolor Group,

other than changes made in application of applicable law or
(x) the takeover by any company of the Group off a third-party
required by the Statutory Auditors off the Company or the
entity for more than €25 million, or any contributions, mergers
relevant company.
or de-mergers having an impact of more than €25 million on the
Company’s business value; Moreover, pursuant to Article L. 225-35 of the French Commercial
Code, security interests and guarantees granted by the Company on
(xi) the appointment off the Chairman of the Board of Directors and behalf of third parties must be authorized by the Board off Directors. An
the Chief Executive Officer of the Company; annual report is made to the Board of Directors on the use off such
authorization.

Board Committees Independent Director, the Chairman, off any personal situation that is
The Board of Directors is assisted in the exercise of its duties by four likely to create a conflict of interest with the Company or any off the
Committees: the Audit Committee, the Remuneration, Nomination and Group’s companies. If necessary, the Lead Independent Director asks
Governance Committee, the Technology Committee, and the Amplify for an assessment from the Remuneration, Nomination and Governance
2015 Committee, which was created in 2012. Committee.
Each Committee formulates proposals, recommendations and 4.2.1.3 Board of Directors’ activities
assessments in its area of expertise, which is defined by the charter of in 2012
each Committee. For this purpose, it may carry out any study that may In 2012, the Board met thirteen times, with a 100% participation rate
help the Board of Directors’ deliberations. for all Directors.
The Chairman off each Committee draws up the agenda for the In 2012, the Board of Directors reviewed the Company’s quarterly,
meetings, which agenda is then communicated to the Chairman of the half-yearly and annual financial information and the process for
Board of Directors. The proposals, recommendations and assessments preparing this information: 2012 annual budget, parent company and
produced by the Committees are compiled in a report to the Board of consolidated financial statements for 2011 and the first half of 2012,
Directors. and quarterly revenues for the first and third quarters of 2012. It
reviewed major accounting issues, such as impairment of goodwill. Each
Board meetings Board meeting which approved the quarterly, half yearly or annual
Each year, the Board off Directors draws up the schedule of its meetings accounts was preceded by one or more meetings of the Audit
for the coming year, based on a proposal from the Chairman. Committee, which systematically provided a report to the Board on the
questions reviewed during these meetings. Moreover, the Board of
This schedule sets the dates for the Board of Directors’ regular Directors reviewed the press releases issued after each meeting, as well
meetings (in conjunction with the release of quarterly financial as the Registration Document, after examination by the Audit
information, the previous year’s annual results, the half year results, the Committee and the Remuneration, Nomination and Governance
Ordinary Shareholders’ Meeting, etc.). In addition to the meetings Committee for the sections falling under their respective fields of
included in the schedule, the Board off Directors holds meetings competence.
whenever required by the Company’s circumstances. If necessary, the
Directors meet in working sessions. In addition, the Directors may meet The Board reviewed and approved the Company’s three-year strategic
in “executive sessions”, in which the Chief Executive Officer does not plan (Amplify 2015) and the corresponding action plans.
participate.
With a view toward stabilizing the Company’s shareholder base, the
Board studied various offers submitted by long-term investors. Two
Directors’ right to information offers in particular caught the attention off the Board off Directors:
The Chairman is required to communicate to each Director all Jesper Cooperatief U.A. (hereinafter “Jesper”), an investment vehicle
documents and information necessary to carry out his or her work. indirectly held by JPMorgan Chase & Co., and Vector Capital.
Article 10.3 of the Internal Rules off the Board off Directors stipulates
that “Outside the meetings of the Board, the directors shall remain On May 2, 2012, the Company entered into two agreements with
informed on a continuous basis by all possible means of the financial Jesper respecting the terms off its equity participation in Technicolor.
position, cash flow, and commitments of the Company as well as any The completion off the transaction was subject to the approval of the
other significant events and transactions relating to the Company”. Combined Shareholders' Meeting of the Company’s shareholders.
The Board of Directors may consult with the Company’s outside In a letter dated May 25, 2012, Vector Capital requested that the
advisors (financial and legal advisors) during its meetings. It may also Company register draft resolutions on the agenda of the 2012
visit Technicolor sites. Shareholders' Meeting to submit to the Company’s shareholders an
alternative transaction to that with Jesper. This transaction provided for
a capital increase for a higher amount and undertakings with respect to
Directors’ duties governance similar to those made by Jesper on May 2, 2012.
Members off the Board off Directors are required to abide by a general
confidentiality obligation concerning the content of deliberations in the Prior to the Shareholders' Meeting held on June 20, 2012, Jesper and
Board and its Committees, and in relation to information that is Vector Capital each submitted an amended offer containing improved
confidential in nature or presented by its Chairman as being financial terms for the proposed transactions. On June 20, 2012,
confidential. during the 2012 Shareholders' Meeting, Jesper submitted amendments
that improved their offer once again and Vector Capital submitted
The Internal Board Regulations stipulate that each Director is required amendments that reflected the terms of their amended offer. The
to inform the Lead Independent Director or, in the absence off a Lead Shareholders' Meeting adopted the amended resolutions submitted by

Vector Capital and rejected the amended resolutions for the The Governance Agreement was amended on December 20, 2012 to
completion of the Jesper transaction. The Board of Directors allow the appointment off Mr. David Fishman to the Audit Committee.
acknowledged the shareholders’ vote and accepted Vector Capital’s
offer. The Board of Directors Meeting of December 19, 2012, which decided
the composition off the Audit Committee, determined that its
Moreover, the Board of Directors approved the transfer off the composition was in compliance with the requirements off Article
Broadcast business activity to Ericsson. L. 823-19 off the French Commercial Code established by Ordinance
No. 2008-1278 of December 8, 2008 and the recommendation of
In terms of governance, the Board of Directors reviewed the the AMF working group issued on July 22, 2010. Two-thirds of the
composition of the Board and its committees, with regard in particular members of the Committee are considered independent by the Board
to the undertakings made with respect to Vector Capital under the off Directors with respect to the AFEP-MEDEF Corporate Governance
Governance Agreement. A decision was also made to create a new Code (please refer to section 4.1.2: “Composition and expertise of the
committee, the Amplify 2015 Committee, the purpose off which is to Board of Directors” above). Furthermore, the Board of Directors
monitor the implementation of the Amplify 2015 plan and, more Meeting of February 17, 2010 stated its belief that Ms. Catherine
generally, review the Company’s overall strategy. Finally, the Board Guillouard meets the qualification of financial expert as defined by the
amended the Internal Board Rules and the Committees’ charters. Ordinance off December 8, 2008. Moreover, Messrs. Bruce Hack and
David Fishman also have special skills in financial matters.
The Board also voted on the compensation off the Chairman and the
Chief Executive Officer and studied the execution of the 2011
long-term incentive plan (LTIP) for Management. Mission
The Audit Committee’s mission and the organization of its activities are
It also carried out a self-evaluation of its performance and that of its defined by applicable law (the Ordinance of December 8, 2008), its
various committees for 2012 conducted by an external consultant. The charter, and by the Internal Board Rules. In 2012, the charter was
consultant conducted individual interviews using a detailed amended to remove references to the rules off governance established
questionnaire that included a series of questions on the following by the NYSE (the Company deregistered its shares in the United States
themes: the structure, missions, functions and functioning of the Board in 2011) and to allow Mr. David Fishman, a non-independent director,
off Directors, organization and functioning of the Committees. The to serve on the Committee.
results of this self-evaluation were examined by the Remuneration,
Nomination and Governance Committee, and then reviewed by the The Committee assists the Board of Directors in fulfilling its
Board of Directors on February 21, 2013. The Board of Directors responsibilities concerning financial information and its publication,
concluded that it shows a good adequacy off competencies with regard internal control procedures and risk management, internal auditing, and
to the company’s activity and the constant improvement off working internal procedures to verify compliance with applicable laws and
conditions of the Board, especially for the quality of the information regulations. In particular, it examines the draft parent company
provided. The Board noted, however, the need to improve the unconsolidated financial statements and consolidated financial
restitution by the committees of their works to the Board. statements prior to their presentation to the Board of Directors, and
verifies that the procedures adopted (i) ensure that the accounts
Finally, it reviewed the independence of each member of the Board of provide a true and fair view of the Company’s financial position; and
Directors and deliberated on the Company policy in respect off equal (ii) are in compliance with applicable accounting standards.
employment and wages.
Similarly, the Audit Committee expresses its opinion and makes
proposals to the Board of Directors concerning the nomination,
4.2.1.4 Composition and activities remuneration, dismissal, mission and activities of the Statutory Auditors.
of the Board Committees In compliance with applicable regulations, the Committee also gives its
authorization, or adopts procedures for authorization of services other
Audit Committee than audits by the Statutory Auditors.
AMF’s report on Audit Committees
Pursuant to the Ordinance of December 8, 2008, the work of the
The Company referred to the AMF’s report on Audit Committees
Audit Committee also relates to the evaluation off the efficiency of
issued on July 22, 2010.
internal controls and the assessment off risks.
Composition The Audit Committee reviews the works conducted by the Ethics
The Audit Committee is comprised of Mr. Bruce Hack (Chairman),
Compliance Committee, which include “whistleblowing” investigations.
Ms. Catherine Guillouard and Mr. David Fishman.
The Ethics Compliance Committee reports to the Audit Committee
(see section 4.2.2.2: “General Control Environment” below).

Organization of the Audit Committee’s activities examined the Statutory Auditors’ audit plan and reviewed the matter of
The Audit Committee meets at least four times a year, and whenever their independence.
necessary before a Board off Directors’ meeting, according to a
Finally, the Audit Committee conducted a self-evaluation of its activity
predetermined annual schedule. In performing its missions, the
in 2012.
Committee may directly discuss matters with the Statutory Auditors in
the absence off the managers or off persons contributing to the
preparation of the financial statements. It may also directly discuss Remuneration, Nomination and Governance
matters with the internal auditors in the absence of management. Committee
The Remuneration, Nomination and Governance Committee is
The Audit Committee may call upon the services of experts within or comprised off Messrs. Alexander Slusky (Chairman), Rémy Sautter and
outside the Group; in particular, legal counsel, accountants or other Bruce Hack.
advisors or independent experts.
The Statutory Auditors participate in each Audit Committee meeting. Mission

The Remuneration, Nomination and Governance Committee submits
The review process for annual and interim financial statements by the proposals pertaining to the Company’s governance, in particular, in
Audit Committee includes an initial meeting for the review of the initial respect of the organization and functioning off the Board off Directors. It
closing issues and a second meeting for the review of the financial also makes proposals to the Board of Directors for the appointment of
statements. As some off the Directors who attend the Audit Committee the Board Members, the Chairman, the Chief Executive Officer and
reside outside of France, for practical reasons, the second meeting may Board Committee Members.
sometimes take place the day before the meeting of the Board of
Directors. In addition, the Remuneration, Nomination and Governance
Committee issues recommendations to the Board off Directors
Audit Committee’s activities regarding the compensation of the Executive Directors and the amount
The Audit Committee met seven times in 2012, with a participation off Directors fees to be submitted to the Shareholders’ Meeting. The
rate of 100%. Committee also makes proposals in respect of the awarding of stock
options and free shares to the Group’s employees, and more generally
During 2012, the Audit Committee examined the following financial concerning employee shareholder and shareholder savings programs,
information: parent company and consolidated financial statements for and issues recommendations on the consistency off the remuneration of
2011 and the first half of 2012, quarterly revenues for the first and third Executive Directors as compared with that off the other managers and
quarters of 2012. The Audit Committee looked into accounting issues employees.
related to the closing of accounts for 2011, the first half of 2012 and
the year 2012. In particular, it conducted an in-depth review of Remuneration, Nomination and Governance
impairment off goodwill and important issues surrounding the closing of Committee’s activities
accounts. The financial statements were examined through The Remuneration, Nomination and Governance Committee met five
presentations by the Company’s Chief Financial Officer and the times in 2012, with an average participation rate off 100%.
Statutory Auditors.
In 2012, the Committee recommended the renewal off the terms of
The Committee carried out the annual review of the Company’s risk Mr. Frederic Rose, the appointment of Messrs. David Fishman and
evaluation and an in-depth review of certain risks (Technicolor Risk Alexander Slusky in accordance with the Governance Agreement and
Management). It reviewed the semi-annual internal audit plans and their off Mr. Hugues Lepic, the new independent director. It reviewed the
results, and internal control and IT procedures. composition of the Board committees accordingly. On this occasion,
the Committee also recommended that the Board of Directors initiate
Moreover, the Audit Committee reviewed the governance procedures measures aimed at identifying potential women candidates. Moreover,
and programs implemented by the Group to monitor and manage legal on February 22, 2012, the Committee examined the Company’s policy
risks. The functioning of the Investment Committee and the Ethics in respect of equal employment and wages.
Compliance Committee was also presented.
Regarding compensation, the Committee studied aspects of the
The Audit Committee also examined the renewal process for the compensation off the Chief Executive Officer and the Chairman off the
Statutory Auditors, whose term expired at the end off the Combined Board (see section 4.4: “Compensation and benefits of Directors” of
Shareholders' Meeting of June 20, 2012 and recommended that the this Chapter).
Board of Directors propose the appointment of Deloitte & Associés. It

It also reviewed the variable compensation system implemented for all Mission
Group employees for 2012 and the fulfillment of the performance The mission of the Committee is to assist the Board in monitoring
criteria applicable to the long-term incentive plan for management implementation of the Amplify 2015 plan. It prepares the Board’s
implemented in 2011 – LTIP (see Chapter 6: “Social information and decisions in relation to the monitoring of the implementation of the
Sustainability”, section 6.1.4: “Stock option plans and free share plans”). Amplify 2015 plan and, generally speaking, reviews the Company’s
overall strategy.
Finally, the Committee reviewed the results of the self-evaluation off the
operation of the Board and its Committees in 2012 conducted by an
Amplify 2015 Committee activity report
external consultant (see above).
The Amplify 2015 Committee met three times during 2012, with a
participation rate of 100%.
Technology Committee
The Committee reviewed the 12 initiatives launched as part of the
Composition Amplify 2015 plan since the beginning of 2012, as well as the
The Technology Committee is comprised of Messrs. Lloyd Carney Jumpstart incubator program to stimulate the development of ideas by
(Chairman), Didier Lombard and Loïc Desmouceaux. Mr. David employees and follow their implementation, in line with the practice at
Fishman is invited to meetings off the Committee as a permanent guest. private equity firms.
Mission It also reviewed several major strategic projects and provided its
The Technology Committee examines issues relating to innovation and conclusions to the Board off Directors.
research. It provides opinions and recommendations to the Board of
Directors on the various technological choices they face, and
participates in defining the strategic direction of the Company. The
Committee carries out its work alongside the Director of Technology, 4.2.1.5 Other information from the
the Chief Scientist, the Director of the Research and Innovation Chairman’s report on conditions
Division, and the Director of Corporate Partnerships. for preparation and organization
of the Board of Directors’ work,
Technology Committee activities
The Technology Committee met twice during 2012, with a
on internal control procedures
participation rate of 100%.
and risk management
In 2012, the Committee reviewed the progress off the Revolution Principles and rules adopted by the Board of
project, which is being conducted by the Connected Home division, Directors to determine compensation and
and which led in particular to the launch of Qeo, a software that bridges benefits of any kind granted to Directors in
ecosystems to interconnect devices and applications of all brands within accordance with Article L. 225-37 of the
the home. It also examined the development and roadmap off the French Commercial Code
M-GO project. It reviewed the existing outlook for the Group regarding
The principles and rules established by the Board of Directors to
the processing of personal data and the major research and innovation
determine compensation and benefits of Mr. Frederic Rose, Chief
projects underway.
Executive Officer, are discussed in paragraph 4.4.2 below. The
The Committee also reviewed the implementation of the Cineglass principles and rules adopted by the Board of Directors to determine
project, a tool that makes it possible to optimize digital flows, along with Director’s fees and other Director’s compensation are discussed in
four Research & Innovation programs. Finally, the incubator program paragraph 4.4.5 below.
Jumpstart was presented to it (see the Amplify 2015 Committee report
Information relating to stock options and free shares granted to
below).
Directors is provided in paragraph 4.4.6 below and in Chapter 6:
“Social information and Sustainability”, section 6.1.4: “Stock option
The Amplify 2015 Committee
plans and free share plans” of this Annual Report.
Composition
The Amplify 2015 Committee, which was created in 2012, is
comprised off Didier Lombard (Chairman), Frederic Rose, Bruce Hack,
Alexander Slusky and David Fishman.

Participation of shareholders in Shareholders’ compliance with applicable laws and regulations;

Meetings reliability of financial information obtained through the
There is no specific arrangement for participation of shareholders in the implementation of internal control procedures.
Company’s Shareholders’ Meetings. For further information about the
conditions of participation for Shareholders’ Meetings, see Chapter 7: The internal control framework aims at preventing and mitigating risks
“Additional information”, section 7.2.5: “Shareholders’ Meetings” of this arising from the Group’s conduct off business and risks off error or fraud,
Annual Report. in particular in areas of accounting and finance. As for every control
system, it cannot provide an absolute guarantee that these risks are
totally eliminated.
4.2.2 INTERNAL CONTROL
PROCEDURES Internal control methodology
The internal control procedures mentioned in the present chapter apply The internal control methodology is based on four pillars:
to the Company and all its subsidiaries and are under the responsibility
off each Technicolor employee. a risk based approach which starts from the Group Risk Management
program (see paragraph below “Risk Management”) and allows
The major components underlying the preparation off this report are (i) internal control to roll-out its methodology on the main Group risks.
the compliance with Loi de Sécurité Financière (LSF or Law regarding Every year, 5 to 6 new sub-processes are rolled out under internal
Financial Security), (ii) the Ordinance No. 2008-1278 of December 8, control program approach and this is still the plan for 2013. During
2008 and (iii) the AMF guidelines on risk management and internal workshops, the internal specialists on the subject matters are
control. identifying and defining the main risks inherent to the process, in the
specific context off the Group. The existing controls are described,
In March 2011, the Company voluntarily delisted from the New York redesigned or new controls are defined for the few situations requiring
Stock Exchange (NYSE). As a consequence, the Company is not improvement. For example, in 2012, the sub-processes off budgeting
subject to the Sarbanes Oxley Act obligations it was subject to and forecasting as well as the ones related to the products life cycle
previously. management were deployed under the internal control program;
Following the delisting, the Group decided to maintain high standards a self assessment on controls implementation by the most significant
off financial reporting discipline, capitalizing on the work undertaken entities, totalling the vast majority of the Group scope according to
previously. The process is now being overhauled to enhance the linkage the relevant indicators (Revenue, contribution to EBITDA and other
between internal control, risks, and Technicolor’s strategic objectives. financial and non-financial indicators function of each nature of risk).
The program, called 8TIC’S, was launched at the beginning off 2011 In 2012, about 240 control owners were designated to perform a
with the objective to maintain and expand the internal control scope self assessment on 3,558 controls over finance and non finance
beyond financial reporting through a risk-based approach. The second processes;
annual campaign off the program has been successfully performed in the
course off 2012, and a new campaign starts as of January 2013. an independent testing managed by internal audit covering about
20% of the self assessed controls. This testing aims at providing
assurance that the Technicolor internal control framework is effective.
4.2.2.1 Objectives of internal control
Independent testers are composed of internal auditors, internal
procedures and implementation control coordinators and members off the central internal control
Objectives of internal control procedures team;
The Group internal control framework is designed to achieve the a questionnaire, made of nine key internal control topics in the
following main objectives: following areas: customer offers management, costs monitoring,
budget and forecast, ethics, delegation of authority, legal monitoring,
application of the instructions and directional guidelines fixed by the
key personal succession plan, growth initiatives and internal control
Group’s management bodies in line with the Group’s overall
monitoring. The questionnaires are completed and signed by Heads
objectives and the inherent risks;
and Financial Controllers off Business Groups, Divisions and
correct functioning of the internal processes, such as the ones transversal functions (about 35 people). This assessment in the form
pertaining to the security of its assets as well as the operational, off a questionnaire covers all the Group's perimeter.
industrial, commercial and financial processes;

The internal control team ensures a continuous monitoring of the Beginning in 2008, the Group deployed ethics training programs.
internal control testing campaign, through key performance indicators Several online training sessions were launched to educate employees on
such as self assessment/independent testing completion rates, various ethical rules and obligations. Some dedicated training sessions
deficiency rates, severities of reported deficiencies. The internal control were also organized on specific sites or for specific functions. These
team communicates permanently with the internal control communities, training sessions involved around 9,100 employees from 2010 through
ensuring training on the approach and the tools to be used. Quarterly 2012.
updates on the program are made to the Audit Committee.
Finally, the Group implemented a Whistleblower Policy in 2006, which
The management community is involved in the deficiency remediation enables employees and other holders of relevant information to report
and takes an active role in the implementation off corrective actions suspected financial, accounting, banking and bribery activities to the
raised during the internal control campaign. A strong coordination exists Ethics Compliance Committee. In 2010, the Group provided to U.S.
between the Internal Audit Department and the internal control team to employees the ability to submit a Whistleblower report through an
ensure effective controls implementation at the various level of the independent third party. The third party’s telephony and web-based
organization and to meet top management expectations. hotline solution enables employees to easily and confidentially submit
Whistleblower reports. In 2012, the Group greatly expanded the reach
At the current pace, the roll-out of the internal control program will be off this third party and now those in many countries can submit a
completed on the main Group risk areas (see Chapter 3: "Risk Factors" Whistleblower report through an independent third party.
off this Annual Report) within the next 2 to 3 years.
The Code of Ethics (in French and in English), the Whistleblower Policy
(in French and in English), and the related policies are available to all
4.2.2.2 General control environment
Group personnel via the Group’s internal website.
The ethical values and principles of conduct for
the Group’s managers Financial Ethics Charter
The values and principles of conduct for the Group’s managers are To reinforce awareness of the ethical dimension off finance activities,
defined in two off the Group’s principal internal documents: the Group’s Technicolor has published an Ethics Charter specific to Finance
Code of Ethics and the Financial Ethics Charter. personnel and activities. It is an extension of the Company’s Code of
Ethics, which applies to all employees.
Code of Ethics The Financial Ethics Charter was first published in December 2005, is
Created in 1999 and updated in 2006 and 2012, the Code of Ethics signed by the Chief Executive Officer and the Chief Financial Officer,
establishes the foundation of the Group’s core values and requires all and is distributed to key persons within the Finance organization.
employees to observe high standards of business and personal ethics in
the conduct of their duties and responsibilities. The Code of Ethics This policy promotes the following rules: acting honestly and with
details the specific rules to guide employees in their day-to-day integrity and avoiding conflicts of interest, providing accurate, complete
activities. Indeed, Technicolor is committed to uncompromising and objective information, compliance with all rules and regulations,
integrity in all of our actions. A reputation for integrity benefits public and private, to which the Group is subject, acting in good faith
Technicolor in countless large and small ways – we are a trusted advisor without misrepresenting material facts or allowing one’s judgment to be
and service provider to our customers, a dependable collaborator for unduly influenced, respecting confidentiality off information, sharing and
our business partners, a valuable member off our communities, and a maintaining appropriate knowledge and skills, promoting ethical
reliable long-term investment for our shareholders. Ethical behavior and behavior in one’s environment, using and controlling responsibly assets
observance of laws are two main ingredients in building our reputation under one’s supervisions and reporting known or suspected violations of
for uncompromising integrity. The Group also created an Ethics the Charter.
Compliance Committee in 2006, which is responsible for all ethical
issues related to Technicolor’s activities and which is governed by the A copy of the Code of Ethics and the Financial Ethics Charter is
Code of Ethics and the Charter for the Ethics Compliance Committee. available on the Company’s website at www.technicolor.com or upon
This includes implementing any new policies if needed, training on request to the Company.
existing policies, and investigating any and all reports of unethical Although the Group is no longer subject to the “SOX” requirements
behavior. It meets at least quarterly and more frequently when required. following its NYSE delisting and SEC deregistration (as described
above), the Financial Ethics Charter is planned to be maintained in the
coming years.

Group Management and decision-making progress of the key programs in each business, key performance
processes indicators, and any specific operational topic which requires
At December 31, 2012, the Group Management is organized around management attention. These programs cover mainly key customer
three principal bodies: issues, new product introduction, operational performance,
transformation programs, cost reduction, and HR-related programs.
the Executive Committee;
In addition, the Group established an Investment Committee in 2010
the Management Committee; to drive prioritization and optimization of resource allocation across the
Company’s organization. The Investment Committee is composed of
the Senior Leadership Team. the CEO, the CFO, Senior Executive Vice Presidents, and the
Company Secretary. The Investment Committee decides on all
Placed under the authority of the Group’s Chief Executive Officer, the
significant investment decisions, including material customer
Executive Committee currently comprises eight members consisting of
opportunities, capital expenditures, restructuring, M&A and joint
Senior Executive Vice Presidents and Executive Vice Presidents in
ventures, asset disposals, pension contributions, large procurement
charge of Technicolor’s major businesses and of the principal corporate
contracts, leases, and financing commitments. The Investment
functions (Finance, Human Resources, etc.). The Executive Committee
Committee ensures compliance with the Board governance rules and
meets every two weeks to analyze and evaluate the financial
debt agreement obligations and is a key part of the Group’s internal
performance (sales, operating income and cash flow) off the Group’s
control procedures. It meets on a weekly basis.
various businesses compared with the budget, strategic developments,
and major events affecting the Group (sales contracts, partnerships,
investments, etc.).
Risk Management
The Group started evaluating its risks on a worldwide basis in 2005,
The Management Committee includes the Executive Committee when the Entreprise Risk Assessment (ERA) program was launched.
Members as well as leaders off Technicolor’s main functions and business The risk management process evolved in 2010 to fit to the strategic
operations. Its responsibilities are to ensure achievement of the Group’s evolution off the Group. It is now under the Executive Committee
objectives and to provide leadership across Technicolor. The responsibility using large support of the Management Committee and is
Management Committee meets monthly. called “Technicolor Risk Management”.
The Senior Leadership Team (SLT), whose Members reflect the The goal of this four-step-process is to identify, assess, manage and
diversity of the corporation in terms of business and organizations, monitor risks that may impact the Group’s ability to achieve its near and
serves as the operational arm of the Management Committee. Senior long-term objectives.
Vice Presidents, appointed by the CEO, are Members of the SLT
Risk identification and assessment permit to build the Technicolor risk
which, along with Executive Committee and Management Committee
universe and prioritize the most important risks to closely manage.
Members, form a group of leaders off around 60 people. As part off the
Those risks are listed under Chapter 3: “Risk Factors”.
SLT are the Technicolor Country Heads nominated in several countries
where the Company operates (typically, the significant countries other Risk management and monitoring consist of identifying who is in charge
than France and the USA). Their first priority is to drive an in-country off producing and following an action plan for mitigating and controlling
“one company” approach for employees, local customers, and support the risk. Risk owners are appointed in respect of the Group’s most
function structures. They are also responsible for Technicolor’s local significant risks. The risk owner is a Member of the Executive
representation efforts, performance management and investments Committee or a direct report. The Group has decided not to name a
decisions. The SLT also aims to provide a strong forum for presenting dedicated risk manager, and rely mainly on the risk owners, closer to the
proposals, generating new ideas and further enabling understanding and business. The risk reviews are embedded in various and regular
communication within the Company. The SLT meets at least twice a management presentations as Quarterly Business Reviews or Budget
year. Reviews.
Together, the three senior management bodies help ensure rapid, The Technicolor Risk Management process is subject to status reports
responsive decision-making as well as smooth, efficient implementation presented to the Executive Committee and the Audit Committee. This
off such decisions. process is supported and facilitated by the Internal Audit Department,
in the framework of the Technicolor Internal Audit Charter.
The Group holds quarterly Business Reviews for each business, during
which the management reviews the performance of the business, the

4.2.2.3 Internal audit Under the authority of the Group’s Chief Financial Officer, the
dedicated teams are responsible for:
The Internal Audit Department has an independent and objective role.
It has responsibility for identifying and proposing improvements in the establishment of the Group’s consolidated financial statements
financial and operational processes. It helps the group design action and Technicolor SA’s statutory accounts;
plans to mitigate risks and reinforce the control environment and
governance principles. The framework of the Internal Audit mission has the preparation off the budget and the analysis off its execution
been defined in an “Internal Audit Charter”, signed in 2010 by the through monthly management and performance reporting; and
Chairmen of the Board of Directors and the Audit committee, the Chief
Executive Officer, the Chief Financial Officer and the Chief Audit the implementation of the Group’s accounting and Controlling
Officer. methods, procedures and standards (and their adaptation in
accordance with changes).
The Internal Audit Department reports its results to the Group’s
management. The Audit Committee reviews and approves the audit The Group’s financial organization follows its operational organization,
plan twice a year and is informed of the main audit results. The Internal based on three segments (Entertainment Services, Connected Home
Audit Department provides support in the risk assessment and and Technology), comprising six Businesses, organized in several
management process. activities. One additional segment (Corporate and Other Continuing)
completes this organization. Each one of these businesses and activities
The Internal Audit Department consists of around 12 auditors who have is under the responsibility of a controller and is assisted by a controlling
past experience in a large range off domains like information systems, supporting team, in charge of budget, reporting follow-up, performance
engineering, finance, law or marketing. The team is located in three key analysis and estimates. Accounting operations within the legal entities
sites for the Group: Issy-les-Moulineaux (France), Indianapolis, Indiana are for the most part managed through two internal shared services
(U.S.) and Burbank, California (U.S.). The Chief Audit Officer is centers. The accounting teams work according to Group accounting
located in Issy-les-Moulineaux and reports to the Chief Financial standards and methods and liaise with the Controlling organization
Officer. through Services Level Agreements.
The Internal Audit Department completes audits covering the following

domains: operational processes, financial audits, transversal or local Budgetary process
financial processes, review of contracts or projects, compliance audits, The budgetary process is mandatory for all of the Group’s segments
and follow-up audits. In direct link with the secretary of the Investment and businesses. The principal stages in the budgetary process are the
Committee, the Internal Audit Department is regularly performing following:
audits on investments. In 2012, as in 2011, 34 audit engagements were
in September and October, preparation by each business of a budget
performed (both assurance and assistance types). Most off the segments
for each quarter of the following year, based on market analysis and
and support functions are covered, through a risk-based approach.
projections, analyses trends, costs base structure, customers &
The Internal Audit Department is responsible for the independent suppliers base analysis and capex needs. It includes also key strategic
evaluation of the internal control, and drives, on a yearly basis, the tests initiatives and their financial impact in the budget (and going forward)
campaign. and a risks and opportunities analysis;
in November and December, review and approval by Senior

4.2.2.4 Internal control procedures Executive management and corporate finance teams of proposed
relating to the preparation action plans and budgets prepared at the business level;
and treatment of accounting approval off the budget by the Board of Directors, at the beginning of
and financial information the following year;
The internal control related to the preparation and treatment of
accounting and financial information relies on the Controlling split off the budget into monthly periods and by legal entities to serve
organization with its processes and controls (budgetary process, as a reference for the Group’s monthly reporting.
monthly reporting and forecasting, quarterly reporting off financial and
In the context of the budgetary procedure, Key Performance Indicators
operational performance review) as well as on the Group’s Accounting
(KPIs) are presented by each business, and analyzed and monitored on
Department (regrouping accounting standards and methods and share
a monthly basis.
services centers teams) and the Internal Audit Department.

Periodic performance review The second step occurs in July and in January/February and involves
The Controlling organization reviews the Group financial performance the finalization of half-year and annual consolidated financial statements
periodically: under International Financial Reporting Standards (“IFRS”).
on a monthly basis: After each monthly closing, the Group’s financial results for the month
and the current quarter are presented to the Executive Committee.
the reporting on actual performance is managed by the Controlling After each quarterly closing, the quarterly financial results (as well as
organization and a detailed review, performed during the closing half-year and annual results) are presented to the Audit Committee.
period off the financial accounts (analysis of variance vs. budget and These results are also presented to the Board of Directors.
last year), is presented to Management;
The Group’s accounting principles are defined in a set off documents
the forecasting of the current and next quarter is performed by entitled “Technicolor Accounting Principles and Methods”, which are
each business and also presented to Management; available on the Company’s intranet site and provided to all the Group’s
Finance Departments. These documents outline the accounting
on a quarterly basis: treatment of such items as tangible and intangible assets, provisions,
reporting of operational performance through a business review intercompany transactions, revenues and hedges.
with Management (review off major KPIs, risks and opportunities, In addition, the Group publishes and distributes procedures that
market trend and competition, customer portfolio analysis, strategic accountants and financial controllers must respect in terms of
programs and key initiatives) and closing of financial statements; purchasing, management of inventories, sales, payments, cash flow, or
the forecasting of the current and next three quarters is performed taxes.
at the beginning of each quarter by each business (including main
income statement indicators such as revenue and adjusted EBITDA Preparation of financial information
as well as Free Cash Flow items) and reviewed at Group level. The Group’s financial information is prepared by the Finance
Department. It is based on information reported through the Annual
Accounting and management reporting Reporting and accounting consolidation processes and on operational
and market information, which is specifically centralized for the
and closing period work at the Group level
preparation of the Company’s Annual Report. The latter is prepared
The Group accounting and financial data are consolidated into one
jointly by the Finance Department and the General Secretary of the
Group reporting system.
Company.
At the end of each month, the Group’s entities report their financial
The quarterly, half-yearly and annual financial information is reviewed
data into this system. The Group reporting system uses a common chart
by the Group’s Audit Committee and the Board.
off accounts, which is regularly updated. The main accounting and
financial figures off the operational and functional departments Prior to being published, the above financial information is also
consolidated at the Group level are analyzed by the Group’s financial reviewed by Members off the management team and senior managers
controlling team and reviewed by the Group’s Executive Committee. within the Corporate Finance and Legal Departments, each for their
respective fields.
The closing process for the half-year and annual consolidated financial
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
4.2.2.5 Other Internal Control
the circulation of instructions prepared by the Group’s Accounting Procedures
Department. Procedures define the controls and actions which must be
undertaken at the entity level (entries in accounting books,
Information Technology Security Procedures
The Chief Information Officer (hereafter the "CIO") leads the
reconciliations, etc.) and the persons authorized to implement them.
Technicolor’s IT organization and is supported by a leadership team
This step leads to a first review by the Statutory Auditors, completed composed off senior IT managers. The managers either directly support
initially at the subsidiary level within a majority of the Group’s legal each of Technicolor’s businesses (Entertainment Services, Connected
entities, then at the Group level. This “hard close” allows for the Home, IP&L) or support shared service IT functions and applications
identification off the most complex issues, which may be reported to the used worldwide by the entire organization (global infrastructure,
Senior Management Team. Corporate Functions).

These individuals are experienced IT professionals with a broad the standardization of Technicolor’s project and portfolio
background and are well versed with the businesses and technologies management processes and methodologies across the organization.
they support. They ensure that the IT tools, services, and applications
used by all Technicolor sites and businesses (e.g. e-mail, networks, In 2012, IT protection levels were enhanced through the following
phone systems, collaboration tools, video conferencing, web actions:
technologies, business intelligence tools, business applications, antivirus,
to increase protection of customer content and raise alerts to
anti-SPAM suites) are operated and managed in an efficient,
potential unauthorized network activity, Intrusion Detection Services
cost-effective, safe and secure manner. Finally the Office of the CIO,
(IDS) were outsourced to Dell Secure Works and deployed
composed off Enterprise Architecture, End to End Business Process and
strategically around the Technicolor perimeter;
Enterprise Project & Portfolio Management, supports the tools,
applications, and control practices used to govern, regulate, and to improve the Security Operations team’s ability to respond to
manage the IT organization (regulatory compliance, internal IT potential security incidents, system and security log management for
standards and best practices, project and project portfolio management critical systems were centralized and outsourced to Dell Secure
processes) ensuring that IT is properly aligned with the corporation's Works;
strategic objectives. This function leverages the IT 3-Year Plan to
ensure that proposed new technology and applications are planned and to improve internet connectivity and browsing services and to further
executed in a rational, holistic manner that encompasses both technical reduce the threat of malware from internet sites, Zscaler’s “Proxy in
and business process impacts and encourages use across the the Cloud ” service was implemented replacing physical appliances at
corporation. more than 40 Technicolor locations worldwide;
The IT Department has developed and applied a governance to ensure that company and personal mobile phones and tablets
framework which defines rules and procedures regarding application incorporate basic security protection, Mobile Iron, a mobile data
development, monitoring and management as well as IT project management service was deployed;
management. This governance framework defines the best practices for
to ensure that anti-malware services are extended to all company
selecting and using IT tools, for accessing data, programs and
supported operating systems, Symantec Endpoint Protection was
applications, and for ensuring the confidentiality, integrity and
deployed to Mac and Linux computers;
availability of these assets. These rules and procedures are audited
annually by the CIO and IT managers and updated as required. to ensure that all devices connecting to the company production
network incorporate the basic security policy for passwords, Centrify
Moreover, the Technicolor IT governance model also covers the
was deployed to require user authentication and policy replication;
following areas:
to ensure that IT projects are aligned with corporate strategic goals
the execution of a broad global infrastructure strategic plan focusing
and to enforce appropriate justification disciplines, IT implemented a
on operational performance;
project portfolio evaluation tool and instituted a global project launch
the creation and execution of a three-year detailed application process;
strategic plan focusing on consolidation and standardization of
to ensure that projects are properly managed and progressing, Bi
systems, tools and business processes;
weekly detailed reviews of key strategic projects were held with IT
the management off the IT projects portfolio; managers.
the divestiture process for all held-for-sale entities and integration for Security of people, assets and Intellectual
acquisitions; Property
The Technicolor Security Office (TSO), created in December 2011,
the measurement of the performance delivered by the IT function;
defines the Security Strategy at Group level. This team located in the
and
key sites of the Group and led by the Chief Security Officer, establishes
priorities, defines best practices, develops common metrics and
promotes the security tools for the Group.

Physical, digital and business security are the prime areas of focus for For Intellectual Property & Licensing, confidentiality is essential to
the TSO. Physical security protects people, assets and transportation, protect Technicolor’s patents. For example, this includes laptop
while digital security covers, for example, network access control, encryption and data loss prevention.
desktop security and data loss prevention. Business security
encompasses security assessments, encryption and forensics analysis. For all employees, security-conscious behavior needs to be key.
Security is a cross-business concern that affects the divisions in different In 2012, the TSO, supported by each Security business representative,
ways. worked on Security audits management, dedicated security training and
Security awareness at Group level: several dedicated communications
For Entertainment Services, studios assign their projects only to have been made to all Technicolor employees (security alerts, security
companies that meet their content security standards. Technicolor’s letters “Security Awareness For Everyone”, security policies...).
facilities and digital networks must succeed customer dedicated, security
audits to win new contracts and to maintain client relationships. A physical Security Plan has been launched at WW level in order to
ensure that any of our facility will comply with best practices.
Security is also important for the Connected Home business. As devices
are increasingly more open and complex, they are exposed to greater Security champions have been appointed at local level to support this
security risks. Security can be a real differentiator in this “commoditized” Plan.
market. Some customers are looking for proven, more secure devices.
Regarding Travel safety, processes and policies have been harmonized
notably for Risky countries where a strict follow up off our business
travellers is needed

Statutory Auditors' report, prepared in accordance with Article L.225-235 of French company law (Code de Commerce)
on the report prepared by the Chairman of the Board of Directors
4.3 STATUTORY AUDITORS’ REPORT, PREPARED IN

ACCORDANCE WITH ARTICLE L.225-235 OF
FRENCH COMPANY LAW (CODE DE
COMMERCE) ON THE REPORT PREPARED BY
THE CHAIRMAN OF THE BOARD OF DIRECTORS
For the year ended December 31, 2012.
This is a free translation into English of the Statutory Auditors’ report issued in French prepared in accordance with Article L.225-235 of French company law on
the report prepared by the Chairman of the Board of Directors on the internal control and risk management procedures relating to the preparation and processing
of accounting and financiall information issued in French and is provided solely for the convenience of English speaking users.
This report should be read in conjunction and construed in accordance with French law and the relevant professional 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 French company law (Code de Commerce), we
hereby report on the report prepared by the Chairman of your company in accordance with Article L.225-37 of French company law (Code de
Commerce) for the year ended December 31, 2012.
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 of French company
law (Code de Commerce), particularly in terms of corporate governance.
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.225-37 of French company law (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.
The professional 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 off the accounting
and financial information on which the information presented in the Chairman's report is based and the existing documentation;
obtaining an understanding of the work involved in the preparation of this information and the 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 French company law (Code de Commerce).
Other disclosures
We hereby attest that the Chairman’s report includes the other disclosures required by Article L.225-37 of French company law (Code de
commerce).
The Statutory Auditors
Neuilly-sur-Seine,March 20, 2013 Courbevoie, March 20, 2013
Deloitte et Associés Mazars
French original signed by French original signed by
Alain Pons Ariane Bucaille Jean-Louis Simon Simon Beillevaire
Partner Partner Partner Partner

Compensation and benefits of Directors
4.4 COMPENSATION AND BENEFITS OF DIRECTORS
4.4.1 COMPENSATION AND contract with the Company or any Group company and is not an officer
off any other Group company.
BENEFITS OF MR. REMY
SAUTTER, CHAIRMAN OF THE The compensation of Mr. Rémy Sautters' in his capacity as Chairman of
BOARD OF DIRECTORS the Board amounts to €130,000 gross per year. Mr. Rémy Sautter
does not receive any directors’ fees in his capacity as a Chairman (see
Mr. Rémy Sautter took up his position off Chairman of the Board of
below the directors’ fees due until June 20, 2012, the date on which he
Directors on June 20, 2012. He does not have any employment
was appointed as Chairman).
Table summarizing the compensation of Mr. Rémy Sautter (table no. 2 of the Annex of the AFEP-MEDEF Corporate
Governance Code)
2011 2012
(in euros) Amounts due Amounts paid Amounts due Amounts paid
N/A N/A 65,000(1) 65,000(1)
Variable N/A N/A N/A N/A
Directors’ fees 59,544(2) 67,000(3) 33,136(4) 59,544(2)
Fringe Benefits N/A N/A N/A N/A
TOTAL 59,544 67,000 98,136 124,544
(1) Amount calculated on a prorata basis from June 20, 2012, when he began his term as Chairman of the Board of Directors.
(2) Directors’ fees for 2011, paid in 2012.
(3) Directors’ fees for 2010, paid in 2011.
(4) Directors’ fees for the period January 1, 2012 to June 20, 2012, date on which M. Sautter was appointed as Chairman of the Board.
4.4.2 COMPENSATION AND consolidated Free Cash Flow target, accounting for 40% of the
targeted bonus; and
BENEFITS OF MR. FREDERIC
ROSE, CHIEF EXECUTIVE a qualitative target, accounting for 20% of the targeted bonus, tied to
OFFICER the completion of certain public specific actions, the achievement of
which is determinated by the Board of Directors.
Mr. Frederic Rose took up his position on September 1, 2008. He does
not have an employment contract with the Company or any Group Eighty percent of each of the Consolidated Adjusted EBITDA and
company. He has also been President of Technicolor USA, Inc. since Consolidated Free Cash Flow targets must be achieved in order to
July 1st, 2012. entitle Mr. Frederic Rose to receive that variable component. In the
event that 80% to 100% of a target were to be achieved, the amount
The compensation of Mr. Frederic Rose for his functions as Chief
of variable compensation for that target would be reduced. The amount
Executive Officer was decided by the Board of Directors on July 23,
of variable compensation may represent 100% of the annual gross fixed
2008 on the basis of proposals by the Remuneration Committee and
compensation in the event the targets are achieved, and is limited to
on February 23, 2012 regarding the performance criteria applicable
150% in the event the targets are exceeded.
to 2012. The Remuneration Committee’s proposal was based on a
comparison of the remuneration of Chief Executive Officers of The Board of Directors meeting held on February 21, 2013, reviewed the
comparable companies. level of achievement of the above objectives for 2012. The Consolidated
Adjusted EBITDA target and the Free Cash Flow target were both 1.5
His compensation includes a fixed portion for an annual gross amount
achieved (on a scale from 0 to 1.5). Approximately 2,300 Group
of €800,000 unchanged since he joined the Group in 2008, and a
employees had similar variable targets in their compensation package and
variable portion, conditional upon achievement in 2012 of the following benefited from the Group's strong performance. Moreover, the Board of
performance targets: Directors considered that the triple qualitative target was 1.2 achieved,
consolidated Adjusted EBITDA target, accounting for 40% of the notably taking into account the Group's strong performance and Mr.
Rose's personal efforts. These efforts notably contribued to the
targeted bonus;
stabilization of the Group's shareholder base, resulting from the capital
increases carried out in 2012, and from the entry of Vector Capital as a

shareholder. As a result the gross variable compensation of Mr. Rose for Indemnity payable in case of removal
2012 amounted to €1,152,000.
of position as Chief Executive Officer
Mr. Frederic Rose does not receive any directors’ fees in his capacity as In the event off removal from his position as Chief Executive Officer,
Director off Technicolor SA. except in the case off gross negligence or gross misconduct, Mr. Rose is
entitled to an indemnity the maximum gross amount of which would be
Management Incentive Plan (MIP-SP1) equal to fifteen months fixed and variable compensation. This amount
On the recommendation off the Remuneration, Nomination and would be calculated according to his total fixed and variable
Governance Committee, the Board off Directors decided on compensation in relation to the fiscal year preceding the date of the
June 17, 2010, to implement a mid-term Management Incentive Plan Board of Director’s decision to remove him from office. Pursuant to
designed to retain key Company contributors while aligning their Article L. 225-42-1 off the French Commercial Code, the payment of
interests with those off the Company and its shareholders. Mr. Rose and this indemnity is subject to performance requirements based on the
about 300 managers are beneficiaries off this Plan. Group consolidated Adjusted EBITDA and Free Cash Flow determined
on a yearly basis by the Board of Directors.
All off the conditions of this plan are described in sub-section 4.4.6:
“Stock options awarded to Executive Directors – Free Shares” below. Half of the indemnity payment is subject to the achievement of a
consolidated EBITDA target and the remaining half is subject to
The Board of Directors, at its meeting on February 21, 2013, noted achievement of a Free Cash Flow target. If at least 80% of either the
that, based on the financial statements for the year ended EBITDA or Free Cash Flow performance target is not achieved, no
December 31, 2012, performance conditions were met and that the indemnity will be due. Should the percentage off achievement of either
cash bonus owed to Mr. Rose amounted to €436,464 and that the target fall between 80% and 100%, the indemnity would be
number off stock options amounted to 190,529. correspondingly reduced. The achievement of all operational
consolidated EBITDA and Free Cash Flow targets is measured, on the
Long-term Management Incentive Plan basis off a constant scope of consolidation, by comparison to the
average EBITDA and Free Cash Flow targets determined for the three
(LTIP) fiscal years prior to the dismissal date.
Mr. Frederic Rose and about 70 managers also benefit from the
long-term profit-sharing plan approved, on the recommendation of the Furthermore, in the event of termination from his duties, a
Remuneration, Nomination and Governance Committee, by the Board non-competition clause will be enforceable for a period of 9 months
off Directors on June 8, 2011. following termination, and applicable in Europe, Asia and the United
States, in exchange for which he will receive monthly compensation
All off the conditions of this plan are described in sub-section 4.4.6: calculated on the basis of his last monthly overall pay.
“Stock options awarded to Executive Directors – Free Shares” below.
Mr. Rose does not benefit from any specific pension scheme. He enjoys
The Board of Director's meeting of Technicolor held on March 27, benefits in kind providing for the use of a vehicle, for an amount of
2013, noted that Mr. Rose is entitled, for 2012, to a cash bonus €4,260 for 2012.
totaling €149,333 gross and to a right for 59,733 free shares. These
shares will be definitely acquired in June, 2015, on condition that he The employer’s charges paid by the Group in respect off Mr. Frederic
remains within the Company until June, 2013. Rose’s compensation amounted to €399,012 in 2012.
Table summarizing the compensation of Mr. Frederic Rose (table no. 2 of the Annex of the AFEP-MEDEF Corporate
Governance Code)
2011 2012
Fixed 800,000 800,000 800,000 800,000
Variable 600,000(1) 869,760(2) 1,152,000(3) 600,000(1)
Cash premium (MIP) N/A N/A 436,464 N/A
Cash premium (LTIP) 52,148 N/A 149,333 52,148
Directors' fees(4) N/A N/A N/A N/A
Fringe Benefits 4,260 4,260 4,260 4,260
TOTAL 1, 456,408 1,674,020 2,542,057 1,456,408
(1) Variable compensation for 2011, paid in 2012.
(2) Variable compensation for 2010, paid in 2011.
(3) Variable compensation for 2012 to be paid in 2013. 3
(4) Mr. Frederic Rose is not entitled to receive Directors’ fees.

Table summarizing the compensation of Mr. Frederic Rose (Annex 2 of the AFG Recommendations on Corporate
Governance)
2010 2011 2012

(Amounts due) (Amounts due) (Amounts due)
Fixed 800,000 800,000 800,000
Variable 869,760 600,000 1,152,000
Directors’ fees N/A N/A N/A
Fringe Benefits 4,260 4,260 4,260
Cash premium (MIP) N/A 52,148 436,464
Cash premium (LTIP) N/A N/A 149,333
Extraordinary compensation 600,000(1) N/A N/A
Total 2,274,020 1, 456,408 2,542,057
Stock options (MIP): number of
options granted N/A N/A 190,529(2)
Price N/A N/A €6.52
Exercise period N/A N/A June 18, 2014-June 16, 2018
Value at the grant date of the stock
options (in euros) N/A N/A 294,622(3)
Free shares (LTIP): number of
Performance Units granted N/A 20,859(4) 59,733(4)
Value at the grant date of the
Performance Units (in euros) N/A 62,417(3) 178,742(3)
(1) Exceptional bonus under 2010 Debt restructuring.
(2) Number of rights to stock options acquired by Mr. Rose after determination, by the Board of Directors of February 21, 2013 of the level of achievement of the performance conditions
(see sub-section 4.4.6: "Stock options awarded to Executive Directors - Free Shares"). The options will be definitely acquired on June 18, 2014, subject to a continuing presence at
that date
(3) According to IFRS 2, this valuation is reestimated at the end of each reporting period depending on the achievements of the performance conditions of the plan.
(4) Number of rights to free shares after determination, by the Board of Directors of March 27, 2013 of the level of achievement of the performance conditions. The shares will be
definitely acquired in June 2015, subject to a continuing presence as of June 8, 2015.
Details regarding stock options and free shares granted to Mr. Frederic Rose are set forth in paragraph 4.4.6: “Stock options awarded to
Executive Directors – Free Shares.”
4.4.3 COMPENSATION AND BENEFITS OF MR. DENIS RANQUE,

CHAIRMAN OF THE BOARD UNTIL JUNE 20, 2012
Mr. Denis Ranque served as Chairman of the Board of Directors from February 17, 2010 to June 20, 2012. Mr. Ranque was not entitled to
Directors’ fees in his capacity as director.
Table summarizing the compensation of Mr. Denis Ranque (table no. 2 of the Annex of the AFEP-MEDEF Corporate
Governance Code)
2011 2012
180,000 180,000 85,000(1) 85,000
Variable N/A N/A N/A N/A
Directors’ fees N/A N/A N/A N/A
Fringe Benefits N/A N/A N/A N/A
TOTAL 180,000 180,000 85,000 85,000
(1) Amount calculated on a prorata basis until June 20, 2012, date on which Mr. Ranque’s directorship expired.

4.4.4 OVERVIEW OF COMPENSATION, BENEFITS, OPTIONS

AND PERFORMANCE SHARES ATTRIBUTED TO THE EXECUTIVE
DIRECTORS
Summary table of the compensation options and shares awarded to each Executive Director (table no. 1 of the Annex of the
AFEP-MEDEF Corporate Governance Code)
Rémy Sautter Frederic Rose Denis Ranque

Amounts due Amounts due Amounts due
(in euros) Fiscal 2011 Fiscal 2012 Fiscal 2011 Fiscal 2012 Fiscal 2011 Fiscal 2012
Compensation owed for the fiscal year (detailed in the
tables provided in paragraphs 4.4.1, 4.4.2 and 4.4.3) 59,544 98,136 1,456,408 2,542,057 180,000 85,000
Valuation of options granted during the fiscal year (detailed
in the table provided in paragraph 4.4.6) N/A N/A N/A 294,622 N/A N/A
Valuation of performance shares granted during the fiscal
year (detailed in the table provided in paragraph 4.4.6) N/A N/A 62,417 178,742 N/A N/A
TOTAL 59,544 98,136 1,518,825 3,015,421, 180,000 85,000
Summary table of benefits granted to the Executive Directors (table no. 10 of the AMF recommendation of December 22,
2008)
Indemnities or benefits due

or possibly due following
taking up, ceasing or Indemnities due to a non-
Employment Contract Additional pensions scheme changing position competition clause
Executive Directors Yes No Yes No Yes No Yes No
Sautter X X X X
Frederic Rose X X X (1) X (1)
Denis Ranque (Chairman of the Board X X X X
until June 20, 2012)
(1) See paragraph 4.4.2 above.
4.4.5 DIRECTORS’ FEES AND OTHER fixed fee of €35,000 for each Director;
COMPENSATION an additional fixed fee of €5,000 for each Director non-resident in
In compliance with Article L. 225-37 of the French Commercial Code, France;
the principles and rules established by the Board of Directors to
a Director’s fee of €3,000 per meeting of the Board of Directors
determine the Directors’ fees awarded to Executive Directors are shown
and €2,000 per Committee meeting (with the exception of
below.
meetings by conference call that last under two hours, for which
The Remuneration, Nomination and Governance Committee Directors fees are not paid).
recommends to the Board of Directors the total amount of Directors
The Directors’ fees paid in 2012 correspond to the Directors’ fees
fees to be submitted for shareholders’ approval at the Annual General
owed for 2011. The amount of the Directors’ fees was distributed based
Shareholders’ Meeting, and their allocation among the Directors. The
on the Directors’ actual attendance, and their total amount could not
maximum annual amount of Directors fees that can be paid to the
exceed the total amount of €450,000 set by the Shareholders’
Directors was set at €450,000 by the Annual General Shareholders’
Meeting.
Meeting held on May 7, 2004 and this amount has not been modified
since this date. The Directors did not receive any other compensation besides
Directors’ fees in respect of fiscal year 2012. Except for
The annual distribution of Directors’ fees owed for 2012 is as follows:
Mr. Frederic Rose, the Directors of the Company do not hold office at
any of the other Group companies.

Directors’ fees and other compensation paid to the non-executive Directors in 2011 and 2012 (table no. 3 of the Annex of
the AFEP-MEDEF Corporate Governance Code)
Name Amounts paid in 2011(3) Amounts paid in 2012(3)

Extraordinary Extraordinary
(in euros) Directors' fees(1) compensation Directors’ fees(2) compensation
Lloyd Carney 56,000 6,000(4) 63,449 -
Loïc Desmouceaux 59,000(5) - 58,568(6) -
Catherine Guillouard 67,000 - 66,377 -
Bruce Hack 80,000 - 77,115 -
Didier Lombard 53,000 - 58,568 -
John Roche 67,000 - 66,377(7) -
Rémy Sautter 67,000 - 59,544 -
TOTAL 449,000 6,000 449,998 -
(1) Directors’ fees for 2010, paid in 2011. The maximum annual amount of Directors' fees being reached, the Board of Directors decided to reduce the amount due to each Director on a
prorata basis.
(2) Directors’ fees for 2011, paid in 2012. The maximum annual amount of Directors' fees being reached, the Board of Directors decided to reduce the amount due to each Director on a
prorata basis.
(3) Some amounts were subject to withholding.
(4) Compensation as observer (censeur) (for the period of February 17, 2010 to June 17, 2010, when Mr. Lloyd Carney was appointed as a Director).
(5) €4,000 was paid directly to the Technicolor Employee Shareholders’ Association at the request of Mr. Loïc Desmouceaux.
(6) €5,000 was paid directly to the Technicolor Employee Shareholders’ Association at the request of Mr. Loïc Desmouceaux.
(7) Amount calculated on a prorata basis until June 20, 2012, the date on which Mr. John Roche’s term as Director expired.
Directors' fees paid in 2013 (Directors' fees for 2012)
Name Amounts paid

Extraordinary
(in euros) Directors' fees(1) compensation
Lloyd Carney 60,545 -
Loïc Desmouceaux 56,455(3) -
David Fishman 30,273(2) -
Catherine Guillouard 63,000 -
Bruce Hack 78,545 -
Didier Lombard 61,364 -
John Roche 34,773 -
Rémy Sautter 33,136(4) -
Alexander Slusky 31,909(2) -
TOTAL 450,000(1) -
(1) The maximum annual amount of Directors fees being reached, the Board of Directors decided to reduce the amount due to each Director on a prorata basis.
(2) Amount calculated on a prorata basis from July 16, 2012.
(3) €5,000 was paid directly to the Technicolor Employee Shareholders’ Association at the request of Mr. Desmouceaux.
(4) Amount calculated on a prorata basis until June 20, 2012, the date on which Mr. Rémy Sautter was appointed Chairman of the Board of Directors (see section 4.4.1 “Compensation
and benefits of Mr. Rémy Sautter, Chairman of the Board of Directors” above).
4.4.6 STOCK OPTIONS AWARDED half stock options. Under this Plan, Performance Units were granted to
Mr. Rose, representing 10 to 15 months of fixed compensation at the
TO EXECUTIVE DIRECTORS – date of award, i.e. a cash bonus ranging from €333,300 to
FREE SHARES €500,000 maximum and stock options ranging from 145,495
to 218,232 (after adjustment due to the capital increases completed
Stock options granted to Mr. Frederic in 2012).
Rose
The Board of Directors, at its meeting on February 21, 2013, noted
On the recommendation of the Remuneration, Nomination and
that, based on the financial statements for the year ended December
Governance Committee, the Board of Directors decided on
31, 2012, perfomance conditions were met, that Mr. Rose acquired a
June 17, 2010 to implement a mid-term Management Incentive Plan
cash bonus amounting to €436,464 and 190,529 rights to stock
designed to retain key Company personnel while aligning their interests
options. Subject to the achievement of the presence condition, the
with those of the Company and its shareholders (MIP-SP1).
stock options will be exercisable after June 18, 2014.
Mr. Frederic Rose is a beneficiary of this Plan which awards
Performance Units comprised of half cash and, in the case of Mr. Rose,

Calculated in accordance with the provisions off Article L. 225-177 of This ratio is defined in the covenants set forth in the Credit Agreement
the French Commercial Code, the subscription price was set at €6.52 and the Note Purchase Agreement dated April 23, 2010. For the
(after adjustment due to the capital increases completed in 2012). purposes of the plan, the Net Debt/EBITDA ratio will be established
based on the same terms and conditions as those set forth in the
The presence and performance conditions are described as follows. contracts. The definition and calculation of this ratio and off its
components (Net Debt and EBITDA) will be the same as outlined in
Presence conditions: the beneficiary must be present without
the contracts. For the sake of confidentiality, the ratios defined by the
interruption during the whole acquisition period of the Plan, either as an
Board of Directors are not made public. Those ratios are stricter than
employee or as an Executive Director (“dirigeant mandataire social”)
the corresponding financial covenant as set forth in the Company’s
within the Company and/or affiliated companies.
Reinstated Debt agreements.
Performance conditions:
In application of Article L. 225-185 paragraph 4 of the French
Technicolor shall not breach the covenants set forth in the contracts Commercial Code, in the event all or some of the stock options granted
signed with its creditors under the Company’s debt restructuring to him were exercised, Mr. Frederic Rose will have to keep (in registered
process (Credit Agreement dated April 23, 2010 and Note form), until the end of his term, the amount of shares acquired through
Purchase Agreement dated April 23, 2010) ; the exercise of options representing 20% off net proceeds, defined as
the difference between the value of the shares on the date of exercise
the amount of Performance Units definitely acquired by the and the strike price free of taxes and social contributions including social
beneficiaries was based on the Net Debt/EBITDA ratio validated by charges or charges off any nature due on the date off exercise as well as
the Board of Directors based on the accounts for the fiscal year those potentially due after that date, and regardless of the country in
ended December 31, 2012. which these charges apply.
Stock options granted to Mr. Frederic Rose (table no. 4 of the Annex of the AFEP-MEDEF Corporate Governance Code)
Value of the options at the Number of rights to stock

Plan number and date Type of options grant date (in euros) options granted Exercise price Exercise period
MIP-SP1 June 17, 2010 Subscription 294,622 190,529(1) €6.52 June 18, 2014 – June 16, 2018
(1) Number of rights to stock options acquired by Mr. Rose afterdetermination by the Board of Directors of February 21, 2013 of the level of achievement of the performance conditions.
The options will be definitely acquired on June 18, 2014, subject to a continuing presence at that date.
Free shares granted to Mr. Frederic Rose

On the recommendation of the Remuneration, Nomination and related to (i) a net debt/EBITDA ratio, and (ii) the stock exchange
Governance Committee, on February 28, 2011, the Board of Directors performance measured annually by benchmarking Technicolor’s share
established the major features of a Long-term Management Incentive price against the share price of a panel of about twenty comparable
Plan, whose purpose is to reward loyalty of key Group contributors by companies in North America, Europe and Asia that are representative
aligning their interests with the Group’s and its shareholders (LTIP of the technology, media and telecom industries.
Plan). On June 8, 2011, the Board of Directors approved its
implementation. Mr. Rose is a beneficiary of this plan. The plan, which is Regarding the first criteria, which counts for two-thirds of the
based on a three-year period, provides for the award of performance evaluation, the objectives for attaining 100% of the eligible
units (hereinafter “Performance Units”) comprised for one-third of a Performance Units are stricter than the corresponding financial
cash bonus and for two-thirds of free (“performance”) shares. Under the covenant as set forth in the Company’s Reinstated Debt agreements.
terms of this plan, Mr. Rose was awarded Performance Units Regarding the second criteria, which counts for one third of the
representing a cash bonus which could reach €533,333 and a evaluation, in order to receive 100% of the eligible Performance Units,
maximum of 213,333 free shares. the achieved benchmark need to rank among the top three selected
comparable securities, and a non-satisfactory ranking results in the
The final number of Performance Units that is acquired is based on award of zero Performance Units. Between these two situations, the
conditions of performance, which are identical for the Chief Executive percentage of Performance Units granted is reduced accordingly.
Officer and the other beneficiaries of the plan. These conditions are

The Performance Units are acquired progressively in three annual In accordance with Article L. 225-185, paragraph 4 of the French
tranches corresponding to 20%, 30% and 50%, respectively, of the Commercial Code, it is provided that in the event of the delivery of all
total number, at which times the achievement off the performance and or part off the shares awarded to him, Mr. Rose shall keep in registered
presence conditions are measured. form, until the end of his functions, a quantity off shares corresponding
to 20% off the gain on acquisition net of taxes and social security
The rights acquired by Mr. Rose for the first two tranches are expenses owed for the acquisition and transfer of the shares. The
mentioned in section 4.4.2: “Compensation and benefits off Mr. Rose, reference price to calculate the number of shares in question shall be
Chief Executive Officer” of this Chapter. the opening share price on the date off acquisition of the shares.
Free shares granted to Mr. Frederic Rose (table no. 6 of the Annex of the AFEP-MEDEF Corporate Governance Code)
Number of shares Value of shares at the grant

Plan number and date granted in 2012 date of the shares(3) (in euros) Dates of acquisition Availability date
June 8, 2011(1) 59,733(2) 178,742 June 8, 2013 for the 2011 and 2012 June 8, 2015(4)
Tranches and early 2014 for the 2013
Tranche
(1) This plan is a three-year plan. The maximum number of free shares that can be acquired by Mr. Rose under this plan, depending on the level of achievement of the performance
conditions, is 213,333.
(2) Number of rights to free shares acquired by Mr. Rose after determination by the Board of Directors held on March 27, 2013 of the level of achievement of the performance conditions.
The shares will be definitely acquired in June 2015, subject to a continuing presence as of June 8, 2013.
(3) According to IFRS 2, this valuation is reestimated at the end of each reporting period depending on the level of achievement of the performance conditions of the plan.
(4) Except for the quantity that Mr. Frederic Rose is required to keep in registered form pursuant to Article L. 225-185, paragraph 4 of the French Commercial Code (see above).
Other information concerning stock option plans or free shares awarded to Executive Directors
Stock option plans
During 2012, 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 Annex of the AFEP-MEDEF Corporate Governance Code) None
Free Shares
No rights to free shares were awarded to the Directors during 2012.
Free shares that became available for each Executive Officer in 2012
(Table no. 7 of the Annex of the AFEP-MEDEF Corporate Governance Code) None
Tables 8 and 9 of the AMF Recommendation of December 22, 2008 section 6.1.4: “Stock option plans and free share plans” of this Annual
are located in Chapter 6: “Social Information and Sustainability”, Report.

Executive Committee
4.5 EXECUTIVE COMMITTEE
4.5.1 MEMBERS OF THE EXECUTIVE COMMITTEE

As of the date hereof, the Executive Committee comprises eight members. The following table shows their responsibilities and year of
appointment.
Name of Executive Committee Member Age Responsibility Appointed

Frederic Rose 50 Chief Executive Officer 2008
Human Resources & Sustainability, Global Sourcing,
David Chambeaud 45 Insurance and Security 2009
Béatrix de Russé 65 Intellectual Property & Licensing 2004
Gary Donnan 54 Technology & Research 2010
Vince Pizzica 49 Corporate Partnerships & Ventures 2008
Connected Home – VoIP/IPTV
Michel Rahier 59 Operations Services & Transformation 2011
Lanny Raimondo 69 Entertainment Services 2001
Chief Financial Officer &
Stéphane Rougeot 44 Group Strategy & Portfolio Management 2008
Biographies of Executive Committee CDCI diploma. She was inducted in the IP Hall of Fame in 2012, a
worldwide recognition of the strategic importance of IP at Technicolor.
Members
Mr. Frederic Rose has assumed the position of Chief Executive Officer Mr. Gary Donnan is Head of Technology & Research since June, 2010.
since September 1, 2008. For more information about his biography, Before joining Technicolor, Mr. Donnan held similar responsibilities at
please refer to paragraph 4.1.3.1 above. Alcatel in Research & Innovation, in addition to serving on the Alcatel
France Executive Committee. Immediately prior to that role, he was the
Mr. David Chambeaud is Head of Human Resources & Sustainability R&D Technical Director (3G) in Alcatel/Fujitsu (Evolium). During the
since July 2009. As an Executive Committee Member, he is also in previous 14 years, Mr. Gary Donnan worked in R&D operations in the
charge of managing the Global Sourcing, Insurance and Security fields of satellite & nuclear control systems, transmission systems,
functions at the Group level. Previously and since 2005, he was switching systems, and radio infrastructure. In addition to being
heading the Sourcing function for the Group as Chief Procurement co-Director of the Technology Business Group, Mr. Gary Donnan
Officer. From 1995 to 2005, Mr. David Chambeaud occupied various currently heads the Company’s Technology, and Research organization
functions within the Sourcing Management team based in France and – charged with promoting advanced technologies and services
Germany, assuming regional or divisional responsibilities for this throughout the Company. He received his degrees in Computer
function. He also worked within the Packaging Division of the Danone Systems from the University of Ulster, Ireland.
Group from 1992 to 1994. David Chambeaud is a graduate of the
EPSCI (École des practiciens du commerce international), l an Mr. Vince Pizzica is Head of Corporate Partnerships and Ventures since
international business school which is part of the ESSEC Group. October, 2011. In addition, he directs the processes for the Technology
Licensing activities of Technicolor, the MediaNavi venture and
Ms. Béatrix de Russé is Head of Intellectual Property and Licensing since previously led Digital Delivery Business Group and the Strategy,
February 2004. Prior to this and since 1999, she was Head of Technology and Research corporate teams. Prior to joining Technicolor
Licensing. From 1993 to 1999 she was successively Head of Licensing, and over a 27-year career in the telecoms industry, Mr. Vince Pizzica
and then Head of Patents and Licensing for Thomson. From 1984 spent 17 years at Telstra at various operation and technology positions,
to 1992, Ms. Béatrix de Russé was in charge of international contracts including as advisor to the COO of Telstra on Mediacomms
and Intellectual Property at Thomson Components and technology. He also spent 7 years at Alcatel Lucent in charge of
STMicroelectronics, where she specialized in Intellectual Property Technology, Strategy and Marketing for the EMEA and APAC region
matters. From 1976 to 1983, she worked as an international attorney at as well as CTO for the APAC region. Mr. Vince Pizzica holds a
the international division of Thales (formerly Thomson CSF). Ms. Bachelor of Engineering from the Institute of Engineers in Australia, and
Béatrix de Russé holds a Master’s degree in law and DESS in a Master of Telecoms & Info Systems from the University of Essex, U.K.
International Trade law as well as a Master’s degree in English and a

Executive Committee
Mr. Michel Rahier is Head off Connected Home and VoIP Divisions Role of the Executive Committee
since October 2011. He is also in charge of Operations Transformation
The Executive Committee meets under the direction of the CEO every
and IT. He joined the Technicolor Executive Committee in April 2011
two weeks, with an agenda determined collectively by its Members. It
following his appointment as Executive Vice-President, Operations
examines questions relating to the activities off the Group. In this regard,
Services & Transformation. Mr. Michel Rahier was most recently
it deals primarily with business activities, specific projects, following up
Executive Vice-President Operations and member of the Management
on transactions and financial results, and the identification and
Committee at Alcatel-Lucent, in charge of the global company
assessment of risks.
transformation. Prior to this, he became President of the Fixed
Communications Group at Alcatel since 2005, then at Alcatel-Lucent, Please refer to section 4.2.2.2: “General control environment – Group
President of the Carrier Business Group in 2007. Mr. Michel Rahier management and decision – making processes” of this Annual Report.
holds a Master and a Ph.D. in electrical engineering from the University
off Louvain as well as an MBA from Boston University.
Mr. Lanny Raimondo is Head off Entertainment Services since

4.5.2 EXECUTIVE COMMITTEE
September 2001. Mr. Lanny Raimondo has worked at Technicolor COMPENSATION
since 1994 and was appointed President and Chief Executive Officer of
Technicolor Inc. in 1998, after having served as President of the Executive Committee compensation
Company’s Home Entertainment business. Prior to that, he spent In 2012, the total compensation paid by the Company and/or
16 years with Pirelli Cable Corporation where he managed large companies of the Group to Members of the Executive Committee
subsidiary companies in Great Britain, Canada and the U.S., holding the (including that paid to the CEO) within Technicolor amounted to
position of President and Chief Executive Officer of North American €7.1 million (excluding charges and including a variable component of
Group from 1985 to 1994. Mr. Raimondo is a graduate of Purdue €2.2 million with respect to 2011 on the basis of the Group financial
University with a degree in electrical engineering. results).
Mr. Stéphane Rougeot is Chief Financial Officer and also Head of In 2011, the total compensation paid by the Company and/or other
Group Strategy and Portfolio Management. Prior to joining Technicolor companies of the Group to the Members of the Executive Committee,
in November 2008, he spent five years with France Telecom Orange, including the CEO, was €7.0 million (excluding charges and including
first as Head of Strategy for Equant, then as Head off Indirect Sales for a variable component of €2.4 million with respect to 2010 on the basis
Orange Business Services and finally as Group Controller. Previously, off the Group financial results).
he had been in charge of Investor Relations and head of Corporate
The total amount provided for pensions and retirement and other
Communications for Thomson. Mr. Rougeot began his career with
similar benefits granted to the Members of the Executive Committee
Total in Africa and Paris, serving in a range of financial control, project
amounted to € 4 million in 2012.
finance and M&A functions. He is a graduate of the IEP business school
in Paris and holds a DEA in International Economics and Finance from
Paris Dauphine University. Loans and guarantees granted
or established for the Members
of the Executive Committee
None.

5 TECHNICOLOR
AND ITS SHAREHOLDERS
5.1.7 Potential modifications to the Company’s share

5.1 SHARE CAPITAL ..................................................................................................................................................................................... 94
capital ......................................................................................................................................................................................................... 97
5.1.1 Distribution of share capital and voting rights ..................................... 94
5.1.8 Delegations granted to the Board of Directors
5.1.2 Purchases of equity securities by the issuer by the Shareholders’ Meetings ............................................................................................. 98
and affiliated purchasers – Board of Directors’
5.1.9 Dividend policy ............................................................................................................................................................ 99
report on treasury shares ........................................................................................................................... 95
5.1.10 Other information relating to share capital .............................................. 99
5.1.3 Individuals or entities holding control
of the Company ............................................................................................................................................................ 96 5.2 LISTING INFORMATION ...................................................................................................................................... 100
5.1.4 Shareholders’ agreements ........................................................................................................................ 96 5.2.1 Market for the Company’s securities .................................................................... 100
5.1.5 Modifications in the distribution of share capital 5.2.2 Listing on NYSE Euronext Paris ....................................................................................... 100
over the past three years ............................................................................................................................ 96
5.1.6 Changes to share capital ............................................................................................................................ 97

5 - TECHNICOLOR AND ITS SHAREHOLDERS
Share capital
5.1 SHARE CAPITAL
Share capital as of December 31, 2012

On December 31, 2012, in accordance with the Sauvegarde Plan, the At December 31, 2012, at the end of the redemption period, Company
Company redeemed 10,191,567 NRS II and 6,189,002 NRS IIC share capital comprised 335,543,841 fully paid-up shares with a
through the issuance of 2,669,936 Company shares. nominal value of €1 each, (ISIN Code FR0010918292), all of which
were of the same category.
5.1.1 DISTRIBUTION OF SHARE CAPITAL AND VOTING RIGHTS

The table below shows the Company’s shareholding structure over the past three years:
As of December 31, 2012 As of December 31, 2011(1) As of December 31, 2010

Number of % of shares % of voting Number of % of shares % of voting Number of % of shares % of voting
Shareholders shares held held rights shares held held rights shares held held rights
Public(2)(3) 265,476,835 79.12% 79.26% 223,153,396 99.73% 100% 174,228,920 99.65% 100%
Vector TCH (Lux) 1,

S.à r.l. (formerly
Petalite Investments
S.à r.l.)(4) 69,461,319 20.70% 20.74% - - - - - -
(5)
Technicolor 605,687 0.18% - 605 687 0.27% - 617,705 0.35% -
TOTAL 335,543,841 100% 100% 2223,759,083
23,759,083 100% 100% 174,846,625 100% 100%
(1) At December 31, 2011, 1,469,580 old shares not exchanged for new (post-reverse split) shares were still in circulation. One (1) voting right was attached to each old share and ten
(10) voting rights were attached to each new share (see Chapter 7: “Additional Information”, section 7.2.3: “Rights, privileges and restrictions linked to shares”).
(2) Estimate obtained by subtraction.
(3) These amounts include investments held by the major institutional funds.
(4) Vector TCH (Lux) 1, S.à r.l. is an investment vehicle wholly owned by the fund Vector TCH Cayman Ltd., which in turn is wholly owned by the funds Vector Capital IV International,
L.P., Vector Capital III International, L.P. and Vector Entrepreneur Fund III, L.P. See section 5.1.5: “Modifications in the distribution of share capital over the past three years” of
chapter 5 of this Annual Report.
(5) Shares in pure nominative form.
Share ownership threshold notified to the Company in 2012

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 Autorité des marchés financiers (AMF) by the following entities for the account of their respective
customers or for their own account in 2012:
Share ownership
Threshold crossing threshold upwards or Percentage of share Number of shares
Shareholders date downwards Threshold crossed capital held held
Vector TCH (Lux) 1
(formerly Petalite Investments)(1) August 14, 2012 upwards 20.00% 20.87% 69,461,319
RBS Group July 16, 2012 downwards 5.00% 4.183% 11,346,421
Vector TCH (Lux) 1

(formerly Petalite Investments)(1) July 16, 2012 upwards 15.00% 18.00% 48,821,506
RBS Group June 19, 2012 upwards 5.00% 5.070% 11,346,421
West Face April 19, 2012 upwards 5.00% 5.093% 11,386,038
Third Point April 13, 2012 downwards 5.00% 2.42% 5,425,000
Third Point January 24, 2012 upwards 5.00% 7.66% 17,149,658

(1) Controlled at the highest level by Vector Capital Ltd, the general partner of Vector Capital IV International, L.P and Vector Capital III International, L.P, which hold a total of 100% of
the fund Vector TCH Holding (Cayman) Ltd, which holds 100% of Vector TCH (Lux) 1, S.à r.l.

TECHNICOLOR AND ITS SHAREHOLDERS - 5
Share capital
Situation as of December 31, 2012 made with major shareholders, customers, suppliers or others pursuant
to which the Board Members and Executive Committee Members were
In accordance with Article L. 233-13 of the French Commercial Code
selected”).
and to the knowledge of Technicolor, it is further noted that (i) as at
October 12, 2012, Apollo Management Holdings L.P. indirectly held, To the Company’s knowledge, except Vector Capital, corporate entity
on behalf off the companies it controls, 7.76 % off the share capital and related to A.Slusky and D.Fishman, Directors of the Company, and Mr.
voting rights (including shares with no voting rights attached in Hugues Lepic, no other member of the administrative and management
accordance with Article 223-11 of the General Regulation off the AMF) bodies hold more than 1% of the share capital or voting rights of the
off the Company, and (ii) as at November 19, 2012, Vector Capital Company (for more information about the Board off Directors’
directly or indirectly held 20.87% off the share capital and voting rights shareholding, please refer to Chapter 4: “Corporate Governance and
(including shares with no voting rights attached in accordance with Internal Control procedures”, section 4.1.3.5: “Directors’ Shareholdings
Article 223-11 of the General Regulation of the AMF) off the in the Company’s Registered Capital” of this Annual Report).
Company.
The main shareholders off the Company do not hold voting rights that
are different from those off other shareholders.
Situation as of April 5, 2013
As off March 8, 2013, Apollo Management Holdings L.P. directly or
indirectly held, on its own behalf or on behalf off its clients, 5.27% off the 5.1.2 PURCHASES OF EQUITY
share capital and voting rights (including shares with no voting rights
attached in accordance with Article 223-11 of the General Regulation
SECURITIES BY THE ISSUER
off the AMF) of the Company.
AND AFFILIATED
PURCHASERS – BOARD OF
As off April 5, 2013, Caisse des dépôts et consignations (CDC) DIRECTORS’ REPORT ON
indirectly held, through the Fonds Stratégique d’Investissement, 7.02%
off the share capital and voting rights (including shares with no voting
TREASURY SHARES
rights attached in accordance with Article 223-11 of the General The following paragraphs include information required in accordance
Regulation off the AMF) of the Company. with Article L. 225-211 of the French Commercial Code.
To the knowledge of the Company, excluding Apollo Management

Holdings L.P., Caisse des dépôts et consignations and Vector Capital,
Share repurchase program
there is no other shareholder that holds more than 5% of share capital The Combined Shareholders’ Meeting of June 8, 2011, authorized an
or voting rights as at April 5, 2013. implementation of a share repurchase program subject to the provisions
off Article L. 225-209 et seq. off the French Commercial
Code and of European Commission Regulation 2273/2003 of
Other information regarding the December 22, 2003.
Company’s shareholders
This delegation of authority, which was granted for a period of
In 2012, the investment fund Vector Capital acquired an interest in the
18 months, expired on December 8, 2012. It has not been
capital of the Company through two capital increases and now holds
implemented by the Board of Directors.
20.70% of the share capital (after redemption of NRS). On July 10,
2012, Vector Capital and the Company entered into a Governance At December 31, 2012, the Company held 605,687 treasury shares
Agreement under which Vector Capital took on a certain number of representing 0.18% of share capital, for a gross book value of
commitments (see Chapter 4: “Corporate Governance and Internal €98,100,191.14 and a nominal value off €605,687.
Control procedures”, section 4.1.3.4: “Arrangements or agreements
Shares purchased by Technicolor and allocation of treasury shares as

of December 31, 2012
Percentage of treasury shares held directly or indirectly 0.18%
Number of treasury shares held directly or indirectly(1) 605,687
Number of shares cancelled over the last 24 months(1) 0
Gross book value of shares owned (in euros) 98,100,191.14
Market value of portfolio(2) (in euros) 1,150,805.30
(1) Last 24 months preceding December 31, 2012.
(2) Based on a quoted market price of €1.90 per share on December 31, 2012.

Share capital
The 605,687 shares held by the Company as off December 31, 2012 In 2012
were allocated by the Board of Directors on October 20, 2010 for There was a change in capital distribution in 2012 because a new main
employee option programs or other allocations off shares to employees shareholder, Vector Capital, acquired a stake in the Company’s capital.
and directors and officers of the Group. The number of treasury shares
delivered to employees of the Group in 2012 is provided in Chapter 6: The transaction presented by the two US funds Vector Capital IV, L.P.
“Social Information and Sustainability”, section 6.1.4: “Stock option and Vector Entrepreneur Fund III, L.P. hereinafter referred to, together
plans and free share plans” of this Annual Report. with the fund management company Vector Capital Corporation, as
“Vector Capital”, and Vector TCH (Lux) 1, S.à r.l. (formerly Petalite
5.1.3 INDIVIDUALS OR ENTITIES Investments S.à r.l.), which was approved by the Combined
HOLDING CONTROL Shareholders’ Meeting of June 20, 2012, was comprised of two capital
increases:
OF THE COMPANY
None. an initial capital increase in the amount off €94,943,012, including
share premium, without shareholders’ preferential subscription rights,
through the issuance of 47,471,506 new shares at a price of €2.00
5.1.4 SHAREHOLDERS’ per share, fully reserved for Vector TCH (Lux) 1, S.à r.l. (formerly
AGREEMENTS Petalite Investments S.à r.l) (the “Reserved Capital Increase”); and
To the Company’s knowledge, there are no shareholders’ agreements a second capital increase in the amount of €96,163,573, including
among any off its shareholders. share premium, with maintenance of shareholders’ preferential
subscription rights, through the issuance of 61,643,316 new shares at
a price of €1.56 per share, in a ratio of five new shares for 22 existing
5.1.5 MODIFICATIONS IN THE shares (the “Rights Issue”, and, together with the Reserved Capital
DISTRIBUTION OF SHARE Increase, the “Capital Increases ”).
CAPITAL OVER THE PAST
The Capital Increases took place on July 16, 2012 and August 14, 2012,
THREE YEARS respectively. As a result, the portion of share capital held by Vector
Capital is now 20.70% (after redemption of NRS).
In 2010 and 2011
In 2010, the implementation of the Company’s Sauvegarde Plan Holdings of institutional shareholders in the Company’s share capital
resulted in the conversion of part of the financial debt of the Company and the crossing off thresholds declared to the Company are noted
into securities issued by the Company (for more information about above under section 5.1.1: “Distribution of share capital and voting
these share capital transactions, see Chapter 2: “Operating and rights” of this Chapter.
Financial Review and Prospects”, section 2.10.3: “Financial Resources”).
When all of these transactions were completed, the portion of share
capital held by individual shareholders decreased to 28% as of
January 21, 2011.

Share capital
5.1.6 CHANGES TO SHARE CAPITAL

Total Value of the
Number of Increase/decrease of amount of Additional additional paid-in Cumulative Nominal
shares issued the share capital the share paid-in capital capital balance number of value
Transaction date or cancelled s capital (in euros) variation (in euros)
(in euros) (in euros) shares (in euros)
As of December 31, 2008 1,012,087,605 1,643,402,595 269,890,028 3.75
As of 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 shares526,608,781 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 capital increase 79,649,881 (9,035,399) 285,865,518 79,649,881 –
December 31, 2010
Capital increase after conversion of NRS I 45,196,744 45,196,744 124,846,625 300,075,371 585,940,889 124,846,625 1
December 31, 2010
Capital increase after conversion of DPN 50,000,000 50,000,000 174,846,625 162,750,000 748,690,889 174,846,625 1
As of December 31, 2010 174,846,625 748,690,889** 174,846,625 1
December 31, 2011
Capital increase after conversion of
remaining NRS I and of NRS II and IIC 48,912,458 48,912,458 223,759,083 323,376,246 1,072,067,135 48,912,458 1
As of December 31, 2011 223,759,083 1,072,067,135** 223,759,083 1
July 16, 2012
Increase in reserved
capital*** 47,471,506 47,471,506 271,230,589 47,471,506 271,230,589 1
August 14, 2012
Capital increase with preferential
subscription rights*** 61,643,316 61,643,316 332,873,905 34,520,258 332,873,905 1
Fees related to capital increases (10,103,209)
December 27, 2012
Increase in capital
After conversion of all
remaining NRS II and IIC 2,669,936 2,669,936 335,543,841 17,156,285 1,161,111,975 2,669,936 1
As of December 31, 2012 335,543,841 1,161,111,975 335,543,841 1
* On July 15, 2010, following the decision of the Board of Directors’ 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 because Notes Redeemable in Shares (NRS) are considered as an equity component and not as a debt.
*** For further details about these capital increases, see section 5.1.5: “Modifications in the distribution of share capital over the past three years” in this Chapter.
5.1.7 POTENTIAL MODIFICATIONS TO THE COMPANY’S SHARE

CAPITAL
Stock options
December 31, 2012, a total of 1,485,337 stock options was allocated If all of the options in the stock option plans mentioned above were
to certain employees, directors and officers pursuant to the stock option exercised, 1,485,337 shares would be issued. Technicolor capital would
plans (for details about these plans, see Chapter 6: “Social Information be composed of 337,029,178 ordinary shares, an increase of 0.44% in
and Sustainability”, section 6.1.4: “Stock option plans and free share plans” the number of shares as compared to the number existing as of
of this Annual Report). December 31, 2012.

Share capital
Convertible/Exchangeable bonds/Share I, II and IIC. A request for deferred redemption of part off these was
made on December 31, 2012.
purchase warrants
In accordance with the securities note approved on April 27, 2010, by On December 31, 2012, the Company redeemed all of the remaining
the Autorité des Marchés Financiers (no. 10-107), on May 26, 2010, 10,191,567 NRS II and 6,189,002 NRS IIC through the issuance of
the Company issued 638,438,133 Notes Redeemable in Shares of the 2,669,936 new Company shares. When this transaction was
Company (NRS) in three tranches, allocated to its senior creditors and completed, the total number of Company shares was increased
2,902,074 Disposal Proceeds Notes (DPN) redeemable in cash or in to 335,543,841.
ordinary shares, from the net disposal proceeds of the sale of certain
non-strategic activities of Technicolor. Consequently, as of this date, there are no longer any securities granting
access to Company capital, other than the stockk options mentioned
The DPNs were fully redeemed on December 31, 2010. In below.
December 2010 and 2011, the Company redeemed a fraction of NRS
5.1.8 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 to the Board of Directors by the Shareholders’ Meeting and the use made of these delegations during the 2012 fiscal year:
I – Financial delegations to allow equity-linked instruments excluding employees or executive officers
Duration of the
delegation and Maximum amount of the
date of issuance of equity-linked Maximum nominal amount of Amount Amount
Type of the financial delegation expiration debt securities (in euros) capital increases used available
Issuance of shares and/or equity-linked securities giving
access, immediately or in the future, to the Company’s
share capital in consideration for contributions in kind
granted to the Company 26 months 100% of the
(12th resolution of the CSM of June 8, 2011) August 8, 2013 N/A €50 million None scope
Global limitations of the issuances under above €87,423,312 representing 26% of

delegations the share capital at December 31,
(13th resolution of the CSM of June 8, 2011) 500 million 2012 N/A N/A
The delegations of power granted to the Board of Directors by the 8th, During the 2012 fiscal year, the Board of Directors used the
9th, 10th, and 11th resolutions of the Combined Shareholders’ Meeting delegations granted by the Combined Shareholders’ Meeting
(“CSM”) of June 8, 2011 were revoked by the Combined Shareholders’ of June 20, 2012 pursuant to Resolutions C bis and D bis related to
Meeting of June 20, 2012. the transaction with Vector Capital (see section 5.1.5: “Modifications in
the distribution of share capital over the past three years” in Chapter 5
of this Annual Report).

Share capital
II – Delegations to allow equity-linked instruments for employees or executive officers
Duration of
the delegation Number of shares that may Number Number
and date of beissued and percentage of shares of shares
Type of the financial delegation expiration of the share capital issued available
Grant of free shares to Company employees or certain categories 38 months
of employees (Long-term incentive plan for key Group employees) August 8, 2,500,000 shares representing 0.74% of 100% of the
(14th resolution of the CSM of June 8, 2011) 2014 share capital at December 31, 2012 None scope
Grant of share subscription or purchase options to employees and 38 months

executive officers August 8, 1,500,000 shares representing 0.45% of 100% of the
(17th resolution of the CS of June 8, 2011) 2014 share capital at December 31, 2012 None scope
Increase of the share capital through issuances reserved to members of 18 months

a Group savings plan December 20, 3,043,123 shares representing 0.91% of 100% of the
(15th resolution of the CSM of June 20, 2012) 2013 share capital at December 31, 2012* None scope
Capital increase reserved to certain categories of beneficiaries 18 months

(Shareholding transactions for employees outside a savings plan) December 20, 3,043,123 shares representing 0.91% of 100% of the
(16th resolution of the CSM of June 20, 2012) 2013 share capital at December 31, 2012* None scope
Global limitations of the issuances under above authorizations

(17th resolution of the CSM of June 20, 2012) 3% of share capital at December 31, 2012 N/A N/A
* The ceilings of the 15th and 16th resolutions are common so that the use of one of these delegations will count towards the individual ceiling of the other delegation as well as the
global ceiling set out in the 17th resolution of the CSM of June 20, 2012.
5.1.9 DIVIDEND POLICY Elements likely to have an influence in

Any payment of dividends or other distributions depends on the case of a public offer
Company’s financial condition and results of operations, especially net Pursuant to Article L. 225-100-3 of the French Commercial Code, it is
income, and its investment policy. The Company has not distributed indicated that the agreements pertaining to the Restructured Debt
any dividends in respect of the 2011, 2010 and 2009 fiscal years. include a change of control clause. For more information on the
agreements pertaining to the Restructured Debt, please refer to
The Internal Rules of the Board of Directors (described in Chapter 4: Chapter 2: “Operating and Financial Review and Prospects”,
“Corporate Governance and Internal Control procedures”, section 2.10.3: “Financial Resources” in this Annual Report.
section 4.2.1: “Preparation and organization of the Board of Directors’
works” in paragraph 4.2.1.2: “Structure of Board of Directors’ work – Moreover, under the terms of the Governance Agreement, Vector
Internal Board Rules” in this Annual Report) require the approval of a Capital has made the following undertakings in the event of a tender
qualified majority of two-thirds of the Directors for any decision relating offer that has not first been recommended by the Board of Directors
to payment of dividends. In addition, the Reinstated Debt agreements (an “Unsolicited Tender Offer”):
contain covenants restricting the ability of the Company or certain of its
subsidiaries to declare or pay dividends (see Chapter 2: “Operating and an undertaking not to offer or participate in or assist with in any way
Financial Review and Prospects”, section 2.10.3: “Financial Resources”). or discuss with a third party offeror or a third party prospective offeror
concerning a tender offer on shares or equity securities in the
Company which has not been previously recommended by a
5.1.10 OTHER INFORMATION resolution of the Board of Directors. In particular, Vector Capital
agrees not to commit in advance with respect to such an initiating
RELATING TO SHARE CAPITAL third party in order to tender its shares and equity securities in
connection with an Unsolicited Tender Offer;
Technicolor shares subject to a security
interest an undertaking to use its best to promote a higher offer
To the knowledge of the Company, as of March 15, 2013, no shares of recommended by the Board of Directors, notwithstanding the
the Company were subject to a pledge or other security interest. intention or opinion expressed by the directors representing Vector
Capital, as set out in the response note from the Company, should
this opinion differ from that of the Board;

Listing information
an undertaking to refrain from any communication to the public Notwithstanding the above and the fact that the Unsolicited Tender
concerning the Unsolicited Tender Offer that is not consistent with Offer is not approved by the Board of Directors, Vector Capital is free
the recommendation of the Board of Directors with the exception of to tender the shares and equity securities that they hold in the Company
the intention or opinion expressed where relevant by the directors to an Unsolicited Tender Offer as from the fifth trading day
representing Vector Capital, as set out in the response note from the immediately preceding close of the said Unsolicited Tender Offer, or to
Company. initiate a tender offer.
5.2 LISTING INFORMATION
5.2.1 MARKET FOR THE COMPANY’S dividend payment date is deemed to occur after the dividend has been
paid. Thus if the deferred settlement sale takes place during the month
SECURITIES off a dividend payment, but before the actual payment date, the
Since November 3, 1999, Technicolor’s shares have been listed on purchaser’s account will be credited with an amount equal to the
NYSE Euronext Paris (Compartiment B).
B dividend paid and the seller’s account will be debited by the same
amount.
As off July 15, 2010, when the Company effected a reverse share split,
its new ordinary shares have been listed on NYSE Euronext Paris under Prior to any transfer of securities listed on NYSE Euronext Paris held in
the designation TECHNICOLOR, ISIN Code FR0010918292, with registered form, the securities must be converted into bearer form and
the trading symbol TCH. accordingly recorded in an account maintained by an intermediary
accredited with Euroclear France, SA, a registered central security
Technicolor’s shares are eligible for the Long-only Deferred Settlement
depositary. Trades of securities listed on NYSE Euronext Paris are
Service. In the Long-only Deferred Settlement Service, the purchaser
cleared through L.C.H. Clearnet and settled through Euroclear France
may on the determination date (date de liquidation), which is the fifth
SA using a continuous net settlement system.
trading day prior to the last trading day of the month, either (i) settle
the trade no later than the last trading day of such month, or (ii) upon In France, Technicolor’s ordinary shares are included in the SBF 120
payment of an additional fee, extend to the determination date of the Index, and on the CAC Media, CAC Consumer Services,
following month the option either to settle no later than the last trading CAC MID&SMALL and CAC Mid 60 Indices.
day of such month or postpone again the selection of a settlement date
until the next determination date. Such option may be maintained on
each subsequent determination date upon payment off an additional fee. 5.2.2 LISTING ON NYSE EURONEXT
Equity securities traded on a deferred settlement basis are considered to PARIS
have been transferred only after they have been registered in the The tables below set forth, for the periods indicated, the high and low
purchaser’s account. Under French securities regulations, any sale of a prices (in euros) for Technicolor’s outstanding shares on NYSE
security traded on a deferred settlement basis during the month off a Euronext Paris.
NYSE Euronext Paris

Volume of transactions Share price (in euros)
Average closing
Years ending December 31 (in € millions) Number of shares Average volume price High Low
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
2011 1,494.3 455,522,406.0 1,772,460.7 3.54 5.73 0.98
2012 1,146.3 593,522,948.0 2,318,449.0 1.87 2.69 1.14
Source: NYSE Euronext.

Listing information
NYSE Euronext Paris

Average closing
Quarters (in € millions) Number of shares Average volume price High Low
2010
First quarter 162.0 155,371,100.0 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
2011
First quarter 705.1 150,062,103.0 2,344,720.4 4.61 5.73 3.42
Second quarter 250.8 51,928,885.0 824,268.0 4.79 5.35 4.06
Third quarter 306.2 95,548,514.0 1,447,704.8 3.24 4.67 2.01
Fourth quarter 232.2 157,982,904.0 2,468,482.9 1.56 2.52 0.98
2012
First quarter 676.90 326,111,600.0 5, 017,101.5 1.99 2.69 1.14
Second quarter 267.36 160,414,367.0 2,587,328.5 1.68 2.20 1.32
Third quarter 127.35 68,086,199.0 1,047,480.0 1.87 2.10 1.57
Fourth quarter 74.67 38,910,782.0 607,981.0 1.92 2.01 1.79
NYSE Euronext Paris

Average closing
Last six months (in € millions) Number of shares Average volume price High Low
2012
September 33.2 16,712,082.0 835,604.1 1.98 2.08 1.85
October 25.2 13,259,656.0 576,506.8 1.90 1.98 1.79
November 23.8 12,381,187.0 562,781.2 1.92 2.01 1.83
December 25.7 13,269,939.0 698,417.8 1.93 2.00 1.86
2013
January 102.5 45,571,417.0 2,071,428.1 2.18 2.55 1.93
February 86.5 32,629,393.0 1,631,469.7 2.58 2.99 2.42

6 SOCIAL INFORMATION
AND SUSTAINABILITY
6.1 EMPLOYEES AND WORKFORCE .............................................................................................. 104 6.2 ENVIRONMENTAL MATTERS ........................................................................................................... 113
6.1.1 Overview ..................................................................................................................................................................................... 104 6.2.1 General .......................................................................................................................................................................................... 114
6.1.2 Employee profit-sharing ........................................................................................................................ 105 6.2.2 Programs, systems, and activities .................................................................................... 114
6.1.3 Shares held by employees ................................................................................................................ 105 6.2.3 Operational data and results ...................................................................................................... 118
6.1.4 Stock option plans and free share plans .......................................................... 105 6.2.4 Data collection method and rationale ................................................................ 121
6.1.5 Human Resources & Sustainable Development ........................ 107 6.3 STAKEHOLDER RELATIONS AND LOCAL
6.1.6 Talent and development ..................................................................................................................... 108 IMPACTS OF THE COMPANY’S ACTIVITIES ........................................ 123
6.1.7 Training policy ............................................................................................................................................................ 110
6.4 TECHNICOLOR FOUNDATION FOR CINEMA
6.1.8 Remuneration policy ........................................................................................................................................ 110 HERITAGE ............................................................................................................................................................................................................. 124
6.1.9 Labor relations ................................................................................................................................................................ 110
6.1.10 Working time management and absenteeism .................................. 111
6.1.11 ILO and Global Compact Progress .......................................................................... 112
6.1.12 Health and Safety management ......................................................................................... 112

6 - SOCIAL INFORMATION AND SUSTAINABILITY
Employees and workforce
6.1 EMPLOYEES AND WORKFORCE
6.1.1 OVERVIEW The highly competitive and rapidly-changing Media & Entertainment

sector in which the Group provides its products, technology and
On December 31, 2012, the Group employed 14,639 employees, services requires continuing adjustment to the workforce.
(66% male and 34% female) compared to 16,942 employees at
December 31, 2011, a decrease off 13.59%. The table below shows Technicolor’s total workforce as of
December 31, 2012, 2011, and 2010, as well as the distribution of
personnel across geographical regions.
2012 2011 2010

Europe 4,135 5,766 6,424
North America 5,930 6,497 7,473
Asia(1) 1,960 1,975 1,797
Other countries(2) 2,614 2,704 2,164
Total number of employees 14,639 16,942 17,858
Number of employees in entities accounted for under the equity method *
*Mainly the SV Holdco joint venture. 413 232 277
(1)Including India 1,238 1,183 923
(2)Including Mexico. 1,618 1,608 1,435
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, 2012:
Number of
Segment employees Percentage
Entertainment Services 10,517 71.8%
Digital Delivery 2,060 14.1%
Technology 625 4.3%
Transversal functions 1,437 9.8%
TOTAL 14,639 100%
The overall reductions in work force during 2012 resulted primarily Increases in the workforce occurred mainly in Digital Productions and
from the Group strategy to refocus on its core business. M-GO.
The decline in film processing and film print distribution required a

realignment of the workforce in these activities in Europe, North Split by gender and age
America and Asia. At the end of December 2012, the Group employed 4,954 women
(representing 34% of Technicolor headcount) and 9,685 men
Decreases in the workforce occurred mainly in Digital Delivery further (representing 66% of Technicolor headcount) with the following
to the sale of the Broadcast Services activity to Ericsson on July 2, 2012 breakdown per age:
and to core business refocus.
Age Women Men Total

< 20 4 17 21
20 to 29 992 2,108 3,100
30 to 39 1,760 3,508 5,268
40 to 49 1,333 2,394 3,727
50 to 59 698 1,339 2,037
60 + 167 319 486
TOTAL 4,954 9,685 14,639

SOCIAL INFORMATION AND SUSTAINABILITY - 6
Hiring and termination 6.1.3 SHARES HELD BY EMPLOYEES

During 2012, 2,947 employees have been hired and 1,037 were made As off December 31, 2012, the number of shares held by the Group’s
redundant. This is in addition to the closing of our facility located in employees in the Group Saving Plan (Plan d’Épargne Entreprise), by
Angers in which 346 employees were working. employees and former employees through Technicolor’s savings plan
(Fonds Communs de Placement d’Entreprise), and the number of shares
Methodology directly held by the employees and subject to a lock-up period was
Employees and workforce figures are extracted from the Technicolor 289,333 shares, representing 0.08% of the share capital.
worldwide HR repository system currently implemented in all
The Combined Shareholders’ Meeting of June 20, 2012 authorized
Technicolor locations.
the Board of Directors to proceed with share capital increases reserved
to the Group’s employees in connection with an employee shareholding
6.1.2 EMPLOYEE PROFIT-SHARING plan (for more information, see Chapter 5: “Technicolor and its
shareholders”, section 5.1.8: “Delegations granted to the Board of
The Holding company and five French subsidiaries off the Company Directors by the Shareholders’ Meetings”).
offer employees incentive plans based on the related subsidiary’s results.
The total annual bonuses distributed to employees in connection with

these incentive plans over the three most recent years amount to the 6.1.4 STOCK OPTION PLANS AND
following: FREE SHARE PLANS
amounts distributed in 2010 for year 2009: €1,616,929; Stock option plans
The Shareholder’s Meeting held on June 8, 2011 authorized the Board
amounts distributed in 2011 for year 2010: €736,312; and
off Directors to grant subscription or purchase options to the Group’s
amounts distributed in 2012 for year 2011: €1,907,592. employees or Directors. This authorization was given for a period of
38 months, and is valid until August 8, 2014. Options granted under
In addition, several of our locations offer their employees profit-sharing this authorization shall not give rights to a total number off shares greater
plans based on company results and/or achievement off objectives. than 1,500,000, i.e. 0.45% of the share capital as of
December 31, 2012. In accordance with Article L. 225-184 of the
French Commercial Code, it is noted that the Board of Directors did
not make use of this authorization in 2012.

The stock option plans in existence as of December 31, 2012 are as follows:
Plan Plan Plan Plan Plan Plan MIP-SPI

09/22/2004 04/19/2005 12/08/2005 09/21/2006 12/14/2007 06/17/2010
November 10, November 10,
Date of Shareholders’ Meeting 2000 2000 May 10, 2005 May 10, 2005 May 10, 2005 May 22, 2008
Date of Board of Directors’ meeting 09/22/2004 04/19/2005 12/08/2005 09/21/2006 12/14/2007 06/17/2010
Type of options Subscription Purchase Purchase Subscription Subscription Subscription
Number of options granted, including: 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:
Frédéric Rose
before adjustments and performance
condition review - - - - - 2,155,700
after adjustments and
j performance condition
review(1)(2) - - - - - 190,529
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 and performance
condition review - - - - - 7,196,400
after adjustments
j and performance condition
review(1)(2) - - - - - 635,996
Beginning of the exercise period 09/23/2007 04/20/2008 12/09/2008 09/22/2008 12/15/2009 06/18/2014
Plan life 10 years 10 years 10 years 8 years 8 years 8 years
Expiration date 09/21/2014 04/18/2015 12/07/2015 09/20/2014 12/14/2015 06/17/2018
Exercise price at grant time €16.00 €20.82 €17.73 €12.49 €10.43 €0.66
50%: 50%: 50%: 50%: 50%:
Exercise period 09/23/2007 04/20/2008 12/09/2008 09/22/2008 12/15/2009
100%: 100%: 100%: 100%: 100%: 100%:
09/23/2008 04/20/2009 12/09/2009 09/22/2009 12/15/2010 06/18/2014
Number of shares subscribed as of
12/31/2012 - - - 1 - -
Number of options cancelled since the
beginning of the plan 4,744,970 425,600 1,539,750 2,020,540 807,000 3,395,651
Number of options cancelled during the 2012
exercise 109,460 3,000 31,200 64,600 51,400 1,275,951
Number of outstanding options at the end
of the exercise before adjustments 2,621,620 293,800 453,425 719,199 500,100 8,771,349
Number of outstanding options at the end
of the exercise (after 2010 and 2012 capital
adjustments and performance condition
review)(2) 319,396 35,796 55,313 87,711 61,086 887,972
Exercise price €131.38 €170.99 €145.60 €102.53 €85.64 €6.52
(1) Information provided pursuant to Article L. 225-184 of the French Commercial Code.
(2) Adjustment coefficient: 1,012348451.
As of December 31, 2012, the total options granted under the plans Performance share plans
amounted to 91,109 purchase options and 1,356,165 subscription
options granted to 303 beneficiaries. Management Incentive Plan 2010-2014
(MIP – SP1 and SP2)
The exercise price of the various stock option plans have been fixed The Board of Directors meeting of June 17, 2010 approved the
without discount and calculated on the basis of the average share price implementation of a Mid-Term Management Incentive Plan (MIP – SP1
of the 20 trading days prior to the Board of Directors’ meeting except and SP2) for the benefit of the CEO and approximately 80 Group key
for the Plan MIP-SP1. executives. This plan awards Performance Units comprised of half cash
and, according to the categories of beneficiaries, either half subscription
In accordance with Article L. 225-184 of the French Commercial options or half performance shares. Depending on the achievement of
Code, it is noted that no options were exercised in 2012. attendance and performance conditions, subscription options will be
exercisable as from June 18, 2014.

Following the determination by the Board of Directors on February 21, The right to the delivery off the shares and the payment of the cash
2013 of the level of achievement off the performance conditions but still bonus is recorded in three annual tranches:
subject to the achievement of the attendance condition during the
four-year vesting period, the maximum number of subscription options 20% of the Performance Units granted was conditional on the
exercisable as from June 18, 2014 is 887,972 accounting for 0.3% of achievement of the performance conditions related to the consolidated
the share capital. financial statements for the year ended December 31, 2011;
Subject to the achievement of cumulative attendance and performance 30% of the Performance Units granted was conditional on the
conditions, this plan requires, depending on the country, a four-year achievement of the performance conditions related to the
vesting period or a two-year vesting period with a two-year holding consolidated financial statements for the year ended
period as from the acquisition of the performance shares. December 31, 2012;
Following the determination by the Board of Directors held on 50% of the Performance Units granted will be conditional on the
February 21, 2013 of the level of achievement off the performance achievement of the performance conditions related to the consolidated
conditions, the maximum number off rights to receive existing company financial statements for the year ended December 31, 2013.
shares at the end off the vesting periods mentioned above amounts to
For each tranche, the payment of the cash bonus and the delivery of the
269,408 performance shares.
shares will be further subject to the uninterrupted employment of the
recipient at the Company.
Long-Term Management Incentive Plan (LTIP 2011)
The Shareholders’ Meeting off June 8, 2011 authorized, with delegation Subject to the achievement of cumulative attendance and performance
to the Board off Directors, the allocation of free shares to employees conditions, this plan requires, depending on the country, a four-year
and/or directors and officers of the Group. vesting period or a two-year vesting period with a two-year holding
period as from the acquisition of the performance shares.
Based on this delegation, on June 8, 2011, the Board off Directors
approved the adoption off a long-term incentive plan designed to retain The number of rights to receive existing company shares determined by
key Group employees while aligning their interests with those off the the Board of Directors for the year ended December 31, 2011 amounts
Company and its shareholders. This three-year plan provides for the to 131,923 performance shares and for the year ended
granting of Performance Units comprising a cash bonus and free shares December 31, 2012 amounts to 377,780 performance shares.
(known as “performance shares”), representing one-third and two-thirds Therefore, the maximum number of rights to receive existing company
respectively. shares at the end off the vesting periods mentioned above amounts to
1,184,277 performance shares.
In addition to a condition requiring recipients to be employed by the
Group at the end of each vesting period, the final number of
Performance Units granted depends on the performance conditions, 6.1.5 HUMAN RESOURCES
which are the same for each recipient. These conditions relate to (i) the
net debt/EBITDA ratio, and (ii) the stock market performance
& SUSTAINABLE
measured each year by comparing the change in the Technicolor share DEVELOPMENT
price with the change in the share prices off a sample of around 20 Technicolor’s Human Resources & Sustainability (HR&S) organization is
stocks listed in North America, Europe and Asia that are representative aimed at reinforcing Technicolor’s strategic priorities and at contributing
off the technology, media and telecoms sectors. to the Group’s objectives. In order to remain fully aligned with the
Group’s different businesses and to reinforce global HR leadership
As regards the former criterion, which accounts for two-thirds off the capability, HR&S has adopted in 2010 a new operating model and has,
assessment, the conditions for obtaining 100% of the Performance during 2012, pursued its reinforcement across the Group.
Units are stricter than those contained in the corresponding covenant in
the agreements relating to the Restructured Debt. For the second This model has three dimensions:
criterion, which accounts for one-third of the assessment, for 100% of
the Performance Units to be awarded, the Company must be among Strong Partnership with Business;
the top three comparable stocks reporting the best performances, and Global Centers of Expertise;
in the event that the comparison is not satisfactory, no Performance
Units will be granted. Between these two situations, the percentage of Regional Human Resources Competence Centers, reinforced with
Performance Units granted will be reduced accordingly. HR sites leaders.

The integration of business strategy and HR has been reinforced communications. HR Sites Leaders report to their respective Regional
through the HR Business Partner function. HR Business Partners work HR Competence Centers.
closely with each business leader to analyze and plan the evolution of
Technicolor’s workforce skills and competencies and ensure they are in The Head of HR&S, a Member of Technicolor’s Executive Committee,
line with its development goals. They leverage with the Company’s defines HR&S strategic priorities in line with Technicolor’s strategic
Global Centers of Expertise and Regional Competence Centers to plan, implements and adapts the HR&S model, identifies organizational
deliver high quality and cost-efficient services. needs and related resources, and pilots HR&S initiatives across all of the
Group’s activities.
The Global Centers off Expertise ensure consistency and delivery of key
Group HR projects and provide specialized advice and expertise across
the whole organization in the following areas: 6.1.6 TALENT AND DEVELOPMENT
Technicolor priorities in Talent and Development in 2012 were
Compensation & Benefits focusing on rewards, incentive programs,
reviewed to support the implementation of the Amplify 2015 strategic
international mobility programs, pension schemes, medical care and
roadmap. In addition to our leadership development and management
other benefits;
development programs, several actions were undertaken to ensure the
Talent and Development focusing on people development, talent coherence of learning and development investments with the execution
management, performance management and organizational off the 2015 plan.
development practices;
These actions have included a broad and deep analysis of all the training
HR Information Systems Processes and KPIs, focusing on needs and investments in the Group and a comprehensive assessment
implementing coherent and sustainable tools supported with off the evolution of jobs and competencies that are key for the execution
adequate processes; off the 2015 plan, allowing to prepare specific competencies
development projects that will be deployed from 2013 onwards. As an
Resources Management, focusing on Technicolor resource plan immediate result of these actions, a special focus was given to the topics
definition and tracking; off innovation, change management and enterprise agility through the
creation of new programs and the reinforcement of these topics in
Corporate Social Responsibility (CSR);
existing programs.
Labor Relations.
The Regional HR Competence Centers, built on a shared service

Talent Review and Development of Leadership
The Talent Review process implemented in 2010 remains stable and is
model, ensure a consistent HR approach across sites and functions
eagerly implemented in all the divisions off the Group and at all levels.
within each geographical region and guarantee that Technicolor
The schedule off the processes has been anticipated to allow a better
remains fully compliant with local employment laws and practices. In
linkage with other internal processes such as the performance review
order to maximize services delivery and quality, Technicolor’s regions
(STEP) and the planning of learning and development activities.
are regrouped under a unique leader and Regional HR Centers are
geographically organized as follows: The talent review process mobilizes executives from our Executive
Committee and Management Committee as well as managers at all
Asia-Pacific including Greater China and India;
levels of the organization in a bottom approach around the
Americas; identification off employees with the right level of potential and
performance to integrate the Group’s Talent pool. The members of the
Europe. talent pool can participate in dedicated leadership development
programs during the year.
HR Leaders are appointed within the Regional Competence centers in
each of the sites to better support business activities with common In three years, this process is more and more implemented at all level of
processes and regulations at site level by delivering all necessary HR the organizations and allow to better identify new talents.
transactional activities. HR Site Leaders also contribute to the
implementation of Corporate HR programs and facilitate coherent local Further to the 2012 Talent Review, the talent pool represents 10% of
the exempt population of the Group.

The 2012 Leadership Development Programs have included management practices aligned with Technicolor values and business
workshops on the theme “Leadership & Influence”, and Forums led by priorities. The network activities concentrate on ensuring an efficient
Executive Committee Members and Management Committee communication to line managers, on supporting managers to deliver
members in Paris and Los Angeles to discuss Technicolor’s business and important business and organization information to their teams; on
leadership challenges. All participants of the programs were closely offering learning opportunities to develop or to refresh people
accompanied by coaches and HR Business Partners, who supported management skills; and on increasing interaction and information
them to build and execute a leadership action plan, maximizing the sharing among managers of different divisions and functions.
relevancy and the application off concepts learned in the program in
their jobs. As a consequence of the Group’s priorities and strategic In 2010 and 2011, several learning activities around performance
ambitions, the focus off the Leadership Development programs on the management and around our three corporate values were offered to the
aspects of Innovation were strengthened. A new partnership with the members of the Line Managers Network. With the objective of
University off Stanford in the United States was created to launch in supporting the Amplify 2015 roadmap and the Operational Excellence
2012 a program on “Innovation Management and Culture”. Program, new learning materials were made available to the LMN in
2012. These materials focus on best practices and concrete advice for
The first edition of this program counted with forty participants, managers on three essential topics: managing change, managing
including a mix of our Senior Leadership Team and members of our creativity and innovation and organization agility.
Talent Pool.
Management Academy
HR Development The pilot phase off a new program, gathering HR and Managers at all
An HR development program was created in 2011 to reinforce the levels, for the development off management competencies was launched
people development capabilities of HR Business Partners and Managers in 2012. Created around management communities who meet
and to support to the development of skills aligned with Technicolor monthly, this management curriculum includes essential topics of
vision, values and strategy. This initiative has been continued in 2012 people management and encourages the collaboration between
with basic and advanced workshops on coaching and certification managers to learn and improve their own practices. Pilot groups
workshops to provide 360° feedback delivered to 26 members of the followed the program in France, UK, Belgium, India and China. This
HR team. initiative will be extended to other countries in 2013 and with the
objective of ensuring the quality and the consistency of our
management practices across the globe.
Job and Competency Evolution Plan
In order to continue to ensure Technicolor’s competitiveness and
innovation capacity, a comprehensive work on has been initiated to Women’s Forum
identify the evolutions of key jobs. This work includes a review of the The Technicolor Women’s Forum is a network that consists of almost
mission and responsibilities of jobs as well as the set of competencies 80 women, each off whom plays a role in raising awareness of changing
that are necessary to achieve excellence in the execution of these jobs. gender values. This network has ensured that each Technicolor site has
A set of customer facing, R&D and research jobs were the first to one appointed woman leader who coordinates regular site meetings on
benefit from this initiative. the progression of women in the Company and how can women be key
change initiators for Technicolor. A policy to encourage gender
Different learning tracks were designed and will be deployed in 2013 to diversity in senior management positions was adopted and is
ensure the development off key competencies. implemented: Technicolor requires recruitment and personnel search
professionals worldwide to ensure that the curriculum vitae off at least
Linked with the learning tracks, a professional accreditation program has
one qualified woman is included in every list of finalist submitted for
been designed to recognize the level of competencies and
open senior management positions within the Company.
achievements of the employees that have followed the tracks. The
accreditation program has been launched in 2012 for four jobs:
Product/Service Line Managers, R&D Project Managers, Customer Disability in the Workplace
Project Managers and Solution Architects. A broader range of jobs will Technicolor complies with national regulations regarding the
benefit from learning tracks and professional accreditation from 2013 employment of disabled persons, including reasonable accommodation
onwards. for all workers and accessible facilities for disabled persons. New
facilities are built according to current building codes and made
Line managers Network accessible to disabled persons.
Created in 2010, the Technicolor Line Managers Network gathers
managers in different sites off the Group and facilitates the promotion of

6.1.7 TRAINING POLICY The total remuneration policy is structured around flexible and
competitive fixed and variable compensation elements driven by market
The objective off Technicolor training policy is to ensure the best practices and the Group’s objectives for long-term value creation
development of competencies and capabilities aligned with the Group's appropriate to circumstances and goals:
strategy and, simultaneously, support employee’s growth and
development. competitiveness: appropriate market benchmarks off total
compensation against comparable companies allow Technicolor to
Training priorities are set based on the evolution of existing jobs and offer competitive compensation packages to employees in
skills, on the identification of new capabilities to develop and on the accordance with competitive pressures in the marketplace. This
individual needs of employees in terms of job performance and/or of ensures that Technicolor continues to attract, motivate and retain
professional evolution. In order to ensure the same quality level as well high potentials and key contributors for which Technicolor competes
as alignment and consistency, development programs regarding in an international market place while controlling cost structures;
Leadership, Management and Technical or Functional skills are
centralized at corporate level. equitable approach: Technicolor believes that it remunerates its
employees on an equitable basis in each of its geographical locations
To do so, Talent & Development HR Center off Expertise advise both in line with local standards and proposed corporate programs.
business heads and HR Business Partners in all aspects regarding The remuneration policy is set according to the Group’s
Learning and Development. HR Business Partners are facilitators of “broadbanding policy” which allows consistent assessment of
functional committees or job committees, formed by managers and responsibility, contribution and levels off expertise on an international
employees at different levels, who have the mission of identifying key business basis across all businesses and functions. In addition, the
competencies and ensuring the training plans to develop them are remuneration policy of top executives is managed by Corporate
appropriate. Human Resources to facilitate consistency of various remuneration
Training is implemented locally by the HR Competency Centers who components and ease international and cross-business mobility;
are in charge off ensuring training actions are optimized between the business and skills focus: the remuneration of professionals,
divisions and that training complies with all local regulations. engineers and managers is a sound, market-driven policy and
Overall training initiatives offered in 2012 encompass 19,200 training ultimately administered to stimulate business performance. A
seats and 43,500 hours of training. substantial part of the total remuneration package is composed of
variable elements which drive a performance culture and support the
Company’s strategy. These variable elements are meant to stimulate,
6.1.8 REMUNERATION POLICY recognize and reward not only individual contribution, especially
innovation and risk-taking, but also and in particular, solid and
Total remuneration is considered a key pillar of Technicolor’s Human
consistent Group and Divisions performances.
Resources policy. The remuneration policy is tailored to acknowledge
and fairly recognize an employee’s contribution to the short and longer In accordance with the principles and rules established by the Group,
term success of the Group. each Group entity is entitled to recognize the potential and encourage
the development of its employees by means of various remuneration
Technicolor continues to incorporate a classification structure based
factors defined by the Group.
upon Towers Watson methodology, with grades and bands that
ultimately emphasizes and reinforces the strong link between
contribution and remuneration. Technicolor is steadily reviewing its job
6.1.9 LABOR RELATIONS
definitions and levels and reflects the evolutions of the Group. Such
classification allows the Group to ensure the internal equity of Labor relations with Technicolor employees are the responsibility of site
remuneration packages; moreover, Technicolor participates to relevant managers in each country with the support of Human Resources.
salary surveys to assess the competitiveness off remuneration in the With respect to its European operations, Technicolor entered into a
proper marketplaces. This provides Technicolor with sustainable, labor agreement with a European council of employee representatives
objective and equitable means of remunerating employees while closely (the “European Council”) confirming the Group’s labour practices. This
controlling its wage bill. council, which meets several times each year, comprises union
representatives or Members of local works councils in European
countries.

In 2011, Technicolor has renewed the composition of its European Works Council in order to reflect its business evolution in Europe; as a
consequence, the European Works Council is now composed with:
Country Number of European Works Council seats

Belgium 1
France 3
Germany 1
Italy 1
Poland 1
UK 3
Due to the sale of the Broadcast Services business and the downsizing In China, 100% of the employees are unionized. This information is not
of our Creative Services activities, The Netherlands and Spain do not applicable for the rest of Asia.
have any more representatives at the European Works Council.
Technicolor’s European Works Council is a supranational body, the 6.1.10 WORKING TIME
purpose of which is to address topics of a transnational nature. The
European Works Council is informed of Technicolor’s European
MANAGEMENT AND
operations in respect of personnel, finance, production, sales, and ABSENTEEISM
research and development, and their impacts upon employment and Working time is managed according to the needs of Technicolor’s
working conditions. It is also informed of major structural, industrial and various business activities in both the parent company and its
commercial changes as well as organizational transformations within the subsidiaries. The Group complies with regulatory obligations and
Group. It met 7 times in 2012. contractual commitments in terms of working time in each country in
which it operates. Through various working time management tools, the
In accordance with applicable law in the European Union, Technicolor’s Group ensures employees do not exceed legal thresholds and are
managers of each European country meet annually with labor appropriately compensated for any overtime according to their
organizations to discuss remuneration and working conditions. employment agreement. However, a large part of Technicolor’s
workforce is exempt and paid a flat rate for a number of days worked
In accordance with domestic laws, data regarding the level of
per year: worked days are then monitored.
unionization is not available in most of European countries (the laws in
these countries do not allow this type of statistic to be published). Part time and remote working are authorized on a case-by-case basis
In 2012, Technicolor entered into four collective bargaining according to the Group policies and depending on the occupational
agreements with its German employees; 10 such agreements in France; requirements. Some activities of Technicolor experience seasonal peak
one such agreement in Belgium, one such agreement in England. workloads (such as DVD Services) and require significant interim and
temporary persons to support client requirements, mainly in the
In Italy 100% of the employees are unionized, in Poland 5% of the
distribution and warehouse sites. These seasonal workers are typically
employees are unionized. In England 2% of the employees are
hired over a period of a few months. Seasonal workers are not included
unionized and it is planned to establish an Employee Consultation
in the Group headcount figures. The main countries employing seasonal
Forum during the first quarter of 2013.
workers are the United States, Mexico, Canada, and to a lesser extent
In Canada, in 2012, we entered into one collective bargaining Australia, and Western Europe.
agreement and 8% of the Group’s employees were unionized. In the
Working time is managed in the Group’s various sites via software such
United States, in 2012, approximately 3% of the Group’s employees
as ADID (France), Oasis (UK), Kronos (UK, Australia, Canada, US),
were unionized and were covered by the collective bargaining
CasNet (Mexico), Myehr (China) and Telematica (Brazil). There are
agreements negotiated with the national and/or local unions. These
also some additional manufacturing related tools that track working time
agreements, with an average duration of three years, address salaries,
such as ScheduAll, Laserbase and CETA.
employment benefits, and the working conditions and organization. In
Mexico, employment agreements are renegotiated every year, in 2012 Absences are generally defined on an annual basis in terms of holidays,
one such agreement has been signed. The proportion of employees vacations, personal and family medical leave or other possible
belonging to an union is 55%. In Brazil, six such agreements were unplanned absence such as jury duty, as described by bargaining unit
signed. contract, employment contract, or regulation. Throughout the year,
each employee categorizes any absence according to its definition, and
In Australia, 44.5% of employees belong to an union and two collective
agreements were signed in 2012.

all absences are subsequently reviewed and approved inside the hazards. The aim of the occupational health and safety program is to
applicable working time tracking software solution. prevent injuries and illnesses, whether or not compliance is an issue. The
Group believes that the necessary elements of an effective program
Leave of absence (for sickness, vacation etc.) is also tracked. The include, at a minimum, provisions for systematic identification,
average rate of employee absenteeism (ratio of total days absent not evaluation, and prevention or control of general workplace hazards,
including vacation days by theoretical days worked) at the Group level specific job hazards, and potential hazards that may arise from
in 2012 was 2.3%. foreseeable conditions.
Technicolor’s health and safety programs are designed to identify

6.1.11 ILO AND GLOBAL COMPACT potential risks and take appropriate prevention and severity reduction
PROGRESS measures. Accident and injury prevention programs include active local
Safety Committees and specialized task forces, job safety analysis,
Technicolor closely follows the international principles laid out in the
written plans and procedures, employee training, monitoring for
International Labour Organization’s (ILO) Declaration on Fundamental
potential chemical, physical, biological, and ergonomic risks, inspections
Principles and Rights at Work in its approach to Ethics and Social
and audits, incident investigations and the implementation of
Responsibility, a standard reinforced in the Group’s Ethics policy and in
appropriate corrective actions.
its membership with the UN Global Compact. In this way the company
pledges to ensure freedom of association and the effective recognition There were many notable H&S achievements during 2012 and several
off the right to collective bargaining, elimination off all forms of forced or off them are summarized below:
compulsory labor, effective abolition of child labor and elimination of
discrimination in respect off employment and occupation. These Bangalore India team developed a supporting relationship with the
principles carry through into the supply chain, and supplier compliance Vatsalya School for Special Education, which works with children
with the company’s policies and principles relating to ethics and human suffering from cerebral palsy, autism, and associated disabilities,
rights is monitored through a Supplier Ethics Programme. inviting members of the school to showcase their vocational products
within the offices and also donating a variety of aid-in-kind supplies
Technicolor has been a Member of the United Nations Global from time to time;
Compact since 2003. The Global Compact is a United Nations
initiative which challenges Member companies to align their operations Brampton Canada completed a sitewide safety railing to further
and strategies around 10 universally accepted principles in the areas of reduce risks off slips, trips, and falls and to put more physical barriers
human rights, labor standards, environmental practices and between travelling pedestrians and powered industrial trucks/forklifts;
anti-corruption and to develop best practices in these fields.
Technicolor seeks to comply with the highest ethical standards, to take Manaus Brazil safety department worked to make improvements to
into account the legitimate and ethical interests of all its stakeholders as component insertion facilitation for additional presence sensing
well as the United Nations founding principles and each year submits a switches to eliminate risks off internal machine contact during
Communication on Progress as part of its support and engagement in operations;
favor off the Global Compact. The most recent public Communication Melbourne Australia team developed and installed safety barriers to
on Progress is available on the Group’s website at the following location further separate pedestrians from powered industrial trucks/forklifts;
under the document section:
Memphis USA site developed and implemented noise reduction
http://www.technicolor.com/en/hi/about-technicolor/corporate-social- measures in the rework/returns lines by moving the primary source
responsibility point equipment up to a mezzanine level and away from the
workforce, achieving an average 5 db reduction in sound pressure
level.
6.1.12 HEALTH AND SAFETY
MANAGEMENT
Health and Safety
An effective occupational health and safety (H&S) program, as defined
by Technicolor, looks beyond specific requirements of law to address all

Environmental matters
Technicolor understands that each employee has the ability to impact Community outreach and employee initiatives
its Environment, Health and Safety (EH&S) efforts and performance, Technicolor sites facilitated a variety off community outreach and
thus it is critical that they are provided with the appropriate tools, employee protection initiatives in 2012, including medical exams,
resources and knowledge. EH&S training programs develop awareness vaccinations, flu shots, blood drives, wellness programs, ergonomic
and skills that allow employees and contractors to perform their jobs in evaluations, first aid training, holiday adoptions, food, clothing, eyewear
such a manner that will not only ensure compliance with appropriate collections and other cash, product, and time donations.
laws, regulations and policies, but also so that they may prevent
accidents which may lead to injuries or harm to the environment. Safety performance
Training programs are evaluated during the Corporate Audit process, What follows are results off key safety metrics that were tracked in 2012:
and are a core requirement in the EH&S performance measurement
process. In 2012, Technicolor experienced a 4.8% increase in work-related
injury and illness incident rate (number of recordable injuries and
occupational illnesses per 200,000 hours worked) from 1.05 in 2011
EH&S training
to 1.10 in 2012.
In 2012, 25,331 hours off documented training on a wide variety of
environmental and safety compliance and protection, injury prevention, The work-related lost workday incident rate (number of recordable lost
emergency preparation and response, and occupational health topics workday injuries and occupational illnesses per 200,000 hours
were provided to employees and contractors throughout Technicolor. worked) rebounded to 2010 levels, from 0.32 in 2011 to 0.46
in 2012.
Work Related Incident Rates for 200,000 hours worked
Injury and Occupational Illness Lost workday incident

Injuries Rate Injuries Incident rate
2010 291 1.37 102 0.48
2011 218 1.05 67 0.32
2012 196 1.10 83 0.46
2012 Incident and Lost Workday Incident Rates for 200,000 hours worked
Injury and Occupational Illness Lost workday incident

Injuries Rate Injuries Incident rate
Digital Delivery 6 0.26 6 0.26
Entertainment Services 188 1.26 76 0.51
Technology 0 0 0 0
Other 2 0.40 1 0.20
6.2 ENVIRONMENTAL MATTERS

This report provides an overview of the activities that Technicolor is workplaces and their surrounding communities. For the 2012
taking to fulfill its responsibilities as a global corporate citizen with management report a total of 36 reporting locations are included.
respect to Environment, Health, and Safety (EH&S). As such,
Technicolor is reporting on what it has determined to be the most There were many notable environmental achievements during 2012
significant aspects and impacts, both globally and by business unit, for and several of them are summarized below:
the fiscal year 2012.
Guadalajara Mexico team continued the Industrial Limpia
In alignment with the principles stated within the EH&S Charter, environmental award for the fifth year in a row;
Technicolor continually assesses the EH&S performance of its facilities
Manaus Brazil operations, as part of their carbon-neutral commitment
to identify opportunities and implement measures to reduce adverse
to the Cooperative for Entrepreneurship and Reforestation of the
environmental impacts and to improve the health and safety of its
Amazon, planted 5,000 acai seedlings to reforest a damaged habitat

and was awarded the “Green Seal”, which may be used on product To provide finished products and services, Technicolor utilizes
packaging for products manufactured at the site. The Manaus team purchased materials, chemicals, components, energy, and water. As a
was also awarded the “Partner off Nature” certificate and packaging result of the products and services it provides, there are a number of
seal by the Brazilian Institute for Nature Defense; potential activities that may result in adverse impacts to the
environment.
Piaseczno Poland site improved their stormwater system with an
expanded reservoir and avoided approximately 9,000 cubic meters Environmental aspects reviewed in this report include waste
consumption of city water by storing and reusing stormwater for site management (total waste generated, landfilled, and recycled), energy
irrigation and landscaping; consumption (electricity and fossil fuels), water consumption, air
emissions (greenhouse gas emissions), main materials used, and
Rennes France team reduced their energy intensity as part of the processing wastewater effluents. The 36 sites included in this report
move to the newly constructed research center, decreasing the ration may be reviewed in the subsection “Data Collection Method and
off energy consumed to hours worked by 18%. Rationale” herein.
Newly acquired businesses are reviewed by Technicolor to identify
EH&S aspects off their operations, to evaluate the status and Organization
effectiveness of existing management and control systems, to determine EH&S is managed transversally within Technicolor and by extension
compliance with Technicolor EH&S Policies and Guidelines, to becomes the duty off each Executive Committee Member, Technicolor
communicate Technicolor’s EH&S initiatives and requirements, and business manager and Site manager. Technicolor established a
finally, to assist in the establishment of location-specific programs that Corporate EH&S group in 1993 to develop, direct and oversee the
conform to Technicolor’s requirements and meet the needs of the development of global policies, guidelines, programs and initiatives. The
Group. Corporate EH&S organization reports to Corporate Social
Responsibility, headed by the Director off Human Resources,
6.2.1 GENERAL Sustainability, Global Sourcing, and Real Estate who is a Member of
Technicolor’s Executive Committee. Overseeing the EH&S group is a
Policy and Charter Corporate manager, who directs the efforts of EH&S personnel
throughout the business. Business Unit liaisons work to ensure that
As a global leader in providing a diverse range of communication and
initiatives relevant to their particular business are shared quickly among
video technologies, finished products, systems, equipment, and services
sites with similar industrial activity. Legal support and counsel for issues
to businesses and professionals in the entertainment and media
such as product safety, environmental protection and workplace safety is
industries, Technicolor understands the importance off establishing
provided by Technicolor in-house attorneys.
consistent and universally applied standards. Such standards not only
assist each of its locations to meet the requirements off the country in It is the responsibility of the Corporate EH&S Organization to develop
which they are located, but also provide an added benefit of policies, programs, processes and initiatives to help the business meet
encouraging each location to develop programs that go beyond local the principles and commitments outlined within the EH&S Charter.
regulatory requirements. To formalize this critical philosophy, Each Technicolor industrial location identifies personnel who, along with
Technicolor has developed a Corporate Environment, Health, and the support off local EH&S Committees, are responsible for reviewing
Safety (EH&S) Charter. The EH&S Charter supports the Technicolor and localizing Corporate Policies and Guidelines and applicable
Ethics Charter and the Corporate Social Responsibility Charter, and is governmental laws and regulations, and for implementing site-specific
the cornerstone of the Group’s EH&S program. It defines key programs and procedures which will ensure compliance and minimize
management principles designed to protect human health and the the potential for their operation to cause harm to human health or the
environment, helps Technicolor meet its legal and corporate environment.
responsibilities, and provides direction for each Technicolor location’s
activities and operations.
The EH&S Charter has been translated into six languages and is
6.2.2 PROGRAMS, SYSTEMS,
available on the Group’s intranet, and is displayed at each industrial site. AND ACTIVITIES
A number of programs and initiatives have been established and
implemented to ensure that the Group meets its legal responsibilities
Environmental Risk Profile and operates in a manner that identifies risks and takes measures to
During 2012, the Group operated 36 main locations, most off which are reduce harm to human health and the environment. The most
industrial. By Technicolor’s definition an industrial location is a facility significant off these are described below:
where DVDs are produced, packaged or distributed, where motion
picture media is processed or distributed, or where any digital delivery
product is made.

Policies and Guidelines off emergency preparedness and response plans is critical to the success
off Technicolor’s EH&S program, making these, along with associated
Corporate EH&S Policies and Guidelines have been developed to
training and testing, key components of the EH&S performance
establish requirements and provide guidance for the development,
measurement process.
implementation and maintenance of EH&S programs. EH&S Policies
and Guidelines were first developed in 1993 and are periodically One of the many challenges that are present in a globally operated
reviewed and revised, and when necessary, adapted to ensure that they business is ensuring effective communication, particularly in the event of
address current regulatory and business needs, most recently distracted a crisis. At Technicolor, a system was designed to provide a consistent
driving, emerging disease and workplace violence. worldwide approach for managing and mitigating significant EH&S
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 off appropriate resources with consistent
developing local programs that ensure compliance and address
crisis management measures throughout the world. This process also
site-specific issues. Along with the Charter and other key information,
serves as a valuable tool for identifying potential concerns within each of
the Policies and Guidelines are available to employees via the
Technicolor’s businesses and to ensure that appropriate preventive
Technicolor 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
Annual Performance Measurement was renewed and cascaded throughout the Group.
Process
A process was implemented in 1997 to allow for the consistent internal In 2012, two SBIs associated with EH&S aspects were reported, and no
benchmarking of key management programs and requirements within penalties or fines were incurred as a result of these SBI events.
each of the Group’s industrial locations, and tracking of site progress
toward environmental, safety and resource conservation improvement Management Systems
goals. This process was revised during 2012 to better support the wider
An Environmental Management System (EMS) is a continual cycle of
network and diversity within the Group’s mix of industrial and
planning, implementing, evaluating and improving practices, processes
non-industrial locations, and it assesses benchmark criteria, helping the
and procedures to meet environmental obligations and successfully
Group create consistent global focus and action plans on key programs,
integrate environmental concerns into normal business practices. An
requirements and initiatives.
effective EMS helps identify and eliminate the causes of potential
environmental problems, establish and achieve environmental goals,
Training reduce potential risk and liability, and operate a more effective
Technicolor understands that each employee has the ability to impact environmental program.
the Group’s EH&S efforts and performance, thus it is critical that they
ISO 14001 is the most widely accepted international standard for an
are provided with appropriate tools, resources and knowledge. The
EMS. In today’s global market, participation in the ISO 14001 process
EH&S training program develops awareness and skills that allow
is one way for an organization to demonstrate its commitment to the
employees and contractors to perform their jobs in such a manner that
environment. To receive certification, organizations are required to
will not only ensure compliance with appropriate laws, regulations and
develop detailed plans and procedures to identify, evaluate, quantify,
policies, but also prevents accidents which may lead to injuries or harm
prioritize and monitor environmental impacts of its activities.
to the environment. Training programs are evaluated during the
Corporate EH&S audit process, and are a core requirement in the During 2012, a total of 10 sites held an ISO 14001 certification. The
EH&S performance measurement process. In 2012, 25,331 hours of Group makes an environmental risk assessment off each site before
documented training were provided on a wide variety off environmental concluding an ISO 14001 certification is required. A few sites work
and safety compliance and protection, injury prevention, emergency beyond the Group requirement and achieve the certification even
preparedness and response, and occupational health topics. though the risk threshold is not exceeded.
Emergency Preparedness and Response

Even the best designed programs and procedures cannot eliminate the
occurrence of unforeseen events. The development and periodic review

Technicolor Locations with ISO 14001 Certified EMS
Site Segment Original certification date

Bangkok Entertainment Services November 2011
Glendale Film Entertainment Services May 2012
Guadalajara Entertainment Services October 2004
Manaus Digital Delivery August 2003
Melbourne Entertainment Services December 2005
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
Restriction of Hazardous Substances program. The use of Technicolor specific audit protocols helps ensure
and maintain consistency in approach while also bringing renewed focus
(RoHS) and Waste Electrical and to key corporate requirements. In addition, the protocols allow for, and
Electronic Equipments (WEEE) require, the inclusion of location-specific regulatory and business
Compliance methods and actions are in place with regard to the RoHS, requirements. Issues and recommendations identified during the audit
and WEEE European directives, and the REACH (Registration, process are reviewed and discussed with Members of the location’s
Evaluation, Authorisation and Restriction of Chemicals) European management.
regulation, or similar legislation in other regions, dealing with the
Restriction on the use of Hazardous Substances within products and In 2012, six locations were audited as part of Technicolor’s objective of
systems, and preparing for better end-of-life handling of Electrical and auditing each industrial location at least every three years. As a result of
Electronic Equipment Waste. these audits potential improvement items were identified and evaluated,
and more importantly, appropriate associated action plans developed.
Regarding consumer product health and safety, the Group ensures that
all products sold comply with all consumer safety regulations applicable
in each country where the product is marketed. Additionally, in some Supplier Involvement and Compliance
emerging markets where safety regulations may not yet be robust, the Through meetings and other methods of formal communication, the
Group applies its knowledge of appropriate product safety regulations Group shares its expectations that suppliers and their subcontractors
and ensures that emerging market products comply with a higher provide safe and healthy working conditions for their employees, abide
product safety standard. by Human Rights laws and standards, and strive for continual
improvement in their environmental management systems, processes
and products.
Audits and Internal Governance
EH&S audits remain a key part of Technicolor’s continued efforts to Technicolor requires its suppliers to actively support its EH&S
improve EH&S management and performance, and to prevent Principles. Suppliers are required to comply with the legal requirements
accidents from occurring. In addition to the establishment of internal and standards of their service or industry as applicable under the
audits within each manufacturing, packaging, and film lab site, a national law of the countries in which they operate. Technicolor
comprehensive corporate audit program was implemented in 1996. suppliers also ensure the compliance of their components and products
The aim of the audit program is to review the Group’s industrial with specific legal requirements applicable in the countries where their
locations’ compliance with Corporate EH&S Policies and Guidelines and products are being sold. Certificates are required from suppliers as to
specific applicable EH&S laws and regulations. The audit program has their compliance with such regulations and standards as well as with
also been demonstrated to be a valuable tool for increasing EH&S Technicolor programs and specifications.
awareness, identifying best practice opportunities, communicating
successful initiatives between plants, creating opportunities for different To ensure effective supplier assessments, Technicolor has defined a
approaches to problem solving, and exposing EH&S personnel to other specific audit scope and focus for suppliers categorized as “high risk,”
aspects of the Group’s multi-faceted business. defined as suppliers in countries with a relatively high potential for
adverse human rights issues. This key supplier audit tool, which includes
The audits include physical inspections of the location, review of a review of EH&S systems and performance, has been developed and
documents and records, and examination of activities within the EH&S implemented since 2003, with 51 audits performed in 2012.

In light of regulations banning or restricting certain chemical substances, and liners. Site assessment work was begun in 2005 and Technicolor
Technicolor implemented an extended process for obtaining and entered into a Voluntary Remediation Agreement with the
tracking information about its suppliers. This system allows for the appropriate environmental agency in 2006. Initial soil clean-up
identification and estimation off relevant chemical substances in actions took place in 2006 and groundwater assessment was
Technicolor’s products and ensures that banned substances are not completed during 2009. The remediation work plan for this site has
included. been approved and is now primarily related to monitoring.
Acquisitions and Closures As a result of a minor groundwater contamination discovered at a

former Technicolor site in North Carolina (USA), an exhaustive
Technicolor has established a process for reviewing locations prior to
environmental site assessment and corrective action plan was
acquisition and upon closure to identify and understand the likelihood
completed in 2005. The corrective action plan was approved by the
and extent of potential environmental contamination associated with the
appropriate environmental agency in September 2006, and
locations’ activities. This process not only helps limit financial liability,
remediation activities at the site were completed in 2007.
but also to understand the type and level of support required to ensure
Monitoring of the declining groundwater contamination continued
that the Group’s corporate policies and guidelines are effectively
in 2012.
implemented. Once acquired, locations are expected to comply with
Technicolor’s EH&S policies and guidelines, which include, as an During site demolition at a closed London film lab with a prior history
example, the development off chemical and waste management off contaminated groundwater, soil contamination was discovered
practices to minimize the potential for uncontrolled releases to air, water while removing below grade structures and piping. All contaminated
and land. soil was excavated and disposed of properly. After demolition was
completed, a sitewide groundwater assessment was made, and a
Environmental Investments, remediation strategy prepared. The remediation strategy was
approved by the governing environmental and health agencies at end
Remediation, and Pollution Prevention
of 2009, and sub-surface remedial chemical treatment was
In total, approximately €1.39 million was spent on environmental
completed during 2010. Groundwater monitoring continues as the
remediation projects in 2012.
effects of the remedial treatment progress.
A certain number of Technicolor’s current and previously-owned
During site redevelopment at a closed Hollywood film lab with a prior
manufacturing sites have an extended history of industrial use. Soil and
history off contaminated groundwater, soils underneath the buildings
groundwater contamination, which occurred at some sites, may occur or
were assessed and contaminated soils removed where possible and
be discovered at other sites in the future. Industrial emissions at sites
disposed of properly. Additionally, installations of sub-surface soil
that Technicolor has built or acquired expose the Group to remediation
vapor extraction systems and passive soil-vapor barriers began prior
costs. The Group has identified certain sites at which chemical
to replacement of the concrete flooring. These works were reviewed
contamination has required or will require remedial measures.
and approved by the governing agency prior to implementation and
Soil and groundwater contamination was detected at a former construction activities will continue into 2013, afterwhich the soil
production facility in Taoyuan, Taiwan acquired in the 1987 vapor extraction process and site groundwater assessment will begin.
transaction with General Electric Company and Technicolor’s affiliate
The Group believes that the amounts reserved and the contractual
in Taiwan owned the facility from approximately 1988 to 1992, when
guarantees provided by its contracts for the acquisition off certain
it was sold to an entity outside the Group. Soil remediation was
production assets will enable it to reasonably cover its safety, health and
completed in 1998. In 2002, the Taoyuan Environmental Protection
environmental obligations. However, potential problems cannot be
Bureau ordered remediation of the groundwater underneath the
predicted with certainty and it cannot be assumed that these reserve
former facility. The groundwater remediation process is underway. It
amounts will be sufficient. In addition, future developments such as
is Technicolor’s position that General Electric Company has a
changes in governments or in safety, health and environmental laws or
contractual obligation to indemnify Technicolor with respect to
the discovery off new risks could result in increased costs and liabilities
certain liabilities resulting from activities that occurred prior to the
that could have a material effect on the Group’s financial condition or
1987 agreement with General Electric (for further information, please
results of operations. Based on current information and the provisions
refer to Note 32 of Technicolor’s consolidated financial statements
established for the uncertainties described above, the Group does not
for 2012, included in this report).
believe it is exposed to any material adverse effects on its business,
During site closure at an Indiana (USA) CRT factory, soil financial condition or results off operations arising from its
contamination was discovered while de-commissioning storage pits environmental, health and safety obligations and related risks.

In addition, Technicolor has initiated a number off environmental This information includes utility consumption, waste generation,
projects at various locations to ensure that they are in compliance with recycling and disposal, air emissions, main raw materials used, and water
applicable laws and regulations and Technicolor standards, or to reduce effluent from industrial locations.
or prevent unwanted emissions, for which approximately
€0.692 million was invested. Potential pollution not directly related to Technicolor is firmly committed to continually assessing the impacts of
chemicals or waste, such as noise pollution or noise restrictions, are its facilities and products. Technicolor’s goal is to continually evaluate
assessed at the site level and mitigating measures are taken where information needs and collection processes to ensure that it remains
appropriate. consistent, with a focus on present activities and issues as well as
anticipated future requirements.
6.2.3 OPERATIONAL DATA Environment

AND RESULTS The year 2012 continued a shift in the environmental profile of the
Group in alignment with the increasing emphasis on business to
Goals and Performance 2012-2015 business partnerships with Media & Entertainment professionals.
Technicolor established the following EH&S goals and objectives for the
Group, to be met by its worldwide industrial operations by the end What follows are results off key environmental metrics that were tracked
of 2015: in 2012. Prior year results are reported for sites within the reporting
perimeter off the year reported, thus sites divested may continue to be
5% annual reduction of injury rate; reported in prior years and sites acquired are not reported in prior year’s
results.
10% minimum proportion off energy coming from renewable sources;
75% minimum waste recycling rate; Energy

In 2012 worldwide energy use was approximately 1,221 tera joules, a
Reporting to satisfy GRI Application Level B+. decrease off 18% compared with 2011. Of the total energy consumed,
86.1% was in the form of electricity (of which 7.6% was from renewable
Reporting Perimeter sources), 13.4% was in the form off fossil fuels, and 0.5% was in the form
This report contains data from 36 operating locations, of which 19 are off purchased steam. When compared to total revenue, average energy
industrial. Prior year data are reported for the same locations when use rate was 0.341 TJ/M€ across the business in 2012. In 2010,
available, although some newly acquired sites may not have data values non-industrial sites were asked to provide their consumption for the first
for years prior to acquisition. Given the diversity of the Group’s time. The non-industrial site consumption represented approximately
operations, the environmental aspects and potential impacts vary by 15% of the total 2012 consumption. For the purposes of comparison,
location, thus not every location is required to report on each of the the table below features two lines showing 2010 results according to
established metrics. both perimeters.
The Corporate EH&S Organization has identified key information that

is tracked and reported on either a monthly, quarterly, or annual basis.
Energy consumption (terajoules or tj/m€)
TOTAL PER
TOTAL ELECTRICITY FUEL SOURCES REVENUE
2010 (ref 2009) 1,369 1,021 348 0.336
2010(1) (ref 2010) 1,618(2) 1,258 354 0.398
2011 1,485(2) 1,201 279 0.430
2012 1,221(3) 1,051 164 0.341
(1) Total energy includes energy from non-industrial locations not reporting energy prior to 2010.
(2) Total energy includes about 5 TJ steam purchase.

2012 energy consumption (terajoules or %)
Total Energy % Total Group Electricity % Total Segment Fuels % Total Segment
Digital Delivery 84.3 6.9% 65.7 77.9% 18.6 22.1%
Entertainment Services 1,109.9 90.9% 964.9 86.9% 145.0 13.1%
Technology 3.4 0.3% 3.4 100% - -
Other 23.0(1) 1.9% 16.7 72.6% - -
Water
In 2012, water consumption at the Technicolor reporting locations Where raw water is developed on-site from local wells, all consumption
decreased by 42% versus 2011 to 880 thousand cubic meters, and pre-treatment is in accordance with granted permissions and
primarily as a result of the Group’s exit from photochemical film. When approved processes. All water consumption, other than that related to
compared to total revenue, average water consumption rate was building and facilities, is linked to photo-chemical film processing, DVD
0.246 KM3/M€ across the business in 2012. In 2010, non-industrial manufacturing, or set-top box manufacturing. Locations experiencing
sites were asked to provide their water consumption for the first time. periodic water shortages, such as DVD manufacturing in Australia,
The non-industrial site consumption represented approximately 10% of invest in rainwater harvesting, while other manufacturing locations in
the total 2012 consumption. Brazil, Mexico, and Poland may invest in process water recycling so that
overall source consumption is reduced.
Water consumption (thousand cubic meters or km3/m€)
Total Consumption Total per Revenue

2010 (ref 2009) 1,791 0.440
2010 (ref 2010) 1,962(1) 0.482
2011 1,488(1) 0.431
2012 880 0.246
(1) Total water includes water from non-industrial locations not reporting water prior to 2010.
2012 water consumption (thousand cubic meters)
Total Consumption % Total

Delivery 49 5.6%
Entertainment Services 823 93.5%
Technology 1.6 0.2%
Other 6.4 0.7%
Process Waste Water demand (COD), in 2012 an estimated total of 34 and 47 metric tons
Within Technicolor’s facilities, 10 utilize water within their were discharged within process effluent respectively.
manufacturing processes. In order to assess the potential environmental
All above quantities of discharged pollutants are fully compliant with
impact of the discharge of this treated water, the Group referenced
authorized limits.
both the European Community (EC) and U.S. Environmental
Protection Agency (EPA) criteria for “priority pollutants”. Based upon Waste
these lists, and information provided by Technicolor’s sites regarding
Technicolor has a long-standing commitment to the principles of sound
the parameters that require monitoring and reporting, 13 pollutants
and environmentally responsible management of waste. Establishing the
were identified on either the EC or EPA list.
hierarchy of internal re-use, recycling and reclaiming followed by
For 2012, the amount of treated water discharged was 0.630 million treatment and then landfill as the last option, Technicolor has
cubic meters, and the total estimated amount of discharged priority developed and implemented programs to reduce waste generation,
pollutants was 0.3 metric ton. decrease the amount of hazardous waste, decrease waste sent to landfill,
and increase recycling.
In addition, due to effluent characteristics, 6 sites are required to
monitor biological oxygen demand (BOD) or chemical, oxygen

Hazardous waste is defined at each site using guidance from local Total waste generated was 33,450 tons, a decrease of 6,298 metric
governing agencies, but in general it means waste chemicals, fuels, oils, tons or 15.8% compared to 2011. The recycling rate was 81.4%
solvents, batteries, fluorescent light bulbs, or other items that may have improving significantly compared to 2011. When compared to total
been in contact with the hazardous material, for example, cleaning revenue, the average waste generation rate across the business was
materials or empty containers. All these hazardous wastes are handled, 9.35 M-Ton/M€ in 2012.
stored, and disposed in compliance with local regulation and Group
Policy.
Waste (metric tons or m-ton/m€)
Total Waste Generated % Treated Hazardous % Recycled Total per Revenue

2010 38,837 5.2% 75.5% 9.54
2011 39,748 5.7% 76.4% 11.5
2012 33,450 7.6% 81.4% 9.35
2012 waste generation (metric tons or %)
Total Waste Generated % Total % Treated Hazardous % Recycled

Digital Delivery 616 1.8% 1.8% 83.9%
Entertainment Services 32,834 98.2% 7.8% 81.4%
Technology 0 - - -
Other 0 - - -
Noise Air Emission

Potential pollution not directly related to chemicals or waste, such as
Upon evaluation of its operations, Technicolor determined the most
noise pollution or noise restrictions, are assessed at the site level and
significant but limited air emission contaminant resulting from the
mitigating measures are taken where appropriate. For many locations,
Group’s industrial operations to be carbon dioxide associated with
any requirements for periodic noise measurement at property
on-site combustion of fuels for heating.
boundaries are sufficient to prove compliance. However, any
stakeholder or neighbouring community concerns will receive additional In 2012, a total of 9,469 metric tons of CO2 were emitted from
attention and generally result in operational or technical solutions such combustion sources within Technicolor’s industrial plants and larger
as limited delivery hours, improved smoothness of on-site roadways to non-industrial locations. This figure was calculated using the 1996
avoid noise from bouncing trucks, re-design of rotating fans to reduce Intergovernmental Panel on Climate Change (IPCC) Emission factors.
blade tip speed, additional noise-reduction devices on reciprocating
equipment, or limited hours of operation for other specialized
equipment.
Air emission (metric tons)
CO2
2010(1) 19,916
2011(1) 15,694
2012 9,469
(1) Total energy includes energy from non-industrial locations not reporting energy prior to 2010.
In 2012, Technicolor participated for the sixth consecutive year in the The Group’s first carbon footprint assessment was published for the
Carbon Disclosure Project, targeting collaboration between large year 2008, taking into account business travel, worker travel between
international firms and investors related to global warming. home and work, incoming and outgoing freight and transportation,
Technicolor’s answer is available on the CDP’s website: energy use, waste disposal, raw materials, and the use of refrigerants and
http://www.cdproject.net. industrial gasses.

Raw Material Usage

The main raw materials consumed by the Group’s businesses in 2012 were:
Raw materials (metric tons)
Polycarbonate molding plastic 23,050

Cardboard and paper packaging 12,604
Plastic packaging 1,843
Bonding resin 1,267
Polyester motion picture film 1,077
Biodiversity effluent from the identified locations. To ensure the timely and
All 19 industrial locations confirm annually whether or not they operate consistent reporting of information from Technicolor’s worldwide
in an area that provides an environmentally sensitive habitat to one or locations, the Group has developed its own electronic reporting system.
more species of plant or animal. During 2012, no industrial sites This system serves as a vital tool for identifying and acting upon trends
reported any impact on sensitive habitats. at the reporting site, business unit, regional and global levels. The
reporting locations provide required data through the electronic system
on a monthly and annual basis, depending upon the information
Land Use provided. Data is organized and consolidated globally and is
Technicolor does not use, alter, mine, quarry, or process soil or minerals communicated to the Vice President, Corporate EH&S and others as
as part of its activities. Leased or owned property is used solely as real appropriate.
estate on which the Group locates its facilities (manufacturing and
production sites, offices and warehouses). The collection period runs from January 1, 2012 to
December 31, 2012.
6.2.4 DATA COLLECTION METHOD Data Verification: Data reporting requirements, and data collection
and consolidation systems are developed by the Corporate EH&S
AND RATIONALE organization communicated to individual locations. Each location is
This report contains data from 36 locations. Given the diversity of the responsible for developing internal systems for the collection of required
Group’s operations, environmental impacts vary by location, thus not data and reporting that data to the Corporate EH&S group. Corporate
every location is required to report on each of the established metrics. EH&S reviews the submitted data for accuracy and works directly with
the locations to clarify and when necessary, resolve inconsistencies. In
The Corporate EH&S Organization has identified key information that
addition, the location’s data are reviewed during scheduled Corporate
is tracked and reported. This information includes utility consumption,
EH&S audits.
waste generation, recycling and disposal, air emissions and water

Scope of Data Collection: The following sites provided data for this report:
2010 2011 2012

Site Segment (ref 2012) Location E utility H&S E utility H&S E utility H&S
Angers N/A(1) France X X X X X X
Bangalore Entertainment Services India X X X X X X
Bangkok Entertainment Services Thailand X X X X X X X X X
Beaverton N/A(1) Oregon USA X X
Bejing Digital Delivery China X X X X X X
Issy Corporate France X X X X X X
Brampton Entertainment Services Canada X X X X X X X X X
Breda N/A(1) The Netherlands X X X
Burbank Entertainment Services California, USA X X X X X X
Camarillo Entertainment Services California, USA X X X X X X X X X
Chiswick N/A(1) UK X X X X
Conflans
St.-Honorine N/A(1) France X X X
Coventry N/A(1) UK X X X X X X
Detroit N/A(1)(2) Michigan, USA X X X X X X
Edegem Digital Delivery Belgium X X X X
Glendale Entertainment Services California, USA X X X X X X
Glendale (film) Entertainment Services California, USA X X X X X X
Guadalajara Entertainment Services Mexico X X X X X X X X X
Hannover Technology Germany X X X X X X
Hilversum N/A(1) The Netherlands X X X X
Hollywood Entertainment Services California, USA X X X X X X
Indianapolis Digital Delivery Indiana, USA X X X X X X
Kobe N/A(1) Japan X X
Livonia Entertainment Services Michigan, USA X X X X X X X X X
London MPC Entertainment Services UK X X X X X X
Madrid N/A(1) Spain X X X X X X
Manaus Digital Delivery Brazil X X X X X X X X X
Melbourne Entertainment Services Australia X X X X X X X X X
Memphis Entertainment Services Tennessee, USA X X X X X X X X X
Mexicali Entertainment Services Mexico X X X X X X X X X
Mirabel N/A(1) Canada X X X X X X
Montreal Entertainment Services Canada X X X X X X X X X
Nevada City N/A(1) California, USA X X X
New York N/A(1) New York, USA X X X X X X
North Hollywood N/A(1) California, USA X X X X X X
Ontario California Entertainment Services California, USA X X X X X X X X X
Perivale Entertainment Services UK X X X X X X
Piaseczno Entertainment Services Poland X X X X X X X X X
Pinewood Entertainment Services UK X X X X X X X X X
Princeton Technology New Jersey, USA X X X X X X
Rennes Cesson Digital Delivery France X X X X X X X X
Entertainment
Rome Services(2) Italy X X X X X X X X X
Rugby Entertainment Services UK X X X X X X X X X
Entertainment
Saint-Cloud Services(3) France X X X X
San Francisco Entertainment Services California, USA X X X X
Southwick N/A(1) Massachusetts, USA X X X
Sydney Entertainment Services Australia X X X X X X X X X
Toronto (film) N/A(1) Canada X X X X X X
Toronto (post) Entertainment Services Canada X X X X
Türgi N/A(1) Switzerland X X X
Tultitlan Entertainment Services Mexico X X X X X X X X X
Vancouver (film) N/A(1) Canada X X X
Vancouver MPC Entertainment Services Canada X X X X
Vancouver (post) Entertainment Services Canada X X X X
Weiterstadt N/A(1) Germany X X X
Wilmington Entertainment Services Ohio, USA X X X X X X X X X
E = Environmental data, Utility = Water and Energy data, H&S = Work injury data.
(1) These sites have been closed or sold.
(2) These sites stopped operating during 2012, and their partial-year figures for the duration of their operation are included in this report.
(3) The prior Saint Cloud location was transferred during 2012 and a small part of prior site was refurbished for dubbing operations.

Stakeholder relations and local impacts of the Company's activities
6.3 STAKEHOLDER RELATIONS AND LOCAL

IMPACTS OF THE COMPANY’S ACTIVITIES
Technicolor maintains close relations with local communities in order to financial difficulties. In so doing, the Group contributed directly to
limit the impacts off the company’s activities on the local environment maintaining expertise, jobs and significant achievements for its
(e.g. noise pollution, light pollution, air pollution and road traffic). The customers and heritage. Additionally, Technicolor moved its several
Group strives to take the necessary steps in these contexts in order to existing R&D locations in Rennes to a newly built research center
achieve a satisfactory outcome for all concerned. building located geographically close to the former sites in order to
offer its research teams a new start, providing them with a competitive
Two areas in which Technicolor had strong activities in the past and attractive environment in which to improve cooperation capabilities
significantly reduced in 2012: photo-chemical film processing due to with the surrounding ecosystem and anchor its local and regional
the acceleration off the transition to digital cinema and the presence. Technicolor continues to contribute actively to regional
manufacturing off set-top-boxes within the European Union largely due competitiveness clusters where it operates R&D activities.
to a loss of competitiveness subsequent to a decision from the
European Commission to grant these products a zero tariff status. In addition to its support to the Technicolor Foundation, the Group
These two developments led to the closure off several manufacturing continues to support activities in various environments relating to the
units to which Technicolor has committed resources, according to its world of film: training students in schools, donating equipment,
existing policies, in order to mitigate the impact. launching festivals for new talent, organizing screenings for children in
hospitals, supporting charities, and developing new experimental
Conversely, as part of the transition to digital, Technicolor has had the technologies.
opportunity to recover the activities of a number of companies facing

Technicolor foundation for cinema heritage
6.4 TECHNICOLOR FOUNDATION FOR CINEMA

HERITAGE
The Technicolor Foundation for Cinema Heritage operates worldwide version in the world. The Foundation also most notably provides legal
to safeguard films of the past, in order that they may be seen now and in support and technical expertise. Several restorations: in 2008, the
the future. Foundation restored Lola Montès by Max Ophuls and in 2009
Mr. Hulot’s Holiday by Jacques Tati, Selvi Boylum al Yazmalim by Atif
Created in 2006, the Technicolor Foundation is a non-profit entity, Yilmaz. In 2009 and 2010, the Foundation worked closely with
acting in the field off the preservation and promotion of film heritage, Pierre Etaix in order to put an end to a legal imbroglio which blocked
which reflects the history and the culture of a country. the films for almost 20 years. Consequently the Complete Film
Works off Pierre Etaix could then be restored and released again. In
The programs are built around three main guiding principles:
2011, the Foundation conducted one of the most ambitious
preserve film heritage as a key part off a country’s memory; restoration project with a master piece of early times of cinema A Trip
to the Moon by Georges Méliès (1902). The original color version
promote and highlight film heritage in order that it may be seen by which had disappeared for 80 years was miraculously found and
and shared with as wide an audience as possible; meticulously restored. In 2012, among other projects: the first feature
off Jacques Demy, Lola (1961) and Tell Me Lies (1968) by Peter
train and sensitize everyone who can play a part in the safeguarding of
Brook. All those films were circulated worldwide since their
film heritage.
restoration;
To meet these three main objectives, the Foundation operates in
it defines and conducts specific education programs targeting mostly
different ways:
film school students: the Foundation is involved in various ways from
it operates directly on site with the related film archive institutions offering a complete curriculum incorporated in film school programs
(Cambodia, India): annual programs are defined to upgrade the to conducting regular workshops in these programs or during festivals
archive and enable access to these archives (preservation work, (India, USA, China, France, Romania, Russia, Italy, Portugal, Ethiopia
equipment donations, education programs for local teams, collection and Turkey). These educational programs cover basic aspects of film
enrichment, etc.). In 2012, the Foundation has amplified its support heritage: preservation concerns and risks, access to film heritage,
to Bophana Center, the Cambodia Film and Audiovisual Archive, basic technical and legal knowledge, filmmaker responsibilities (rights
managed by the Franco/Cambodian filmmaker Rithy Panh. The and duties). The objective is to raise the awareness of the future
program comprises equipment donation and technical training, lost generation off filmmakers, in close liaison with film industry
film search worldwide, digitization of film, creation of an international representatives and film archive institutions;
festival fully dedicated to film heritage etc.;
it supports classics festivals or creates specific festivals or events for
it defines and monitors major restorations: each year, one off the the promotion of film heritage.
objectives off the Foundation is to restore and promote key
For all of these programs, the Foundation identifies the appropriate
international cinema titles in order better to raise audiences’
resources required and helps set up multi-disciplinary teams. These
awareness of the importance of film heritage and the risks of
include experts from its founder Technicolor and experts from leading
endangering films that are not properly safeguarded. A project team
film archive institutions, film preservation schools and cinema schools.
is set up, which includes the Foundation, the rights owners and a film
Knowledge transmission and education play a key role in each program.
archive institution. The Foundation monitors the whole process from
the preservation to the non-commercial distribution of the restored

7 ADDITIONAL INFORMATION
7.1 PROPERTY, PLANT AND EQUIPMENT ................................................................. 126 7.5 ORGANIZATION OF THE GROUP ....................................................................................... 131
7.1.1 Operating facilities and locations .................................................................................... 126 7.5.1 Legal organizational Chart as of December 31,
2012 ..................................................................................................................................................................................................... 131
7.2 MEMORANDUM AND BYLAWS ..................................................................................................... 128
7.5.2 Operational organization ..................................................................................................................... 133
7.2.1 Corporate purpose .............................................................................................................................................. 128
7.2.2 Board of Directors and Executive Committee 7.6 AVAILABLE DOCUMENTS ............................................................................................................................ 134
Members ...................................................................................................................................................................................... 128 7.7 INFORMATION ON ACCOUNTING SERVICES .......................... 134
7.2.3 Rights, privileges and restrictions linked to shares ................. 128
7.7.1 Statutory Auditors .................................................................................................................................................. 134
7.2.4 Actions necessary to change the rights of
7.7.2 Substitute Statutory Auditors .................................................................................................. 135
shareholders ........................................................................................................................................................................... 129
7.2.5 Shareholders’ Meetings ........................................................................................................................... 129 7.8 ACCOUNTING FEES AND SERVICES .......................................................................... 135
7.2.6 Bylaws requirements for holdings exceeding certain
7.9 PERSONS RESPONSIBLE FOR
percentages ............................................................................................................................................................................ 129 THE REGISTRATION
DOCUMENT AND THE ANNUAL FINANCIAL
7.3 MATERIAL CONTRACTS ....................................................................................................................................... 130 REPORT ....................................................................................................................................................................................................................... 136
7.4 ADDITIONAL TAX INFORMATION ................................................................................... 130 7.9.1 Declaration by the person responsible for the
Registration Document and the Annual Financial
Report ............................................................................................................................................................................................. 136
7.9.2 Responsible for information .......................................................................................................... 136

7 - ADDITIONAL INFORMATION
Property, plant and equipment
7.1 PROPERTY, PLANT AND EQUIPMENT
7.1.1 OPERATING FACILITIES number off key actions to optimize its global real estate footprint. These
actions have resulted in a reduced global real estate footprint from
AND LOCATIONS 12.2 million square feet at end 2011, to 11.1 million square feet at end
Technicolor occupies, as owner or tenant, a number off office buildings, 2012, or a reduction of 9%.
manufacturing plants, and distribution and warehousing sites around the
world. Technicolor is constantly reviewing its real estate needs in order The key actions taken to reduce the Group’s real estate footprint
to improve efficiency and minimize costs. In 2012, Technicolor took a (including the sale off Broadcast Services) in 2012 included:
Operating Facilities Primary Activity Type of Action

Hilversum, Netherlands Office Transfer
Leeds, United Kingdom Office Transfer
Chiswick, United Kingdom Office Transfer
Saint-Cloud, France Office Transfer
Angers, France Manufacturing Closure
Mirabel, Canada Film Lab Closure
Venray, Netherlands Office Closure
Rennes – Cesson, France (rue de Bray) Office Closure
Rennes – Cesson, France (Belle Fontaine) Lab Closure
La Salle, Canada Distribution Closure
Toronto, Canada Production Closure
Vancouver, Canada Distribution Closure
Detroit, United States Distribution Closure
Glendale, United States Office Closure
New-York, United States (Leroy Street) Production Closure
Singtel, Singapore Office Closure
Madrid, Spain Film Lab Closure
Vancouver, Canada (Homer street) Office Closure
New-York, United States (320 West 44 4th St.) Office Sub-lease
Indianapolis, United States (100 W 103rd St.) Office Sub-lease
Toronto, Canada (49 Ontario Street) Production Sub-lease
Burbank, United States, (2255 N. Ontario Street) Office Sub-lease
Princeton, United States Production Sub-lease
The Group operates various manufacturing, production, 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 requirements, maximize the quality, flexibility and responsiveness of its
manufacturing some of its finished products, particularly for Connected products and services, while minimizing negative impacts that could
Home. affect the environment, or the health and safety of its employees and
contractors.
At the end of 2012, Technicolor occupied the following key facilities:
Main Operating Facilities Primary Activity Own/Lease Square Feet

Memphis (TN, United States) Distribution Lease 4,399,521
Livonia (MI, United States) Distribution Lease 788,174
Brampton (ON, Canada) Distribution Lease 529,552
Piaseczno (Poland) Manufacturing Own 291,776
Rugby (United Kingdom) Distribution Lease 282,675
Guadalajara (Mexico) Manufacturing Own 272,850
Ontario (CA, United States) Distribution Lease 241,170
Tultitlan (Mexico) Distribution Lease 239,292
Burbank (CA, United States) Office Lease 224,155
Mexicali (Mexico) Distribution Lease 210,630
Rome (Italy) Production Own 197,119
Issy-les-Moulineaux (France) Office Lease 195,410
Rennes-Cesson (France) Les Champs Blancs Lab Lease 194,129

ADDITIONAL INFORMATION - 7
Property, plant and equipment
Main Operating Facilities Primary Activity Own/Lease Square Feet

Indianapolis (IN, United States) Office Lease 179,913
Bangalore (India) Production Lease 169,866
Camarillo (CA, United States) Distribution Lease 158,256
Mississauga (ON, Canada) Distribution Lease 149,629
Wilmington (OH, United States) Distribution Lease 121,600
Sydney (NSW, Australia) Distribution Lease 118,230
Hollywood (CA, United States) Office Lease 116,830
Los Angeles (United States) Production Lease 99,447
Montreal (QC, Canada) Production Lease 99,150
Glendale (CA, United States) Film Lab/Office Lease 92,835
Beijing (China) Office Lease 92,127
London (United Kingdom) Production Lease 76 956
Toronto (ON, Canada) Production Lease 76,749
Princeton (NJ, United States) Office Lease 67,401
Bangkok (Thailand) Film Lab Own 65,998
Perivale (United Kingdom) Production Lease 50,198
Manaus (AM, Brazil) Manufacturing Own 50,001
Hannover (Germany) Lab Lease 46,780
Boulogne (France) Production Lease 46 285
San Francisco (CA, United States) Production Lease 45,843
Melbourne (Australia) Manufacturing/Distribution Lease 43,415
Edegem (Belgium) Office Lease 37,867
London Pinewood Studios (United Kingdom) Production Lease 36,739
Vancouver (Canada) Production Lease 30,220
Rome (Italy) Office Lease 28,755
Summary of Operating Facilities Square Feet Percentage of Surface

Office 929,163 8%
Lab 263,671 2%
Film Lab 105,948 1%
Manufacturing 622,914 6%
Production 1,158,574 11%
Warehouse/Distribution 8,017,544 72%
ALL PROPERTIES 11,143,657 100%
Production: sites dedicated to digital work for Digital Creative services (post production, special effects, animation, digital conversion, digital distribution,...).
Manufacturing: sites dedicated to DVDs, Set top boxes and gateways are manufacturing.
Film lab: photochemical film development and printing sites.
Lab: Research sites.
Office: sites dedicated to corporate activities and product development.
Warehouse/Distribution: sites dedicated to DVDs and film distribution/warehousing.
Manufacturing, Production, Film DVD Manufacturing and Distribution

Processing and Distribution Global distribution and supply chain activities are provided in-house and
Technicolor’s manufacturing, production, film processing, and distri- through a network of contracted Third-Party Logistic Providers (3PLs).
bution facilities accounted for 90% of its facilities space, at the end of In markets where distributed unit volumes are sufficient, Technicolor
2012. The location of each significant facility can be found in the table completes all distributions and logistics activities in-house. In smaller
above. markets, or where other considerations prevail, these activities are
completed by 3PL’s on Technicolor’s behalf. In North America, the
Technicolor’s respective business segments have varying approaches to Group distributed 100% in-house; in Europe, approximately 58%
performing these activities; each is discussed in turn below. in-house and approximately 42% by 3PL’s. In Australia, Technicolor
provides distribution services.

Memorandum and bylaws
Film Services Set-Top Boxes, Gateways,

Bulk-printing services are offered to customers for the release of film to and Connected Devices
cinemas for theatrical release. Following the rapid shift to digital cinema In 2012, Technicolor delivered a total off about 30.1 million gateways,
since 2010, the Company has launched several initiatives in order to set-top boxes, and connected devices. Overall, around 15.3% of the
optimize its photochemical film activities. In 2012, the Group Group’s total volume has been manufactured in-house, with the rest of
subcontracted all release printing services in North America and in its volumes being outsourced to partners in Asia and Mexico.
Europe to Deluxe, resulting in the closure of four film laboratories in
Montreal, London, Rome, Madrid. While in London a small front lab
was maintained for rush orders. For more information, please refer to
section 1.3.2: “Entertainment Services” of this Annual Report.
The total in-house manufacturing and replication output for the Group can be found in the table below for 2012.
In-house Manufacturing and Replication Number of Units

DVD Replication 1.2 billion DVDs
Blu-rayTM Replication 182 million Blu-rayTM discs
Film Processing 479 million feet of film
Connected Home
Gateways, SetTop Boxes and Connected Devices 4.6 million units
7.2 MEMORANDUM AND BYLAWS

This section contains the information required by paragraph 21.2: agreement, association or Company, with any other legal entity or
“Memorandum and Bylaws” of European Commission Regulation (EC) individual, and carry out, in France or abroad, in any manner
no. 809/2004 of April 29, 2004. whatsoever, any and all financial, commercial, industrial, real property,
and personal property transactions within the scope of its purpose or
You may obtain copies of the Company’s bylaws in French from the involving similar or related matters” (Article 2 of the bylaws).
Greffe of the Registry of Commerce and Companies of Nanterre,
France.
7.2.2 BOARD OF DIRECTORS AND
7.2.1 CORPORATE PURPOSE EXECUTIVE COMMITTEE
MEMBERS
“Technicolor’s corporate purpose is, directly or indirectly, in France and
in any other country: Information relating to administrative bodies is listed in Chapter 4:
“Corporate governance and Internal Control”, section 4.1.2:
the taking of equity holdings or interests in any business of any nature “Composition and expertise of the Board of Directors” of this Annual
in any form whatsoever, whether in existence or to be created; Report.
the acquisition, management, and transfer of any and all real property
rights and assets and any and all financial instruments, and the 7.2.3 RIGHTS, PRIVILEGES
execution of any and all financing transactions;
AND RESTRICTIONS LINKED
the acquisition, transfer and use of any and all Intellectual Property TO SHARES
rights, licenses or processes;
Voting rights
the manufacture, purchase, importation, sale and export, anywhere, of
“Each shareholder shall have as many votes as the shares that he
any and all materials and products, as well as the rendering of any and
possesses or represents by proxy” (Article 20 of the bylaws). Each
all services.
shareholder is entitled to one vote per share only.
Technicolor may act directly or indirectly, for its own account or for the
account of third parties, whether alone or through an equity holding,

Memorandum and bylaws
Under French law, treasury shares are not entitled to voting rights. 7.2.6 BYLAWS REQUIREMENTS FOR
HOLDINGS EXCEEDING
Other rights of shareholders CERTAIN PERCENTAGES
“In addition to the right to vote that is attributed by law, each share “Without prejudice to applicable law, any legal entity or individual,
gives the right to the ownership of the corporate assets, to a share in the whether acting alone or in concert, who comes to own directly or
profits, and to the liquidation proceeds, in an amount equal to the indirectly a number of shares or voting rights equal to or greater than
portion off the share capital represented. 0.5% of the total number of shares or voting rights of the Company,
Whenever it may be necessary to own a certain number of shares in must so inform the Company. This obligation is governed by the same
order to exercise a right, it is the responsibility off the shareholders who provisions as those governing the legal obligation; the
do not own an adequate number of shares, as the case may be, to group threshold-crossing declaration is to be made within the same time limit
their shares in the amount necessary. as for the legal obligation, by registered letter with return receipt
requested, by facsimile or by telex, indicating whether the shares or the
The ownership of share entails, by operation of law, adherence to the voting rights are held for the account of, under the control of, or in
bylaws of the Company and to the decisions of the Shareholders’ concert with other legal entities or individuals. An additional notice is
Meeting and of the Board of Directors, as authorized by the required for each additional holding of 0.5% of the share capital or
Shareholders’ Meeting” (Article 9 of the bylaws). voting rights, without limitation.
This duty to inform applies under the same conditions when the equity
7.2.4 ACTIONS NECESSARY TO holding or the voting rights decrease below the thresholds mentioned in
the preceding paragraph.
CHANGE THE RIGHTS OF
SHAREHOLDERS In the event off a failure to comply with the duty to inform provided
Any amendment to the bylaws must be voted or authorized by the above, the shareholder may, under the conditions and within the limits
Shareholders’ Meeting under the conditions off quorum and majority off applicable laws and regulations, be deprived of the right to vote in
required by the laws or regulations in force for Extraordinary respect of the shares exceeding the relevant threshold. This penalty is
Shareholders’ Meetings. independent of any penalty which may be decided by judicial decision
upon request of the Chairman, a shareholder, or the AMF.
For the purpose of determining the thresholds referred to above, shares

7.2.5 SHAREHOLDERS’ MEETINGS or voting rights held indirectly and shares or voting rights associated
with the shares or voting rights actually held, as defined by the
Notice of Shareholders’ Meetings provisions of Articles L. 233-7 et seq. off the French Commercial Code,
“Shareholders’ Meetings are convened and deliberate pursuant to are taken into account.
applicable laws and regulations” (Article 19 of the bylaws).
The declarant must certify that the declaration includes all the securities
giving access, immediately or in the future, to the share capital off the
Attendance and voting at Shareholders’ Company held or owned within the meaning of the preceding
Meetings paragraph. The declarant must also indicate the date or dates of
“Every shareholder has the right, upon proof of identity, to participate in acquisition.
Shareholders’ Meetings, by attending in person, by mailing in a voting
form, or by designating a proxy. Mutual fund management firms are required to report this information
in respect of all of the voting rights attached to the shares of the
Such participation is subject to the recording off the shares, either in the Company held by the funds that they manage” (Article 8.2 off the
Company’s registered share account, or in bearer share account held by bylaws).
an authorized intermediary, within the time limits and under the
conditions provided for by applicable regulation. In the case of bearer
shares, the registration is evidenced by a certificate of participation
(attestation de participation) issued by the authorized intermediary”
(Article 19 off the bylaws).

Material contracts
7.3 MATERIAL CONTRACTS

Readers are invited to refer to the description of the agreements affecting the Restructured Debt described in Chapter 2: “Operating and
Financial Review and prospects”; section 2.10.3 “Financial resources” of this Annual Report.
7.4 ADDITIONAL TAX INFORMATION
Total amounts, by category Total amount of certain non-deductible

of expenditure, reinstated in the taxable expenses under Articles 39-4 and 223
profits following a definitive tax quater of the Tax Code
The non-deductible expenses referred to in Article 39-4 of the French
adjustment under Article 223 quinquies General Tax Code amounted to €164,317.43 in 2012 for the
of the Tax Code Company and correspond to the non-deductible rents on private
None. vehicles.

Organization of the Group
7.5 ORGANIZATION OF THE GROUP

7.5.1 LEGAL ORGANIZATIONAL CHART AS OF DECEMBER 31, 2012
At December 31, 2012, the Group included 115 consolidated subsidiaries: 96 were incorporated outside France; 19 in France (see notes 4
and 35 to the Group consolidated financial statements).
Main legal entities

EUROPE
TECHNICOLOR SA
100% 100% 99.99% 100%

Technicolor Multimedia Technicolor RCA Trademark 100%
International 77.30% 27.70% SOFIA SA Gallo 8 SAS Management SAS
Distribution (Netherlands) (France) (France)
B.V (Netherlands) SAS (France) (France)
99.99% 100%
Deutsche Technicolor Technicolor Trademark
Management SAS 100%
Technicolor Thomson OHG Holdings Ltd.
100% (Germany) (UK) (France)
France SAS (France) 100%
100% Technicolor Technology
Thomson Multimedia Licensing SAS
Technicolor Entertainment 100% Technicolor Delivery Sales UK Ltd. (France)
Services Spain. SA Technologies SAS
(Spain) (France)
100%
99.99%
0.01% Technicolor S.p.A. Cirpack SAS (France)
(Italy)
100%
100%
Thomson Technicolor Delivery
Licensing SAS Technologies Belgium
(France) N.V (Belgium)
(Subsidiaries in
Japan & Switzerland) 99.99%
Technicolor Ltd. 100% Technivision Ltd. 100%
Technicolor R&D (UK) (UK)
Paris SNC (France)
100% 100%
64%
Technicolor Media Technicolor
35% Technicolor R&D Services (UK) Limited Videocassette Holdings
France SNC (France) (UK) UK Ltd. (UK)
Technicolor Disc 100%

Services Technicolor 100% 100% Technicolor Distribution
International Ltd. (UK) Europe Ltd. Services France EURL
(UK) (France)
Technicolor 100% 100%
Video Services (UK)
Ltd. (UK) Technicolor
Polska Sp Z.o.o.
(Poland)
The Moving Picture 100%

Company Ltd.
(UK)
SEGMENTS:
Corporate
Entertainment Connected Home Technology (Corporate, Holding
Services or belonging to
several divisions)

Main legal entities

ASIA AND AMERICA
TECHNICOLOR SA
100%
100%
Technicolor 100%
International
Technicolor Asia Pacific SAS (France) Gallo 8 SAS Technicolor Inc.
Investments 100%
(France) (USA)
Pte Ltd. (Singapore)
99.9% 100%
100% Technicolor Malaysia Sofia SA Technicolor 100%

Sdn Bhd 99.99% Holdings of Canada. Technicolor. Inc.
(France) (USA)
(Malaysia) Technicolor Brasil Inc. (Canada)
Midia E entretenimento 100%
22.70% Ltda. (Brazil) 100%
100% Technicolor Technicolor Delivery 77.30% Technicolor Creative
(China) Technology Technologies SAS Services
Co. Ltd. (China) (France) Technicolor Canada. USA. Inc. (USA)
Inc. (Canada)
(Subsidiaries in Australia Technicolor Home 100% (Subsidiaries in Canada)
100% Thomson Holdings Canada, Hong-Kong, Entertainment Services Thomson Licensing LLC 100%
(India) Mexico) of America LLC (USA) Technicolor 100% (USA)
Private Ltd. (India) Australia Investments
Ltd. (UK)
100% Thomson Multimedia Second Screen 100%
Ltd. (Canada) 99.99% Technicolor Export 0.01% Solutions. Inc.
100% Technicolor Asia de Mexico. S de R.L.
Pacific Holdings 100% Technicolor Pty Ltd. (USA)
de C.V. (Mexico)
Pte Ltd. (Singapore) (Australia)
99.99% Thomson Telecom 100% Technicolor Technology 100%
99.95% Mexico SA de C.V
99.99% Technicolor 0.01% Licensing LLC (USA)
0.003% Technicolor India (Mexico) Mexicana. S. de R.L. Technicolor Delivery
Private Ltd. de C.V. (Mexico) Technologies 50%
(India) Australia Pty Ltd.
Technicolor Asia (Australia) Shuhari Technology LLC
Ltd. 100% (USA)
100% (Hong Kong) Technicolor Distribution
Commercializadora 100%
Thomson Australia Pty Ltd. 89.01%
de Mexico SA de C.V (Australia) MediaNaviCo LLC
(Mexico) (USA)
100%
Technicolor
Holdings Ltd. Technicolor 100%
(UK) Videocassette of
Michigan. Inc. (USA)
100%
IZ-ON Media LLC 100%

Technivision Ltd.
(UK) (USA)
100%
Technicolor Home 100%
Entertainment
Technicolor Ltd. Services. Inc. (USA)
(UK)
100% (Subsidiaries in USA)
99.9%
Technicolor Technicolor Home
(Thailand) Ltd. Entertainment Services
(Thaïland) de Mexico S de R.L
de C.V (Mexico)
SEGMENTS:
Corporate
Entertainment Connected Home Technology (Corporate, Holding
Services or belonging to several
divisions)

7.5.2 OPERATIONAL ORGANIZATION

The Group’s organizational chart below contains the Group’s main The list off main consolidated subsidiaries is described in note 35 to the
operating subsidiaries, classified by segments. These subsidiaries are Group’s consolidated financial statements. A summary table sets forth
directly held or indirectly held through Technicolor as off December 31, the list off Group’s subsidiaries broken down by the geographic location
2012. They have been selected based on their contribution to the off the entity (please refer to note 4 to the consolidated financial
Group’s revenues (external and intra-group) for the entities of statements).
Entertainment Services and Digital Delivery segments. They are based
on workforce for the entities belonging to Technology. Revenues from Main financial data (revenues, profit (loss) from continuing and
these subsidiaries represent 96% of the Group’s revenues (external and discontinuing activities, geographic breakdown of assets and liabilities)
intra-group) in 2012. as well as goodwill and trademarks are broken down for each segment in
the Group’s consolidated financial statements in notes 5 and 13,
respectively.
Technology Digital Delivery Entertainment Services
Technicolor R&D France SNC (2) Technicolor Delivery Technologies SAS Technicolor Distribution Services France EURL
France Thomson Licensing SAS
Technicolor Trademark management SAS
Technicolor Entertainment Services France SAS
RCA Trademark management SAS
Europe
Technicolor Media Services UK Ltd. Technicolor Polska sp.zo.o.
excl.
MPC The Moving Picture Company Ltd.
France
Technicolor Disc Services International Ltd.
(Hammersmith)
Technicolor SpA
Technicolor Video Serv. (UK) Ltd.
Technicolor Ltd.
Thomson multimedia Distribution
(Netherlands) BV
Thomson Licensing LLC Technicolor USA, Inc. (1) Technicolor Home Entertainment Serv. de
Americas MediaNavi Co LLC Technicolor Brasil Midia E Entretenimento LTDA Mexico SA de CV
Thomson Telecom Mexico, SA de C.V. Technicolor Export de Mexico, S. de R.L.
Comercializadora Thomson de Mexico Technicolor Mexicana, S. de R.L. de C.V.
SA de CV Technicolor Canada Inc.
Technicolor Home Entertainment Services, Inc.
Technicolor, Inc.
Technicolor Videocassette of Michigan, Inc.
Technicolor Creative Services USA, Inc.
IZ-ON Media, LLC
Technicolor (China) Technology Co., Ltd.(2) Technicolor Delivery Technologies Australia Technicolor India Pvt Ltd.
Asia Pty Ltd. Technicolor, Pty, Ltd.
Technicolor Asia Pacific Holding Pte Ltd. Technicolor (Thailand) Ltd.
(1)
This entity also hosts some operation of the Entertainment Services segment
(2)
This entity also hosts some operation of the Digital Delivery segment
Parent company Group treasury and part of the segments Digital Delivery and
Technology. The profit and loss account of the parent company (as
At December 31, 2012, Technicolor SA comprised 373 employees. It
presented in statutory accounts) shows a gain off €2,104 million
hosts mainly the activities of Group management, support functions,

Available documents
in 2012 (compared to a net loss of €338 million in 2011) (for more off other financial income in 2012. The Company has organized a
information regarding the parent company, refer to Technicolor SA’s system of centralization off the treasury in the main countries where it
statutory accounts and notes to the financial statements in Chapter 8: operates and implements hedge transactions for the Group, in
“Technicolor financial statements”, section 8.4: “Technicolor SA’s accordance with defined management rules.
Statutory accounts” and 8.5: “Notes to Technicolor SA Statutory
accounts” off 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
Main cash flows between the Company percentage of the income or/and on the subsidiaries, result by a fixed
and the subsidiaries fee, or upon completion off the services.
The Parent company ensures the financing of its subsidiaries by loans
For more details, see note 21 to the Parent company's statutory
and current accounts (net receivable position of €2,643 million before
accounts for related party transactions.
depreciation at December 31, 2012) and equity instruments and,
consequently, has received €332 million of dividends and €55 million
7.6 AVAILABLE DOCUMENTS

The bylaws and other corporate documents of the Company, any Moreover, historical financial information and regulated information of
evaluation or statement prepared by an expert at the request of the the Group is available on the Company’s
Company, part off which is included or mentioned in website (www.technicolor.com).
this Annual Report, and, more generally, all documents sent or
made available to shareholders pursuant to French law may be Paper versions of this Annual Report are available free off charge.
consulted at the Company’s headquarters, 1-5 rue Jeanne d’Arc, This Annual Report may also be consulted on the Technicolor website.
92130 Issy-les-Moulineaux, France.
7.7 INFORMATION ON ACCOUNTING SERVICES
7.7.1 STATUTORY AUDITORS Starting date of Statutory Auditors’ first

Deloitte & Associés mandate
185 C avenue Charles de Gaulle Deloitte & Associés: 2012.
92200 Neuilly-sur-Seine Mazars: 1985.
Represented by Ariane Bucaille and Alain Pons
Mazars Duration and expiration date

61 rue Henri-Régnault – Tour Exaltis of Statutory Auditors’ mandate
92400 Courbevoie Deloitte & Associés: approved at the Combined Shareholders’ Meeting
Represented by Jean-Louis Simon and Simon Beillevaire off June 20, 2012. Their mandate will expire at the Shareholders’
Meeting held for the approval of the 2017 annual accounts.

Accounting fees and services
Mazars: renewed by the Annual Ordinary Shareholders’ Meeting held Duration and expiration date of
on June 17, 2010. Their mandate will expire at the Shareholders’
Meeting to be held in 2016 for the approval of the 2015 annual
Substitute Statutory Auditors’ mandate
accounts. BEAS: approved at the Combined Shareholders’ Meeting of
June 20, 2012. Their mandate will expire at the Shareholders’ Meeting
held for the approval of the 2017 annual accounts.
7.7.2 SUBSTITUTE STATUTORY Mr. Patrick de Cambourg: renewed by the Annual Ordinary
AUDITORS Shareholders’ Meeting held on June 17, 2010. Their mandate will
BEAS expire at the Shareholders’ Meeting to be held in 2016 for the approval
195 avenue Charles de Gaulle of the 2015 annual accounts.
92200 Neuilly-sur-Seine
Mr. Patrick de Cambourg
1 rue André Colledebœuf
75016 Paris
7.8 ACCOUNTING FEES AND SERVICES
(in € thousands) Deloitte KPMG Mazars Total

2012 2012 2011 2012 2011 2012 2011
Audit services(1) 2,039 - 3,017 1,598 2,450 3,637 5,467
Technicolor SA 717 - 910 760 1,038 1,477 1,948
Subsidiaries 1,322 - 2,107 838 1,412 2,160 3,519
Audit-Related Fees(2) 83 174 67 305 70 562 137
Technicolor SA 75 174 22 274 20 523 42
Subsidiaries 8 - 45 31 50 39 95
Tax fees(3) 62 - 86 - - 62 86
Technicolor SA - - - - - - -
Subsidiaries 62 - 86 - - 62 86
Other fees 44 - - - - 44 -
Technicolor SA - - - - - - -
Subsidiaries 44 - - - - 44 -
TOTAL 2,228 174 3,170 1,903 2,520 4,305 5,690
(1) Audit Fees are the aggregate fees billed by Deloitte, 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 consist of fees billed for services related to audits of financial statements in connection with disposals or acquisitions as well as other regulatory attestations.
(3) Tax Fees include fees billed for tax compliance and for tax advice on actual or contemplated transactions, expatriate employee tax services and transfer pricing studies.

Persons responsible for the Registration Document and the Annual Financial Report
7.9 PERSONS RESPONSIBLE FOR THE REGISTRATION

DOCUMENT AND THE ANNUAL FINANCIAL
REPORT
7.9.1 DECLARATION BY THE “Without qualifying our opinion, we draw your attention to note 3.1 to the
consolidated financial statements which describes the reasons for applying
PERSON RESPONSIBLE the going concern assumption to approve the consolidated financial
FOR THE REGISTRATION statements.”
DOCUMENT AND THE The Statutory Auditors’ report on the parent company financial
ANNUAL FINANCIAL REPORT statements for the same fiscal year included on page 258 of the 2011
Mr. Frederic Rose, Chief Executive Officer, Technicolor. French Registration Document is unqualified and contains the following
“I declare that, having taken all reasonable care to ensure that such is the emphasis off matter:
case, the information contained in this Registration Document is, to the “Without qualifying our opinion, we draw your attention to note 2 to the
best of my knowledge, in accordance with the facts and that there is no financial statements which describes the reasons for applying the going
omission likely to affect the fairness of the presentation. concern assumption to approve the financial statements."
I certify that, to the best of my knowledge, the financial statements have The Statutory Auditors’ report on the consolidated financial statements
been prepared in accordance with the applicable set off accounting for the year ended December 31, 2010, included on page 252 of the
standards and give a true and fair view of the assets and liabilities, 2010 Registration Document submitted to the AMF on
financial position and results of the Company and of its consolidated March 30, 2011 under the no. D. 11-0196 and included by reference
subsidiaries, and that the management report, integrated within this in this Registration Document, is unqualified and contains the following
Registration Document, fairly presents the evolution of the business, emphasis off matter:
results and financial position of the Company and its consolidated “Without qualifying our opinion, we draw your attention to the following
subsidiaries, together with a description of the principal risks and notes to the consolidated financial statements:
uncertainties that they face. notes 1.2. and 3.1, which describe the impact of the financial
I have received a letter off completion of assignment from the Statutory restructuring as well as the reasons for applying the going concern
Auditors, in which they state that they have verified the information assumption to approve the consolidated financial statements;
relating to the financial position and the financial statements set out in notes 2.2. and 2.3., relating to the new standards effective as of
this Registration Document and have read the Registration Document January 1, 2010, and to the new interpretation IFRIC 19 “Extinguishing
in its entirety. Financial Liabilities with Equity Instruments”, which the Company ado-
The report on the consolidated financial statements for the year ended pted on January 1, 2010 in advance of its effective application date”.
December 31, 2012, included on page 221 of this Registration The Statutory Auditors’ report on the parent company financial
Document is unqualified and contains the following emphasis of matter: statements for the same fiscal year included on page 281 off the
"Without qualifying our opinion, we draw your attention to note 3.1 to the 2010 French Registration Document is unqualified and contains the
consolidated financial statements, which describes the reasons for applying following emphasis of matter:
the going concern assumption to approve the consolidated financial “Without qualifying our opinion, we draw your attention to the notes 1.2
statements." and 2 to the financial statements which describe the impact of the
The report on the annual financial statements for the same year, financial restructuring as well as the reasons for applying the going concern
included on page 246 of this Registration Document is unqualified and assumption to approve the financial statements”.
contains the following emphasis of matter: The historical financial information presented in this Registration
"Without qualifying our opinion, we draw your attention to note 2 to the Document has been subject to reports by the Statutory Auditors”.
fiancial statements, which describes the reasons for applying the going Chief Executive Officer, Technicolor,
concern assumption to approve the financial statements."
Frederic Rose
The Statutory Auditors’ report on the consolidated financial statements
for the year ended December 31, 2011, included on page 231 of the 7.9.2 RESPONSIBLE FOR
2011 Registration Document submitted to the AMF on March 27, INFORMATION
2012 under the no. D. 12-0224 and included by reference in this Mr. Stéphane Rougeot, Chief Financial Officer, Technicolor
Registration Document, is unqualified and contains the following
1-5 rue Jeanne-d’Arc – 92130 Issy-les-Moulineaux – France
emphasis off matter:
Tel.: +33 (0)1 41 86 50 00 – Fax: +33 (0)1 41 86 56 22

8 FINANCIAL STATEMENTS
8.1 TECHNICOLOR 2012 CONSOLIDATED 8.5 NOTES TO THE PARENT COMPANY FINANCIAL
FINANCIAL STATEMENTS ............................................................................................................................ 138 STATEMENTS ...................................................................................................................................................................................... 226
8.1.1 Consolidated statement of operations ............................................................... 138 8.6 PARENT COMPANY FINANCIAL DATA OVER THE
8.1.2 Consolidated statement of comprehensive income ......... 139 FIVE LAST YEARS (UNDER ARTICLES R. 225-81
AND R. 225-102 OF THE FRENCH COMMERCIAL
8.1.3 Consolidated statement of financial position ..................................... 140 CODE) .............................................................................................................................................................................................................................. 245
8.1.4 Consolidated statement of cash flows ................................................................ 142
8.1.5 Consolidated statement of changes in equity ................................. 143 8.7 STATUTORY AUDITORS’ REPORT ON THE
FINANCIAL STATEMENTS FOR THE YEAR
8.2 NOTES TO THE CONSOLIDATED FINANCIAL ENDED DECEMBER 31, 2012 ................................................................................................................ 246
STATEMENTS ........................................................................................................................................................................................ 144
8.8 STATUTORY AUDITORS’ SPECIAL REPORT
8.3 STATUTORY AUDITORS' REPORT ON THE ON REGULATED AGREEMENTS AND
CONSOLIDATED FINANCIAL STATEMENTS .............................. 221 COMMITMENTS – GENERAL MEETING OF
SHAREHOLDERS HELD TO APPROVE THE
8.4 TECHNICOLOR SA PARENT COMPANY ENDED DECECEMBER 31, 2012 .............................................................................................. 248
FINANCIAL STATEMENTS ......................................................................................................................... 223
8.4.1 Statement of operations ......................................................................................................................... 223
8.4.2 Statement of financial position .............................................................................................. 224
8.4.3 Statement of changes in shareholders’ equity ................................. 225

8 - FINANCIAL STATEMENTS
Technicolor 2012 consolidated financial statements
8.1 TECHNICOLOR 2012 CONSOLIDATED

FINANCIAL STATEMENTS
8.1.1 CONSOLIDATED STATEMENT OF OPERATIONS

Year ended December 31,
(in € millions) Note 2012 2011
Continuing operations
Revenues 3,580 3,450
Cost of sales ((2,750)) (2,714)
Gross margin 830 736
Selling and administrative expenses (6) ((397)) (376)
Research and development expenses (7) ((132)) (128)
Restructuring costs (25) ((29)) (83)
Net impairment losses on non-current operating assets (8) ((10)) (188)
Other income (expense) (6) 2 6
Profit (loss) from continuing operations before tax and net finance income (expense) 264 (33)
Interest income (9) 4 5
Interest expense (9) ((149)) (154)
Other financial income (expense) (9) ((52)) (38)
Net finance income (expense) (197) (187)
Share of loss from associates ((5)) -
Income tax (10) ((49)) (83)
Profit (loss) from continuing operations 13 (303)
Discontinued operations
Net loss from discontinued operations (11) (35) (21)
NET INCOME (LOSS) (22) (324)
Attributable to:
Equity holders ((20)) (323)
Non-controlling interests ( )
(2) (1)

(in euros, except number of shares) Note 2012 2011
Weighted average number of shares outstanding (basic net of treasury shares held)(1) (28) 275,885,374 211,364,435
Earnings (loss) per share from continuing operations (28)
basic 0.05 (1.4)
diluted 0.05 (1.3)
Earnings (loss) per share from discontinued operations
basic (
(0.12) ) (0.1)
diluted ((0.12)) (0.1)
Total earnings (loss) per share
basic (
(0.07)
) (1.5)
diluted (
(0.07)
) (1.4)
(1) According to IAS 33.26 and IAS 33.27b, the weighted average number of shares outstanding was adjusted in 2012 and 2011 to take into account the share capital increase with
preferential subscription rights that occurred on August 14, 2012. The 2011 earnings (loss) per share was adjusted accordingly.
The accompanying notes on pages 145 to 220 are an integral part of these consolidated financial statements.

FINANCIAL STATEMENTS - 8
8.1.2 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Period ended December 31,
Net income (loss) for the year (22) (324)
Actuarial gains and (losses)(1) (24) (65) (29)
Fair value gains (losses), gross of tax on available-for-sale financial assets:
Reclassification adjustments to income on disposal of available-for-sale financial
assets - -
Fair value adjustment of the year 1 1
Fair value gains (losses), gross of tax on cash flow hedges:
Reclassification adjustments when the hedged forecast transactions affect profit or
loss (19) (1) -
Currency translation adjustments
Currency translation adjustments of the year (16) 6
Reclassification adjustments on disposal or liquidation of a foreign operation 1 -
Total other comprehensive income(2)(3) (80) (22)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (102) (346)
Attributable to:
Equity holders of the parent (100) (345)
Non-controlling interests (2) (1)
(1) Impact related to held for sale businesses is nil as of December 31, 2012 and December 31, 2011.
(2) No significant tax effect due to the overall tax loss position of the Group.
(3) Within the other comprehensive income, only the actuarial gains and losses will never be reclassified to income, except upon disposal. All other elements may, depending on future
events, be reclassified to income.

8.1.3 CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(in € millions) Note December 31, 2012 December 31, 2011
Assets
Non-current assets
Property, plant and equipment (12) 350 401
Goodwill (13) 478 481
Other intangible assets (13) 433 459
Investments in associates and joint ventures (14) 18 14
Investments and available-for-sale financial assets 7 7
Derivative financial instruments (21) - 1
Contract advances and up-front prepaid discount 42 49
Deferred tax assets (10) 388 394
Income tax receivable 20 20
Other non-current assets (17) 66 67
Cash collateral and security deposits (18) 15 14
Total non-current assets 1,817 1,907
Current assets
Inventories (15) 112 118
Trade accounts and notes receivable (16) 526 585
Income tax receivable 12 13
Other current assets (17) 340 325
Cash collateral and security deposits (18) 29 35
Cash and cash equivalents (18) 397 370
Assets classified as held for sale (11) 4 66
Total current assets 1,420 1,512
TOTAL ASSETS 3,237 3,419


Equity and liabilities
Shareholders’ equity
Common stock (335,543,841 shares at December 31, 2012 with nominal value of €1 per share) (19) 335 224
Treasury shares (156) (156)
Additional paid-in capital 940 857
Subordinated perpetual notes 500 500
Notes redeemable in shares - 13
Other reserves - 60
Retained earnings (accumulated deficit) (1,142) (1,122)
Cumulative translation adjustment (240) (225)
Shareholders’ equity 237 151
Non-controlling interests 4 4
TOTAL EQUITY 241 155
Non-current liabilities
Borrowings (22) 1,019 1,242
Retirement benefits obligations (24) 353 349
Restructuring provisions (25) 1 2
Other provisions (25) 76 83
Deferred tax liabilities (10) 158 167
Other non-current liabilities (27) 96 97
Total non-current liabilities 1,703 1,940
Current liabilities
Borrowings (22) 96 85
Derivative financial instruments (21) - 1
Retirement benefits obligations (24) 35 37
Restructuring provisions (25) 45 79
Other provisions (25) 78 58
Trade accounts and notes payable 445 499
Accrued employee expenses 164 138
Income tax payable 13 14
Other current liabilities (27) 414 361
Liabilities classified as held for sale (11) 3 52
Total current liabilities 1,293 1,324
TOTAL LIABILITIES 2,996 3,264
TOTAL EQUITY AND LIABILITIES 3,237 3,419

8.1.4 CONSOLIDATED STATEMENT OF CASH FLOWS

Net income (loss) ((22)) (324)
Loss from discontinued operations ((35)) (21)
Profit (loss) from continuing operations 13 (303)
Summary adjustments to reconcile profit from continuing operations to cash generated from
continuing operations
Depreciation and amortization 219 261
Impairment of assets(1) (8) 16 191
Net changes in provisions ((75)) 1
Gain on asset disposals - (8)
Interest (income) and expense (9) 145 149
Other non-cash items (including tax) 77 80
Changes in working capital and other assets and liabilities (30) 26 20
Cash generated from continuing operations 421 391
Interest paid ((117)) (124)
Interest received 4 5
Income tax paid ((49)) (7)
Net operating cash generated from continuing activities 259 265
Net operating cash used in discontinued operations (11.3) (6) (19)
NET CASH FROM OPERATING ACTIVITIES (I) 253 246
Acquisition of subsidiaries, associates and investments, net of cash acquired (30) ((10)) (12)
Net cash impact from sale of investments (30) 17 14
Purchases of property, plant and equipment (PPE) ((80)) (106)
Proceeds from sale of PPE and intangible assets 2 5
Purchases of intangible assets including capitalization of development costs ((69)) (64)
Cash collateral and security deposits granted to third parties ((4)) (7)
Cash collateral and security deposits reimbursed by third parties 8 31
Loans (granted to) / reimbursed by third parties ((1)) 1
Net investing cash used in continuing activities ((137)) (138)
Net investing cash used in discontinued operations (11.3) (5) (20)
NET CASH USED IN INVESTING ACTIVITIES (II) (142) (158)
Increase in capital (net of fees paid) (19) 179 -
Changes in ownership interests with no gain/loss of control, net of transaction fees - 3
Proceeds from borrowings (22) 2 4
Repayments of borrowings (22) ((255)) (55)
Fees paid linked to the debt and capital restructuring (30) ((1)) (9)
Hedge accounting 2 -
Net financing cash generated used in continuing activities ((73)) (57)
Net financing cash used in discontinued operations (11.3) - -
NET CASH USED IN FINANCING ACTIVITIES (III) (73) (57)
NET INCREASE IN CASH AND CASH EQUIVALENTS (I+II+III) 38 31
Cash and cash equivalents at beginning of year 370 332
Exchange gains/(losses) on cash and cash equivalents ((11)) 7
Cash and cash equivalents at end of year 397 370
(1) Including €6 million and €3 million of impairment of assets as part of restructuring plans in 2012 and 2011, respectively (see note 25).

8.1.5 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non- Total
controlling equity
Attributable to equity holders of the Group interests (deficit)
Total
Additional Cumulative Group
Share Treasury paid-in Perpetual Other Retained translation equity
(in € millions) capital shares capital NRS Notes reserves earnings adjustment (deficit)
Balance at January 1, 2011 175 (156) 641 278 500 87 (791) (231) 503 2 505
Variation for the year ended
December 31, 2011
Total other comprehensive income (*) - - - - - (28) - 6 (22) - (22)
Net income (loss) for 2011 - - - - - - (323) - (323) (1) (324)
Total comprehensive income for 2011 - - - - - (28) (323) 6 (345) (1) (346)
NRS (Notes Redeemable in Shares)
converted into equity (see note 19) 49 - 210 (259) - - - - - - -
Tax impact on fees related to capital
increase(**) - - 6 (6) - - - - - - -
Share-based payment to employees
(see note 29) - - - - - 1 - - 1 - 1
Other tax impacts on equity(**) - - - - - - (8) - (8) - (8)
Capital increase of non-controlling
interests - - - - - - - - - 3 3
Balance at December 31, 2011 224 (156) 857 13 500 60 (1,122) (225) 151 4 155
Variation for the year ended
December 31, 2012
Total other comprehensive income (*) - - - - - (65) - (15) (80) - (80)
Net income (loss) for 2012 - - - - - - (20) - (20) (2) (22)
Total comprehensive income for 2012 - - - - - (65) (20) (15) (100) (2) (102)
NRS converted into equity (see note 19) 2 - 11 (13) - - - - - - -
Capital increase (see notes 1.2 and 19) 109 - 70 - - - - - 179 - 179
Tax impact on fees related to capital
increase (***) - - 2 - - - - - 2 - 2
Share-based payment to employees
(see note 29) - - - - - 5 - - 5 - 5
Capital increase of non-controlling
interests - - - - - - - - - 2 2
BALANCE AT DECEMBER 31, 2012 335 (156) 940 - 500 - (1,142) (240) 237 4 241
(*) Refer to details in the “Consolidated Statement of Comprehensive Income”.
(**) In 2011, the depreciation of French deferred tax assets has been partly allocated to equity (see note 10).
(***) In 2012, fees on capital increases has been allocated to equity for €10 million, of which €2 millionof tax effect (see note 1.2).

Notes to the consolidated financial statements
8.2 NOTES TO THE CONSOLIDATED FINANCIAL

STATEMENTS
Note 1 General information ....................................................................................................................................................................... 145 Note 18 Cash, cash equivalents, cash collateral and security
deposits ........................................................................................................................................................................................................................ 179
Note 2 Summary of significant accounting policies ..........................................................................146
Note 19 Shareholders’ equity ....................................................................................................................................................................... 179
Note 3 Group critical accounting estimates and judgments ...................................... 158
Note 20 Financial risk management ........................................................................................................................................... 181
Note 4 Significant changes in the scope of consolidation ............................................... 161
Note 21 Derivative financial instruments ...................................................................................................................... 182
Note 5 Information by operating segments and by geographic
areas ....................................................................................................................................................................................................................................... 163 Note 22 Borrowings ............................................................................................................................................................................................................. 183
Note 6 Selling and administrative expenses and other income Note 23 Financial instruments and market related exposures .................................... 190
(expense) .................................................................................................................................................................................................................... 167 Note 24 Retirement benefit obligations ........................................................................................................................... 198
Note 7 Research and development expenses .............................................................................................. 167 Note 25 Provisions for restructuring and other charges ....................................................... 203
Note 8 Net impairment losses on non-current operating assets ..................... 167 Note 26 Share-based compensation plans ........................................................................................................... 204
Note 9 Net finance income (expense) ............................................................................................................................ 168 Note 27 Other current and non-current liabilities ............................................................................... 208
Note 10 Income tax ............................................................................................................................................................................................................. 168 Note 28 Earnings (Loss) per share .............................................................................................................................................. 208
Note 11 Discontinued operations and held for sale operations ............................ 170 Note 29 Information on employees .......................................................................................................................................... 209
Note 12 Property, plant and equipment .......................................................................................................................... 173 Note 30 Specific operations impacting the consolidated
Note 13 Goodwill and other intangible assets .................................................................................................. 174 statement of cash flows .................................................................................................................................................... 210
Note 14 Investments in associates and joint ventures .................................................................... 177 Note 31 Contractual obligations and other commitments ............................................. 211
Note 15 Inventories ............................................................................................................................................................................................................. 178 Note 32 Contingencies ......................................................................................................................................................................................... 213
Note 16 Trade accounts and notes receivable .............................................................................................. 178 Note 33 Related party transactions ............................................................................................................................................ 217
Note 17 Other current and non-current assets .............................................................................................. 178 Note 34 Subsequent events .......................................................................................................................................................................... 218
Note 35 List of main consolidated subsidiaries ........................................................................................... 219
144 | TECHNICOLOR | ANNUAL REPORT 2012 |

NOTE 1 GENERAL INFORMATION These repayments, without penalty, took place during the third quarter
off 2012. The repayments reduced debt by €145 million (€162 million
on a nominal basis) and resulted in a financial charge off €17 million
1.1 General information representing the partial cancellation of the gain recognized when the
Technicolor is a technology-driven company supporting its Media & Reinstated Debt was determined initially at its fair value in 2010 (see
Entertainment (M&E) customers in shaping their digital future. note 9).
Technicolor’s activities are organized into three operating segments,
namely Technology, Digital Delivery and Entertainment Services. All In addition, following the redemption of 16,380,569 NRS II and
other activities and corporate functions (unallocated) are presented NRS IIC at the end of 2012, the share capital of Technicolor SA
within the “Other” segment. increased by 2,669,936 shares (see note 19.1).
In these consolidated financial statements, the terms “Technicolor

Disposal of Broadcast business
group”, “the Group” and “Technicolor” mean Technicolor SA together
On March 13, 2012, Technicolor announced that it had received a
with its consolidated subsidiaries. Technicolor SA or the “Company”
binding offer from Ericsson, the world leader in communication
refers to the Technicolor group parent company.
technologies and services, for the acquisition of its Broadcast Services
The consolidated financial statements were approved by the Board of activity. The transaction has been closed on July 2, 2012 for a price of
Directors of Technicolor SA on February 21, 2013. According to €19 million and a potential earn-out based on 2015 revenues off the
French law, the consolidated financial statements will be considered as Broadcast Services activity off up to €9 million.
definitive when approved by the Company’s shareholders at the
Net disposal proceeds of the transaction before potential earn-out have
Ordinary Shareholders’ Meeting, which should take place in May 2013.
been applied to the prepayment of the Reinstated Debt (see note 22).
Following the disposal of the Broadcast Services activity, the Group

1.2 Main events of the year decided to reorganize its Digital Delivery operating segment and
transferred the Media Services activity, formerly reported as part of
Changes in Technicolor share capital
Digital Delivery segment, to the Creative Services business within the
On June 20, 2012, Technicolor’s shareholders approved by a large
Entertainment Services segment (see note 5).
majority the resolutions relating to the transaction proposed by Vector
Capital Corporation (“Vector Capital”) in its offer dated May 25 and
amended on June 13. The transaction, agreed by the General Thomson Angers « règlement judiciaire » and
Shareholders’ Meeting, took place in July and August 2012. deconsolidation
At the end of May 2012, Thomson Angers SAS filed for insolvency
Technicolor issued 47,471,506 shares through a reserved capital (cessation de paiement)
t with the Nanterre Commercial Court in France
increase to Vector TCH (Lux) 1, S.à.r.l (previously Petalite Investments (the “Court”) and has petitioned the Court to open rehabilitation
S.à.r.l), an investment vehicle controlled by Vector Capital, at a price of proceedings (redressement judiciaire) for Thomson Angers SAS, which
€2.00 per share (the "Reserved Capital Increase") and representing a was approved by the Court on June 1, 2012 for a duration off 6 months.
gross proceeds of €94,943,012. The settlement of this capital increase
occurred on July 16, 2012. An independent legal administrator (administrateur judiciaire) was
named on June 1, 2012. As a consequence, Technicolor lost the control
Technicolor issued 61,643,316 shares in a capital increase with off Thomson Angers at this date and stopped the consolidation off this
preferential subscription rights at a price off €1.56 per share (the entity from June 1, 2012. In June 2012 Technicolor paid to Thomson
"Rights Issue") and representing a gross proceeds off €96,163,574. Angers €2 million in order to finance the activity during the observation
The settlement of this capital increase occurred on August 14, 2012. period and incurred some other losses for €2 million.
Vector Capital, following its participation in the two capital increases,
has become the largest shareholder of Technicolor, with a shareholding As no offer was presented the Court ordered on October 11, 2012 the
off 20.9% (20.7% at December 31, 2012 after NRS redemption). liquidation of Thomson Angers SAS. On October 16, 2012, Thomson
Angers’ liquidator sued Technicolor and on November 16, 2012 an
In accordance with the terms of the Group’s credit agreements, 80% of agreement was signed by which the Group will finance the Social Plan
the net proceeds off these capital increases and 100% of the net for €10 million, employees supports costs for €3 million and funding
proceeds from disposal of the Broadcast business (see below) have additional liabilities for €3 million.
been used to repay the Reinstated Debt (see note 22).

These amounts were recognized as expenses and classified in the NOTE 2 SUMMARY OF SIGNIFICANT
“Other income (expense)” caption of our consolidated statement of ACCOUNTING POLICIES
operations, except for the €13 million payable to employees and
booked as restructuring expenses.
2.1 Basis of preparation
European Cathode Ray Tubes (CRT) litigation The consolidated financial statements have been prepared on the basis
off the Group continuing to operate as a going concern (see note 3.1
On December 5, 2012, the European Commission fined a cartel in the
for more detailed information) and in accordance with
Cathode Ray Tubes (CRT) industry including Technicolor (Thomson at
International Financial Reporting Standards (‘’IFRS’’) effective as
the time of the alleged acts), Samsung, Philips, LG, Panasonic and
of December 31, 2012 and adopted by the European Union
Toshiba, among others. The European Commission’s main reproach is
as of February 21, 2013.
that these electronic manufacturers had an understanding to fix prices
between 1999 and 2005. The standards approved by the European Union are
available on the following web site:
Technicolor was notified by the European Commission of its decision to
impose a fine off €38.6 million to Technicolor. This amount is classified http://ec.europa.eu/internal_market/accounting/ias/index_en.htm.
in the “Net loss from discontinued operations” caption of the
consolidated statement of operations as it relates to a business The accounting policies applied by the Group are consistent with those
discontinued by the Group in 2005. followed last year except for the following standards, amendments and
interpretations which have been applied for the first time and for the
change in accounting method for joint ventures detailed below.
2.2 Standards, amendments and interpretations effective

and applied as of January 1, 2012
Main impacts on the 2012 consolidated financial
New standard or interpretation Main provisions statements
Amendments to IFRS 1 First-time This amendment provides guidance for entities emerging The application of this amendment since January 1, 2012
Adoption of IFRS – Severe from severe hyperinflation either to resume presenting had no impact on the Group consolidated financial
Hyperinflation and Removal of Fixed IFRS financial statements or to present IFRS financial statements.
Dates for First time Adopters statements for the first time.
Amendments to IFRS 7 Disclosures – These amendments allow users of financial statements to The application of this revised standard since January 1,
Transfers of Financial Assets improve their understanding of transfer transactions of 2012 leads the Group to add some disclosure about
financial assets (for example, securitisations), including transfer of financial assets in the Group consolidated
understanding the possible effects of any risks that may financial statements.
remain within the entity that transferred the assets. The
amendments also require additional disclosures if a
disproportionate amount of transfer transactions are
undertaken around the end of a reporting period.
Amendments to IAS 12 Income Taxes – This amendment applies when an asset is measured using the The application of this revised standard since January 1,
Deferred tax: Recovery of Underlying fair value model in IAS 40 Investment Property. 2012 had no impact on the Group consolidated financial
Assets statements

2.3 Change in the accounting method for joint ventures starting January 1, 2012
under the equity method, Technicolor opted to apply starting January 1,
either through the proportionate consolidation method or through the 2012 the equity method for the Group’s joint ventures instead of the
equity method. Until 2011, Technicolor applied the proportionate proportionate consolidation method applied until 2011. The impact of
consolidation method for its joint ventures. this change in accounting method is not material on Technicolor’s
consolidated financial statements and accordingly the comparative
In view off the future IFRS 11 “Joint Arrangements” applicable at the information for the year ended December 31, 2011 presented has not
latest, from January 1, 2014, on endorsement of the European Union, been restated. See note 14 for detailed information on joint-ventures.
that will remove this option and require to account for joint ventures
2.4 Standards, amendments and interpretations that are not yet effective and have
not been early adopted by Technicolor
New standard and interpretation Effective Date Main provisions
IFRS 9 – Financial Instruments, Classification Annual periods IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized
and Measurement(1) beginning on or after cost or fair value, replacing the many different rules in IAS 39. The approach in IFRS 9 is based
January 1, 2015 on how an entity manages its financial instruments (its business model) and the contractual cash
flow characteristics of the financial assets. The new standard also requires a single impairment
method to be used, replacing the many different impairment methods in IAS 39.
IFRS 10 – Consolidated Financial Annual periods IFRS 10 establishes principles for the presentation and preparation of consolidated financial
Statements(2) beginning on or after statements when an entity controls one or more other entities. IFRS 10 replaces the
January 1, 2013. consolidation requirements in SIC-12 – Consolidation – Special Purpose Entities and IAS 27 –
Consolidated and Separate Financial Statements.
IFRS 11 – Joint Arrangements(2) Annual periods IFRS 11 provides for accounting of joint arrangements by focusing on the rights and obligations
beginning on or after of the arrangement, rather than its legal form (as is currently the case).
January 1, 2013. The standard eliminates diversity in practice in the reporting of joint arrangements by requiring
a single method to account for interests in jointly controlled entities.
Following the change in accounting method for joint ventures detailed in note 2.3 above, the
Group does not anticipate a significant impact of the application of this new standard based on
its existing joint venture portfolio as of December 31, 2012.
IFRS 12 – Disclosure of Interests in Other Annual periods IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of
Entities(2) beginning on or after interests in other entities, including subsidiaries, joint arrangements, associates and
January 1, 2013. unconsolidated structured entities.
IFRS 13 – Fair Value Measurement(1) Annual periods IFRS 13 sets out in a single IFRS a framework for measuring fair value and requires disclosures
beginning on or after about fair value measurements.
January 1, 2013
IAS 27 – Separate Financial Statements Annual periods Amended version of IAS 27 which now only deals with the requirements for separate financial
(2011) beginning on or after statements, which have been carried over largely unchanged from IAS 27 – Consolidated and
January 1, 2013. Separate Financial Statements. Requirements for consolidated financial statements are now
contained in IFRS 10 – Consolidated Financial Statements.
Amendments to IFRS 1 – Government Annual periods Amends IFRS 1 – First-time Adoption of IFRS to address how a first-time adopter would
Loans beginning on or after account for a government loan with a below-market rate of interest when transitioning to IFRSs.
January 1, 2013.
Amendments to IFRS 7 – Disclosures – Annual periods Amends the disclosure requirements in IFRS 7 – Financial Instruments: Disclosures to require
Offsetting Financial Assets and Financial beginning on or after information about all recognised financial instruments that are set off in accordance with
Liabilities January 1, 2013. paragraph 42 of IAS 32 – Financial Instruments: Presentation.
Amendments to IFRS 10, IFRS 12 and Annual periods These amendments include the main following items:
IAS 27 – Investment Entities beginning on or after provide “investment entities” (as defined) an exemption from the consolidation of particular
January 1, 2014. subsidiaries and instead require that an investment entity measure the investment in each
eligible subsidiary at fair value through profit or loss in accordance with IFRS 9 – Financial
Instruments or IAS 39 – Financial Instruments: Recognition and Measurement;
require additional disclosure about why the entity is considered an investment entity, details of
the entity's unconsolidated subsidiaries, and the nature of relationship and certain transactions
between the investment entity and its subsidiaries.
Amendments to IAS 1- Presentation of Items Annual periods The amendments to IAS 1 only revise the way other comprehensive income is presented:
of Other Comprehensive Income(1) beginning on or after requiring separate subtotals for those elements which may be 'recycled' (e.g. cash-flow
July 1, 2012 hedging, foreign currency translation), and those elements that will not.

New standard and interpretation Effective Date Main provisions

Amendments to IAS 19 – Employee Annual periods These amendments include the main following items:
Benefits(1) beginning on or after require recognition of changes in the net defined benefit liability (asset) in other
January 1, 2013 comprehensive income (end of the corridor approach). This method, which was an option
under IAS 19, is already applied by the Group;
require alignment of the discount rate used for defined benefit obligation and the rate used
for expected return on plan assets;
introduce enhanced disclosures about defined benefit plans;
clarify the criteria for distinguishing benefits provided in exchange for service and benefits
provided in exchange for the termination of employment and affect the recognition and
measurement of termination benefits.
Main impacts of this amendment are estimated to be an increase in 2012 and 2013 pension
financial costs of €3 million and the recognition of the €(1) million prior service costs in the
pension liability with a counterpart in equity as of January 1, 2012.
Amendments to IAS 28, Investments Annual periods This Standard supersedes IAS 28 Investments in Associates. It prescribes the accounting for
in Associates and Joint Ventures(2) beginning on or after investments in associates and sets out the requirements for the application of the equity
January 1, 2013 method when accounting for investments in associates and joint ventures.
Amendments to IAS 32 – Offsetting Annual periods Amends IAS 32 Financial Instruments: Presentation to clarify certain aspects because of
Financial Assets and Financial Liabilities beginning on or after diversity in application of the requirements on offsetting.
January 1, 2014
IFRIC 20, Stripping Costs in the Production Annual periods IFRIC 20 establishes when and how to account separately for these two benefits arising from
Phase of a Surface Mine(1) beginning on or after the stripping activity, as well as how to measure these benefits both initially and subsequently.
January 1, 2013
(1)
Improvements to IFRS (May 2012) Annual periods The IASB issued amendments to five International Financial Reporting Standards as part of its
beginning on or after program of annual improvements to its standards.
January 1, 2013
(1) The effective dates mentioned in the table above are the dates as defined by the IASB. They may be modified when the standards and interpretations are adopted by the European
Union.
(2) IFRS 10, IFRS 11, IFRS 12, the amended IAS 27, the amended IAS 28, and the consequential amendments, have been endorsed by the EFRAG in December 2012. These standards
will be applicable for the Group, at the latest, from January 1, 2014, with early application possible.
The impacts of the standards, amendments and interpretations currently be zero at the IFRS transition date. The gain or loss on a subsequent
studied by the IASB or IFRIC were not anticipated in these consolidated disposal of any foreign operation will exclude translation differences
financial statements and cannot be reasonably estimated at this time. that arose before the IFRS transition date but will include later
translation differences.
2.5 Main accounting options selected Stock options and other share-based payments
by the Group for the preparation of The Group elected to apply IFRS 2 to all equity instruments granted
the opening IFRS balance sheet at after November 7, 2002 and for which the rights had not vested as
the transition date of December 31, 2004.
(January 1, 2004)
IFRS 1, First-time Adoption of IFRS, sets out the rules to be followed by
first-time adopters of IFRS when preparing their first IFRS consolidated
2.6 Functional and presentation
financial statements. The Group has opted to apply the following main currency
options and exemptions provided by IFRS 1: These consolidated financial statements are presented in euros. All
financial information presented in euros has been rounded to the
Business combinations nearest million, unless otherwise stated.
In accordance with IFRS 3, the Group has opted not to restate past
business combinations that occurred before January 1, 2004. 2.7 Basis of measurement
Cumulative translation differences The IFRS financial information has been prepared using the historical
cost convention with some exceptions regarding various assets and
The Group elected to recognize cumulative translation differences liabilities, for which specific provisions recommended by the IFRS have
of the foreign subsidiaries into opening retained earnings as been applied: available-for-sale financial assets at fair value, derivative
of January 1, 2004, after having accounted for the IFRS adjustments financial instruments and financial assets at fair value through profit and
in the opening shareholders’ equity. All cumulative translation loss, and initial recognition of a financial assets or liabilities at fair value.
differences for all foreign operations have therefore been deemed to

2.8 Use of estimates are the actual and potential voting rights which are immediately
exercisable or convertible) and when no other shareholder holds a
The preparation off consolidated financial statements in accordance with
significant right allowing veto or the blocking of ordinary financial and
IFRS requires management to make estimates and assumptions that
operating decisions made by the Group. Consolidation is also applied to
affect the reported amounts of assets and liabilities and the reported
special purpose entities that are controlled, whatever their legal forms
amounts of revenues and expenses during the reporting period of the
are, even where the Group holds no shares in their capital.
Management regularly reviews its valuations and estimates based on its (b) Associates
past experience and various other factors considered reasonable and An associate is an entity over which the Group has significant influence
relevant for the determination off the fair estimates off the assets and and that is neither a subsidiary nor an interest in a joint venture.
liabilities’ carrying value and of the revenues and expenses. The actual Significant influence is the power to participate in the financial and
results could significantly differ from these estimates depending on operating policies decisions off the investee without having either control
different conditions and assumptions. The critical accounting or joint control over those policies. Investments in associates are
assumptions and estimates made by the Group are detailed in note 3. accounted for under the equity method. The goodwill arising on these
entities is included in the carrying value off the investment.
2.9 Positions taken by the Group
when no specific requirement (c) Joint-ventures
exists in the IFRS A joint-venture is a contractual arrangement whereby the Group and
other parties undertake an economic activity that is subject to joint
These positions are linked to issues that are being analyzed by the
control. Investments in joint-ventures are consolidated under the equity
IFRIC or the IASB. In the absence off standards or interpretations
method since January 1, 2012 (see note 2.3 above).
applicable to the transactions described below, Group management has
used its judgment to define and apply the most appropriate accounting
methods. The Group's judgment-based interpretations relates to 2.11 Business combinations and
joint-venture.
goodwill
The accounting for gains or losses resulting from contribution of non Business combinations are accounted for using the acquisition method
monetary assets to jointly controlled entities, are not currently precisely as at the acquisition date, which is the date on which control is
defined by applicable IFRS. The Board discussed recently the transferred to the Group.
consistency between IAS 27R (Consolidated and separate financial
statements) and SIC 13 (jointly controlled entities – non monetary The Group measures goodwill at the acquisition date as:
contribution by venturers). For the time being the Group does not the fair value of the consideration transferred; plus
recognize a portion off the gain or loss which is attributable to the equity
interests of the other venturers but rather applies the disposition of the recognized amount off any previously owned non-controlling
IFRS 3R and IAS 27R, i.e. recognizes the gain and loss on 100% off the interests in the acquiree; plus
contribution and values the acquisition in the joint venture at its fair
value. if the business combination is achieved in stages, the fair value of the
pre-existing equity interest in the acquire; less
2.10 Scope and consolidation method the net recognized amount (generally fair value) of the identifiable
assets acquired and liabilities assumed.
(a) Subsidiaries Under option, for each business combination, any non controlling
All the entities that are controlled by the Group (including special interest in the acquiree is measured either at fair value (thus increasing
purpose entities) i.e. in which the Group has the power to govern the the goodwill) or at the non controlling interest’s proportionate share of
financial and operating policies in order to obtain benefits from the the acquiree’s identifiable net assets. Once control is achieved, further
activities, are subsidiaries off the Group and are consolidated. Control is acquisition of non-controlling interests or disposal of equity interest
presumed to exist when the Group directly or indirectly owns more than without losing control are accounted as equity transaction.
half off the voting rights of an entity (the voting rights taken into account

Goodwill is recognized in the currency of the acquired the revenues and costs are translated into euro at the average
subsidiary/associate and measured at cost less accumulated impairment exchange rate of the period.
losses and translated into euros at the rate effective at the end of the
period. Goodwill is not amortized but is tested annually for impairment. The translation adjustments arising are directly recorded in other
comprehensive income.
Transaction costs, other than those associated with the issue of debt or
equity securities, that the Group incurs in connection with a business
combination are expensed as incurred. 2.13 Translation of foreign currency
transactions
Any contingent consideration payable is measured at fair value at the
Transactions in foreign currency are translated at the exchange rate
acquisition date. Subsequent changes in the fair value of the contingent
effective at the trade date. Monetary assets and liabilities in foreign
consideration are recognized in profit or loss, except if contingent
currency are translated at the rate of exchange prevailing at the
consideration is classified in equity.
consolidated statement of financial position date. The differences
arising on the translation of foreign currency operations are recorded in
2.12 Translation of foreign subsidiaries the consolidated statement of operations as a profit or loss on
exchange.
For the financial statements of all the Group’s entities for which the
functional currency is different from that of the Group, the following The non-monetary assets and liabilities are translated at the historical
methods are applied: rate of exchange effective at the trade date.
the assets and liabilities are translated into euro at the rate effective at The main exchange rates used for translation (one unit of each foreign
the end of the period; currency converted to euros) are summarized in the following table:
Closing rate Average rate

2012 2011 2012 2011
U.S. dollar (U.S.$) 0.75809 0.77259 0.77442 0.71482
Pound sterling (GBP) 1.22444 1.19303 1.23145 1.14666
Canadian dollar (CAD) 0.76161 0.75763 0.77383 0.72239
The average rate is determined by taking the average of the month-end closing rates for the year, unless such method results in a material
distortion.
2.14 Property, plant and equipment 2.15 Leases

(PPE) Leases which transfer substantially all risks and rewards incidental to the
All PPE are recognized at cost less any depreciation and impairment ownership of the leased asset are classified as finance leases. This
losses. They are essentially amortized using the straight-line method transfer is based on different indicators analyzed such as (i) the transfer
over the useful life of the asset which ranges from 20 to 40 years for of ownership at the end of the lease, (ii) the existence of a bargain price
buildings and from 1 to 12 years for materials and machinery. Each option in the agreement, (iii) the fact that the lease term is for the major
material component of a composite asset with different useful lives or part of the economic life of the asset, or (iv) the present value of
different patterns of depreciation is accounted for separately for the minimum lease payments amounts to substantially all of the fair value of
purpose of depreciation and for accounting of subsequent expenditure. the leased asset. The assets held under finance leases are capitalized
and the corresponding financial liability is accounted for by the Group.
The assets held under finance leases are capitalized at the lower of the Leases which are not classified as finance leases are operating leases.
present value of future minimum payments and the fair value of the The payments related to these contracts are recorded as expenses on a
leased assets. They are amortized using the straight-line method over straight-line basis over the lease term.
the shorter of the estimated useful life of the asset and the duration of
the lease. The costs related to the assets acquired through these The aggregate benefits of lease incentives received from the lessor are
contracts are included within the amortization allowances in the recognized as a reduction of rental expense over the lease term, on a
statement of operations. straight-line basis.

2.16 Intangible assets in its market expressed in terms off volume of activity, international
presence and notoriety, and its expected long-term profitability.
Intangible assets consist mainly of capitalized development projects,
trademarks, rights for use of patents and acquired customer With respect to trademarks acquired through business combinations,
relationships. Intangibles acquired through a business combination are the valuation methodology used is based on the royalty relief method
recognized at fair value at the transaction date. For material amounts, which takes into account the royalty that could reasonably be paid by
Technicolor relies on independent appraisals to determine the fair value third-party licensees on similar trademarks.
off intangible assets. Separately acquired intangible assets are recorded
at purchase cost and internally generated intangibles are recognized at
production cost. Purchase cost comprises acquisition price plus all
(c) Customer relationships
associated costs relating to the acquisition and set-up. All other costs, Customer relationships that are acquired through business combinations
including those relating to the development off internally generated are amortized over the expected useful life of such relationships, which
intangible assets such as brands, customer files, etc., are recognized as range from 8 to 20 years, taking into account probable renewals of
expenses of the period when they are incurred. Intangible assets long-term customer contracts that last generally from 1 to 5 years. The
considered to have a finite useful life are amortized over their estimated initial valuation methodology used is generally based on the excess
useful lives and their value written down in the case of any impairment profit method using the attributable discounted future cash flows
loss. Intangible assets with indefinite useful lives are not amortized but expected to be generated.
are tested for impairment annually. Depending on the nature and the
use of the intangible assets, the amortization off these assets is included (d) Other intangible assets
either in “Cost of sales”, “Selling and administrative expenses”, “Other This caption comprises mainly acquired or internally developed
income (expense)” or “Research and development expenses”. software.
(a) Research and development projects 2.17 Impairment of intangible assets,

Research expenditures are expensed as incurred. Development costs
are expensed as incurred, unless the project to which they relate meets
goodwill and PPE
the IAS 38 capitalization criteria. Recognized development projects Goodwill, intangible assets having an indefinite useful life and
correspond to projects which objectives are to develop new processes or development projects not yet available for use are tested annually for
to improve significantly existing processes, considered as technically impairment during the last quarter of the year and updated in
viable and expected to provide future economic benefits for the Group. December and whenever circumstances indicate that they might be
Development projects are recorded at cost less accumulated impaired.
depreciation and impairment losses, if any. The costs of the internally
For the purpose of impairment testing, goodwill is allocated to each of
generated development projects include direct labor costs (including
the cash-generating units (CGU) or groups of cash-generating units
pension costs and medical retiree benefits), costs of materials and
(hereafter called “goodwill reporting units” (GRU)) that represent the
service fees necessary for the development projects. They are
lowest level within the entity at which the goodwill is monitored for
amortized over a period ranging from one to five years starting from the
internal management purposes.
beginning of the commercial production of the projects, based on units
sold or based on units produced or using the straight-line method. PPE and intangible assets having a definite useful life are tested for
impairment at the consolidated statement of financial position date only
(b) Patents and trademarks if events or circumstances indicate that they might be impaired. The
main evidence indicating that an asset may be impaired includes the
Patents are amortized on a straight-line basis over the expected period
existence of significant changes in the operational environment of the
off use. Trademarks are considered as having an indefinite useful life and
assets, a significant decline in the expected economic performance of
are not amortized, but are tested for impairment annually according to
the assets, or a significant decline in the revenues or margin versus prior
IAS 36. The main reasons retained by the Group to consider a
year and budget or in the market share off the Group.
trademark as having an indefinite useful life were mainly its positioning

The impairment test consists of comparing the carrying amount of the (b) Discontinued operations
asset with its recoverable amount. The recoverable amount off the asset
A discontinued operation is a component off the Group that either has
is the higher of its fair value (less costs to sell) and its value in use.
been disposed of (by sale or otherwise) or is held for sale. To be
Value in use is the present value of the future cash flow expected to be disclosed as discontinued, the operation must have been stopped or be
derived from an asset or group of assets. classified as “asset held for sale”. The component discontinued is clearly
distinguishable operationally and for reporting purposes. It represents a
The fair value (less costs to sell) corresponds to the amount that could separate major line off business (or geographical area off business), is part
be obtained from the sale of the asset (or the CGU), in an arm’s-length off a single major plan of disposal or is a subsidiary acquired exclusively
transaction between knowledgeable and willing parties, less the costs of for resale.
disposal. It can be determined using an observable market price for the
asset (or the CGU) or using discounted cash flow projections that The profit (loss) from discontinued operations is presented as a
include estimated future cash inflows or outflows expected to arise from separate line item on the face of the statement of operations with a
future restructuring or from improving or enhancing the asset’s detailed analysis provided in note 11. The statement off operations data
performance but exclude any synergies with other CGU of the Group. for all prior periods presented are reclassified to present the results of
operations meeting the criteria of IFRS 5 as discontinued operations. In
For determining the recoverable value, the Group uses estimates of the statement of cash flows, the amounts related to discontinued
future pre-tax discounted cash flows generated by the asset including a operations are disclosed separately and detailed in note 11.
terminal value when appropriate. These flows are consistent with the
most recent budgets approved by the Board of Directors of the Group. When a non-current asset or disposal group no longer met the held for
Estimated cash flows are discounted using pre-tax long-term market sale criteria, the asset or disposal group ceases to be classified as held
rates, reflecting the time value of money and the specific risks of the for sale.
assets. Methodology and assumptions used by the Group are detailed in
It is then measured at the lower of:
note 13.
its carrying value before the asset (or disposal group) was classified as
An impairment loss corresponds to the difference between the carrying
held for sale, adjusted for any depreciation, amortization that would
amount of the asset (or group off assets) and its recoverable amount and
have been recognized had the asset (or disposal group) not been
is recognized in “Net impairment losses on non-current operating
classified as held for sale; and
assets” for continuing operations unless the impairment is part of
restructuring plans, or related to discontinued operations in which case it its recoverable amount at the date of the subsequent decision not to
is recognised in “Restructuring expenses”. In accordance with IAS 36, sell. Recoverable value is the higher of fair value less costs to sell and
impairment off goodwill cannot be reversed. value in use.
Any adjustment to the carrying amount is included in profit and loss

2.18 Assets held for sale and from continuing operations in which the assets ceased to be classified as
discontinued operations held for sale.
(a) Assets held for sale

A non-current asset (or disposal group) is classified as held for sale 2.19 Inventories
when its carrying amount will be recovered principally through a sale Inventories are valued at acquisition or production cost. The production
transaction rather than through continuing use. This means the asset costs include the direct costs of raw materials, labor costs and a part of
(or disposal group) is available for immediate sale and its sale is highly the overheads representative off the indirect production costs, and
probable. A non-current asset (or disposal group) classified as held for exclude general administrative costs. The cost off inventory sold is
sale is measured at the lower of its fair value less costs to sell and its determined based on the weighted average method or the FIFO
carrying amount. Any impairment loss for write-down off the asset (first in – first out) method, depending on the nature of the inventory.
(or disposal group) to fair value (less costs to sell) is recognized in the When the net realizable value off inventories is lower than its carrying
statement of operations. amount, the inventory is written down by the difference.

2.20 Customer contract advances and (b) Loans and receivables

up-front prepaid discount
As part of its normal course off business, Technicolor makes cash determinable payments that are not quoted in an active market. They
advances and up-front prepaid discount to its customers, principally are included in current assets in “Trade accounts and notes receivable”,
within its Entertainment Services segment. These are generally in the except for maturities greater than 12 months after the balance sheet
framework of a long-term relationship or contract and can take different date. These are classified as non-current assets. Loans and receivables
forms. Consideration is typically paid as an advance to the customers in are, subsequent to initial recognition, carried at amortized cost using the
return for the customer’s various commitments over the life of the effective interest method.
contracts. These contracts award to the Group a customer’s business
within a particular territory over the specified contract period (generally (c) Available-for-sale financial assets
from 1 to 5 years). The contracts contain provisions that establish Available-for-sale financial assets are non-derivatives that are either
pricing terms for services and volumes to be provided and other terms designated in this category or not classified in any off the other
and conditions. categories. They are included in non-current assets unless management
intends to dispose of the investment within 12 months of the balance
Such advanced payments are classified under “Non-current assets”,
sheet date.
recorded as “Contracts advances and up-front prepaid discount” and
are amortized as a reduction of "Revenues" on the basis of units of Within the Group, available-for-sale financial assets consist mainly of
production or film processed. investments held in unlisted entities. Available-for-sale financial assets are
subsequently carried at fair value and changes in the fair value are
recognized in other comprehensive income. The foreign exchange
2.21 Financial assets differences on monetary securities (debt instruments) denominated in a
Financial assets are classified in the following categories, depending on the foreign currency are recognized in profit or loss. When securities are sold
purpose for which the financial assets were acquired: financial assets at fair or impaired, the accumulated fair value adjustments recognized previously
value through profit or loss, loans and receivables, and available-for-sale through other comprehensive income are recycled through profit or loss in
financial assets. Management determines the classification of its financial the line item “Other financial income (expense)” in the statement of
assets at initial recognition and re-evaluates this designation at every operations.
reporting date. Except for financial assets at fair value through profit or
loss, financial assets are recognized at fair value plus transaction costs at Interest on available-for-sale securities calculated using the effective
the date when the Group commits to purchase or sell the asset. Financial interest rate method is recognized in the statement of operations.
assets at fair value through profit or loss are initially recognized at fair Dividends on available-for-sale equity instruments are recognized in the
value and transaction costs are expensed. statement of operations when the Group’s right to receive payments is
established.
(a) Financial assets at fair value through profit
Derecognition
or loss Investments are derecognized when the rights to receive cash flows from
This category has two sub-categories: financial assets held for trading, and the investments have expired or have been transferred and the Group has
those designated at fair value through profit or loss at inception. A transferred substantially all risks and rewards of ownership.
financial asset is classified in this category if acquired principally for the
purpose of selling in the short-term. Derivatives are also categorized as
Fair value measurement
"held for trading" unless they are designated as hedges. Assets in this
The Group establishes fair value of the unlisted securities by using
category are classified as current assets if they are either held for trading or
valuation techniques. These include the use of recent arm’s length
are expected to be realized within 12 months after the consolidated
transactions (when available), reference to other instruments that are
statement of financial position date. Financial assets at fair value through
substantially the same, discounted cash flow analysis, and option pricing
profit or loss are subsequently carried at fair value. Gains or losses arising
models, making maximum use of market inputs and relying as little as
from changes in fair value, including interest and dividend income, are
possible on entity-specific inputs.
presented in the statement of operations within “Other financial income
(expense)”, in the period in which they arise.

Impairment of financial assets The Group’s objectives, policies and processes for managing equity are
The Group assesses at each balance sheet date whether there is described in notes 19, 20 and 23.
objective evidence that a financial asset or a group off financial assets is
impaired. A significant or prolonged decline (more than 9 months) in
the fair value of the security below its cost is considered as an indicator
2.23 Borrowings
that the securities are impaired. If any such evidence exists for Borrowings are initially recognized at fair value. Borrowings are
available-for-sale financial assets, the cumulative negative changes in subsequently stated at amortized cost using the effective interest rate
fair value – measured as the difference between the acquisition cost and method. Any difference between the proceeds (net of transaction costs)
the current fair value, less any impairment loss on that financial asset and the redemption value is recognized in the statement of operations
previously recognized in profit or loss – is removed from other over the period off the borrowings using the effective interest rate
comprehensive income in equity and recognized as an expense in the method. Borrowings are classified as current liabilities unless the Group
statement of operations. Impairment losses recognized in the statement has an unconditional right to defer settlement of the liability for at least
off operations on financial instruments classified as available-for-sale are 12 months after the balance sheet date. More information is provided in
not reversed through the statement off operations, except if the note 22.
instruments are disposed of.
2.24 Trade receivables and payables

2.22 Financial liabilities and equity The trade receivables and payables are part off the current financial
instruments issued by the Group assets and liabilities. At the date of their initial recognition, they are
measured at the fair value of the amount to be received or paid. This
Classification as debt or equity generally represents their nominal value because the effect of
Debt and equity instruments are classified as either financial liabilities or discounting is immaterial between the recognition of the instrument and
as equity in accordance with the substance of the contractual its realization (for assets) or its settlement (for liabilities).
arrangement.
The Group assesses at each balance sheet date whether there is any
Notes redeemable in shares (NRS) issued in connection with the objective evidence that a trade receivable is impaired. If any such
implementation of the Company’s Sauvegarde Plan, have been classified evidence exists, the amount of the loss is measured as the difference
as equity because they are redeemable into a fixed number of shares between the asset's carrying amount and the present value of estimated
(including NRS IIC, which are redeemable in cash or into a fixed future cash flows.
number off shares at the Company option). Interests accrued on May
26, 2010 on NRS were redeemable into a fixed number off shares and A receivable is derecognized when it is sold without recourse and when
were accordingly also classified into equity. it is evidenced that the Group has transferred substantially all the
significant risks and rewards off ownership of the receivable and has no
Equity instruments more continuing involvement in the transferred asset.
An equity instrument is any contract that evidences a residual interest in
the assets of the entity after deducting all off its liabilities. Equity
instruments issued by the Group are recorded for the proceeds 2.25 Derivatives
received, net of direct issue costs. The Group uses derivatives as hedging instruments for hedges of
foreign currency risks, changes in interest rates, commodity prices and
Subordinated perpetual notes equity market risks. These instruments may include agreements for
On September 26, 2005, Technicolor issued subordinated perpetual
interest rate and currency swaps, options and forward contracts. If
notes in a nominal amount off €500 million. Because of their perpetual
hedge accounting criteria are met, they are accounted for in accordance
and subordinated nature and the optional nature off the coupon, the
with hedge accounting.
notes were recorded in shareholder’s equity for the net value received of
€492 million (€500 million issue price less €8 million offering Derivative instruments may be designated as hedging instruments in
discount and fees classified in retained earnings). No derivative was one of three types of hedging relationships:
identified because the provisions off the notes detailed in note 19 fall
outside the scope of the definition of a derivative under IAS 39 (the fair value hedge, corresponding to a hedge of the exposure to the
“change of control” event represents a non financial event excluded change in fair value of an asset or a liability;
from the definition of a derivative under IAS 39). More information is
provided in note 19.3.

cash flow hedge, corresponding to a hedge of the exposure to the In both cases, subsequent changes in value of the hedging instrument, if
variability in cash flows from future assets or liabilities; it remains outstanding are recognized in profit or loss.
net investment hedge in foreign operations, corresponding to a Derivatives not designated as hedging instruments are measured at fair
hedge off the amount off the Group’s interest in the net assets off these value. Subsequent changes in fair value are recognized in the statement
operations. off operations.
Derivative instruments qualify for hedge accounting when:

2.26 Cash, cash equivalents, cash
at the inception of the hedge, there is a formal designation and
documentation off the hedging relationship;
collateral and security deposits
Cash and cash equivalents include cash in hand, deposits held at call
the hedge is expected to be highly effective, its effectiveness can be with banks and other short-term highly liquid investments with original
reliably measured and it has been highly effective throughout the maturities of three months or less, i.e. investments that are readily
financial reporting periods for which the hedge was designated. convertible to a known amount off cash and subject to an insignificant
risk of change in value. Bank overdrafts are shown within borrowings in
The effects off hedge accounting are as follows: current liabilities in the balance sheet.
for fair value hedges of existing assets and liabilities, the hedged Cash collateral and security deposits represent cash granted to third
portion off the asset or liability is recognized in the balance sheet at parties to secure credit facilities and other obligations off the Group.
fair value. The gain or loss from remeasuring the hedged item at fair
value is recognized in profit or loss and is offset by the effective
portion off the loss or gain from remeasuring the hedging instrument 2.27 Treasury shares
at fair value; Treasury shares are recorded at purchase cost and deducted from
for cash flow hedges, the portion of the gain or loss on the hedging shareholders’ equity. The gain or loss on disposal or cancellation of
instrument that is determined to be an effective hedge is recognized these shares is recorded directly in equity.
in other comprehensive income (OCI) in equity, because the change
in the fair value of the hedged portion off the underlying item is not 2.28 Equity transaction costs
recognized in the balance sheet, and the ineffective portion off the
gain or loss on the hedging instrument, if any, is recognized in profit Incremental and external costs directly attributable to the equity
or loss. Amounts recognized in OCI are subsequently recognized in transactions are accounted for as a deduction from equity.
profit or loss in the same period or periods during which the hedged
transaction affects profit or loss. Such periods are generally less than 2.29 Deferred and current income taxes
6 months except for the licensing activity and certain activities linked
Deferred taxes result from:
to long-term contracts where the period is generally up to one year;
temporary differences arising from differences between the tax bases
the termination of hedge accounting may occur if the underlying
off assets and liabilities and their carrying amounts in the Group
hedged item does not materialize, if there is a voluntary revocation of
consolidated balance sheets; and
the hedging relationship or at the termination or the arrival of
maturity off the hedging instrument. The accounting consequences the carry forward of unused tax losses and tax credits.
are then as follows:
Deferred taxes for all temporary differences are calculated for each
for fair value hedges the fair value adjustment of the debt at the taxable entity (or group of entities) using the balance sheet liability
date of cessation of the hedging relationship is amortized via the method.
effective interest rate method recalculated on that date,
All deferred tax liabilities are recorded except:
for cash flow hedges. the amounts recorded in other
comprehensive income are taken to profit or loss in the case of the when the deferred tax liability results from the initial recognition of
disappearance of the hedged item. In other cases, they are included goodwill, or from the initial recognition of an asset or a liability in a
in the income statement linearly over the remaining life of the transaction which is not a business combination and, at the trade date,
hedging relationship as defined at the origin off the hedge. affects neither the net income nor the taxable income or loss; and

for taxable temporary differences associated with investments in 2.30 Post employment benefits and
subsidiaries, associates and interests in joint ventures, when the Group
is able to control the timing of the reversal of the temporary
other long-term benefits
differences and when it is probable that these temporary differences
(a) Post employment obligations
will not reverse in the foreseeable future.
The Group operates various post employment schemes for some
Deferred tax assets are recorded: employees. Contributions paid and related to defined contribution plans
i.e. pension plans under which the Group pays fixed contributions and
for all deductible temporary differences, to the extent that it is has no legal or constructive obligation to pay further contributions (for
probable that future taxable income will be available against which example if the fund does not hold sufficient assets to pay to all
these temporary differences can be utilized, except when the related employees the benefits relating to employee service in the current and
deferred tax asset results from the initial recognition of an asset or a prior periods) are recorded as expenses as they fall due.
liability in a transaction which is not a business combination and, at
the trade date, affects neither the net income nor the taxable income The other pension plans are analyzed as defined benefit plans (i.e.
or loss; and pension plans that define an amount of pension benefit that an
employee will receive on retirement, usually dependent on one or more
for the carry forward of unused tax losses and unused tax credits, to factors such as age, years of service and compensation) and are
the extent that it is probable that future taxable income will be recognized in the balance sheet based on an actuarial valuation of the
available against which the unused tax losses and credits can be defined benefit obligations at the balance sheet date less the fair value
utilized. off the related plan assets.
The recoverable amount off the deferred tax assets is reviewed at each The method used for determining employee benefits obligations is
balance sheet date and adjusted to take into account the level of taxable based on the Projected Unit Credit Method. The present value of the
profit available to allow the benefit of part or all of the deferred tax Group benefit obligations is determined by attributing the benefits to
assets to be utilized. employee services in accordance with the benefit formula of each plan.
The provisions for these benefits are determined annually by
Deferred tax assets and liabilities are valued using the tax rates that are
independent qualified actuaries based on demographic and financial
expected to apply to the period when the asset is realized or the liability
assumptions such as mortality, employee turnover, future salaries and
is settled, based on tax rates (and tax laws) that have been enacted or
benefit levels, discount rates and expected rates of return on plan assets.
substantively enacted by the balance sheet date. Deferred taxes are
classified as non-current assets and liabilities. Expenses related to interest cost and expected return on plan assets are
recognized as financial expense and financial income (in note 9).
Income tax expense comprises current and deferred tax. Deferred tax is
recognised in profit or loss, except to the extent that it relates to items Net cumulative actuarial gains and losses of the period are immediately
previously recognised outside profit or loss (either in OCI or directly in recognized in the provision for post-employment obligation with a
equity). Moreover, IAS 12 does not specify whether tax benefits arising corresponding debit or credit to OCI in the Statement of
from tax losses should be allocated to the source of the loss or the Comprehensive Income (SOCI).
source off the realisation of the benefit. The Group has accounted for
any tax benefits arising from tax losses from discontinued activities in Past service cost resulting from plan amendment are booked as an
continuing operations since these tax losses will be used by future expense on a straight line basis over the average period until the benefit
benefits from continuing operations. become vested or booked immediately up-front if benefit are vested
immediately.
(b) Other long-term benefits

The obligations related to other long-term benefits (for example jubilee
award) are also based on actuarial valuations. Actuarial gains and losses
related to these obligations are immediately recognized in the
consolidated statement of operations.

2.31 Share-based payments discount rates that reflect the assessment off the time value of money.
Unwinding of discounts is recognized in the line item “Net finance
The Group issues equity-settled and cash-settled share-based payments
income (expense)” in the consolidated statement of operations.
to certain employees. According to IFRS 2, the advantage given to the
employees regarding the grant off stock options or free shares consists
Restructuring provisions
off an additional compensation to these employees estimated at the
Provisions for restructuring costs are recognized when the Group has a
grant date.
constructive obligation towards third parties, which results from a
Equity-settled share-based payments are measured at fair value at the decision made by the Group before the balance sheet date and
grant date. They are accounted for as an employee expense on a supported by the following items:
straight-line basis over the vesting period off the plans, based on the
the existence off a detailed and finalized plan identifying the sites
Group’s estimate of instruments that will eventually vest.
concerned, the location, the role and the approximate number of
For cash-settled share-based payments, a liability equal to the portion of headcounts concerned, the nature of the expenses that are to be
the goods or services received is recognized at the current fair value incurred and the effective date of the plan; and
determined at each balance sheet date with any changes in fair value
the announcement of this plan to those affected by it.
recognized in profit or loss for the period within other financial income
(expense). In addition, for plans based on non-market performance The restructuring provision only includes the costs directly linked to the
conditions, the probability of achieving the performance is assessed plan.
each year and the expense is adjusted accordingly.
The fair value of instruments, and especially of options granted, is 2.33 Revenues
determined based either on a binomial option pricing model or on the
Revenue is measured at the fair value of the amount received or to be
Black-Scholes valuation model that takes into account an annual
received, after deduction of any trade discounts or volume rebates
reassessment off the expected number of exercisable options. The
allowed by the Group, including customer contract advances
Monte Carlo model may also be used for taking into account some
amortization.
market conditions. The recognized expense is adjusted accordingly.
When the impact of deferred payment is significant, the fair value of the
revenue is determined by discounting all future payments.
2.32 Provisions
Provisions are recorded at the balance sheet date when the Group has
an obligation as a result of a past event and when it is probable that an
(a) Sales of goods
outflow of resources embodying economic benefits will be required to Related revenue is recognized when the entity has transferred to the
settle the obligation and a reliable estimate can be made of the amount buyer the significant risks and rewards off ownership of the goods, which
off the obligation. generally occurs at the time of shipment.
The obligation may be legal, regulatory or contractual or it may

(b) Services agreements
represent a constructive obligation deriving from the Group's actions
The Group signs contracts which award to the Group a customer’s
where, by an established pattern of past practice, published policies or a
business within a particular territory over the specified contract period
sufficiently specific current statement, the Group has indicated to other
(generally over 1 to 5 years). The contracts contain provisions that
parties that it will accept certain responsibilities, and as a result, has
establish pricing terms for services and volumes to be provided and
created a valid expectation on the part of those other parties that it will
other terms and conditions. Revenue is recognized when the entity has
discharge those responsibilities.
transferred to the customer the major risk and rewards of ownership,
The recorded provision represents the best estimate of the expenditure which generally occurs, depending on contract terms, upon duplication
required to settle the obligation at the balance sheet date. If a reliable or delivery.
estimate cannot be made of the amount of the obligation, no provision
is recorded but details of the obligation are disclosed in the notes to the (c) Royalties
Patent licensing agreements generally state that a specified royalty
Where the discounting effect is material, the recorded amount is the amount is earned at the time of shipment off each product to a
present value off the expenditures expected to be required to settle the third-party by a licensee. The gross royalty amount is determined on a
related obligation. The present value is determined using pre-tax quarterly basis and in accordance with the license agreement.

2.34 Earnings per share some degree of uncertainty. Management bases its estimates on
historical experience and various other assumptions that are believed to
Basic earnings per share are calculated by dividing income (loss)
be reasonable under the circumstances, the results of which form the
attributable to ordinary equity holders of the parent entity by the
basis for making judgments about the reported carrying values of assets
weighted-average number of shares outstanding during the period,
and liabilities and the reported amounts of revenues and expenses.
excluding treasury shares.
Actual results may differ from these estimates, while different
Diluted earnings per share is calculated by dividing income (loss) assumptions or conditions may yield different results. Technicolor’s
attributable to ordinary equity holders of the parent entity by the management believes the following to be the critical accounting policies
weighted-average number of shares outstanding during the period and related judgments and estimates used in the preparation of its
assuming that all potentially dilutive securities were exercised and that consolidated financial statements under IFRS.
any proceeds from such exercises were used to acquire shares of the
Company's stock at the average market price of the period or the
3.1 Going concern
period the securities were outstanding.
The consolidated financial statements as of December 31, 2012 were
Potentially dilutive securities comprise: approved by the Board of Directors on February 21, 2013 on a going
concern basis.
outstanding put options, if dilutive;
The Board of Directors considered the Group’s cash flow projections
the securities to be issued under the Company's management which support the operating performance with the sensitivities
incentive plan, to the extent the average market price of the highlighted in note 13 and believes that the Group can meet its
Company's stock exceeded the adjusted exercise prices off such expected cash requirements and address potential financial
instruments. consequences off ongoing litigation, until at least December 31, 2013.
Having considered the above, the Board of Directors determined that it

2.35 Related parties was appropriate for these consolidated financial statements to be
A party is related to the Group if: prepared on a going concern basis.
directly or indirectly the party (i) controls, is controlled by or is under

common control with the Group, (ii) has an interest in the Group that 3.2 Tangible and intangible assets with
gives it significant influence over the Group; finite useful lives
the party is an associate; The Group records intangible assets with finite useful lives (mainly
customer relationships, software, development projects and certain
the party is a joint venture in which the Group is a venture; rights on intellectual property acquired) under “Other intangible assets”
and tangible assets under “Property, plant and equipment” (“PPE”).
the party or one of its Directors is a Member off the Board of Significant estimates and assumptions are required to determine (i) the
Directors or off the Executive Committee off the Group or a close expected useful lives of these assets for purposes of their depreciation
Member of the family of any individual referred to above. and (ii) whether there is an impairment off their value requiring a
write-down of their carrying amount. Estimates that are used to
determine the expected useful lives off PPE and intangible assets are
NOTE 3 GROUP CRITICAL defined in the Group’s accounting policies manual and are consistently
ACCOUNTING ESTIMATES applied throughout the Group.
AND JUDGMENTS
For the year ended December 31, 2012, the Group recognized
Technicolor’s principal accounting policies are described in note 2 amortization expense amounting to €103 million related to PPE and
above. Certain of Technicolor’s accounting policies require the amortization expense of €76 million for intangible assets with finite
application of judgment by management in selecting appropriate useful lives (these figures exclude depreciation expense booked in the
assumptions for calculating financial estimates which inherently contain loss from discontinued operations).

In order to ensure that its assets are carried at no more than their rates of underlying assets for related future periods and the royalty rates
recoverable amount, Technicolor evaluates at each reporting date for trademarks. These assumptions used by the Group for the
certain indicators (see note 2.17) that would result, if applicable, in the determination of the recoverable amount are described in note 13.
calculation of an impairment test in accordance with the accounting
policy. The recoverable amount of an asset or group off assets may Additional to the annual review for impairment, Technicolor evaluates
require the Group to use estimates to assess the future cash flows at each reporting date certain indicators that would result, if applicable,
expected to arise from the asset or group of assets and a suitable in the calculation of an additional impairment test in accordance with
discount rate in order to calculate present value. Any negative change in the accounting policy stated in note 2 above.
relation to the operating performance or the expected future cash flows
The impairment tests performed in 2012 did not result in an
off individual assets or group of assets will change the expected
impairment off goodwill.
recoverable amount of these assets or groups off assets and therefore
may require a write-down of their carrying amount. Management believes the updated assumptions used concerning sales
growth, terminal values and royalty rates are reasonable and in line with
As off December 31, 2012, the Group reviewed its triggering indicators
updated market data available for each GRU.
and determined that some amortizable assets and cash generating units
may have lost value. Consequently, it performed impairment tests for Following the decision to rebrand PRN into IZ-ON Media, PRN
these assets or group of assets (see notes 12 and 13). The impairment trademark was written off for €4 million.
booked on amortizable assets in 2012 amounts to €3 million, split
between PPE (€1 million) and intangible assets (impairment of Consequently, as of December 31, 2012, the net book value of
€2 million). These amounts exclude impairment loss off tangible assets goodwill and trademarks amounted to €478 million (excluding goodwill
in the frame of a restructuring plan that amounted to €5 million in classified as held for sale) and €206 million, respectively, after
2012 and impairment loss of assets in the process of held for sale impairment.
valuation that amounted to €6 million in 2012 related to the Broadcast
Services activities.
3.4 Deferred tax
Consequently, as of December 31, 2012, the net carrying amount of Management judgment is required to determine the Group’s deferred
PPE and intangible assets with finite useful lives amounted to tax assets and liabilities and the extent to which deferred tax assets can
€350 million and €227 million, respectively (excluding PPE and be recognized in accordance with the accounting policy stated in note 2
intangible assets classified as held for sale). above. When a specific subsidiary has a history off recent losses, future
positive taxable income is assumed improbable, unless the asset
recognition can be supported for reasons such as (1) the losses having
3.3 Impairment tests of goodwill and resulted from exceptional circumstances which are not expected to
intangible assets with indefinite re-occur in the near future, and/or (2) the expectation of exceptional
useful lives gains or (3) future income to be derived from long-term contracts. The
The Group reviews annually goodwill and other indefinite-lived Group considered taxplanning in assessing whether deferred tax assets
intangible assets for impairment in accordance with the accounting should be recognized.
policy stated in note 2 above. Such review requires management to
In 2011, French Tax rules were amended by limiting the use of tax loss
make material judgments and estimates when performing impairment
carryforward to only 60% off yearly taxable profit interest instead of
tests.
100% previously. As a consequence of this new rule and updated
Technicolor’s management believes its policies relating to such forecasts French deferred tax assets were partially written off.
impairment testing are critical accounting policies involving critical
In 2012, French tax rules were amended whereby the use of tax loss
accounting estimates because determining the recoverable amount of
carry-forward is now limited to only 50% of yearly taxable profit instead
cash-generating units requires (1) determining the appropriate discount
off 60% in 2011 and 100% previously. In addition, in 2012, the French
rate to be used to discount future expected cash flow of the
tax regulation limits to 85% (in 2012 and 2013) and to 75% (in 2014
cash-generating unit and (2) estimating the value of the operating cash
and after) the deductibility of net interest expenses. As well, a surtax of
flows including their terminal value, the growth rate off the revenues
5% was extended up to 2014.
generated by the assets tested for impairment, the operating margin

As a consequence of all the new rules, but taking into account updated As off December 31, 2012, the post-employment benefits provision
forecasts within the French tax group and 2012 consumption, French amounted to €388 million. The present value of the obligation
deferred tax assets remained stable compared to the deferred tax assets amounted to €(560) million, the fair value of plan assets amounted to
recognized as at December 31, 2011. The remaining deferred tax assets €173 million and unrecognized prior service cost was €(1) million. For
correspond to a usage by 2026, which represents the estimated the year ended December 31, 2012, net pension gain was €26 million,
Licensing activity’s predictable taxable income period based on existing corresponding to net periodic pension cost of €19 million and an
licensing programmes. exceptional curtailment gain off €45 million (see details in note 24).
As off December 31, 2012, the Group recorded deferred tax liabilities
off €158 million and €388 million of deferred tax assets reflecting 3.6 Provisions and litigation
management’s estimates off their recoverable amount. Technicolor’s management is required to make judgments about
provisions and contingencies, including the probability of pending and
potential future litigation outcomes that, by their nature, are dependent
3.5 Post employment benefits
on future events that are inherently uncertain. In making its
The Group’s determination off its pension and post-retirement benefits determinations off likely outcomes of litigation and tax matters,
obligations and expense for defined benefit plans is dependent on the management considers the opinion of outside counsel knowledgeable
use of certain assumptions used by actuaries in calculating such about each matter, as well as developments in case law. See note 32 for
amounts. These assumptions are described in note 24 to the a description of the significant legal proceedings and contingencies for
consolidated financial statements and include, among others, the the Group.
discount rate, expected long-term rate of return on plan assets and
annual rate of increase in future compensation levels. Our assumptions 3.7 Determination of royalties payable
regarding pension and post-retirement benefits obligations are based on
In the normal course of its business, the Group may use certain
actual historical experience and external data.
technology protected by patents owned by third parties. In the majority
The assumptions regarding the expected long-term rate of return on off cases, the amount of royalties payable to these third parties for the
plan assets are determined by taking into account, for each country use of this technology will be defined in a formal licensing contract. In
where the Group has a plan asset, the distribution off investments and some cases, and particularly in the early years off an emerging
the long-term rate of return expected for each of its components. technology when the ownership of intellectual property rights may not
Capital markets experience fluctuations that cause downward or upward yet be ascertained, management’s judgement is required to determine
pressure on assets value and higher volatility. As a result, short-term the probability of a third party asserting its rights and the likely cost of
valuation of related plan assets fluctuates, causing a corresponding using the technology when such assertion is probable. In making its
increase or decrease of the provision for pension and post-retirement evaluation, management considers past experience with comparable
obligations. While Technicolor’s management believes the assumptions technology and / or with the particular technology owner. The royalties
used are appropriate, significant differences in actual experience or payable are presented within the captions “Other current liabilities” and
significant changes in the assumptions may materially affect the Group’s “Other non-current liabilities” in the Group’s balance sheet and detailed
pension and post-retirement benefits net obligations under such plans in note 27.
and related future expense.

NOTE 4 SIGNIFICANT CHANGES IN THE SCOPE OF CONSOLIDATION

For the years ended December 31, 2012 and 2011, Technicolor’s consolidated statement off financial position and statement off operations include
the accounts of all investments in subsidiaries, jointly controlled entities and associates (the main ones being listed in note 35). The following is a
summary of the number off companies consolidated and accounted for under the full consolidation method, the equity method and the
proportionate consolidation method.
As of December 31
2012 2011
Europe* France U.S. Others Europe * France U.S. Others
Number of companies:
Parent company and consolidated subsidiaries 36 18 15 35 40 19 14 37
Companies consolidated under the proportionate
method(1) - - - - 1 - 2 5
Companies accounted for under the equity method(1) 1 1 4 5 - 1 1 -
Sub-total by region 37 19 19 40 41 20 17 42
TOTAL 115 120
* Except France.
(1) Technicolor has decided to apply starting January 1, 2012 the equity method for the Group’s joint ventures instead of the proportionate consolidation method applied until 2011.
4.1 CHANGES IN 2012

(a) Main business acquisitions
Following the January 20, 2012 and February 3, 2012 rulings by the Tribunal de Commerce in Nanterre, France, Technicolor acquired
postproduction activities, certain operating assets and took over 54 employees from the Quinta Industries group, especially from ADJ (Les
Auditoriums de Joinville), SIS (Société Industrielle de Sonorisation), Scanlab and Duboi.
The impacts of these transactions are detailed below:
Acquirees’ carrying amount

(in € millions) before acquisition Fair value adjustments Fair value
Net assets acquired
Property, plant and equipment 2 - 2
Retirement obligation and other liabilities - (1) (1)
TOTAL NET ASSETS ACQUIRED 2 (1) 1
TOTAL PURCHASE CONSIDERATION PAID 2
GOODWILL (PROVISIONAL AMOUNT AS OF DECEMBER 31, 2012) 1
The goodwill is mainly attributable to the anticipated future synergies and to the skills of the people transferred within the Group.
The contribution to revenues and operating profit of the Group of the acquired business for the period from its acquisition date to December
31, 2012 is not significant.

(b) Main disposal

On July 2, 2012, Technicolor sold its Broadcast Services activity to Ericsson, the world leader in communication technologies and services for a
purchase price of €19 million and a potential earn-out based on 2015 revenues of the Broadcast Services activity of up to €9 million.
(€ in millions) Broadcast business

Net assets disposed of
Goodwill 20
Tangible assets 18
Intangible assets 2
Inventories 1
Trade receivables 18
Tax assets 1
Other assets 6
Provisions (4)
Trade payables (13)
Other liabilities (31)
TOTAL NET LIABILITIES/(ASSETS) DISPOSED OF (18)
Disposal consideration
Cash consideration received 19
Working capital adjustment (1)
TOTAL DISPOSAL PRICE 18
Costs linked to the disposal (1)
CTA recycled in the statement of operations (3)
LOSS ON SHARES DISPOSED OF (4)
(c) Other main change in the scope of Thomson’s Angers’ liquidator sued Technicolor and on November 16,
consolidation 2012 an agreement was signed by which the Group will finance the
Social Plan for €10 million, employees supports costs for €3 million and
At the end of May 2012, Thomson Angers SAS filed for insolvency funding additional liabilities for €3 million.
(cessation de paiement)
t with the Nanterre Commercial Court in France
(the “Court”) and has petitioned the Court to open rehabilitation These amounts were recognized as expenses and classified in the
proceedings (redressement judiciaire) for Thomson Angers SAS, which “Other income (expense)” caption of our consolidated statement of
was approved by the Court on June 1, 2012 for a duration of 6 months. operations, except for the €13 million payable to employees and
booked as restructuring expenses.
An independent legal administrator (administrateur judiciaire) was
named on June 1, 2012. As a consequence, Technicolor lost the control
of Thomson Angers at this date and stopped the consolidation of this 4.2 Changes in 2011
entity from June 1, 2012. In June 2012 Technicolor paid to Thomson
Angers €2 million in order to finance the activity during the observation (a) Main business acquisition
period and incurred some other losses for €2 million. Technicolor acquired Laser Pacific’s digital postproduction assets for
$11 million (€8 million at transaction date) in September 2011.
As no offer was presented the Court ordered on October 11, 2012 the
liquidation of Thomson Angers SAS. On October 16, 2012,
Acquirees’ carrying amount
(€ in millions) before combination Fair value adjustments Fair value
Net assets acquired
Property, plant and equipment 10 (5) 5
Trade receivables and other assets 1 - 1
TOTAL NET ASSETS ACQUIRED 11 (5) 6
TOTAL PURCHASE CONSIDERATION 8
GOODWILL 2
The goodwill is mainly attributable to the anticipated future synergies and to the skills of the people transferred within the Group.

(b) Main disposals Technicolor launched its franchise licensing program with the
establishment of Technicolor PostWorks New York. As part of the
On April 4, 2011, Technicolor sold the Grass Valley Transmission
agreement, Technicolor sold its New York post production assets to
business to Parter Capital Group.
PostWorks in October 2011 with no significant impact on the
On May 3, 2011, Technicolor sold to the FCDE (Fonds de Group’s consolidated statement of financial position and statement of
Consolidation et de Développement des Entreprises) the Grass Valley operations.
Head-end business, operating under the Thomson Video Networks
On November 2, 2011, Technicolor sold its 25.7% stake in
brand. Technicolor is committed to certain future payments to FCDE
ContentGuard to Pendrell Technologies LLC for net disposal
that have been recorded in Technicolor 2011 consolidated financial
proceeds of approximately $25 million (€18 million at the transaction
statements. The net capital loss related to the sale of the Grass Valley
date) which has been totally used to repay the Group’s financial debt
businesses amounts to €7 million in 2011 and impacts the net loss
in December 2011. The gain related to the disposal of
from discontinued operations.
ContentGuard amount to €6 million and is booked in “Other income
On July 18, 2011, Technicolor sold its remaining Screenvision (expense)”.
Europe business.
Carrying amount as of the date of disposal

Discontinued businesses (Grass
(€ in millions) Valley and Screenvision Europe) Continuing businesses (ContentGuard)
Net assets disposed of
Goodwill - 12
Intangible assets - 4
Inventories 14 -
Trade receivables 35 -
Tax assets - 9
Other assets 28 -
Bank and cash balances 5 2
Provisions (36) -
Trade payables (36) -
Other liabilities (10) (9)
Deferred tax liabilities - (6)
TOTAL NET LIABILITIES/(ASSETS) DISPOSED OF - (12)
Disposal consideration
Cash consideration received 1 18
TOTAL DISPOSAL PRICE 1 18
Costs linked to the disposals (1) -
Commitments to future payments (8) -
CTA recycled in the statement of operations 1 -
GAIN/(LOSS) ON SHARE DISPOSED OF (7) 6
(c) Other transactions

On August 22, 2011, Technicolor formed a new entity jointly with Dreamworks called “MediaNaviCo” (to collaborate on the M-Go VOD
platform). Technicolor brought its MediaNavi start-up activity and Dreamworks invested a cash consideration representing a minority
ownership of MediaNaviCo.
NOTE 5 INFORMATION BY OPERATING SEGMENTS AND BY GEOGRAPHIC

AREAS
The Group’s Executive Committee (considered as the Chief segments under IFRS 8: Technology, Digital Delivery and
Operating Decision Maker in the meaning of the standard) makes its Entertainment Services. All the remaining activities (including
operating decisions and assesses performances on the basis of three unallocated Corporate functions) are grouped in a segment “Other” as
types of activities. These are therefore the reportable operating a reconciling item.

Technology: Consequently, Entertainment Services is organized around the

following businesses:
The Technology segment is organized around the following businesses:
Creative Services that contain:
Research & Innovation;
Digital Postproduction, Distribution Services and Digital
Licensing; Cinema as well as legacy activities (mostly Film services), and
MediaNavi. Digital Production;
Research & Innovation includes the Group’s fundamental research DVD Services;
activities. The Licensing business is responsible for protecting and
monetizing the Group’s Intellectual Property portfolio and generates IZ-ON Media (ex-PRN).
most of the Technology revenues. The MediaNavi business includes
Other operations are as follows:
the Group’s platforms and applications aiming at simplifying and
enriching the end-user experience for consuming digital content. unallocated Corporate functions, which comprise the operation
and management off the Group’s Head Office, together with
Digital Delivery:
various Group functions centrally performed, such as Sourcing,
Following the disposal of the Broadcast Services activity to Ericsson Human Resources, IT, Finance, Marketing and Communication,
completed on July 2, 2012, the Group reorganized in H1, 2012 its Corporate Legal Operations and Real Estate Management, and
Digital Delivery operating segments and transferred the Media that cannot be strictly assigned to a particular business within the
Services activity, formerly reported as part off Digital Delivery segment, three operating segments;
to the Creative Services business within the Entertainment Services
after-sales service operations and commitments related to former
segment. Broadcast Services activity was classified as held for sale as of
Consumer Electronic operations, mainly pension and legal costs.
December 31, 2011 and its results were presented within the Digital
Delivery segment in the below tables. The following comments are applicable to the two tables below:
The Digital Delivery segment now includes mainly Connected Home the Technology segment generates substantially all of its revenue
business as the Broadcast Services and IPTV activities were sold in from royalties. Entertainment Services and Digital Delivery generate
2012 and VOIP activity was sold beginning 2013 (see note 34). their revenue from the sale off goods and services;
Connected Home offers a wide range of solutions to Pay-TV operators the caption “EBITDA adjusted” corresponds to the profit (loss) from
and network service providers for the delivery of digital entertainment, continuing operations before tax and net finance income (expense),
data, voice, and smart home services, through the design and supply of net off other income (expense), depreciation and amortization
products like set-top boxes, gateways, managed wireless tablets, and (including impact off provision for risks, litigation and warranties);
other connected devices, as well as software for multi-device
communication, applications for the smart home (including home the caption "Profit (loss) from continuing operations before tax and
automation), and professional services. net finance income (expense)" does not include intercompany items;
Entertainment Services: the captions "Amortization of customer relationships" and "Other

depreciation and amortization" only relate to continuing operations;
As mentioned above, Media Services activity is now integrated into the
Creative Services business to offer integrated digital workflow and the caption "Other non-cash income (expenses)" includes mainly
stronger project management between postproduction and content the net variation of provisions without cash impact;
delivery.
the caption "Other segment assets" includes advances to suppliers
and to customers and excludes cash and cash equivalents;
the caption "Total segment assets" includes all operating assets used
by a segment and consists principally of receivables, inventories,
property, plant and equipment, intangible assets and goodwill, net of
depreciation and provisions. Segment assets do not include income
tax assets and cash;

the caption "Unallocated assets" includes mainly financial assets, benefits, income tax, payables on acquisition off companies and
current accounts with associates and joint ventures, income tax payables to suppliers off PPE and intangible assets);
assets, cash and cash equivalents and assets classified as held for sale;
all the statement off operations and statement of financial position
the caption "Unallocated liabilities" includes mainly financial and items disclosed in the tables below have been measured in
income tax liabilities and liabilities classified as held for sale; accordance with IFRS;
the caption "Capital expenditures" excludes the net change in as of December 31, 2012, one external customer within the
payables to suppliers off fixed assets (amounting to €(21) million and Entertainment Services segment and one external customer within
€15 million as of December 31, 2012 and 2011, respectively); the Digital Delivery segment represent more than 10% off the
Group’s consolidated revenues (respectively €479 and
the caption "Capital employed" is defined as being the aggregate of €483 million). As of December 31, 2011, one external customer
net both tangible and intangible assets (excluding goodwill), within the Entertainment Services segment and one external
operating working capital and other current assets and liabilities (with customer within the Digital Delivery segment represent more than
the exception off provisions including those related to employee 10% of the Group’s revenue (respectively €490 and €403 million).
5.1 Information by business segment

Digital Entertainment Consolidation
(in € millions) Technology Delivery * Services * Other Adjustments Total
Year ended December 31, 2012
Statement of operations items
Revenues 515 1,334 1,730 1 - 3,580
Intersegment sales 4 2 4 2 (12) -
EBITDA adjusted 400 14 199 (101) - 512
Profit (loss) from continuing operations before tax
and net finance income (expense)(1) 403 (55) 12 (96) - 264
Out of which the main non-cash items below:
amortization of customer relationships - (6) (13) - - (19)
amortization of contract advances and up-front
prepaid discounts - - (37) - - (37)
other depreciation and amortization (7) (31) (120) (4) - (162)
net impairment
p losses on non-current operating
assets(2) 3 (8) (5) - - (10)
other non-cash income ((expenses)) 5 ((24)) ((20)) 19 - ( )
(20)
Statement of financial position items
Assets
Operating segment assets 92 384 931 14 - 1,421
Goodwill - 50 428 - - 478
Other segment assets 188 93 107 18 - 406
Total segment assets 280 527 1,466 32 - 2,305
Investments in associates - 2 3 13 - 18
Unallocated assets 914
TOTAL CONSOLIDATED ASSETS 3,237
Liabilities
Segment liabilities 180 455 551 523 - 1,709
Unallocated liabilities 1,287
TOTAL CONSOLIDATED LIABILITIES
(WITHOUT EQUITY) 2,996
Other information
Capital expenditures (18) (49) (59) (2) - (128)
Capital employed 119 121 587 (89) - 738
* Following the disposal of the Broadcast Services activity to Ericsson completed on July 2, 2012, the Group reorganized its Digital Delivery operating segment and transferred the
Media Services activity, formerly reported as part of Digital Delivery segment, to the Creative Services business within the Entertainment Services segment. Accordingly, the
information above has been restated and Media Services is now presented within the Entertainment Services segment.
(1) Operating losses of Angers until June 1, 2012 are presented within the Digital Delivery segment. 2012 Thomson Angers’ liquidation losses incurred by the Group are presented within
the Other segment to reflect the way Technicolor management follows and manages this liquidation process.
(2) See details in note 8.

Digital Entertainment Consolidation

(in € millions) Technology Delivery(1) * Services * Other Adjustments Total
Year ended December 31, 2011
Revenues 456 1,157 1,832 5 - 3,450
Intersegment sales 4 8 1 2 (15) -
EBITDA adjusted 346 (20) 230 (81) - 475
Profit (loss) from continuing operations before tax
and net finance income (expense) 342 (251) (29) (95) - (33)
Out of which the main non-cash items below:
amortization of customer relationships - (15) (13) - - (28)
amortization of contract advances - - (49) - - (49)
other depreciation and amortization (8) (45) (115) (4) - (172)
impairment losses on non-current operating assets(2) - (160) (28) - - (188)
other non-cash income ((expenses)) ((4)) ((25)) ((57)) ((8)) - ((94))
Assets
Operating segment assets 79 373 1,096 15 - 1,563
Goodwill - 50 431 - - 481
Other segment assets 170 82 132 17 - 401
Total segment assets 249 505 1,659 32 - 2,445
Investments in associates 14 - 14
Unallocated assets 960
TOTAL CONSOLIDATED ASSETS 3,419
Liabilities
Segment liabilities 148 442 645 472 - 1,707
Unallocated liabilities 1,557
TOTAL CONSOLIDATED
LIABILITIES (WITHOUT EQUITY) 3,264
Other information
Capital expenditures (8) (52) (124) (1) - (185)
Capital employed 132 105 709 (39) - 907
information above has been restated and Media Services is now presented within the Entertainment Services segment. As of December 31, 2011, Media Services external revenue and
EBITDA amounted to respectively €53 million and €(9) million.
(1) Assets and liabilities of Broadcast Services have been classified as held for sale as of December 31, 2011 and are therefore presented within the unallocated assets and liabilities.
Broadcast Services’ statement of operations items are included in the Digital Delivery figures mentioned above.
(2) See details in note 8.
5.2 Information about geographical areas

Rest of Rest of
(in € millions) France UK Europe U.S. Americas Asia/Pacific Total
December 31, 2012
Revenues(1) 899 165 380 1,435 471 230 3,580
Segment assets 503 125 133 1,173 268 103 2,305
Non-current assets(2) 196 92 34 845 116 71 1,354
December 31, 2011
Revenues(1) 828 202 496 1,288 439 197 3,450
Segment assets 446 134 177 1,297 283 108 2,445
Non-current assets(2) 182 94 44 917 130 76 1,443
(1) Revenues are classified according to the location of the entity that invoices the customer.
(2) Non-current assets exclude financial instruments, deferred tax assets, equity investments, non-current loans and collateral cash and security deposits.

NOTE 6 SELLING AND ADMINISTRATIVE EXPENSES AND OTHER INCOME

(EXPENSE)
Selling and marketing expenses (
(120)) (127)
General and administrative expenses (277) (249)
SELLING AND ADMINISTRATIVE EXPENSES (397) (376)
OTHER INCOME (EXPENSE)(1) 2 6
(1) The line “Other income (expense)” includes the main following elements:
(a) For 2012:
a curtailment gain linked to the elimination of the U.S. life insurance benefits for retirees (included in the U.S. post-retirement medical plan) for €41 million (see note 24);
a loss of €7 million related to the deconsolidation of Thomson Angers, additional to the €13 million booked as restructuring expenses (see note 4);
a provision related to a litigation for €25 million.
(b) For 2011:
a settlement loss of €6 million with a third party together with €3 million one-off exit costs in the context of the reorganization of our European logistic business within our
Entertainment Services segment;
again on the sale of ContentGuard for €6 million;
gains on disposal of various tangible and intangible assets for €3 million.
NOTE 7 RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses, gross ((179)) (175)
Capitalized development projects 49 42
Amortization of research and development intangible assets ((21)) (18)
Subsidies(1) 19 23
RESEARCH AND DEVELOPMENT EXPENSES, NET (132) (128)
(1) Include mainly research tax credit granted by the French State.
NOTE 8 NET IMPAIRMENT LOSSES ON NON-CURRENT OPERATING ASSETS

Digital Entertainment
(in € millions) Technology Delivery * Services * Other Total
Impairment losses on intangible assets(1) - (2) (4) - (6)

Impairment losses on tangible assets(2) - (6) (1) - (7)
IMPAIRMENT LOSSES ON NON-CURRENT OPERATING ASSETS(3) - (8) (5) - (13)
Impairment reversal on intangible assets(1) 3 - - - 3
NET IMPAIRMENT LOSSES ON NON-CURRENT OPERATING ASSETS(3) 3 (8) (5) - (10)
2011
Impairment losses on goodwill - (129) (18) - (147)
Impairment losses on intangible assets(1) - (22) - - (22)
Impairment losses on tangible assets - (9) (10) - (19)
IMPAIRMENT LOSSES ON NON-CURRENT OPERATING ASSETS(3) (4) - (160) (28) - (188)
information above has been restated and Media Services is now presented within the Entertainment Services segment.
(1) Mainly impairment of PRN trademark for €4 million. For details, see note 13 “Goodwill and intangible assets”.
(2) Includes €(6) million of impairment losses related to Broadcast Services business recognized as part of the held for sale valuation process. For details, see note 11 “Discontinued
operations” and note 12 “Property, plant and equipment”.
(3) Additional €6 million and €3 million on tangible assets and other current assets have been written-off respectively in 2012 and 2011 in the frame of a restructuring plan, apart from
impairment process. Total net impairment of assets amounts therefore to €16 million and €191 million in 2012 and 2011, respectively.
(4) Additional €5 million impairment was booked on current assets in the discontinued perimeter in 2011.

NOTE 9 NET FINANCE INCOME (EXPENSE)

Interest income 4 5
Interest expense ((149)) (154)
Interest expense, net(1) (145) (149)
Financial component of pension plan expense ((13)) (15)
Exchange loss ((6)) (1)
Acceleration of amortization of the effective interest rate on the debt(2) ((20)) (2)
Change in fair value on financial instrument (loss)(3) ((1)) (7)
Other(4) ((12)) (13)
Other financial (expense) income, net (52) (38)
NET FINANCE INCOME (EXPENSE) (197) (187)
(1) In 2012 and 2011 the average effective rate was 11.80% and 11.78% respectively (see note 23.2 for more details). Interest expense includes €32 million (€30 million in 2011) due to
the difference between the effective interest rate and the nominal rate of the debt.
(2) The proceeds from the capital increases that occurred in July and August 2012 and the disposal of the Broadcast business, completed on July 2, 2012, were used largely to repay debt
(in accordance with the terms of the credit agreements to which the Group is a party – see note 22.3 (g)). This early debt repayments triggered a partial reversal of the IFRS gain
resulting from the debt restructuring on May 26, 2010. In accordance with IAS 39 (AG8), the estimates of the future repayments of the debt have been adjusted using the effective
interest rate method and consequently “Other financial expense” includes a €17 million charge due to this change in the repayment schedule. Likewise, the Group prepaid debt in
March 2012, based on its 2011 excess cash flow (as defined per the credit agreements), resulting in a loss of €3 million.
(3) Related mainly to a loss from revaluation of interest rate caps.
(4) In 2012 related mainly to bank fees and discount losses. In 2011, other expenses are mainly explained by a depreciation of a financial asset.
NOTE 10 INCOME TAX

Income tax expense is summarized below:

Current income tax
France ( )
(28) (12)
Foreign ((23)) (14)
Total current income tax (51) (26)
Deferred income tax
France - (55)
Foreign 2 (2)
Total deferred income tax 2 (57)
TOTAL INCOME TAX (EXPENSE) ON CONTINUING OPERATIONS (49) (83)
In 2012, the Group total income tax expense on continuing operations, United States, and were booked as an income tax charge. The current
including both current and deferred taxes, amounted to €49 million income tax charge amounted to €12 million in France (reflecting mainly
compared to an expense of €83 million in 2011. withholding taxes and “CVAE”) and €14 million outside France.
The current tax charge in 2012 was notably the result of current taxes In 2012, French tax rules were amended whereby the use of tax loss
due in France, Mexico, the U.K., Poland, Australia and India, as well as carry-forward is now limited to only 50% of yearly taxable profit instead
withholding taxes on income earned by our licensing activities, which of 60% in 2011 and 100% previously. In addition, in 2012, the French
were mostly credited against taxes payable in France and not in the tax regulation limits to 85% (in 2012 and 2013) and to 75% (in 2014
United States. The current income tax charge amounted to €28 million and after) the deductibility of net interest expenses. As well, a surtax of
in France (reflecting income taxes payable due to the limitation of the 5% was extended up to 2014.
usage of tax losses carried forward, withholding taxes and the local tax
“CVAE”) and €23 million outside France. In 2011, as a consequence of the 60% limitation new rule and updated
forecasts within the French tax group, French deferred tax assets were
The current tax charge in 2011 was notably the result of current taxes partially impaired. The French deferred tax decreased by €63 million
due in France, Thailand, Australia, Mexico and Italy, as well as compared to the deferred tax assets recognized as at December 31,
withholding taxes on income earned by our licensing activities, which 2010 (of which €55 million in the consolidated statement of
were only partially credited against taxes payable in France and in the operations and €8 million in equity).

In 2012, as a consequence off all the new rules, but taking into account As per the Group’s current interpretation off the U.S. Tax rules, namely
updated forecasts within the French tax group and 2012 consumption, Section Code 382, the May 26, 2010 share capital increase of
French deferred tax assets remained stable compared to the deferred Technicolor SA and NRS issuance under the Sauvegarde Plan leads to
tax assets recognized as at December 31, 2011. The remaining deferred an “ownership change” of the U.S. Group off subsidiaries. Such
tax assets correspond to a usage by 2026, which represents the “ownership change” severely restricts the use of tax losses carried
estimated Licensing activity’s predictable taxable income period based forward of the U.S. subsidiaries. The Group is lobbying against such a
on existing licensing programs. severe application of the Section 382.
10.1 Analysis of the difference between the theoretical and effective income tax
expense
The following table shows reconciliation from the theoretical income tax expense – using the French corporate tax rate of 36.1% as at
December 31, 2012 and 2011 – to the reported tax expense. The reconciling items are described below:

Consolidated net income/(loss) (22) (324)
Discontinued operations ((35)) (21)
Income tax ((49)) (83)
Share of profit (loss) from associates ((5)) -
Pre-tax accounting income on continuing operations 67 (220)
Theoretical income tax using the statutory rate ((24)) 79
Change in unrecognized deferred tax assets(1) ((51)) (147)
Tax credits 4 -
Effect of difference in tax rates(2) 23 (1)
Permanent differences(3) 18 (6)
Withholding taxes not recovered(4) ((8)) (2)
Other, net(5) ((11)) (6)
Effective income tax on continuing operations ( )
(49) (83)
(1) In 2012, it relates mainly to the depreciation of the deferred tax assets of the U.S. entities, due to the restriction on the U.S. tax losses. In 2011, net change in unrecognized deferred tax
assets relates mainly to the partial deferred tax assets impairment in France for €69 million and unrecognized deferred tax assets in the U.S for €70 million.
(2) In 2012, the mother company benefited from a reduced rate taxation, resulting in a tax benefit of €17 million related to the licensing revenue (€4 million in 2011).
(3) In 2012 it includes mainly permanent differences related to assets disposals. In 2011, this amount comprises €(52) million related to impairment of non-current assets and €24 million
related to assets disposals.
(4) Withholding tax not recovered related to withholding tax paid on licensing revenues but not refunded through current income tax in France and in the U.S.
(5) In 2012 and in 2011, this amount comprises €7 million and €6 million respectively related to “CVAE” of French entities.
10.2 Analysis of variations of deferred tax assets and liabilities

(in € millions) Deferred tax assets Deferred tax liabilities Total, net deferred tax assets
At January 1, 2011 488 (193) 295
Changes impacting 2011 continuing result (73) 16 (57)
Changes impacting 2011 Shareholder ‘s equity (8) - (8)
Other movement * (13) 10 (3)
Year ended December 31, 2011 394 (167) 227
Changes impacting 2012 continuing result (7) 9 2
Other movement 1 - 1
YEAR ENDED DECEMBER 31, 2012 388 (158) 230
* In 2011 this caption corresponds mainly to the disposal of Content Guard (€3 million net).

10.3 Analysis of tax position by major temporary differences and unused tax losses
and credits
Tax effect of tax losses carried forwards 1,387 1,344
Tax effect of temporary differences related to:
Property, plant and equipment 24 23
Goodwill 3 3
Intangible assets ((79)) (81)
Investments and other non-current assets ((19)) (28)
Inventories 5 4
Receivables and other current assets 8 5
Borrowings 88 79
Retirement benefit obligations 69 66
Restructuring provisions 15 23
Other provisions 23 41
Other liabilities current and non current 77 61
Total deferred tax on temporary differences 214 196
Deferred tax assets/(liabilities) before netting 1,601 1,540
Valuation allowances on deferred tax assets (1,371) (1,313)
NET DEFERRED TAX ASSETS/(LIABILITIES) 230 227
10.4 Expiration of the tax losses carried forward

(in € millions)
2013 10
2014 18
2015 17
2016 21
2017 28
2018 and thereafter 3,989
TOTAL 4,083
NOTE 11 DISCONTINUED OPERATIONS AND HELD FOR SALE OPERATIONS
11.1 Scope of the discontinued operations

For the year 2012, there has been no change in discontinued perimeter compared to 2011.
Operations within the discontinued perimeter in 2011 are mainly the Grass Valley businesses.

11.2 Results of discontinued operations

As of December 31, 2012 and 2011, the results of these discontinued operations are as follows:
(in € millions) Year ended December 31, 2012 Year ended December 31, 2011
Revenues - 32
Cost of sales - (23)
Gross Margin - 9
Net operating expenses and other expenses other than impairment of assets ((36)) (22)
Loss from operations before tax and finance cost and before impairment(1) (36) (13)
Net interest income (expense) - 1
Other financial income (expense) 1 (4)
Income tax - -
Loss for the period from discontinued operations before impairment (35) (16)
Loss on impairment of businesses held for sale(2) - (5)
LOSS FOR THE PERIOD FROM DISCONTINUED OPERATIONS (35) (21)
(1) Mainly corresponds to the fine from the European Commission related to Thomson’s former Cathode Ray Tubes (CRT) business. On December 5, 2012, the European Commission
fined a cartel in the CRT industry including Technicolor (Thomson at the time of the alleged acts), Samsung, Philips, LG, Panasonic and Toshiba. The European Commission’s main
reproach is that these electronic manufacturers had an understanding to fix prices between 1999 and 2005. Technicolor was notified by the European Commission of its decision to
impose a fine of €38.6 million. This amount is included in “Net loss from discontinued operations” caption of the consolidated statement of operations as it relates to a business
discontinued by the Group in 2005.
In 2011, the loss was mainly linked to Grass Valley businesses.
(2) In 2011, corresponds to an impairment loss to adjust the held for sale businesses at their fair value less costs to sell.
11.3 Net cash used in discontinued operations

Loss from discontinued operations (35) (21)
Summary adjustments to reconcile loss from discontinued operations to cash used in discontinued
operations
Depreciation and Amortization - 1
Impairment of assets - 5
Net changes in provisions ((3)) (22)
(Profit)/ Loss on asset sales ((4)) 7
Changes in working capital and other assets and liabilities(1) 36 10
Cash used in discontinued operations (6) (20)
Net interest received - 1
NET OPERATING CASH USED IN DISCONTINUED OPERATIONS (I) (6) (19)
Net cash impact from sale of investments (see note 30) ((5)) (32)
Cash collateral and security deposits reimbursed by third parties - 12
NET INVESTING CASH USED IN DISCONTINUED OPERATIONS (II) (5) (20)
NET FINANCING CASH USED IN DISCONTINUED OPERATIONS (III) - -
NET DECREASE IN CASH AND CASH EQUIVALENTS (I+II+III) (11) (39)
(1) In 2012, corresponds mainly to the accrual of the European Commission’s fine for €38.6 million.
11.4 Losses on impairment of held for Based on the latest information available to the Group regarding the
selling prices of the held for sale businesses and on the non-current
sale businesses assets carrying values of such businesses, the Group recognized in 2012
IFRS 5.15 requires that a disposal group classified as held for sale be an impairment loss of €6 million related to Broadcast Services business
measured at the lower of its carrying amount and fair value less costs to (not classified as discontinued). In 2011 the Group booked an
sell. impairment loss of €5 million for the held for sale businesses classified
as discontinued.

11.5 Assets and liabilities held for sale As off December 31, 2011, the Broadcast Services activity was classified
as held for sale. This business has been sold during 2012.
The assets and liabilities attributable to the operations not yet sold as of
December 31, 2012 and December 31, 2011 have been classified as As off December 31, 2012, the VoIP activity was classified as held for
held for sale in the Group consolidated statements of financial position sale. This business has been sold on January 21, 2013 (see note 34). As
and presented separately from other assets and liabilities. this activity was small compared to the Group’s financial statements, it
was therefore not classified as discontinued and is presented in the
statement of operations of the Digital Delivery segment (see note 5).
The major classes of assets and liabilities comprising the businesses classified as held for sale are as follows:
(in € millions) December 31, 2012 December 31, 2011

Goodwill - 20
Intangible assets - 3
Property, plant and equipment - 21
Other assets - 7
Inventories 2 -
Accounts receivable and other receivables 2 15
TOTAL – ASSETS CLASSIFIED AS HELD FOR SALE 4 66
Provisions - 4
Retirement benefit obligations - 1
Accounts payable and other liabilities 3 47
TOTAL – LIABILITIES DIRECTLY ASSOCIATED
WITH ASSETS CLASSIFIED AS HELD FOR SALE 3 52

NOTE 12 PROPERTY, PLANT AND EQUIPMENT

Machinery & Other Tangible
(in € millions) Land Buildings Equipment Assets(1) Total
At December 31, 2010
Cost 8 86 1,187 235 1,516
Accumulated depreciation - (49) (921) (116) (1,086)
YEAR-ENDED DECEMBER 31, 2010, NET 8 37 266 119 430
2011
Opening net amount 8 37 266 119 430
Exchange differences - - 4 4 8
Additions - 3 62 61 126
Acquisition of subsidiaries(5) - - - 5 5
Disposals (1) - (3) (1) (5)
Depreciation charge - (3) (97) (15) (115)
Impairment loss(2) - (3) (17) (2) (22)
Classification as held for sale(3) - - (18) (3) (21)
Other(4) - - 30 (35) (5)
Year-ended December 31, 2011, net 7 34 227 133 401
Cost 7 73 931 255 1,266
Accumulated depreciation - (39) (704) (122) (865)
YEAR-ENDED DECEMBER 31,2011, NET 7 34 227 133 401
2012
Exchange differences - - (3) (2) (5)
Additions - - 15 54 69
Acquisition of subsidiaries(5) - - 2 - 2
Disposals - - - (1) (1)
Disposal of subsidiaries(6) (2) - (1) (1) (4)
Depreciation charge - (2) (82) (19) (103)
Impairment loss(2) - - (3) (3) (6)
Other(4) - (1) 42 (44) (3)
Cost 5 73 1,068 266 1,412
Accumulated depreciation - (42) (871) (149) (1,062)
(1) Includes tangible assets in progress.
(2) In 2012, corresponds mainly to impairment losses linked to the end of the photochemical film printing operations. These impairments were mainly booked in the frame of restructuring
plans for €5 million that are not included in the impairment losses on non-current operating assets disclosed in note 8.
Additional to the €6 million impairment losses disclosed above, the Group recorded €6 million related to the Broadcast Services business classified as held for sale as of December 31,
2011 and therefore not included in the 2012 variations above.
In 2011, corresponds to:
an impairment on Entertainment Services assets for €10 million, mainly related to the end of the photochemical film printing operations in Mirabel (Canada) (€4 million) and to
the reorganization of our European logistic business (€2 million);
an impairment on Digital Delivery assets for €9 million, mainly related to Digital Content Delivery Services activity in the UK.
It also includes a depreciation of PPE for €3 million in the frame of a restructuring plan that is not included in the impairment losses on non-current operating assets disclosed in
note 8.
(3) Refer to note 11 above for details. In 2011, Broadcast Services business has been classified as held for sale.
(4) Corresponds mainly to the transfer of tangible assets in progress to machinery and equipment.
(5) Related mainly to the acquisition of Quinta business in 2012 and to the acquisition of Laser Pacific’s digital post production business in 2011.
(6) This reflects mainly the impact of the deconsolidation of Thomson Angers in 2012.

NOTE 13 GOODWILL AND OTHER INTANGIBLE ASSETS

Patents and Customer Other Total
(in € millions) trademarks relationships intangibles(1) intangible assets Goodwill
Cost 558 494 314 1,366
Accumulated amortization and impairment (238) (365) (251) (854)
2011
Exchange differences 6 2 3 11 12
Additions - - 49 49 2
Acquisition of subsidiary - - - - 2
Disposal - - (1) (1) -
Disposal of subsidiary(4) (4) - - (4) (12)
Amortization charge (29) (28) (28) (85) -
Impairment loss(2) - (3) (19) (22) (147)
Classification as held for sale(3) - (1) (2) (3) (20)
Other - - 2 2 -
Cost 608 485 279 1,372
2012
Exchange differences (4) (1) (1) (6) (5)
Additions 5 - 54 59 2
Acquisition of subsidiary - - 1 1 1
Disposal - - (1) (1) -
Amortization charge (27) (19) (30) (76) -
Impairment loss(2) (4) - (2) (6) -
Reversal of impairment loss 3 - - 3 -
Other (1) - 1 - (1)
Cost 597 300 266 1,163
(1) Includes capitalized development projects, acquired or internally developed software and acquired technologies on a stand-alone basis or as part of a business combination.
(2) In 2012 impairment loss regarding PRN trademark (see note 13.1). The impairment on goodwill is detailed in note 13.3.
(3) In 2011, Broadcast Services business has been classified as held for sale.
(4) Relates to the disposal of ContentGuard in 2011.
13.1 Trademarks
As of December 31, 2012, trademarks total €206 million and consist value of the trademark is estimated as the present value of the after-tax
mainly of Technicolor®, RCA®, THOMSON® and MPC®. royalties that the Group avoids to pay to a third-party. This method is
commonly used to estimate the fair value of trademarks. The values of
Trademarks are considered to have indefinite useful lives. the other trademarks have been assessed based on the value in use.
Consequently, they are tested annually for impairment. For the purpose
of this test, trademarks are tested on a stand-alone basis by calculating Following the decision to rebrand PRN into IZ-ON Media, PRN
their fair value. The value of Technicolor® trademark has been mainly trademark was written off for €4 million.
assessed based on a royalty relief method. Under this approach, the

Technicolor® RCA® Total

Method used to determine the recoverable amount Royalty relief method and discounted Discounted cash flows
cash flow
Description of key assumptions Budget and cash flow projections, Budget and cash flow projections
trademark royalty rate
Period for projected future cash flows 5 years 5 years
Growth rate used to extrapolate cash flow projections beyond 0% 0%
projection period
Post-tax discount rate applied
as of December 31, 2012 9.1% (1) 8%
Net amount of trademarks 171 29 200
Other trademarks 6
TOTAL NET AMOUNT OF TRADEMARKS 206
(1) Weighted average discount rate of the businesses using the trademark.
For Technicolor® trademark, its recoverable value is very close to its 13.3 Goodwill
net book value. Therefore, a 0.3% increase in the post-tax discount
Impairment tests of goodwill are carried out based on groups of
rate assumption would bring the recoverable value in line with the
Cash-Generating Units (hereafter called “goodwill reporting units”
book value; likewise, a 3% fall in cash flow would bring the recoverable
(GRU)):
value in line with the book value.
in the Entertainment Services segment, 4 GRU are considered: DVD
For RCA® trademark, no reasonably expected change in assumptions
Services, Creation Services (regrouping Digital Postproduction,
would result in any impairment.
Media Distribution Services and Digital Cinema as well as Film
services), Digital Production and IZ-ON Media. Following the
13.2 Customer relationships
disposal of the Broadcast Services activity to Ericsson, the Group
Customer relationships are amortizable assets. Consequently, they are reorganized in H1, 2012 its Digital Delivery operating segment and
tested for impairment only if management identifies triggering events transferred the Media Services activity, formerly reported as part of
that may result in a loss of value of such assets. Digital Delivery segment, to the Creative Services business within the
Entertainment Services segment. Media Services activity is now
As of December 31, 2012 and 2011, management didn’t identify any
integrated into Creation Services to offer integrated digital workflow
triggering event that may result in a loss of value of such assets.
and stronger project management between postproduction and
content delivery. Consequently, Media Services is now tested within
Creation Services for goodwill impairment review;
in the Digital Delivery segment, one GRU is considered: Connected

Home;
the Technology segment is considered as a single GRU.

The following table provides the allocation of the significant amounts of goodwill and trademarks to each significant goodwill reporting unit
based on the organisation effective as of December 31, 2012.
Entertainment Services Digital Delivery Technology Total

DVD Creation Digital IZ-ON Media Connected
(in € millions) Services Services Production (ex-PRN) Home
As of December 31, 2012
Net amount of goodwill 353 30 29 16 50 - 478
Technicolor trademark 171 171
Net amount of trademark other than
Technicolor(1) - - 2 - - 33 35
Held for
sale
Entertainment Services Digital Delivery Technology business
Post
Production and IZ-ON
Theatrical Digital Media Media Broadcast
(in € millions) DVD Services Services Production (ex-PRN) Services Connect Technology Services Total
As of December 31, 2011
Goodwill before impairment of
the period 358 5 29 16 41 179 - 20 648
Impairment of the period - - - - (18) (129) - - (147)
Reclassification as held for sale - - - - - - - (20) (20)
NET AMOUNT OF
GOODWILL 358 5 29 16 23 50 - - 481
Technicolor trademark 174 - 174
Net amount of trademark other
than Technicolor - - 2 4 - - 33 - 39
(1) Includes:
Moving Picture Company® (MPC) trademark in the Digital Production goodwill reporting unit;
THOMSON® trademark and the license to use the RCA® trademark in the Technology goodwill reporting unit.
The Group recorded as of December 31, 2011 an impairment charge in Connect, it reflects a worsening European economic environment,
of €147 million on goodwill. This impairment was triggered by the the late rollout of certain new contracts and an increase in
following factors: development costs.
in Media Services it is essentially the accounting consequence of the

split of the Digital Content Delivery GRU into two separate business
units;

In order to perform the annual impairment test, the Group used the following assumptions to determine the recoverable amount of the main
goodwill reporting units:
Entertainment Services Digital Delivery

IZ-ON Media
DVD Services Creative Services Digital Production (ex-PRN) Connected Home
Basis used to determine the recoverable amount Fair-Value(1) Fair-Value(1) Fair-Value(1) Value in Use Value in Use
Description of key assumptions Budget and cash flow projections
Period for projected future cash flows (*) (*) 5 years 5 years 5 years
Growth rate used to extrapolate cash flow
projections beyond projection period
as of December 31, 2012 (*) (*) 2% 2% 2%
as of December 31, 2011 (*) (*) 2% 2% 2%
Post-tax discount rate applied
as of December 31, 2012(2) 8% 8.5% 8.5% 9% 11%
as of December 31, 2011 8% 8.5% 8.5% 9% 11%
(1) In the absence of a binding sale agreement at closing date, of an active market and of comparable recent transactions for any of our goodwill reporting units, we used discounted cash
flow projections to estimate fair value less costs to sell. Technicolor management considers that fair value less costs to sell is the most appropriate method to estimate the value of its
businesses as it takes into account the future restructuring the Group will need to make to adapt to a quickly changing technological environment. Such restructuring would be taken
into account by any market participant given the economic environment of the businesses the Group evolves in.
(2) The corresponding pre-tax discount rates are within a range from 11.5% to 15.3%.
(3) Following the finalization of Thomson Angers’ restructuring in 2012, Technicolor determined that Connected Home value in use was higher than fair value as of December 31, 2012.
(*) Certain activities within the DVD Services and Creative Services are considered to have a finite life, determined on the expected timing for the obsolescence of the underlying
technology of these activities. Accordingly, no terminal value has been applied for these activities. A growth rate of 2% has been applied to the remaining activities within DVD Services
and Creative Services.
Sensitivity of recoverable amounts

At December 31, 2012, among the main goodwill reporting units listed for Post Production and Theatrical Services, no reasonably expected
above: change in assumptions would result in any impairment;
for DVD Services, a 0.9% increase in the post-tax discount rate for Digital Production, no reasonably expected change in
assumption would bring the recoverable value in line with the book assumptions would result in any impairment;
value; likewise, a 6% fall in cash flow would bring the recoverable
value in line with the book value. Additional to these elements, the for IZ-ON Media (ex PRN), no reasonably expected change in
main assumptions that drive DVD Services recoverable value include assumptions would result in any impairment;
the evolution of the DVD and Blu RayTM markets volume over the
for Connected Home, no reasonably expected change in assumptions
projection period, the selling prices of these products and the
would result in any impairment.
capacity of DVD Services to adapt its cost structure to a quickly
changing market environment;
NOTE 14 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

Beginning of the year 14 12
Acquisition(1) 5 -
Share of (loss)/ profit before impairment on associates and joint ventures ((5)) -
Other equity movements(2) 4 2
END OF THE YEAR 18 14
(1) Acquisition is mainly linked to an investment in Indoor Direct, owned at 50%.
(2) Impact of the change in consolidation method off joint ventures (see note 2.3).

Details of investments in associates and joint-ventures are summarized below:
Group’s share of associates’ and joint ventures Group’s share of associates’ and joint
% Interest net assets ventures profit (loss)
(in € millions) 2012 2012 2011 2012 2011
SV Holdco, LLC 18.3% 9 10 ((1)) -
TechFund Capital Europe 20% 4 4 - -
Indoor Direct, LLC 50% 2 - ((4)) -
Beijing Thomson CITIC Digital Technology
Co., Ltd. 50% 2 - - -
Others N/A 1 - - -
TOTAL 18 14 (5) -
NOTE 15 INVENTORIES
Raw materials 44 57
Work in progress 12 15
Finished goods and purchased goods for resale 68 59
Gross value 124 131
Less: valuation allowance (12) (13)
TOTAL 112 118
NOTE 16 TRADE ACCOUNTS AND NOTES RECEIVABLE

Trade accounts and notes receivable 562 622
Less: valuation allowance (36) (37)
TOTAL(1) 526 585
(1) Including €36 million which are past due as of December 31, 2012 (€46 million as of December 31, 2011) for which no valuation allowance was recorded as the amount is still
considered recoverable.
The credit risk exposure on the Group’s trade receivables corresponds to the net book value of these assets (€526 million as of December 31,
2012 compared to €585 million as of December 31, 2011).
NOTE 17 OTHER CURRENT AND NON-CURRENT ASSETS

Other non-current assets 66 67
Other current assets(1) 340 325
TOTAL OTHER ASSETS 406 392
(1) Detail of other current assets: 2012 2011

Value added tax receivable(*) 33 35
Research tax credit and subsidies 32 33
Prepaid expenses 35 42
Other current assets(**) 240 215
Total Other current assets 340 325
(*) The value added tax receivable corresponds to the consolidated value added tax position generated in the normal course of the Technicolor group's business.
(**) As of December 31, 2012 and 2011 other current assets include €136 million and €128 million of accrued royalty income, respectively.

NOTE 18 CASH, CASH EQUIVALENTS, CASH COLLATERAL AND SECURITY

DEPOSITS
Cash 126 210
Cash equivalents 271 160
CASH & CASH EQUIVALENTS 397 370
Of which restricted cash(1) 42 45
CASH COLLATERAL AND SECURITY DEPOSITS(2) 44 49
(1) Cash held in TCE Television Taiwan with restricted use except to pay local expenses.
(2) Cash to secure credit facilities and other obligations of the Group, out of which the current portion amounts to €29 million as of December 31, 2012. Some cash collaterals for U.S.
entities are classified as current because of their short maturity but are renewed automatically for periods of 12 months.
The average interest rate on short-term bank deposits was 1.04% in 2012 (1.58% in 2011); these deposits generally have a maturity of less than
1 month.
NOTE 19 SHAREHOLDERS’ EQUITY
19.1 Common stock, additional paid-in capital and notes redeemable in shares (NRS)
(a) Share capital
The change to the shares and the share capital since January 1, 2011 is as follows:
(In euros, except number of shares) Number of shares Par value Euros
Share Capital as of January 1, 2011 174,846,625 1 174,846,625
Share capital increase after NRS I redemption(1) 767,249 1 767,249
Share capital increase after NRS II and NRS IIC redemption(2) 48,145,209 1 48,145,209
Share Capital as of December 31, 2011 223,759,083 1 223,759,083
Share capital Increase after reserved capital increase to Vector Capital(3) 47,471,506 1 47,471,506
Share capital Increase after capital increase with preferential subscription rights(4) 61,643,316 1 61,643,316
Share capital increase after NRS II and NRS IIC redemption(5) 2,669,936 1 2,669,936
SHARE CAPITAL AS OF DECEMBER 31, 2012 335,543,841 1 335,543,841
Weighted average number of shares outstanding (basic net of treasury stock)
as of December 31, 2011 211,364,435
Weighted average number of shares outstanding (basic net of treasury stock)
as of December 31, 2012 275,885,374
(1) In 2011, for the “NRS tranche I” (corresponding to redemption of “NRS tranche I” which was differed in 2010 to year 2011 at the option of the holders): 5,328,181 notes redeemable
in shares (“NRS tranche I”) corresponding to €5,328,181, were redeemed including amounts in respect of capitalized interest with 767,249 newly issued shares of the Company at a
fixed rate of €1/$1.3 and € 1.1/1£ for the notes in foreign currencies.
(2) For the “Tranche II”: 189,877,533 notes redeemable in shares (“NRS tranche II”) corresponding to €189,877,533 were redeemed including amounts in respect of capitalized interest
with 30,186,650 newly issued shares of the company at a fixed rate of € 1/$1,3 and € 1.1/1£ for the notes in foreign currencies.
For the “Tranche IIC”: 112,961,194 notes redeemable in shares (“NRS tranche IIC”) corresponding to € 112,961,194 were redeemed including amounts in respect of capitalized
interest with 17,958,559 newly issued shares of the company at a fixed rate of € 1/$1,3 and € 1.1/1£ for the notes in foreign currencies.
(3) On June 20, 2012, Technicolor’s shareholders approved the resolutions relating to the transaction proposed by Vector Capital Corporation (“Vector Capital”) in its offer dated May
25 and amended on June 13. The transaction, agreed by the General Shareholders’ Meeting, took place in July and August 2012.
Technicolor issued 47 471 506 shares through a reserved capital increase to Vector TCH (Lux) 1, S.à.r.l (previously Petalite Investments S.à.r.l), an investment vehicle controlled by
Vector Capital, at a price of €2.00 per share (the "Reserved Capital Increase") and representing a gross proceeds of 94,943,012 euros. The settlement of this capital increase
occurred on July 16, 2012.
(4) Technicolor issued 61 643 316 shares in a capital increase with preferential subscription rights at a price of €1.56 per share (the "Rights Issue") and representing a gross proceeds of
€96,163,574. The settlement of this capital increase occurred on August 14, 2012.
(5) For the “Tranche II and IIC”: 16,380,569 notes redeemable in shares corresponding to €16,380,569 were redeemed with 2,669,936 newly issued shares of the company (ratio of
conversion increased from 0.159 to 0.163 because of the 2012 capital increases’ dilution impact).
(b) Notes Redeemable in Shares (except for 10,191,567 holders of “NRS tranche II” and 6,189,002
holders of “NRS tranche IIC” who requested to defer redemption until
On May 26, 2010, €638 million of NRS were issued by way of set-off
December 31, 2012). Because all the interest is capitalized and repaid by
debts of senior creditors. The NRS I were redeemed in December 2010
a fixed number of shares, the NRS were classified in their entirety as
(except for 5,328,181 NRS I for which redemption was deferred until
equity.
December 31, 2011 at the option of the holders). The NRS II and NRS
IIC were redeemed on December 2011 into a fixed number of shares

The number of NRS issued as of May 26, 2010 were as follows:
Number of NRS issued Maturity

NRS I 319,218,837 31/12/2010
NRS II 200,069,100 31/12/2011 (2)
NRS IIC 119,150,196 31/12/2011 (2)
Total NRS on May 26, 2010 638,438,133
NRS I redeemed by issued shares on December 31, 2010 (313,890,656)
NRS I redeemed by issued shares on December 30, 2011 (5,328,181)
NRS II and NRS IIC redeemed by issued shares on December 30, 2011(1) (302,838,727)
Total NRS to be redeemed by new shares on December 31, 2011(1) 16,380,569
NRS II and NRS IIC redeemed by issued shares on December 30, 2012(1) at conversion ratio of 0.163 (16,380,569)
TOTAL NRS ON DECEMBER 31, 2012 -
(1) The redemption of 10,191,567 NRS II and 6,189,002 NRS IIC into shares (16,380,569 NRS in total) was deferred until December 31, 2012 at the bond holder’s request.
Following the July and August share capital increases, the conversion ratio was adjusted from 0.159 to 0.163 for NRS II and NRS IIC.
(2) Redemption could be deferred until December 31, 2012 at holders option.
In accordance with IFRIC 19 the equity issued (share capital, paid-in capital and NRS) in exchange for the debt extinguished has been stated at
fair value using the listed price of Technicolor shares on the Euronext Paris as of May 26, 2010.
19.2 Treasury shares

2012 2011
Number of Treasury shares at opening 605,687 617,705
Treasury shares delivered(1) - (12,018)
Number of Treasury shares at closing 605,687 605,687
(1) The delivery of Technicolor shares were made in 2011 in the framework of the Free Share Plan launched in 2007 for all Group employees
19.3 Subordinated perpetual notes currently below investment grade (S&P: BBB- and Moody’s: Baa3), this
provision does not apply because no change of control has occurred.
On September 26, 2005, Technicolor issued deeply subordinated
The above mentioned provision does not constitute a derivative
notes in a nominal amount of €500 million. Because of their perpetual
because it falls outside the scope of the definition under IAS 39 (the
and subordinated nature and the optional nature of the coupon, the
“change of control” event represents a non financial event excluded
notes are recorded under IFRS in shareholder’s equity for the net value
from the definition of a derivative under IAS 39).
received of €492 million (issue price less offering discount and fees).
The notes can be redeemed at Technicolor's option at par on The coupon adjustment clause after 10 years does not in itself imply
September 25, 2015 and at each interest payment date thereafter. The any particular intention on the part of Technicolor at that time. Because
notes have an annual fixed coupon of 5.75% and a yield to the call date the notes are perpetual and Technicolor has no obligation to pay either
of 5.85%. If not redeemed the interest rate starting September 25, the notes or a dividend, the notes are classified in shareholders’ equity.
2015 is the 3-month EURIBOR deposit rate plus 3.625%. On any
interest payment date, payment of interest is optional only if The terms and conditions of the notes specify also that, if any judgment
Technicolor did not declare and pay a dividend at the most recent is issued by any competent court for the judicial liquidation (liquidation
general meeting of its shareholders or before the due date of interest judiciaire) of Technicolor, or following an order of redressement
and it has not bought back shares in the previous six months. judiciaire, the sale of the whole of the business of Technicolor or in the
event of the voluntary dissolution of Technicolor or if Technicolor is
The notes have a specific provision whereby if Technicolor's senior liquidated for any other reason, then the notes will become immediately
rating is reduced by one full notch by either Moody’s or S&P – such that due and payable at their principal amount together with accrued interest
after the reduction the rating is below investment grade – in anticipation to the date of redemption. In that case, because of their subordinated
of or as a result of a change of control, Technicolor can redeem the nature, the right of the subordinated notes would be paid to the extent
notes at no penalty; however should Technicolor decide not to redeem that all other creditors of Technicolor ranking in priority to the
the notes, an additional margin of 5% is added to the interest rate of the subordinated note holders have been reimbursed.
coupon. A change of control is defined as having occurred when any
person or persons acting in concert own or acquire more than 50% of Pursuant to the Sauvegarde Plan the payment in 2010 of the interest
the capital or more than 50% of the voting rights. Even though claims of the TSS holders against the Company in cash for an amount
Technicolor’s senior credit ratings (S&P: B and Moody’s: B3) are of €25 million definitely extinguished these interest claims.

19.4 Dividends and distributions NOTE 20 FINANCIAL RISK

The Group did not pay any dividend in 2012 or 2011. MANAGEMENT
Technicolor faces a wide variety off financial risks including market risk
Under the internal rules off the Board adopted in connection with the
(due to fluctuations in exchange rates, interest rates, and prices of
Sauvegarde Plan, any decision to propose a dividend needs to be
financial instruments), liquidity risk and credit risk.
approved at least by 2/3 of the Board Members.
Technicolor’s financial market risks and liquidity risk are managed
centrally by its Group treasury department in France. One regional
19.5 Non-controlling interests treasury department in Indianapolis, United States reports to the Group
In 2012, there was no significant change in non-controlling interests. treasury. The treasury department is part off the Group finance
department and reports to the Chief Financial Officer. Total staffing of
In 2011, Technicolor formed a new entity jointly with Dreamworks
treasury is 10 persons.
called “MediaNaviCo”. Technicolor brought its MediaNavi start-up
activity and Dreamworks invested a cash consideration representing a Management of financial risks by the Group treasury is done in
minority ownership of MediaNaviCo (for futher details, see note 4). accordance with Group policies and procedures which cover, among
other aspects, responsibilities, authorizations, limits, permitted
instruments and reporting. All financial market risks are monitored
19.6 Net equity hedging reserve continually and reported regularly to the Chief Financial Officer, to the
Gains and losses on hedging instruments accounted for as cash flow Executive Committee and to the Audit Committee via various reports
hedges are recognized in other comprehensive income directly in showing the company’s exposures to these risks with details of the
equity. transactions undertaken to reduce these risks.
During 2012, of the result on hedging instruments recognized in OCI To reduce interest rate and currency exchange rate risk, the Group
at December 31, 2011, €4.2 million in loss was recognized in profit enters into hedging transactions using derivative instruments.
(loss) from continuing operations as the underlying hedged amounts
were realized. At December 31, 2012, a gain of €0.5 million on Because of the different nature of the Group’s U.S. dollar exposure
hedging instruments was recognized in OCI. related to its licensing activity (mainly a U.S. dollar sales exposure)
compared to the U.S. dollar exposures of its other segments, the Group
During 2011, of the result on hedging instruments recognized in OCI at may hedge the U.S. dollar licensing exposure separately. Apart from this
December 31, 2010, €4 million in loss was recognized in profit (loss) exception the Group tries to net offsetting exposures and to hedge only
from continuing operations as the underlying hedged amounts were the net exposure with banks.
realized. At December 31, 2011, a gain of €0.2 million on hedging
instruments was recognized in OCI. With regard to derivative instruments, Technicolor’s policy is not to use
derivatives for any purpose other than for hedging its commercial and
financial exposures. This policy does not permit the Group or its
19.7 Breach of minimum statutory share subsidiaries to take speculative market positions.
capital threshold
Credit risk on commercial clients is managed centrally or in some cases
Due to the accumulated losses, Technicolor SA’s statutory shareholders’
managed by each segment based on policies that take into account the
equity was negative since December 31, 2008. As of December 31,
credit quality and history of customers. From time to time, the Group
2012 Technicolor SA’s statutory shareholders’ equity is positive and
may decide to insure or factor without recourse trade receivables in
amount to €1,522 million (before €500 million off other equity),
order to manage underlying credit risk.
subsequent to the following intra-group transaction: on December 21,
2012 Technicolor SA sold at fair value its Technicolor Licensing SAS The Group’s derivative and cash transaction counterparties are limited
affiliate to Technicolor International SAS, a 100% affiliate of to highly rated financial institutions. Moreover the Group has policies
Technicolor SA. This transaction had no impact on the consolidated limiting the maximum amount off exposure to any single counterparty.
financial statements.

The Group’s financial risk management, and in particular its liquidity The Group put in place interest rate caps in 2010 for a part of its debt
risk, has been impacted by the debt restructuring. The deterioration of at variable interest rate as described in note 23.2; they were classified as
the Group’s financial condition and the subsequent debt negotiations cash flow hedges.
and Sauvegarde proceeding considerably increased the liquidity risk of
the Group but the closing off the debt restructuring in May 2010 as well In 2012 a total of €14 million in forecast transactions for which hedge
as the putting in place of two committed receivables backed credit accounting had been applied did not occur and as a result the hedges
facilities has reduced somewhat this risk. were cancelled resulting in a gain of €0.1million.
The Sauvegarde proceeding did not have a direct impact on the

(b) Fair Value hedges
Group’s outstanding derivatives, however the events described above
Forward foreign currency operations hedging accounts payable and
including the Sauvegarde Plan have impacted the Group’s management
accounts receivable in foreign currencies are designated as fair value
off financial risks because the Group has had more limited access to the
hedges. At December 31, 2012 there was a gain of €4 million on the
over-the-counter derivatives markets and is currently only able to
outstanding hedging instruments and a loss of €4 million on the hedged
execute operations on a short-term, cash collateralized basis.
items.
See notes 22 and 23 for more complete information on the Group’s
borrowing situation and financial risks. (c) Ineffectiveness recognized in profit and loss
The forward points on the foreign currency hedges described above are
excluded from the hedging relationship and are recognized in profit and
NOTE 21 DERIVATIVE FINANCIAL loss. In 2012 and 2011 this impact was a loss of €0.2 million and a loss
INSTRUMENTS off €1 million, respectively, booked in Other financial income (expense),
net.
21.1 Disclosures related to derivatives The ineffective portion of the interest rate caps is recognized in profit
qualifying for hedge accounting and loss. In 2012 and 2011 a loss off €0.5 million and a loss of
treatment €6 million, respectively was booked in Other financial income
As described in note 20, the Group uses derivatives to reduce market (expense), net.
risk. Technicolor uses principally forward foreign currency operations to
hedge foreign exchange risk and interest rate caps to hedge interest rate
21.2 Fair value of derivatives
risk.
The fair value of all derivative financial instruments is shown in the table
below. The fair value of forward exchange contracts and currency swaps
(a) Cash Flow hedges is computed by discounting the difference between the forward contract
Forward foreign currency operations hedging forecast exposures of rate and the market forward rate and multiplying it by the nominal
commercial purchases and sales in foreign currencies are designated as amount. The fair value of caps is determined by independent financial
cash flow hedges. Generally such hedges are for periods of 6 months or institutions and verified using standard option pricing methods.
less. The amounts related to these hedges that is recognized in other
comprehensive income (OCI) as well as the amounts reclassified from The Group’s financial derivatives are governed by standard ISDA
OCI to profit or loss for the period are given in note 19.6. (International Swaps and Derivatives Association, Inc.), Master
Agreements or similar master agreements customary in the French
market, which, in each case, contain cross default provisions.

The Group executes operations on the over the counter derivatives markets on a short-term, cash collateralized basis.

Assets Liabilities Assets Liabilities
Interest rate caps(1) - - 1 -
Total non-current - - 1 -
Forward foreign exchange contracts – cash flow and fair value hedges - - - 1
Total current - - - 1
TOTAL - - 1 1
(1) For further information, refer to details in note 23.1.
Credit risk on these financial derivative assets arises from the possibility that counterparties may not be able to meet their financial obligations to
Technicolor. The maximum risk is the marked-to-market carrying values shown in the table above, that is, €0.4 million at December 31, 2012
and €1 million at December 31, 2011.
NOTE 22 BORROWINGS
The tables below present information concerning Technicolor’s debt at December 31, 2012 compared to previous year.
22.1 Analysis by nature

Debt due to financial institutions 1,108 1,319
Bank overdrafts 1 -
Other financial debt 5 7
Accrued interest 1 1
TOTAL 1,115(1) 1,327(1)
Total non-current 1,019 1,242
Total current 96 85
(1) The nominal value is €1,236 million at December 31, 2012 and €1,500 million as of December 31, 2011 (see note 22.3).
22.2 Summary of the debt

Debt as of December 31, 2012 consisted principally of the Reinstated Debt, which includes €659 million of term loans and €435 million of
notes. The details, before hedging operations, are given in the table below:
Nominal IFRS Nominal Effective

(in € millions) Currency Amount Amount(1) Type of rate rate(2) rate(2) Repayment Type Final maturity
Series A1 Notes USD 94 88 Fixed 9.35% 13.49% Amortizing Mar. 31, 2016
Series B1 Notes GBP 5 4 Fixed 9.55% 14.28% Amortizing Mar. 31, 2016
Series C1 Notes EUR 29 28 Fixed 9.00% 12.56% Amortizing Mar. 31, 2016
Series A2 Notes USD 252 230 Fixed 9.35% 11.88% Bullet May 26, 2017
Series B2 Notes GBP 13 12 Fixed 9.55% 12.45% Bullet May 26, 2017
Series C2 Notes EUR 79 73 Fixed 9.00% 11.16% Bullet May 26, 2017
Term Loans A1 EUR 125 114 Floating(3) 7.00% 12.55% Amortizing Mar. 31, 2016
Term Loans A2 USD 77 70 Floating(3) 7.00% 12.93% Amortizing Mar. 31, 2016
Term Loans B1 EUR 335 295 Floating(4) 8.00% 11.42% Bullet May 26, 2017
Term Loans B2 USD 206 180 Floating(4) 8.00% 11.65% Bullet May 26, 2017
Reinstated Debt 1,215 1,094 8.33% 11.97%
Other Debt 21 21 Various 3.28% 3.28%
TOTAL 1,236 1,115 8.25% 11.80%
(1) In Technicolor’s IFRS statement of financial position the Reinstated Debt was initially recognized at fair value and then subsequently is measured at amortized cost.
(2) Rates as of December 31, 2012.
(3) 3 month EURIBOR or LIBOR with a floor of 2% +500bp with the margin stepping down if certain leverage ratios hit.
(4) 3 month EURIBOR or LIBOR with a floor of 2% + 600bp with the margin stepping down if certain leverage ratios hit.

22.3 Main features of the Group's borrowings

(a) Maturity
The table below gives the contractual maturity schedule of the Group’s subsequently revalued at amortized cost. The maturity schedule below
debt. The amounts are the nominal amounts and thus differ from the for 2011 does not include the mandatory prepayment in 2012 from
amounts in the consolidated statement of financial position which for excess cashflow generated in 2011 (see note 22.3 (g) for more details).
the new Reinstated Debt were initially recognized at fair value then
Less than 1 month 13 10
Between 1 and 6 months 37 22
Between 6 months and less than 1 year 46 53
Total current debt 96 85
Between 1 and 2 years 97 102
Between 4 and 5 years 885(1) 61
Over 5 years - 1,023(1)
Total non-current debt 1,140 1,415
Total nominal debt 1,236 1,500
IFRS Adjustment(2) (121) (173)
DEBT UNDER IFRS 1,115 1,327
(1) Entire amount due May 26, 2017.
(2) In Technicolor’s consolidated statement of financial position the Reinstated Debt was initially recognized at fair value and then subsequently is measured at amortized cost.
Technicolor’s senior debt outstanding under its private placement notes Group’s definition are treated in the same manner as floating rate debt.
and the syndicated credit facility was restructured in 2010 under the Under this definition it is necessary to set a threshold such that interest
Sauvegarde Plan. Under this plan, the Company’s debt level was rates fixed for remaining periods beyond the threshold are considered at
reduced and the senior debt replaced by Reinstated Debt. fixed rate. A threshold of 1 year seems pertinent in as much as it is also
the threshold between current and non-current debt. This treatment
should make it easier to understand, from the financial information
(b) Interest rate characteristics
presented in these notes, the underlying interest rate risk of the Group.
The table below presents the periods for which the interest rates on
This treatment has no impact on the accounting treatment of the
Technicolor’s debt are fixed for its debt with maturity greater than one
Group’s debt.
year, the debt for which the interest rate is fixed for remaining periods
of under one year being considered to be at floating rate. The Group The table below shows the periods for which the interest rate on the
has adopted this definition of floating rates in order to have a simple Group’s debt is fixed. The amounts shown are the contractual nominal
and consistent way of analyzing the interest rate risk on its debt. For amounts and therefore do not correspond to the amounts in the
example, fixed rate non-current debt maturing in 3 months, 3 months consolidated statement of financial position which were initially at fair
fixed rate term debt and long-term floating rate debt which is reset value then subsequently revalued at amortized cost.
every 3 months, all have the same interest rate risk profile and under the
Amounts at December 31, 2012 with interest rate

fixed for the following periods
Floating rate debt (interest fixed for
(in € millions) less than 1 year) 1 year to 5 years Greater than 5 years Total
Total nominal debt 792(1) 444 - 1,236
IFRS Adjustment(2) (121)
DEBT UNDER IFRS 1,115
(1) Includes €742 million (nominal amount) of floating rate debt that has a 2% floor; this debt is partially hedged via interest rate caps with a cap rate of 3%. The combination of the floor
and cap creates, for the hedged debt, debt that is at fixed rate when the reference EURIBOR or LIBOR rate is 2% or less, then is at variable rate when the reference rate is above 2%
and less than 3% and then again is at fixed rate when the reference rate is 3% or above.
(2) In Technicolor’s consolidated statement of financial position the Reinstated Debt was initially recognized at fair value and then is subsequently measured at amortized cost.

(c) Effective interest rates

The effective interest rates on the Group’s consolidated debt are as follows:
December 31, 2012 December 31, 2011

All borrowings 11.80% 11.81%
(d) Carrying amounts and fair value of

borrowings (see note 23.6)
(e) Analysis of borrowing by currency
Euro 522 611
U.S. Dollar 576 688
Other currencies 17 28
TOTAL DEBT 1,115 1,327
(f) Undrawn credit lines

Undrawn, committed lines expiring in more than one year 195 197
The Group has two receivables backed committed credit facilities, for a For the purposes of the covenants EBITDA means the IFRS amounts
total amount of €195 million of which €100 million matures in 2013 for the entire Group of “Consolidated profit before tax and net finance
and €95 million in 2016. Neither was drawn at December 31, 2012. costs” excluding the impact (to the extent otherwise included in
The availability of these credit lines varies depending on the amount of consolidated profit) of:
receivables. A new credit facility to replace the one coming due in 2013
is currently under negotiation. other income (expense);
depreciation, amortization and impairment of assets;

(g) Financial covenants and other limitations
transaction costs (related to the debt restructuring);
The Credit Agreement and the Note Purchase Agreement governing
the Reinstated Debt contain certain affirmative and financial covenants restructuring costs;
including covenants that in particular require that (i) EBITDA be not
less than a certain multiple of net total interest on a trailing twelve fair value adjustments;
month basis (“interest cover covenant”) on June 30 and December 31
changes in provisions;
of each financial year, (ii) total net debt be not more than a certain
multiple of EBITDA on a trailing twelve month basis (“leverage any gain or loss against book value arising on the disposal (not made
covenant”) on June 30 and December 31 of each financial year, and in the ordinary course of trading) or revaluation of any asset; and
(iii) capital expenditure be not more than a certain amount for each
financial year. Each of the interest cover covenant and leverage extraordinary and exceptional items.
covenant become stricter over time. The total net debt, the total net
interest and the capital expenditures are all calculated on the basis of
the entire Group perimeter.

The level of these covenants is as follows:
Interest cover covenant

Reference Period Interest coverage ratio (EBITDA/total net interest)
July 1, 2009 to June 30, 2010 2.55:1.00
January 1, 2010 to December 31, 2010 2.80:1.00
July 1, 2010 to June 30, 2011 3.05:1.00
July 1, 2011 to June 30, 2012 3.35:1.00
July 1, 2012 to June 30, 2013 3.70:1.00
July 1, 2013 to June 30, 2014 3.95:1.00
July 1, 2014 to June 30, 2015 4.45:1.00
July 1, 2015 to June 30, 2016 and for each subsequent period 4.80:1.00
Leverage covenant
Reference Date Leverage ratio (Total Net Debt/EBITDA)
30, 2010 3.85:1.00
December 31, 2010 3.20:1.00
June 30, 2011 3.05:1.00
December 31, 2011 2.55:1.00
June 30, 2012 2.70:1.00
December 31, 2012 2.25:1.00
June 30, 2013 2.30:1.00
December 31, 2013 1.95:1.00
June 30, 2014 1.95:1.00
December 31, 2014 1.60:1.00
June 30, 2015 1.60:1.00
December 31, 2015 and each subsequent June 30 and December 31 1.25:1.00
Capital Expenditure covenant

Maximum Authorized Amount of Capital Expenditure(1)
Year Ending (€ in millions)
December 31, 2010 190
December 31, 2011 205
December 31, 2012 220
December 31, 2013 225
December 31, 2014 225
December 31, 2015 230
December 31, 2016 235
(1) For the purposes of this covenant all capital expenditures in foreign currencies will be converted at the Group’s 2010 budget exchange rates.
At December 31, 2012, the calculation of these financial covenants was as follows:
Interest coverage covenant

For the twelve months ending December 31, 2012, EBITDA for the Group must be no less than 3.65 times the net interest for the period.
EBITDA €512 million
Net Interest €113 million
Ratio EBITDA/Net Interest 4.53:1.00
Since 4.53 is greater than the required minimum level of 3.65, the Group meets this financial covenant.

Leverage covenant
Total net debt off the Group at December 31, 2012 must be no more accrued interest is excluded; moreover the debt and cash of the Group
than 2.25 times the EBITDA for the Group for the twelve months in foreign currencies are valued at the average exchange rate over the
ending December 31, 2012. For the calculation of the net debt, the twelve months ending December 31, 2012.
Net Debt €724 million

EBITDA €512 million
Ratio Net Debt/EBITDA 1.41:1.00
Since 1.41 is less than the maximum allowed level of 2.25, the Group meets this financial covenant.
Capital Expenditure covenant grant guarantees;

Capital expenditure for the Group cannot exceed €271 million for the
grant loans for an aggregate amount greater than €20 million except
financial year ending December 31, 2012. This amount consists of the
in certain cases related to deferred compensation related to disposals;
maximum authorized amount of capital expenditure of €220 million
plus €51 million of unused expenditure carried over from 2011. Since enter into derivatives contracts, interest rate or currency hedging or
the total capital expenditure in 2012 was €140 million (converted at treasury transactions other than as required by the Credit Agreement
the Group’s 2010 budget exchange rates) the Group meets this and Note Purchase Agreement and other than for hedging
financial covenant. transactions arising in the ordinary course of business;
Other Restrictions amalgamate, merge or consolidate with or into any other person;
In addition to certain information provision covenants, the Credit substantially change the general scope of its business;
Agreement and Note Purchase Agreement include certain negative
covenants that restrict the ability of the Company and certain of its enter into material transactions or arrangements with affiliates unless
subsidiaries to undertake various actions. These restrictions were in the ordinary course of business and on an arm’s length basis;
modified in October 2011 following agreement from the required
majorities of noteholders and lenders. The modifications relate invest in joint ventures or partnerships where the total cash investment
principally to the restrictions concerning disposals, joint ventures and is in excess of €25 million in cash per year;
acquisitions. In particular, main modifications consisted of eliminating
acquire any companies, businesses, shares or securities in excess of
the annual limit on disposals of €100 million as well as the limits on the
€50 million in cash or €200 million in shares per year;
disposals of the Connected Home and Entertainment Services divisions,
eliminating the limit on non-cash contributions to joint ventures and issue, attribute or allot any shares or redeem or repurchase any shares
increasing the annual limit on acquisitions. These negative covenants, as previously issued (other than resulting from the capital increase
modified in October 2011, restrict the ability of the Company and provided for by the Sauvegarde Plan and the redemption in shares of
certain of its subsidiaries, subject in each case to certain exceptions and the NRS and DPN and certain other contractual arrangements); and
limitations to (among other things):
for Group Members other than the Company, declare or pay any
create or grant security interests that secure financial indebtedness on dividends or make any other distribution in respect of any class of its
any of its present or future assets; share capital or apply any sum for any such purpose.
incur additional financial indebtedness in excess of €40 million The acquisitions made by the Group (see note 30 (b) for further
excluding certain permitted financial indebtedness including, among information) in 2012 were in full compliance with the restrictions
others, the refinancing of the Reinstated Debt and Committed described above.
Receivables Facilities;

Events of Default Intercreditor Agreement

The Credit Agreement and the Note Purchase Agreement also contain To establish the relative rights of certain off their creditors under the
certain events of default, the occurrence off which provides creditors Reinstated Debt, the Company and the guarantors entered into an
with the ability to immediately demand payment of all or a portion of Intercreditor Agreement with the lenders under the Credit Agreement,
the outstanding amounts under the Reinstated Debt. If the creditors the holders of the New Notes, each holder of the DPN, certain
had exercised their enforcement rights pursuant to the Reinstated Debt, intra-group lenders, certain intra-group debtors and a security trustee
the NRS and the DPN would have been prepaid in shares and cash, (the Intercreditor Agreement).
respectively.
The events off default pursuant to the Reinstated Debt include, among
Mandatory Prepayments
The Company will be required to prepay the outstanding Reinstated
other things, and subject to certain exceptions and grace periods:
Debt in certain circumstances, including the following:
non-payment of any amount due under the Reinstated Debt or any
Asset disposals: the net proceeds in respect off any disposal of any of
permitted hedging agreements;
its assets to an unaffiliated third party will be applied subject to a
failure by the Company or any of the guarantors to comply with its minimum threshold to repay the outstanding Reinstated Debt, on the
material obligations and undertakings under the Reinstated Debt; understanding that this undertaking does not apply to: (i) the disposal
off certain non-core assets during 2010, the proceeds of which was
certain events of insolvency; used to redeem the DPN; and (ii) the disposal off certain assets, the
proceeds of which will be used during the year to finance capital
any auditor’s report qualification made to either the Company’s ability
expenditures;
to continue as a going concern or the accuracy of the information
given; Equity issuances: at least 80% of the net proceeds received in respect
off any new equity issuances (other than any share issuances permitted
failure by the Company or any guarantor to comply with the material
under the share capital increase that maintains the preferential
obligations under the Intercreditor Agreement;
subscription rights (droits préférentiels de souscription) of shareholders
non-payment of any financial indebtedness off any Group Member in under the terms of the Sauvegarde Plan, shares issued in redemption
excess off €25 million; off the DPN and the NRS) will be applied to repay the outstanding
Reinstated Debt. In addition, the Company could opt to use the
acceleration of any financial indebtedness of any Group Member in proceeds received in respect of any new equity issuances to prepay all
excess off €25 million under the committed receivables facilities or or a portion of the NRS IIC; however the Company chose to exercise
default under any other financial indebtedness of any Group Member its right to redeem the NRS IIC in shares on maturity at December
in excess of €25 million that gives the relevant creditor or creditors 31, 2011 except for the small number of holders who requested the
the right to accelerate the date for payment of such indebtedness; optional one year extension (see note 22), which was finally
converted at the end off December 2012.
creditors’ proceedings for any assets in excess of €25 million that are
not discharged within 60 days; Excess cashflow: means 80% of:
any security enforcement in excess of €25 million that is not set aside the Group’s cashflow which comprises (i) the aggregate of net cash
within 30 days; and from operating and investing activities, plus (ii) the aggregate of
cash paid for acquisitions and marketable securities, interest paid,
any event which has a material adverse effect on the ability of the
and loans granted to third parties, less (iii) the aggregate of cash
Company or its guarantors, taken as a whole, to perform their
proceeds from sales of marketable securities, net disposal proceeds
material obligations under the Reinstated Debt.
(including net disposal proceeds from sales of discontinued
operations), net insurance proceeds, interest received, loans
Change of control provisions reimbursed by third parties and net income of subsidiaries or joint
Under the terms off the Reinstated Debt, in the event of a change of ventures which cannot distribute such income to the Company due
control in the Company, the advances under the Credit Agreement and to legal or contractual prohibitions,
the outstanding principal amount off the New Notes, together with any
other outstanding amounts under the Reinstated Debt, will become less total funding costs, which comprise the aggregate of interest
immediately due and payable upon an occurrence of a change of paid during the year plus all scheduled repayments of debt
control in the Company. Further, such change of control in the (including the Reinstated Debt) and all voluntary or mandatory
Company would have triggered a mandatory redemption in shares of prepayments off the Reinstated Debt during the year,
the NRS.

all subject to certain adjustments relating to the making available a nominal basis) and resulted in a financial charge of €17 million
off trapped cash. representing the partial cancellation of the gain recognized when the
Reinstated Debt was determined initially at its fair value in 2010. The
In respect off 2011 and subsequent financial years, the Company’s savings in nominal interest expense will be about €13 million per year on
excess cashflow (which is defined above) will be applied to prepay the a full year basis and about €4 million in 2012.
Reinstated Debt.
In 2011 the only disposal that triggered a mandatory prepayment was
Change of control: upon the occurrence of a change of control in the the sale of the Group’s stake in ContentGuard for $25 million which
Company (see “Change off Control Provisions” above), all advances resulted in a pre-payment in the amount of €19 million off which
under the Credit Agreement and the outstanding principal amount of €17 million was recorded as a reduction of debt and €2 million,
the New Notes, together with any other outstanding amounts under corresponding to the partial reversal of the gain recorded when the
the Reinstated Debt, will become immediately due and payable; and Reinstated Debt was initially recognized at fair value, was recorded as a
financial loss.
Other: net proceeds in respect of any payment or claim under any
insurance policy or issuance off subordinated debt in connection with In 2011 the Group generated excess cashflow as defined above in the
any refinancing, shall in each case be applied to the repayment of the amount of €25 million which has been used to prepay Reinstated Debt
Reinstated Debt (in the case of a refinancing, a customary “make in March 2012.
whole” amount must be paid to noteholders).
As described in note 19, two capital increases occurred in July and Voluntary Prepayments
August 2012, for a total amount of €179 million. In addition the Group Under the terms off the Credit Agreement, Note Purchase Agreement
completed on July 2, 2012 the disposal of its Broadcast Services and Intercreditor Agreement, the Company is, at its election, able to
activity for a net cash consideration off €17 million, taking into account prepay all or part off its advances under the Credit Agreement and any
costs of disposal. principal amount of the New Notes, including any make whole payment,
under the Note Purchase Agreement.
In accordance with the terms of the Group’s credit agreements, 80% of
the net proceeds off these capital increases and 100% of the net
Summary of repayments
disposal proceeds were used to repay the Reinstated Debt. These
The table below summarizes the payments as described above on the
repayments, without penalty, took place during the third quarter of
Reinstated Debt by type of payment:
2012. The repayments reduced debt by €145 million (€162 million on
(€ in millions) 2012 2011

Start of period (cumulative) 81 30
Normal scheduled principal repayments 58 32
Payments following 2011 excess cashflow 25 -
Mandatory prepayments from disposals 17 19
Mandatory prepayments from capital increases 145 -
End of period (cumulative) 326 81
(h) Fair value of the Reinstated Debt As a result, the fair value of the debt was estimated at €1,364 million at
the May 26, 2010 exchange rate. Accordingly, the weighted average
In accordance with IAS 39 paragraph 43, the Reinstated Debt was
effective rate of the new debt (excluding DPN) was originally
determined initially at its fair value. The difference between the fair
determined to be 11.89% and is currently 11.97%.
value of the Reinstated Debt and the nominal value has been booked as
a financial non cash gain of €229 million under the line “Gain on In October 2011, the Group renegotiated certain clauses of its
Technicolor’s debt extinguishment on May 26, 2010” of the Reinstated Debt documentation and the related fees of approximately
consolidated Statement of Operations. €5 million were recorded as a reduction of debt. These fees are being
charged to interest over the remaining life of the Reinstated Debt using
Because Technicolor’s debt is not listed the fair value was estimated by
the effective interest rate method.
using data from trading levels of the Group’s debt at or around the issue
date of May 26, 2010 by certain banks to the extent available and by The fair value of the Group’s debt at December 31, 2012 can be found
using trading levels and yields at that time of debt of companies having in note 23.6.
a similar rating (CCC).

NOTE 23 FINANCIAL INSTRUMENTS (a) Translation risks

AND MARKET RELATED The assets, liabilities, revenues and expenses of the Group’s operating
EXPOSURES entities are denominated in various currencies, the majority being in U.S.
dollar and the euro. The Group’s consolidated financial statements are
23.1 Foreign exchange risk presented in euro. Thus, assets, liabilities, revenues and expenses
A significant part off the net revenues of the Group, as well as a portion denominated in currencies other than euro must be translated into euro
off its operating income (loss) are in subsidiaries that use U.S. dollars as at the applicable exchange rate to be included in the consolidated
their functional currency. This reflects the strong presence of financial statements.
Technicolor in the United States, particularly with the Entertainment
Services and Digital Delivery segments. As a result, fluctuations in the If the euro increases in value against a currency, the value in euro of
U.S. dollar/euro exchange rate have a significant translation impact on assets, liabilities, revenues and expenses originally recorded in such
the Group’s revenues and to a lesser extent on profit/(loss) from other currency will decrease. Conversely, if the euro decreases in value
continuing operations before tax and net finance costs. In 2012, against a currency, the value in euro off assets, liabilities, revenues and
exchange rate fluctuations of all currencies had a positive translation expenses originally recorded in such other currency will increase. Thus,
impact of €136 million on revenue and a negative impact of increases and decreases in the value of the euro can have an impact on
€20 million on profit/(loss) from continuing operations before tax and the value in euro off the Group’s non-euro assets, liabilities, revenues and
net finance costs. These impacts were in part due to the 8% increase in expenses, even if the value of these items has not changed in their
the 2012 average U.S. dollar/euro exchange rate compared to the original currency.
2011 average rate. The Group estimates that this sensitivity has not
The Group’s policy is not to hedge translation risk.
significantly changed since the end of 2012.
Translation risk is measured by consolidating the Group’s exposures and
To the extent that the Group incurs costs in one currency and has sales
by doing sensitivity analyses on the main exposures.
in another there is foreign currency transaction risk and the Group’s
profit margins may be affected by changes in the exchange rates
between the two currencies. Most of Technicolor’s sales are in U.S. (b) Transaction risks
dollars and in euros; however, certain expenses are denominated in Technicolor’s foreign exchange risk exposure mainly arises on purchase
other currencies. In particular, some of the sales in the U.S. dollar and and sale transactions by its subsidiaries in currencies other than their
the euro have related expenses in Mexican peso and Polish zloty functional currencies. In order to reduce the currency exposure on
respectively, due to production facilities in Mexico and Poland. commercial transactions, the Group’s subsidiaries seek to denominate
Moreover, the Group also has sales in Europe in euros where a portion their costs either in the same currencies as their sales or in specific cases
off the expenses, related to the purchase of products from Asian in currencies that they believe are not likely to increase in value
suppliers, is in U.S. dollar. The Group’s UK subsidiaries also have compared with the currencies in which sales are made. The Group’s
transactional exposures to both the U.S. dollar and the euro. Currency policy is for its subsidiaries to report regularly their projected foreign
transaction risk also impacts revenues but the impact is significantly less currency needs and receipts to the Group treasury department, which
than the translation impact on revenues because about 70% of the sales then reduces the overall exposure by netting purchases and sales in each
off the Group’s subsidiaries are in their domestic currencies. currency on a global basis. Exposures that remain after this process are
hedged with banks using foreign currency forward contracts and
The Group’s foreign currency risk on translation and transactional
occasionally foreign currency options. These hedges are recorded as
exposures and on investments in foreign subsidiaries as well as the
cash flow hedges under IFRS, as described further under “Derivatives”
associated hedging policies are described in more detail below.
in note 2 to these consolidated financial statements.
Even though the Group may hedge against currency risk, given the
For products with a short business cycle, the Group’s policy is to hedge
volatility of currency exchange rates and the occasional illiquidity in
on a short-term basis up to six months. For products and services which
some emerging market currencies together with the potential for
are sold on a longer-term basis, and in particular the Group’s Licensing
changes in exchange control regulations in such emerging markets, the
activities, hedges may be put in place for periods greater than six
Group cannot assure that it will be able to manage these risks
months.
effectively. Volatility in currency exchange rates may generate losses,
which could have a material adverse effect on its financial condition or Transaction risk on commercial exposures is measured by consolidating
results of operations. the Group’s exposures and doing sensitivity analyses on the main
exposures.
For more information on the sensitivity of the Group’s key financial
parameters to fluctuations of the U.S. dollar/euro exchange rate, see
note 23.1(f) below “Sensitivity to Currency Movements”.

(c) Financial exposure (e) Foreign currency operations

The Group’s general policy is for subsidiaries to borrow and invest In accordance with the Group’s policies on financial risk management as
excess cash in the same currency as their functional currency thereby described in note 20, the Group enters into foreign currency operations
eliminating the exposure of its financial assets and liabilities to foreign to hedge its exposures as described above. The swap points on currency
exchange rate fluctuations. In certain emerging countries with currencies hedges that qualify as hedges under IAS 39 and the premiums paid on
which may depreciate, the Group may, however, elect to maintain currency options are excluded from the hedging relationship and taken
deposits in U.S. dollar or euro rather than the subsidiaries’ functional directly to the financial result: these amounts were nil in 2012 and
currency. These operations are performed through the Group treasury €(1) million in 2011.
department to the extent practicable. In order to balance the currencies
that the Group treasury department borrows (both internally and In order to match the currencies that Technicolor’s group treasury
externally) with currencies that it lends to affiliates, it may enter into department borrows with the currencies that it lends, Technicolor may
currency swaps. For more information regarding the use of currency enter into currency swaps primarily (i) to convert euro borrowings into
swaps, see note 23.1 (e) “Foreign Currency Operations” below. U.S. dollars which are lent to the Group’s U.S. subsidiaries/associates
and (ii) to convert U.S. dollars borrowed externally or from the Group’s
U.S. subsidiaries/associates into euros. The forward points on these
(d) Risk on investments in foreign subsidiaries currency swaps are accounted for as interest and were nil in 2012 and
The Group’s general policy is to examine and hedge on a case by case nil in 2011.
basis the currency risk on its investments in foreign subsidiaries. The
variations in the euro value of investments in foreign subsidiaries are The future cash flows at the contracted rate of the Group’s foreign
booked under “Cumulative translation adjustment” in the Group’s currency operations are shown below. The maturities of all of these
consolidated statement of financial position. At December 31, 2012 no foreign exchange operations is under one year and the related cash
hedges of this type were outstanding. flows and impact on the profit and loss of the Group of the foreign
exchange operations outstanding at December 31, 2012 will occur in
2013.
2012 2011
Forward exchange contracts (including currency swaps)
Euro 128 19
Singapore dollar - 2
U.S. dollar - 28
Polish zloty 5 12
Other currencies - -
Total forward currency purchases 133 61
Euro ((5)) (18)
Canadian dollar - (2)
Pound sterling ((12)) (28)
Japanese yen ((10)) (9)
U.S. dollar ((106)) (2)
Other currencies - (2)
Total forward currency sales (133) (61)
Deferred hedging gains (losses) related to forecast transactions 1 -
(f) Sensitivity to currency movements may be hedged separately in some cases in accordance with the general
policy of the Group (see note 20).
Because of the Group’s significant activities in the U.S. and in other
countries whose currencies are linked to the U.S. dollar, the Group’s The Group believes a 10% fluctuation in the U.S. dollar versus the euro
main currency exposure is the fluctuation of the U.S. dollar against the is reasonably possible in a given year and thus the tables below show the
euro. impact of a 10% increase in the U.S. dollar versus the euro on the
Group’s sales, on Profit from continuing operations before tax and net
After offsetting the U.S. dollar revenues of its European activities with
finance costs, on the currency translation adjustment component of
the U.S. dollar costs related to purchases of finished goods and
equity and on net debt. A 10% decrease in the U.S. dollar versus the
components by its European affiliates, the net U.S. dollar exposure for
euro would have a symmetrical impact in the opposite amount. These
continued operations was net revenue of U.S.$ 600 million in 2012
calculations assume no hedging is in place.
(net revenue of U.S.$ 383 million in 2011). These U.S. dollar exposures

Sales impact: the transaction impact on sales is calculated by applying a translation impact is calculated by applying a 10% increase in the U.S.
10% increase in the U.S. dollar/euro exchange rate to the external U.S. dollar/euro exchange rate to the profits of the affiliates with the U.S.
dollar sales of affiliates with the euro as functional currency and to the dollar as functional currency. For both the sales and profit the impacts
external euro sales off affiliates with the U.S. dollar or currencies pegged are calculated before hedging.
to the U.S. dollar (such as the Hong Kong dollar) as functional currency.
The translation impact is calculated by applying a 10% increase in the Equity impact: this is calculated by applying a 10% increase in the U.S.
U.S. dollar/euro exchange rate to the sales off affiliates with the U.S. dollar/euro exchange rate to the unhedged net investments in foreign
dollar or a currency pegged to the U.S. dollar as functional currency. subsidiaries that are denominated in U.S. dollar or currencies pegged to
the U.S. dollar. This variation is booked in the cumulative translation
Profit impact: the transaction impact on profit is calculated by applying adjustment component of equity.
a 10% increase in the U.S. dollar/euro exchange rate to the net U.S.
dollar exposure (sales minus purchases) of affiliates which have the euro Net debt impact: this is calculated by applying a 10% increase in the
as functional currency and then applying a factor estimated by the U.S. dollar/euro exchange rate to the net debt off the Group at
Group to approximate the actual impact on profits. This factor is December 31, 2012 that is denominated in U.S. dollar or currencies
applied because often changes in exchange rates lead to changes in pegged to the U.S. dollar.
competitive pricing. The factor varies depending on the business. The
2012
(in € millions) Transaction Translation Total
Sales 99 157 256
Profit from continuing operations before tax and net finance costs 48 ((9)) 39
Equity Impact (cumulative translation adjustment) 21
Impact on net debt 53
2011
(in € millions) Transaction Translation Total
Sales 62 142 204
Profit from continuing operations before tax and net finance costs 30 ((8)) 22
Equity Impact (cumulative translation adjustment) 28
Impact on net debt 60
23.2 Interest rate risk

Technicolor is mainly exposed to interest rate risk on its deposits and market conditions. To hedge this exposure, the Group may enter into
indebtedness. interest rate swaps, forward rate agreements and caps.
The Group’s policy is for all subsidiaries to borrow from, and invest Interest rate risk is measured by consolidating the Group’s deposit and
excess cash with, the Group treasury department, which in turn satisfies debt positions and performing sensitivity analyses.
the net cash needs by borrowing from external sources. Subsidiaries that
are unable to enter into transactions with Group treasury because of At the nominal interest rates of the Reinstated Debt and without taking
local laws or regulations borrow from or invest directly with local banks into account hedging, cash interest charges for a full year (at the
in accordance with the policies and rules established by the treasury December 31, 2012 exchange rate) would be €101 million on the
department. Reinstated Debt of approximately €1.2 billion (nominal amount rather
than the IFRS amount in the consolidated statement of financial
In accordance with Group policies and procedures, the treasury position) compared to total gross cash interest charges for 2012 of
department manages the financings, and hedges interest rate risk €117 million. In 2011 total gross cash interest charges were
exposure in accordance with target ratios of fixed to floating debt, as €124 million. Note 23.2(d) below shows the sensitivity of the Group’s
well as maximum risk targets, which are set periodically as a function of interest charges to interest rate movements.

(a) Interest rate operations

In accordance with the Group’s policies on financial risk management as See note 21 for further information about the Group’s derivative
described in note 20, the Group enters into interest rate hedging operations.
operations.
In April 2010 in anticipation of the finalization of the new Reinstated (b) Cash flows on interest rate operations
Debt, the Group purchased caps. These caps for nominal amounts of Because the Group has only interest rate caps outstanding and because
$480 million and €270 million protect the Group if 3 month LIBOR or off their nature whereby there are flows only if interest rates rise above a
3 month EURIBOR respectively goes above 3%. If the reference rate certain level it is not possible to determine future cash flows related to
goes above the cap rate the bank counterparty will pay the difference interest rate hedging transactions.
between the market rate and 3% to Technicolor. The caps mature in
2014.
(c) Effective interest rates

The average effective interest rates on the Group’s consolidated debt are as follows:
2012 2011
Average interest rate on borrowings 11.80% 11.78%
Average interest rate after interest rate hedging 11.80% 11.78%
Average interest rate after currency swaps and interest rate hedging 11.80% 11.78%
The average effective interest rate in 2012 on the Group’s consolidated deposits was 1.04% (1.58% in 2011).
(d) Sensitivity to interest rate movements

Interest rate movements impact the price of fixed rate financial assets The average percentage of the Group’s debt in 2012 and 2011 at
and liabilities held at fair value and the interest income and expense of floating rates taking into account interest rate hedging operations is as
variable rate financial assets and liabilities. The Group has no significant shown below. The Group considers all debt with interest rates fixed for
fixed rate financial assets and liabilities held at fair value. remaining periods of less than one year to be at floating rate (see note
22.3(b) above for more information about the Group’s classification
between fixed and floating rate).

Average debt 1,231 1,302
Percentage at floating rate* 60% 59%
* See the Group’s definition of floating rate in note 22.3(b). Includes €742 million (consolidated statement of financial position value after IFRS adjustment) of floating rate debt that
has a 2% floor; this debt is partially hedged via interest rate caps with a cap rate of 3%. The combination of the floor and cap creates debt that is at fixed rate when the reference
EURIBOR or LIBOR rate is 2% or less, then is at variable rate when the reference rate is above 2% and less than 3% and then again is at fixed rate when the reference rate is 3% or
above.
The Group’s average deposits in 2012 amounted to €325 million, consolidated statement of financial position which for the Reinstated
100% at floating rate. Debt were initially recognized at fair value then subsequently revalued
at amortized cost. The 2011 amounts do not include the mandatory
The tables below present the Group’s interest rate sensitive assets and prepayment in 2012 from excess cashflow generated in 2011 (see note
liabilities by maturity with a breakout by fixed or floating rate at each 22.3(g) for more details).
year end. The amounts at December 31, 2012 and 2011 are the
contractual amounts and thus differ from the amounts in the

Net exposure before Net exposure after

2012 Cash and deposits (a) Borrowings (b) hedging (c) = (b) – (a) Interest rate hedging(1) (d) hedging (e) = (c) + (d)
Fixed Floating Fixed Floating Fixed Floating Fixed Floating Fixed Floating
(in € millions) rate(2) rate rate(2) rate rate(2) rate rate(2) rate rate(2) rate
Less than 1 year - 397 - 96 - (301) - - - (301)
1 to 2 years - - 37 60 37 60 - - 37 60
2 to 3 years - - 40 63 40 63 - - 40 63
3 to 4 years - - 23 32 23 32 - - 23 32
4 to 5 years(3) - - 344 541 344 541 - - 344 541
More than 5 years - - - - - - - - - -
TOTAL - 397 444 792 444 395 - - 444 395
IFRS Adjustment(4) - - (37) (84) (37) (84) - - (37) (84)
DEBT UNDER IFRS S - 397 407 708 407 311 - - 407 311
(1) The caps will only be in the money when interest rates move above 3%. Until then, they do not have any impact on the split between fixed and floating and therefore have not been
included in the table.
(2) Interest rates fixed for remaining periods of greater than 1 year; otherwise considered floating rate.
(3) Entire principal amount due May 26, 2017.
(4) In Technicolor’s consolidated statement of financial position the Reinstated Debt was initially recognized at fair value and then subsequently is measured at amortized cost
Net exposure before Net exposure after

2011 Cash and deposits (a) Borrowings (b) hedging (c) = (b) – (a) Interest rate hedging(1) (d) hedging (e) = (c) + (d)
Fixed Floating Fixed Floating Fixed Floating Fixed Floating Fixed Floating
(in € millions) rate(2) rate rate(2) rate rate(2) rate rate(2) rate rate(2) rate
Less than 1 year - 370 - 85 - (285) - - - (285)
1 to 2 years - - 38 64 38 64 - - 38 64
2 to 3 years - - 43 67 43 67 - - 43 67
3 to 4 years - - 47 72 47 72 - - 47 72
4 to 5 years - - 24 37 24 37 - - 24 37
More than 5 years(3) - - 399 624 399 624 - - 399 624
TOTAL - 370 551 949 551 579 - - 551 579
IFRS Adjustment(4) - - (53) (120) (53) (120) - - (53) (120)
DEBT UNDER IFRS - 370 498 829 498 459 - - 498 459
(1) The caps will only be in the money when interest rates move above 3%. Until then, they do not have any impact on the split between fixed and floating and therefore have not been
included in the table.
(2) Interest rates fixed for remaining periods of greater than 1 year; otherwise considered floating rate.
(3) Entire principal amount due May 26, 2017.
(4) In Technicolor’s balance sheet the Reinstated Debt was initially recognized at fair value and then subsequently is measured at amortized cost.
The Group’s debt and deposits are primarily in U.S. dollar and in euro For each of the scenarios, the impacts are calculated by multiplying the
and thus fluctuations of EURIBOR and $-LIBOR will impact the Group’s floating rate net debt at contractual amounts (which at
Group’s interest income and expense. The Group believes a 1% December 31, 2012 and 2011 differ from the amounts in the
fluctuation in interest rates is reasonably possible in a given year and the consolidated statement of financial position which for the Reinstated
tables below show the maximum annual impact of such a movement, Debt were initially at fair value and subsequently revalued at amortized
taking into account interest rate hedging operations. cost) and after interest rate hedging in euros and in U.S. dollar by 1%. A
positive impact is an increase in income (decrease in expense) and a
The Group’s Reinstated Debt consists of new variable term loans based negative impact is a decrease in income (increase in expense).
on EURIBOR or LIBOR with a floor of 2% and new notes at fixed rates.
The Sauvegarde Plan required that 2/3 of the term loans be hedged The impact on equity before taxes in the tables at December 31, 2012
against interest rate risk and the Group put in place interest rate caps to and 2011 is an approximation and does not take into account
satisfy this requirement. The tables below show the impact after interest adjustments necessary to determine the impact under IFRS using the
rate hedging of the variation of 1% in interest rates with different effective interest rate method nor does it take into account the impact
assumptions regarding different EURIBOR and LIBOR levels in the of the change in market value of the caps.
financial markets.

Maximum impact over one year on the net exposure after hedging at December 31, 2012 and with EURIBOR* and LIBOR* at 3% or more
(in € millions) Impact on cash net interest Impact on equity before taxes
Impact of interest rate variation of +1% 2 2
Impact of interest rate variation of -1% 4 4
Maximum impact over one year on the net exposure after hedging at December 31, 2012 and with EURIBOR* and LIBOR* at 2%
Impact of interest rate variation of +1% (4) (4)
Impact of interest rate variation of -1% (4) (4)
Maximum impact over one year on the net exposure after hedging at December 31, 2012 and with EURIBOR* and LIBOR* at 1% or less
*At December 31, 2012, 3 month EURIBOR and 3 month LIBOR were 0.187% and 0.306% respectively.
Maximum impact over one year on the net exposure after hedging at December 31, 2011 and with EURIBOR* and LIBOR* at 3% or more
Impact of interest rate variation of -1% 6 6
Maximum impact over one year on the net exposure after hedging at December 31, 2011 and with EURIBOR* and LIBOR* at 2%
Impact of interest rate variation of +1% (6) (6)
Maximum impact over one year on the net exposure after hedging at December 31, 2011 and with EURIBOR* and LIBOR* at 1% or less
* At December 31, 2011, 3 month EURIBOR and 3 month LIBOR were 1.356% and 0.581% respectively.
23.3 Liquidity risk and management of Technicolor’s access to financial markets was significantly impacted by
the deterioration of its financial situation, subsequent debt restructuring
financing and capital structure negotiations, and the Sauvegarde proceeding.
Liquidity risk is the risk of being unable to raise funds in the financial
markets necessary to meet upcoming obligations. In order to reduce this The debt restructuring in 2010 and capital increases in 2012 allowed
risk, the Group pursues policies with the objectives of having continued the Group to improve its financial structure and notably to:
uninterrupted access to the financial markets at reasonable conditions.
These policies are developed based on regular reviews and analysis of reduce the level of net debt and increase net equity;
its capital structure, including the relative proportion of debt and net maintain sufficient cash flow to cover liquidity needs and financial
worth in the context of market conditions and the Group’s financial needs such as principal and interest repayments;
projections. Among other things these reviews take into account the
Group’s debt maturity schedule, covenants, projected cash flows and put in place credit lines secured by receivables and factoring in order
financing needs. To implement these policies, the Group uses various to assure access to liquidity; and
long-term and committed financings which may include net worth, debt,
subordinated debt and committed credit lines. For further information spread out debt maturities with a significant portion being long-term.
about the details of the Group’s net worth and debt please refer to
notes 19 and 22, respectively.

As a result, the Group was able to put in place in April 2010 two 3-year The tables below show the future contractual cash flow obligations due
committed receivables backed credit facilities for a total amount of on the Group’s debt. The interest rate flows due on floating rate
€195 million (converted at the December 31, 2012 exchange rates). In instruments are calculated based on the rates in effect at December 31,
2012 one of the facilities, for €95 million was extended to 2016. 2012 and December 31, 2011, respectively. In 2011, the amounts do
Nevertheless due to its overall level off remaining indebtedness and to not include the mandatory prepayment in 2012 from excess cashflow
the restrictions in the Group’s Reinstated Debt, the Group’s access to generated in 2011 (see not 22.3(g) for more details).
financial market remains limited.
For more information about the restrictions in the Group’s Reinstated

Debt see note 22.

(in € millions) 2013 2014 2015 2016 2017* There after Total
Fixed rate notes – principal 31 37 40 20 344 - 472
Floating rate term loans – principal 49 58 63 32 541 - 743
Fixed rate other debt – principal - - - 3 - - 3
Floating rate other debt – principal 16 2 - - - - 18
TOTAL DEBT PRINCIPAL PAYMENTS 96 97 103 55 885 - 1,236
IFRS Adjustment (121)
Debt in IFRS 1,115
Fixed rate notes – interest 42 39 36 32 13 - 162
Floating rate term loans – interest 57 53 48 44 18 - 220
Fixed rate other debt – interest - - - - - - -
Floating rate other debt – interest 1 - - - - - 1
TOTAL INTEREST PAYMENTS 100 92 84 76 31 - 383
* Entire principal amount due May 26, 2017.

(€ in millions) 2012 2013 2014 2015 2016 There after* Total
Fixed rate notes – principal 25 36 43 47 24 399 574
Floating rate term loans – principal 39 56 67 72 37 624 895
Fixed rate other debt – principal - 2 - - - - 2
Floating rate other debt – principal 21 8 - - - - 29
TOTAL DEBT PRINCIPAL PAYMENTS 85 102 110 119 61 1,023 1,500
IFRS Adjustment (173)
Debt in IFRS 1,327
Fixed rate notes – interest 52 49 46 41 38 15 241
Floating rate term loans – interest 69 65 61 56 51 20 322
Fixed rate other debt – interest - - - - - - -
Floating rate other debt – interest 1 - - - - - 1
TOTAL INTEREST PAYMENTS 122 114 107 97 89 35 564
* Entire principal amount due May 26, 2017.
The contractual cash flow obligations of the Group due to its current liabilities are considered to be equal to the amounts shown in the
consolidated statement of financial position.
23.4 Equity instruments 23.5 Financial counterparty risk

At December 31, 2012 and 2011, Technicolor had no outstanding The financial instruments used by the Group to manage its interest rate
equity derivatives on its shares. and currency exposure are all undertaken with counterparts having an
investment grade rating.

The percentage of outstanding foreign exchange operations by counterparty credit rating is as follows:
Foreign exchange forwards: Counterparty’s rating (according to Standard & Poor’s) 2012 2011
A-1+ - -
A-1 84% 100%
A-2 16% -
TOTAL 100% 100%
All significant cash deposits are maintained with rated financial institutions.
The table below gives the percentage of outstanding cash deposits by counterparty credit rating:
Cash deposit: Counterparty’s rating (according to Standard & Poor’s) 2012 2011
A-1+ 16% 14%
A-1 75% 83%
A-2 3% -
A-3 6% 3%
Money Market funds - -
Non rated financial institutions - -
TOTAL 100% 100%
Credit risk arises from the possibility that counterparties may not be limiting the deposits made with any single bank and by making deposits
able to perform their financial obligations to Technicolor. The maximum primarily with banks that have strong credit ratings or by investing in
credit risk exposure on the Group’s cash and cash equivalents was diversified, highly liquid money market funds as shown in the table
€397 million at December 31, 2012. The Group minimizes this risk by above.
23.6 Fair value of financial assets and liabilities

December 31, 2012 Accounting Categories Fair Value
Fair value
through P&L Consolidated Internal model Internal model
(incl. Available Payables Debt at statement of with with
derivative for sale and amortized financial Quoted observable non-observable
instruments) assets receivables cost position value Price parameters parameters Fair Value
and available-
for-sale financial assets - 7 - - 7 - 7 - 7
Derivative financial instruments
(current and non-current assets) - - - - - - - -
Trade accounts and notes receivable - - 526 - 526 - - - 526
Borrowings - - - 1,115 1,115 1,247
(current and non-current liabilities) - - - - - -
Trade accounts and notes payable - - 445 - 445 445
December 31, 2011 Accounting Categories Fair Value

Fair value
through P&L Consolidated Internal model Internal model
(incl. Available Payables Debt at statement of with with
derivative for sale and amortized financial Quoted observable non-observable
instruments) assets receivables cost position value Price parameters parameters Fair Value
Investments and available-
for-sale financial assets - 7 - - 7 - 7 - 7
(current and non-current assets) 1 - - - 1 - 1 - 1
Trade accounts and notes receivable - - 585 - 585 - - - 585
Borrowings - - - 1,327 1,327 1,217
(current and non-current liabilities) 1 - - - 1 1
Trade accounts and notes payable - - 499 - 499 499

The fair value of the above assets and liabilities was determined as Borrowings: The fair value off the Reinstated Debt was estimated by
follows: using trading levels of the debt on or around December 31, 2012 and
2011, respectively. Although the Reinstated Debt is not traded on a
Derivative financial instruments: see note 21; public exchange, trading levels off private transactions are readily
available via financial market information providers. For the small
Trade accounts and notes receivable and notes payable: The fair
amount of non-current debt other than the Reinstated Debt and due
value of all current assets and liabilities (trade accounts receivable and
to the fact that most of it is secured, the Group has used the book
payable, short-term loans and debt, cash and bank overdrafts) is
value as an approximation off the fair value. The fair value of current
considered to be equivalent to their net book value due to their
debt other than the current portion of the Reinstated Debt is
short-term maturities;
assumed to be the book value due to the short-term maturity.
NOTE 24 RETIREMENT BENEFIT OBLIGATIONS
24.1 Summary of the benefits

Medical
Pension plan benefits post-retirement benefits Total
(in € millions) 2012 2011 2012 2011 2012 2011
Opening provision 341 344 46 42 387 386
Net Periodic Pension Cost 18 19 1 2 19 21
Benefits paid and contributions ((31)) (42) ((2)) (1) ((33)) (43)
Curtailment gain(1) ((4)) - ((41)) - ((45)) -
Change in perimeter ((5)) (8) - - ((5)) (8)
Actuarial (gains) losses recognized in OCI(2) 62 27 3 2 65 29
Currency translation differences - 1 - 1 - 2
Change in held for sale provision - (1) - - - (1)
Closing provision of continued operations(3) 381 340 7 46 388 386
Provision classified as held for sale - 1 - - - 1
TOTAL CLOSING PROVISION 381 341 7 46 388 387
(1) In June 2012 and consistent with many U.S. companies, Technicolor has curtailed and eliminated retirees life insurance benefits in the United States of Americas. These benefits were
included in the U.S. post-retirement medical plan. The impact is a curtailment gain of U.S.D 54 million (€41 million at December 31, 2012 average rate) booked in the line “Other
income (expenses)” of the consolidated statement of operations.
(2) In 2012 and 2011, actuarial losses are mainly explained by the decrease in discount rates over the period.
(3) Out of which current portion amounts to €35 million and €37 million for years ended December 31, 2012 and 2011, respectively.
(a) Defined contribution plans Pension benefits and retirements indemnities

the defined contribution plans, the Group pays contributions to The benefits are mainly based on employee’s pensionable salary and
independently administered funds. These plans guarantee employee length of service. These plans are either funded through independently
benefits that are directly related to contributions paid. The pension administered pension funds or unfunded. Pension plans maintained by
costs of these plans, corresponding to the contributions paid, are the Group are mainly the following:
charged in the statement of operations. The total contributions paid by
Technicolor amounted to €19 million in 2012 and €22 million in 2011. Within the Nafta area, the plans mainly consist of pension plans in
the United States:
(b) Defined benefit plans The employees of Technicolor are covered by a defined benefit
These plans mainly cover pension benefits, retirement indemnities and pension plan, funded by a trust. Technicolor’s funding policy is to
medical post-retirement benefits. contribute on an annual basis in an amount that is at least sufficient to
meet the minimum legal requirements of the U.S. law. Benefits are
equal to a percentage of the plan Member’s earnings each year plus a
guaranteed rate of return on earned benefits until retirement.

Technicolor mainly operates two defined benefit pension plans: a Medical Post-retirement benefits
cash balance pension plan that covers substantially all non-union In the U.S., Technicolor provided to certain employees a
employees, funded through a trust fund, and an additional pension post-retirement medical plan. Under this plan, employees are eligible
plan for executive employees, closed to new participants. for medical benefits if they retire at age 55 or older with at least 10
years of service in most cases. The plan also includes life insurance
A hard freeze occurred over 2009 on U.S. pension plans. The rights
benefits. Such plan was no longer available to newcomers since 2003.
as of January 1, 2010 remain vested but no additional pay-based
credits are added to the cash balance account under the Plans. In June 2012 and consistent with many U.S. companies, Technicolor
Interest credits however, continue to be added to employees’ has curtailed and eliminated retirees life insurance benefits in the United
account. States off Americas. The impact is a curtailment gain off U.S.D
54 million (€41 million at December 31, 2012 average rate) booked in
In Germany, employees are covered by several vested unfunded
the line “Other income (expenses)” of the consolidated statement of
pension plans. These plans mainly provide employees with retirement
operations.
annuities and disability benefits.
In France, the Group is legally required to pay lump sums to (c) Multi-employer plan
employees when they retire. The amounts paid are defined by the Since August 2009, Technicolor participates in the Motion Picture
collective bargaining agreement in force and depend on years of Industry multi-employer defined benefit plan in the U.S. As the
service within the Group and employee’s salary at retirement. information about the dividing up of plan financial position and
performance between each plan Member are not available, Technicolor
In other countries, Technicolor mainly maintains a dedicated funded
accounts for this plan as a defined contribution plan.
pension plan in the UK, which provides retirement annuity benefits.
24.2 Elements of the statement of operations and other comprehensive income

Medical
Pension plan benefits post-retirement benefits Total
(in € millions) 2012 2011 2012 2011 2012 2011
Service cost ((6)) (6) - - ((6)) (6)
Interest cost ((22)) (23) ((1)) (2) ((23)) (25)
Expected return on plan assets 10 10 - - 10 10
TOTAL NET PERIODIC PENSION COST (18) (19) (1) (2) (19) (21)
Effect of curtailment 4 - 41 - 45 -
TOTAL PENSION IMPACT ON NET
INCOME OF THE GROUP (14) (19) 40 (2) 26 (21)
The financial components of pension plan expenses and expected return on assets are recognized in “Other financial income (expense)”.
The effect of curtailment is recognised in “Other income (expenses)”.

Opening cumulative amount of actuarial gains and (losses) recognised in other comprehensive income (OCI) ((30)) (2)
Actuarial gains (losses) of the year recognized in OCI(1) ((65)) (29)
Change in perimeter - 1
CLOSING CUMULATIVE AMOUNT OF ACTUARIAL GAINS AND (LOSSES) RECOGNISED IN OCI (95) (30)
(1) In 2012 and 2011, actuarial losses are mainly explained by the decrease in discount rates over the period (see note 24.5).

24.3 Analysis of the change in benefit obligation

Medical post-retirement
Pension plan benefits benefits Total
(in € millions) 2012 2011 2012 2011 2012 2011
Change in benefit obligation
Benefit obligation at opening(1) (510) (533) (46) (42) (556) (575)
Current service cost ((6)) (6) - - ((6)) (6)
Interest cost ((22)) (23) ((1)) (2) ((23)) (25)
Amendment 3 (1) - - 3 (1)
Curtailment/settlement(2) 4 1 41 - 45 1
Actuarial (gain)/ loss ((69)) (21) ((3)) (2) ((72)) (23)
Benefits paid 42 42 2 1 44 43
Currency translation adjustments - (6) - (1) - (7)
Change in perimeter(3) 5 37 - - 5 37
Benefit obligation at closing(4) (553) (510) (7) (46) (560) (556)
Benefits obligation wholly or partly funded ((222)) (213) - - ((222)) (213)
Benefit obligation wholly unfunded ((331)) (297) ((7)) (46) ((338)) (343)
Change in plan assets
Fair value at opening(1) 166 187 - - 166 187
Expected return on plan assets 10 10 - - 10 10
Actuarial gain/(loss) 6 (6) - - 6 (6)
Employer contribution(5) 7 17 - - 7 17
Settlement - (1) - - - (1)
Benefits paid ((17)) (17) - - ((17)) (17)
Currency translation adjustments - 5 - - - 5
Change in perimeter(3) 1 (29) - - 1 (29)
Fair value at closing(4) 173 166 - - 173 166
Funded status (I) (380) (344) (7) (46) (387) (390)
Unrecognized prior service cost (II) ((1)) 3 - - ((1)) 3
Recognition in held for sale (see note 11) (III) - 1 - - - 1
RETIREMENT BENEFIT OBLIGATIONS (I)+(II)+(III) (381) (340) (7) (46) (388) (386)
(1) The 2012 and 2011 opening position of the benefit obligation and plan asset includes a portion classified in held for sale.
(2) In June 2012 and consistent with many U.S. companies, Technicolor has curtailed and eliminated retirees life insurance benefits in the United States of Americas. These benefits were
included in the U.S. post-retirement medical plan. The impact is a curtailment gain of U.S.D 54 million (€41 million at December 31, 2012 average rate).
(3) The 2012 changes in perimeter reflects mainly the disposal of the Broadcast businesses and of Thomson Angers. In 2011 changes in perimeter show impacts on disposal of Grass
Valley businesses in the UK, France, U.S., Germany, Switzerland and Japan.
(4) For NAFTA subsidiaries (which include U.S., Canada and Mexico):
pension benefits obligations amount to €134 million and €136 million, for the years ended December 31, 2012 and 2011, respectively;
plan assets amount to €85 million and €88 million for the years ended December 31, 2012 and 2011, respectively;
medical post-retirement benefits obligations amount to €7 million and €46 million for the years ended December 31, 2012 and 2011, respectively (nil for plan assets and nil for
unrecognized actuarial prior service cost.
For German subsidiaries, the pension benefit obligation and the net pension accrual amount to €294 million and €253 million for the years ended December 31, 2012 and 2011,
respectively.
(5) Employer contributions are lower compared to last year due to a change in the US contributions rules in 2012.

Medical post-retirement benefits plans are wholly unfunded. The Group expects the overall 2013 cash payments to be equal to €30 million for
defined benefits plans. The experience adjustments are the following over the last five years:
Pension plan benefits Medical post-retirement benefits

(in € millions) 2012 2011 2010 2009 2008 2012 2011 2010 2009 2008
Defined Benefit Obligation ((553)) (510) (533) (544) (513) ((7)) (46) (42) (39) (38)
Experience adjustment in Defined
Benefit Obligation ((2)) 14 (12) 10 (50) - (1) (3) 1 (4)
In % of defined benefit obligation 0.4% (2.7)% 2.3% (1.8)% 9.7% - 2% 7% (3)% 11%
Plan Assets Fair Value 173 166 187 172 148 - - - - -
Experience adjustment on Plan Assets 6 (6) 3 - N/A N/A N/A N/A N/A N/A
In % of plan assets fair value 3.5% (3.6)% 1.6% - N/A N/A N/A N/A N/A N/A
24.4 Plan assets

When defined benefit plans are funded, mainly in the U.S. and the UK, The 2012 actual return on plan assets amounts to €16 million and
the investment strategy of the benefit plans aims to match the €4 million for the year ended 2011.
investment portfolio to the membership profile. Asset performance is
reviewed on a quarterly basis and the asset allocation strategy is Technicolor’s pension plans weighted-average asset allocations by asset
reviewed on an annual basis. category are as follows:
Plan assets allocation Plan assets fair value allocation

(in % and € in millions) 2012 2011 2012 2011
Equity securities 38% 38% 65 63
Debt securities 29% 30% 50 50
Insurance 21% 21% 37 35
Other 12% 11% 21 18
TOTAL 100% 100% 173 166
The fair value of the plan assets did not include any Technicolor’s own financial instruments or any asset used by the Group.
24.5 Assumptions used in actuarial calculations

Pension benefits Medical post-retirement benefits
2012 2011 2012 2011
Weighted average discount rate 3.4% 4.5% 3.6% 4.6%
Weighted average expected return on plan assets 6.0% 6.5% N/A NA
Weighted average long-term rate of compensation
increase 2.0% 1.8% N/A NA

Discount rate methodology for the main benefits

The projected benefit cash flows under the U.S. schemes are determined based on AA rate corporate bonds common indexes and
discounted using a yield curve determined based on AA rated corporate are as follows:
bonds. The discount rates used for the Euro zone and the UK are
Euro zone U.S. UK

Pension 2.8% 3.7% 4.6%
Early retirement 0.7% N/A N/A
Medical N/A 3.7% N/A
Other assumptions
The long-term rates of return on plan assets (U.S. 6.5% and the UK investment policies, the expected return for each component of the
6.5%) have been determined for each plan in consideration of the investment portfolio and other local factors in the country of the plan.
Sensitivity analysis
The table below shows the sensitivity to change in healthcare costs and change in discount rate:
Sensitivity of assumptions for

(€ in millions) 2012
1% increase in healthcare costs
Impact on medical post-retirement benefit 2013 expense -
Impact on medical post-retirement benefit obligation as of December 31, 2012 1
1% reduction in healthcare costs
Impact on medical post-retirement benefit 2013 expense -
Impact on medical post-retirement benefit obligation as of December 31, 2012 ((1))
0.25% increase in discount rate
Impact on pension and medical post-retirement benefit 2013 expense -
Impact on pension and medical post-retirement benefit obligation as of December 31, 2012 ((16))
0.25% reduction in discount rate
Impact on pension and medical post-retirement benefit 2013 expense -
Impact on pension and medical post-retirement benefit obligation as of December 31, 2012 17
Amendments to IAS 19, Employee Benefits, applicable in 2013 require change for the Group is estimated to be an increase in 2013 pension
the alignment of the discount rate used for defined benefit obligation financial cost of €3 million.
and the rate used for expected return on plan assets. The impact of this

NOTE 25 PROVISIONS FOR RESTRUCTURING AND OTHER CHARGES
25.1 Restructuring provisions

Opening provisions 81 56
Current year expense(2) 31 90
Release of provision(2) ((3)) (6)
Usage during the period(1) ((56)) (54)
Currency translation adjustment - -
Change in held for sale provision - (1)
Other movements (7) (4)
CLOSING PROVISIONS 46 81
Of which current 45 79
Of which non-current 1 2
(1) In 2012, of which €(22) million related to the restructuring plans announced in December 2011.
(2) Restructuring expenses, net of release, have been posted as follows in the consolidated statement of operations:

Profit (loss) from continuing operations
Termination costs(*) ((23)) (80)
Impairment of assets (part of a restructuring plan)(**) ((6)) (3)
Continuing restructuring expenses (29) (83)
Profit (loss) from discontinued operations
Related to activities discontinued and classified as held for sale(***) - 2
Related to activities discontinued but not classified as held for sale 1 (1)
Discontinued restructuring expenses 1 1
TOTAL RESTRUCTURING EXPENSES OF THE GROUP (28) (82)
(*) Termination costs are related to both employees and facilities. This amount includes €(13) million related to Thomson Angers’s Social Plan.
(**) These restructuring costs are reclassified against assets prior to disposals and appeared therefore in the line “other movements” within the restructuring provision variation.
(***) The amounts related to activities discontinued and classified as held for sale are not presented in the variation of restructuring provision above as they are presented within “Liabilities
classified as held for sale” in the consolidated statement of financial position.
25.2 Other provisions

Risk and litigation related Other provisions related to
(in € millions) Warranty to businesses disposed of continuing businesses(1) Total(2)
of January 1, 2011 26 72 68 166
Current period additional provision 7 25 17 49
Release of provision (7) (14) (15) (36)
Usage during the period (4) (14) (12) (30)
Change in held for sale provision (1) - (3) (4)
Currency translation adjustments and other (3) - (1) (4)
As of December 31, 2011 18 69 54 141
Current period additional provision 8 8 31 47
Release of provision (4) (5) (9) (18)
Usage during the period (4) (5) (10) (19)
Currency translation adjustments and other - - 3 3
AS OF DECEMBER 31, 2012 18 67 69 154
(1) Include mainly provision for risk and litigation.
(2) Split of total provisions between non-current and current:
- as of December 31, 2012, €76 million classified as non-current and €78 million as current.
- as of December 31, 2011, €83 million classified as non-current and €58 million as current.
As of December 31, 2012, total provisions for litigation amount to €55 million (€31 million as of December 31, 2011).

NOTE 26 SHARE-BASED Stock options will vest on the date the Board of Directors approves
COMPENSATION PLANS the accounts for the fiscal year ended December 31, 2012 (“the first
vesting date”) and become exercisable as off June 17, 2014. The
duration of the plan is eight years.
26.1 Plans granted by Technicolor
In February 2011, the Board off Directors approved the principles of a For French-tax domicile beneficiaries, free shares will be acquired on
Long-Term Incentive Plan (LTIP) that has been implemented during the date the Board off Directors approves the accounts for the fiscal
the first semester of 2011. As part of this plan, free performance year ended December 31, 2012 (“the first vesting date”, estimated to
shares may be awarded in 2012, 2013 and 2014 to some senior be in April 2013) and will be subject to additional two-years holding
executives subject to and proportionally to fulfillment of specified period. For non-French tax domiciled beneficiaries, free shares will be
performance conditions based both on market performance criteria acquired and exercisable on June 17, 2014. Beneficiaries need to be
and on Technicolor performance achieved respectively on December continuously employed for the plan’s entire vesting period.
31, 2011, 2012 and 2013 as approved by the Board of Directors. As off December 31, 2012 the total number of outstanding stock
For free performance shares that would be awarded based on 2011 options amounted to a maximum off 1,371,640 options and
and 2012 performance, final vesting is still conditional to senior 1,508,861 free shares granted to employees and Directors and of
executives staying in the company at least until June 8, 2013. 204,806 options granted to employees and Directors that are not in
On June 17, 2010, the Board approved a Mid-term Incentive Plan the scope of IFRS 2 because of IFRS 1 exemptions. The details of
(MIP) granting non-market performance units made up of a these options are disclosed hereafter.
combination of cash and, depending on Management level, either In accordance with the transition provisions of IFRS 2 “Share-based
stock options or free shares. Subject to the presence condition at Payments”, IFRS 2 has been applied to all grants made after
vesting dates and fulfillment off specified non-market performance November 7, 2002 that were unvested as of January 1, 2005. As a
conditions on December 31, 2012 as approved by the Board of result, only the following stock option plans are accounted for under
Directors, the rights under the plan shall vest either partially or in full IFRS 2, with the other plans being disclosed later in this section:
for each beneficiary in the proportions set by the Board off Directors.

Estimated fair
Number of Number of Initial values of the
options initially options number of Contractual Exercise options
(2)
Type of plan Grant date granted outstanding beneficiaries Vesting date option life price granted
Subscription 50% as of Sept. 22, 2007
Plan 3 options Sept. 22, 2004 359,990 114,590 574 50% as of Sept. 22, 2008 10 years €131.38 €65.3
Purchase 50% as of April 19, 2008
Plan 4 options April 19, 2005 71,940 35,796 93 50% as of April 19, 2009 10 years €170.99 €73.2
Purchase 50% as of Dec. 8, 2008
Plan 5 options Dec. 8, 2005 199,317 55,313 390 50% as of Dec. 8, 2009 10 years €145.60 €62.5
Subscription 50% as of Sept. 21, 2008
Plan 6 options Sept. 21, 2006 273,974 87,711 485 50% as of Sept. 21, 2009 8 years €102.53 €32.2
Subscription 50% as of Dec. 14, 2009
Plan 7 options Dec. 14, 2007 130,710 61,086 482 50% as of Dec. 14, 2010 8 years €85.64 €20.8
April 30, 2013 for France
MIP* Existing Free June 17, 2014 for other
Free Share Shares June 17, 2010 492,020(1) 297,620 64 countries - - €5.5
MIP* Subscription June 17, 2014 for other
Options options June 17, 2010 1,216,700(1) 1,017,144 18 countries 8 years €6.52 €2.32
Free Shares April 28, 2011
LTI Free (existing or to be and June 2013 (50%) and €5.2 on
Share issued) June 30, 2011 1,637,152(1) 1,211,241 63 March 2014 (50%) - - average
* Management Incentive Plan (MIP), see description above.
(1) Maximum potential number.
(2) Exercise prices and number of options were modified following the 2012 capital increases.
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows for 2012 and 2011:
Number of share options Weighted Average Exercise Price (in euros)

Outstanding as of December 31, 2010 46
(with an average remaining contractual life of 5 years – excluding free shares) 2,210,074 (ranging from 0 to 208.2)
Out of which exercisable 634,484 148,6
New free shares granted in 2011 (maximum number) 1,637,152 -
Delivered(1) (5,744) -
Paid(1) (6,282) -
Forfeited (613,574) 63.9
Outstanding as of December 31, 2011 19.4
(with an average remaining contractual life of 6 years – excluding free shares) 3,221,626 (ranging from 0 to 208.2)
Out of which exercisable 376,666 148.6
Adjustment following capital increases of July and August 2012 17,000 37.7
Forfeited (358,125) 8.6
OUSTANDING AS OF DECEMBER 31, 2012 2,880,501 17.4
(
(with an average remaining contractual life of 5 years - excluding free shares)) (
(ranging from 0 to 171))
(1) In 2011, in the frame of the Free Share Plan, Technicolor proposed to its employees either to receive the shares vested or to be paid for the value of such shares.

Significant assumptions used

The estimated fair values of the stock options granted were calculated using the Black-Scholes option pricing model.
The inputs into the model were as follows:
(in % and in euro) Stock options plan granted in 2010

Weighted average share price at measurement date 5.5
Weighted average exercise price 4.68
Expected volatility 52%
Expected option life* 5 years
Risk free rate 1.85%
Expected dividend yield 0%
Fair value of option at measurement date 2.3
* Which is shorter than the contractual option life as it represents the period of time from grant date to the date on which the option is expected to be exercised.
Factors that have been considered in estimating expected volatility for For the “Value Options Plan” granted in December 2011, the
the long-term maturity stock option plans include: employees will vest a lump sum payment upon a change in control of
MediaNaviCo or an Initial Public Offering (IPO) equal to the
the historical volatility of Technicolor's stock over the longest period amount, if any, by which the final per share value of MediaNaviCo
available; exceeds the exercise price of the options;
adjustments to this historical volatility based on changes in For the “Profit Interest Plan”:
Technicolor's business profile.
the two executives have each been granted “incentives units”
For shorter maturity options, expected volatility was determined based corresponding to 1.57% (T1) of MediaNaviCo gains and profits
on implied volatility on Technicolor's share observable at grant date. (equivalent to fair market value at liquidity event date minus fair
market value at grant date) after the grant date of T1 (granted in
For the 2011 and 2010 free shares granted as part of the MIP and the September 2011),
LTI, Technicolor considered an expected turnover of 4% based on
following the departure of one executive in 2012, only one
historical data of related beneficiaries, an average initial share price of executive will be granted “incentive units” corresponding to
€5.2 in 2011 (€5.5 in 2010), and a dividend rate of 0% (in 2011 and 0.44% (T2) of MediaNaviCo gains and profits after grant date
2010). of T2 (to be granted on January 1, 2013),
following the departure of one executive in 2012, only one

executive will be granted “incentive units” corresponding to
26.2 Plans granted by MediaNavico 0.34% (T3) of MediaNaviCo gains and profits after grant date
Technicolor’s subsidiary MediaNaviCo granted “Value Options Plan” to of 3rd tranche (T3) (to be granted on January 1, 2014).
employees and a ”Profit Interest Plan” for two MediaNaviCo executives.
These “incentives units” will vest 25% per year for 4 years from the
Both plans are similar to share appreciation rights and fall within the
grant date. They can be exercised each year starting January 1, 2019 or
scope of IFRS 2. They are both cash settled share-based transactions.
earlier in case of a change in control of MediaNaviCo or an IPO.
The estimated fair values of the options granted to the employees and
to the two executives were calculated using a binomial option pricing
model.

The inputs into the model were as follows:
Profit interest Plan Options Value Options

Expected volatility 60% 60%
Expected vesting period (in years) 4 Between 3.5 and 4.5 depending on the grant date
Risk free rate 2.1% 2.1%
Repo rate 3% 3%
Turnover rate over the vesting period 0% Between 0% and 15%
Exercise price (in euro) N/A 0.43
Fair value of option at measurement date (in euros) 0.20 0.20
Volatility is a measure of the amount by which a price has fluctuated or As the plans are cash settled, the counterpart of the expense in the
is expected to fluctuate during a period. The measure of volatility used consolidated statement of financial position is a liability that has to be
is based on the volatility rates used by MediaNaviCo’s peers to value remeasured at fair value at each reporting date, by applying an option
their stock options plans. pricing model.
Profit interest Plan Options Value Options

NUMBER OF OPTIONS GRANTED AS OF DECEMBER 31, 2011 4,450,624 3,590,000
New options granted (with an average fair value of €0.33 at grant date) - 7,828,414
Forfeited (1,112,656) (2,705,000)
NUMBER OF OPTIONS OUTSTANDING AS OF DECEMBER 31, 2012 3,337,968 8,713,414
The impact of this plan on Technicolor’s result is less than €1 million in 2012 and nearly nil in 2011.
26.3 Compensation expenses charged to income

The compensation expenses charged to income for the services The counterpart of this expense has been credited fully to equity in
received during the period amount to €5 million and €1 million 2012 and 2011.
for the years ended December 31, 2012 and 2011, respectively.
26.4 Elements concerning the plans to which IFRS 2 has not been applied*
* Granted before November 7, 2002 and/or vested as of January 1, equity instruments not restated under IFRS 2 and for which the option
2005. life has not expired are the stock options granted in 2004 in
replacement of stock option rights granted prior to November 7, 2002
The equity instruments not restated under IFRS 2 in accordance with (part of Plan 3).
IFRS 1 includes BASAs (“Bons d’Achat et de Souscription d’Actions”)
granted on September 15, 2004 and acquired by the Group’s The details of stock options (excluding BASAs) not accounted for
employees who were eligible to participate in the plan. The residual under IFRS 2 because of IFRS 1 exceptions are as follows:
Number of options Weighted Average Exercise Price (in €)

as of January 1, 2011
(with an average remaining contractual life of 3 years) 293,619 177
Out of which exercisable 293,619 177
Forfeited (54,018) 160
Expired (Plan 2 – expired on October 11, 2011) (32,773) 315
Outstanding as of December 31, 2011
(with an average remaining contractual life of 3 years) 206,828 160
Out of which exercisable 206,828 160
Adjustment following capital increases of July and August 2012 2,508 131.38
Forfeited (4,530) 131.38
OUTSTANDING AS OF DECEMBER 31, 2012
(
(with an average remaining contractual life of 2 years)) 204,806 131.38

NOTE 27 OTHER CURRENT AND NON-CURRENT LIABILITIES

TOTAL OTHER NON-CURRENT LIABILITIES 96 97
Taxes payable 33 32
Current royalties 98 98
Payables for PPE and intangible assets 18 37
Other(1) 265 194
TOTAL OTHER CURRENT LIABILITIES 414 361
(1) In 2012 includes the €38.6 million fine from the European Commission related to Thomson’s former Cathode Ray Tubes (CRT) business payable in 2013 (see note 1.2).
NOTE 28 EARNINGS (LOSS) PER SHARE

NRS I and NRS II, including the accrued interest, are equity instruments (see note 19.1), and have therefore been considered as outstanding
shares, for the computation of the basic earnings per share.
Diluted earnings (loss) per share

The calculation of the diluted earnings (loss) “Group share” per share from continuing operations “Group share” attributable to the ordinary
equity holders of the parent presented is as follows:
2012 2011
NUMERATOR:
Adjusted profit (loss) "Group share" from continuing operations attributable to ordinary shareholders
(in € millions) 15 (302)
DENOMINATOR*:
Weighted shares (in thousands) 277,191 230,748
Of which
NRS IIC(1) 1,006 19,310
Stock options(2) 300 79
* Weighted average number of share for basic earnings is 275,885 thousands shares in 2012 and 211,364 thousands shares in 2011. For computation of the diluted earnings (loss) per
share, weighted number of NRS IIC and stock options is added.
According to IAS 33.26 and IAS 33.27b, the weighted average number of shares outstanding was adjusted in 2012 and 2011 to take into account the share capital increase with
preferential subscription rights that occurred on August 14, 2012.
(1) In 2012, this weighted amount of shares includes 1,009 thousands new shares issued on December 30, 2012. In 2011 this weighted amount of shares included 18,354 thousands
new shares issued on December 30, 2011 and 1,006 thousand shares that could be issued for the NRS IIC whose conversion was deferred until December 31, 2012, adjusted to take
into account the share capital increase with preferential subscription rights that occurred on August 14, 2012.
(2) Due to Technicolor share price during 2011 and 2012 all other stock option plans except free share plans have no dilution impact. Some of these plans could have dilution impact in the
future depending on the stock price evolution (see details of these plans in note 26).
The calculation of the diluted earnings (loss) “Group share” per share from discontinued operations attributable to the ordinary equity holders of
Technicolor is as follows:
2012 2011
NUMERATOR
Adjusted profit (loss) "Group share" from discontinued operations attributable to ordinary shareholders
(€ in million) ((35)) (21)
DENOMINATOR
Weighted shares (in thousands) 277.191 230,748

NOTE 29 INFORMATION ON EMPLOYEES

The geographical breakdown of the number of employees of the Group at the end of the year is as follows:
2012 2011
Europe* 4,135 5,766
North America 5,930 6,497
Asia(1) 1,960 1,975
Other countries(2) 2,614 2,704
TOTAL NUMBER OF EMPLOYEES 14,639 16,942
Number of employees in entities accounted for under the equity method 413 232
(1) Of which People’s Republic of China and Hong Kong 476 568
(2) Of which Mexico 1,618 1,608
* The decrease in the number of employees in Europe is mainly explained by the disposal of Broadcast Services activities and the deconsolidation of Thomson Angers.
There were no employees reported under the discontinued perimeter as of December 31, 2012 and 2011.
The total “Employee benefits expenses” (including only people employed in the consolidated entities) is detailed as follows:
2012 2011
Total Discontinued Continuing Total Discontinued Continuing
(in € millions) Group operations operations Group operations operations
Wages and salaries 710 - 710 833 9 824
Social security costs 103 - 103 114 3 111
Compensation expenses linked to share
options granted to Directors and employees(1) 5 - 5 1 - 1
Pension costs – defined benefit plans(2) ((26)) - ((26)) 21 - 21
Termination benefits and other long-term
benefits(3) 19 - 19 79 (1) 80
TOTAL EMPLOYEE BENEFITS
EXPENSES (EXCLUDING DEFINED
CONTRIBUTION PLANS)(4) 811 - 811 1,048 11 1,037
Pension costs – defined contribution plans 19 - 19 22 - 22
(1) See note 26.
(2) The positive impact of pension costs is linked to the curtailment gain booked in 2012. See note 24.
(3) These costs were presented in restructuring expenses within continuing operations and in net loss from discontinued operations in the consolidated statement of operations
(see note 25). In 2011, the significant termination benefits is due to the restructuring plans announced at the end of December 2011 (see note 25).
(4) The defined contribution expenses paid within a legal and mandatory social regime are included in Employee benefits expenses shown above.

NOTE 30 SPECIFIC OPERATIONS IMPACTING THE CONSOLIDATED STATEMENT

OF CASH FLOWS
(a) Cash impact of debt restructuring

Fees paid for debt and capital restructuring(1) (9) ((1)) (9)
Reimbursement of borrowings to bank holders (22) (245) (51)
TOTAL CASH IMPACT OF DEBT RESTRUCTURING (246) (60)
(1) The fees paid directly linked to the restructuring have been classified as financing cash flows as they relate to the debt and capital restructuring of the Group.
(b) Acquisition of subsidiaries, associates and investments

Business acquisition from Quinta ((2)) -
Acquisition of 50% interests in Indoor Direct ((6)) -
Business acquisition from Laser Pacific ((1)) (6)
Technicolor Digital Cinema LLC (deferred payment) ((1)) (2)
Other - (4)
ACQUISITION OF INVESTMENTS (10) (12)
ACQUISITION OF INVESTMENTS, NET OF CASH POSITION OF COMPANIES ACQUIRED (10) (12)
(c) Disposal of subsidiaries and activities

Disposals on continuing activities
Broadcast 17 -
ContentGuard - 18
Other disposal and cash of companies disposed of - (4)
Net cash impact in continuing activities 17 14
Disposals of discontinued activities
Grass Valley activities(1) ( )
(4) (27)
Other disposal and cash of companies disposed of ((1)) (5)
Net cash impact of discontinued activities (5) (32)
TOTAL CASH IMPACT OF DISPOSALS 12 (18)
(1) Corresponds to the payment of commitments given in the disposals agreements.
(d) Changes in working capital and other assets and liabilities

Starting in 2011 the French tax authorities reimburse the Research tax a €3 million receivable towards the financial institution, corresponding
credit (CIR) after a three-year period (instead a one year period for to the residual cash to be received when the French tax authorities
previous years’ CIR). Technicolor, as it did last year, decided reimburse the CIR in 2015; and
accordingly to sell to a financial institution its CIR for €17 million and
€15 million in cash in the first half of 2012 and 2011, respectively. a €2 million expense over the period.
This sale occurred at the end of June 2012 and led to the The Group keeps a residual continuing involvement in the
derecognition of the €22 million receivable with the following derecognized receivable due to the fiscal risk.
counterpart:
On top of this transaction, the Group enters into factoring agreements
a cash receipt of €17 million; during 2012 for a total amount of €21 million, of which €3 million
receivables as of December 31, 2012.

NOTE 31 CONTRACTUAL The Group provides certain guarantees to third parties (financial
OBLIGATIONS AND institutions, customers, partners and government agencies) to ensure the
OTHER COMMITMENTS fulfilment of contractual obligations by Technicolor and its consolidated
subsidiaries in the ordinary course of their business. The guarantees are
The following table provides information regarding the aggregate not shown in the table below as they do not increase the Group’s
maturities of contractual obligations and commercial commitments as of commitments in relation to the initial commitments undertaken by the
December 31, 2012 for which the Group is either obliged or conditionally entities concerned.
obliged to make future cash payments (contractual obligations related to
the debt restructuring agreement is detailed in note 22). This table In the normal course off its activity, the Entertainment Services segment may
includes firm commitments that would result in unconditional or provide guarantees to its customers on the products stored and then
conditional future payments, but excludes all options since the latter are distributed against any risk or prejudice that may occur during
not considered as firm commitments or obligations. When an obligation manufacturing, storage or distribution. Such guarantees provided are
leading to future payments can be cancelled through a penalty payment, covered by insurance and are therefore excluded from the table below.
the future payments included in the tables are those that management has Guarantees provided by entities off the Group for securing debt, capital
determined most likely to occur. leases, operating leases or any other obligations or commitments of other
entities off the Group are not included as the related obligations are already
included in the table below.
Unconditional and conditional future payments Amount of commitments by maturity
1–3 3–5 More than
(in € millions) 2012 Less than 1 year Years years 5 years
Unconditional future payments
On-balance sheet obligations:
Financial debt excluding finance leases(1) 1,236 96 255 885 -
Finance leases(2) - - - - -
Payables on acquisition and disposal of companies 2 - 1 1 -
Off-balance sheet obligations:
Operating leases(3) 359 79 124 75 81
Purchase obligations(4) 171 171 - - -
Other unconditional future payments(5) 27 12 9 6 -
TOTAL UNCONDITIONAL FUTURE PAYMENTS* 1,795 358 389 967 81
Conditional future payments
Off-balance sheet obligations:
Guarantees given(6) 49 48 1 - -
Other conditional future payments(7) 6 3 3 - -
TOTAL CONDITIONAL FUTURE PAYMENTS* 55 51 4 - -
* “Total Unconditional future payments” and “Total Conditional future payments” as of December 31, 2011 amounted respectively to €2,022 million and €78 million on continuing
entities.
(1) Financial debt is reported here at its nominal value for its principal amount and accrued interest (IFRS value reported in the consolidated statement of financial position is €1,115 million,
see note 22). Future interest expenses and the impact of interest rate swaps are not reported in this table. Currency swaps, hedging operations and foreign exchange options are
described below in a separate table.
(2) There is no significant finance lease in the Group.
(3) Operating leases are described below in this note.
(4) These include in particular commitments to acquire minimum volumes from Asian suppliers for €170 million.
(5) Other unconditional future payments relate in particular to (i) licensing agreements within the Digital Delivery and Entertainment Services segments and (ii) other contractual
advances.
(6) These guarantees comprise:
guarantees given for disposal of assets for €2 million;
guarantees for customs duties and legal court proceedings for €0.6 million, comprising mainly duty deferment guarantees required by the customs administrations to benefit from
customs duty deferments. Imported goods are normally taxed when they enter the territory. In the case of regular import flows, customs may grant an economic regime, under
which a cumulated duty payment is made after a determined one-month credit period. The carrying value of this guarantee is to cover the duties to be paid during the credit period;
guarantees given to tax offices for €26 million related to ongoing tax litigations;
various operational guarantees granted to customs administrations in order to be exempt from duties goods transiting through customs warehouses for re-exportation, and transit
guarantees in order that taxes are paid on goods only at their final destination in the import country. The maturity of these bank guarantees match the one-month renewable term of
the agreements.
(7) Conditional obligations mainly include contingent earn-out payments for €4 million related to past acquisitions.
Additional information:
Technicolor SA is committed to pay half of the soil remediation costs of Angers site;
guarantees and commitments received amount to €219 million as of December 31, 2012. This amount is mainly related to the royalties from licensees (patents, trademarks)
within the Technology segment;
the above table is only related to continuing entities. Contractual obligations and commercial commitments taken by discontinued entities, unconditional and conditional, amount
to €13 million as of December 31, 2012.

Commitments related to financial instruments

Commitments related to financial instruments held by the Group Forward exchange contracts, swaps and options: for their related cash
generate both future cash payments and receipts. Therefore they have inflow and outflow amounts;
not been disclosed in the table above. These commitments are
disclosed in the following table as follows: Interest rate swaps: for the underlying nominal debt amounts.
(in € millions) 2012

Currency swaps 128
TOTAL COMMITMENTS GIVEN 128
Currency swaps (128)
TOTAL COMMITMENTS RECEIVED (128)
Operating leases
At December 31, 2012, commitments related to future minimum and non-cancellable lease payments are detailed below:
Minimum future Future lease payments Net value of future

(€ in millions) lease payments(1) commitments received(2) lease commitments
2013 79 (2) 77
2014 68 (2) 66
2015 56 (2) 54
2016 44 (2) 42
2017 31 (1) 30
After 5 years 81 (4) 77
TOTAL 359 (13) 346
(1) Minimum operating lease payments shown are not discounted.
(2) Includes mainly operating lease payments made by Ericsson Broadcast Services UK Limited for the subleasing of a part of the Chiswick building in UK.
The main operating leases relate to the office buildings in To secure its obligations under the Reinstated Debt, certain subsidiaries
Issy-les-Moulineaux and Indianapolis: of the Company have agreed, severally and not jointly, irrevocably and
unconditionally to guarantee the Company’s and each other guarantor’s
On April 22, 2008, Technicolor signed a commitment for a new obligations of payment and performance under the Reinstated Debt. All
operating lease for its headquarters in France in Issy-les-Moulineaux material group Members as defined in the Credit Agreement are
near Paris for a duration of 9 years from November 2009; required to provide such guarantee. In addition, the guarantors
coverage must represent at least 90% of Covenant Group EBITDA
Technicolor USA, Inc. Sold its office building (administration and
and/or 70% of consolidated assets and/or 50% of consolidated
technical services buildings) in March 2000 and subsequently leased
revenues.
back from the purchaser until 2012 and renewed until 2017.
New material group Members and additional guarantors must accede as
The net operating lease expense in 2012 was €82 million (€84 million
guarantors in order to maintain the guarantor coverage on the basis of
in rental expense and €2 million in rental income).
the annual audited accounts for the year ended December 31, 2010
and each financial year-end thereafter.
Guarantees granted by subsidiaries and security
interests granted to secure the Reinstated Debt As of the closing date of the Reinstated Debt, the guarantors under the
A security package consisting of share pledges, pledges of certain Credit Agreement and the Note Purchase Agreement comprised 18
receivables under material customer contracts, pledges of material entities mainly located in UK, France and USA. In 2011, 8 additional
intra-group loans and pledges of material cash-pooling accounts was subsidiaries have granted guarantees to secure the Reinstated Debt.
put in place to secure the obligations of the borrower’s and each
guarantor’s obligations under the Credit Agreement and Note Purchase
Agreement. These assets will remain pledged until the final payment of
all the amounts due by the Group to its creditors.

Shares of subsidiaries pledged Banco Finantia declared its claim on the last day of the 4-month
Technicolor SA and the main guarantors, which include Technicolor deadline applicable to foreign creditors under Article R. 622-24 of the
International SAS (formerly Thomson Multimedia Sales International French Commercial Code. The Company and its Mandataires
SAS), Technicolor Delivery Technologies SAS, Technicolor Inc. and Judiciaires consider that, as this claim was held by a French creditor on
Technicolor USA, Inc. (formerly Thomson Inc.) have pledged the the date the Sauvegarde proceeding was opened (the French branch of
shares of 38 off their subsidiaries to secure part of the Reinstated Debt. Bank of America), it should have been declared within the two-month
deadline applicable to French creditors rather than the four-month
deadline applicable to foreign creditors.
Receivables from material contracts pledged
Receivables of Thomson Licensing SAS were pledged under a Patent On February 22, 2011, the Juge-Commissaire rendered a decision in
Licensing Agreement dated December 23, 2009 with Koninklijke favor off Banco Finantia, holding that Banco Finantia benefited from the
Philips Electronics N.V.. four-month deadline for the purposes off filing a claim. The Company
has appealed against this decision.
Cash pooling accounts pledged
Pursuant to six different Cash Pooling Pledge Agreements, the cash On May 10, 2012, the Versailles Court of Appeals rejected the
pooling accounts of Technicolor SA and Technicolor USA, Inc. were Company’s claims. The Company lodged an appeal with the French
pledged. The Cash Pooling Agreements relate to the domestic and Supreme Court (Cour de cassation) on June 29, 2012.
international centralization off Group Treasury, a bilateral target
balancing agreement, an automatic dollar transfer agreement, a North Italian tax litigation – Videocolor transfer prices
American target balancing agreement for multiple legal entities and a The Company’s former Italian subsidiary, Videocolor S.p.A.
domestic UK cash concentration daily sweep arrangement. (Videocolor), was subject to a tax verification process in connection with
its exporting of picture tubes to Technicolor USA, Inc. (formerly
Intragroup loans pledged Thomson Inc.) from 1993 to 1998. In its report transmitted to the
Pursuant to an Intragroup Loans Receivables Pledge Agreement, Italian Direct Taxes Local Office in December 1999, the Guardia di
Intragroup loans receivables were pledged from Technicolor Trademark Finanza decided to modify the valuation method of the tubes exported
Management, Technicolor Europe Ltd., Technicolor Videocassette to Technicolor USA, Inc. and, as a consequence, increasing the taxable
Holdings (UK) Limited and (iv) Technicolor Entertainment Services income of Videocolor in the amount off €31 million for the years 1993
Spain, SA. through 1998.
NOTE 32 CONTINGENCIES In May 2003, Videocolor elected to benefit, in respect of the years

1993 and 1994, from the new tax amnesty, enacted by the Italian
In the normal course of the business, the Group is involved in various Parliament in 2003. In application of this amnesty law, Videocolor paid
legal proceedings and is subject to tax, customs and administrative a total amount of €1 million, thereby ending all disputes with regard to
regulation. The Group’s general policy is to accrue a reserve when a risk the years 1993 and 1994. Videocolor is able to use all the tax losses
represents a contingent liability towards a third-party and when the originating from 1993 and the previous years.
probability of a loss is probable and it can be reasonably estimated.
With regard to the year 1995, the Direct Taxes Local Office gave
Significant pending legal matters include the following: notice in 2001 of an assessment resulting in additional taxes amounting
to €4 million and tax penalties amounting to €4 million (before
Banco Finantia case interest). Videocolor successfully appealed this assessment in October
In the course off the Sauvegarde proceeding, the Mandataires Judiciaires 2001 but, following an appeal from the tax authorities, the judgment
in charge of Technicolor’s Sauvegarde contested the claim in an amount was partially overturned in November 2006, with the Court of appeal
off €9.9 million off Banco Finantia, a Portuguese bank, due to a confirming an assessment in the amount off €2 million, including
declaration outside of the legal time limit. Banco Finantia had acquired penalties.
such claim from the French branch of Bank of America, which held the
Videocolor filed an appeal to the Supreme Court based on the
claim at the opening of the Sauvegarde proceeding, and which did not
argument that the assessment was not founded on OCDE transfer
declare the claim prior to the transfer to Banco Finantia.
pricing principles. In addition, the Court of appeal made a manifest
error of calculation in revising the assessments and added a charge of
€1.8 million that the Company is contesting with the Supreme Court.

In 2002, the Direct Taxes Local Office gave notices of two considers this decision as unlawful in view of European Community law
assessments with regard to 1996 and 1997 fiscal years resulting in and is studying how to lodge a complaint.
additional taxes amounting to €3 million and €2 million, respectively
and tax penalties amounting to €3 million and €2 million, respectively. The French Customs Authority accepted to submit in August 2005 to
Videocolor challenged the assessments with the tax court in order to the European Commission Technicolor’s duty refund claim based on
nullify these assessments. In November 2004, this tax court rejected Article 239 off the European Community’s Customs Code. In May
almost all of the assessments notified by the Italian Tax authorities. The 2007, the European Commission notified a rejection of this claim, but
Direct Taxes Local Office appealed this decision in December 2005. accepted the good faith off Technicolor. In July 2007, Technicolor filed
In December 2007, the Court decided in favour of Videocolor, an appeal at the 1st Instance of the European Court of Justice, which
confirming the previous favorable judgment. In July 2008, the Direct rejected in September 2009 Technicolor’s position. In November
Taxes Local Office appealed these rulings to the Supreme Court. 2009, Technicolor lodged an appeal at the European Court off Justice
which also rejected in June 2010 Technicolor’s position. Technicolor
In December 2003, the Direct Taxes Local Office gave notice of an continues the legal proceedings at the national courts in France,
assessment with regard to fiscal year 1998 resulting in additional taxes Germany and the UK. In June 2011, the French court followed
amounting to €0.1 million and penalties amounting to €0.1 million. Technicolor’s request and decided to transfer the case to the European
Videocolor appealed this assessment in March 2004 before the court Communities Court off Justice, which answered in April 2012 and sent
off appeal which decided, in December 2005, to reject almost all of the back the case to the French court. The French Court met in September
assessments of the Italian Tax authorities. The Tax office appealed this 2012, but issued an unfavorable decision early February 2013.
decision. In April 2008, the Court decided in favor of Videocolor. In Technicolor lodged an appeal on February 18, 2013.
May 2009, the Direct Tax Office appealed this sentence to the
Supreme Court. In July 2009, Videocolor filed its memorandum Technicolor still believes that it has correctly declared and paid duty on
against the appeal of the Direct Taxes Local Office with the Supreme the imported televisions concerned, and, accordingly, strongly disputes
Court. the grounds off these re-assessments.
Technicolor sold Videocolor in February 2005, but remains

Pegasus Development
responsible for the possible outcome of this dispute as a result of the
Corporation/Personalized Media
guarantees given to the buyer.
Communications, LLC v. Thomson Consumer
Electronics, Inc.
Anti-dumping on televisions manufactured by In December 2000, Pegasus Development Corporation (“Pegasus”)
Technicolor’s Thailand unit and Personalized Media Communications, L.L.C. (“PMC”) filed suit in
Customs authorities in eight European countries are assessing imports the US District Court for the District off Delaware against
into the European Union by Technicolor subsidiaries of television Technicolor USA, Inc. (formerly Thomson Inc.), DIRECTV, Inc.,
manufactured by Technicolor in Thailand’s unit. These proceedings Hughes Electronics Corporation, and Philips Electronics North America
relate to different periods according to the different rules in each Corporation alleging infringement with respect to seven patents relating
country, beginning at the earliest in 1997 and ending at the latest in to digital satellite signal processing.
August 2002. In accordance with the relevant procedures, Technicolor
received in May 2004, January 2005 and February 2005 various In May 2003, the US District Court for the District of Delaware stayed
re-assessment notices relating to antidumping duties, excluding interest the lawsuit pending the re-examination of the patents at issue by the
and any penalties applicable in various countries off the European Union, U.S. Patent and Trademark Office (“USPTO”). The USPTO has now
inclundig the United Kingdom, Germany, France and Italy with an confirmed as patentable four claims of three patents asserted against
aggregate amount of around €22 million. the Company in the Delaware District Court litigation.
On March 24, 2005, the Provincial Tax Court of Milan (Italy) At the end of 2011, the Court lifted the Stay and the action is
rendered a decision and maintained the assessment. The assessment proceeding. Pegasus claims damages in the form of royalties for some
was again maintained by the Court of Appeal in a judgment rendered in or all of the satellite integrated receivers/decoders (“IRD’s”) the
March 2008. Technicolor appealed at the Italian Supreme Court. The Company has sold. Plaintiffs are attempting to assert three previously
Supreme Court hearing took place on February 2, 2012 and issued an unasserted claims to relate back to the December 2000 filing of the
unfavorable decision in October 2012. The Italian Customs Authorities Complaint. Technicolor is vigorously defending Plaintiff’s claims.
have requested the payment of 7.6 M€ by installments. Technicolor

Poland Tax Proceedings Taoyuan County Form RCA Employees’

Solicitude Association (the “Association”)
between France and the UK on one side and Poland on the other side, In April 2004, the Plaintiff, the Taoyuan County Former RCA
the Polish entity, Technicolor Polska, submitted in June 2009 a Employees’ Solicitude Association (“The Association”), which is a
€8 million tax refund request to the Polish Tax Authorities. At the same non-profit entity composed off former RCA employees (or heirs of
time, the Polish Tax Authorities launched, in 2009, an audit on the former workers) who claim to have worked at the Company’s former
2003 Income Tax and 2004 withholding tax returns. manufacturing facility in Taoyuan filed a purported class action under
Article 44-1 of the Taiwan Code of Civil Procedure in the Taipei
After lengthy proceedings, the Polish Tax Authorities issued provisional District Court, Taiwan, Republic of China against the Company and
assessments in 2010 with respect to 2003 deductibility of R&D costs General Electric International, Inc. (“GEI”). The Association is alleging
& 2004 withholding taxes resulting in additional taxes amounting to they were exposed to various contaminants while living and working at
€10 million and interest amounting to €7 million. In between, Polish the facility, which allegedly caused them to suffer various diseases,
Tax Authorities had established a €17 million mortgage on the including cancer, or caused them emotional distress from fear that living
company’s assets which also had as an indirect consequence the and working at the facility increased their risk of contracting diseases.
prevention of the statute of limitations from expiring. In May 2010, the The Association claims damages of NTD 2.7 billion (€70 million at the
Polish Tax Authorities launched another audit on the 2004 corporate December 31, 2012 closing rate) to compensate the members off the
income tax and 2005 withholding tax returns. They issued in Association for the alleged injury suffered by the former plant
January 2011 provisional assessments equivalent to the previous year employees who worked and lived at the facility from its inception until
assessments, i.e. deductibility of 2004 R&D costs and 2005 its closure in 1992.
withholding taxes, amounting €5 million in principal and €3 million in
interest. In August 2011, the 1st level Administrative Court of Warsaw In March 2005, the Association’s complaint was dismissed by the
rejected 98% of the 2010 assessments (on 2003 deductibility of R&D Taipei District Court based on the Association’s failure to comply with
costs and 2004 withholding taxes) notified by the Polish Tax certain procedural aspects of Taiwan’s class action statutes. Shortly
Authorities. In December 2011, this verdict became final as the Polish thereafter, the Association appealed the dismissal, which was reversed
Tax Authorities did not appeal. The Polish Tax Administration is by the Taiwan Supreme Court. In 2006, the case was remanded to the
currently reviewing the final aspects of the proceedings. They Taipei District Court for further proceedings as to procedural
interviewed around 20 former employees. Technicolor is waiting for its compliance by the Association. The parties have filed a number of
conclusions. briefs addressing procedural and substantive issues and the court has
held several hearings. The Association has also attempted to add
Technicolor Polska continues to contest the other assessments, as it Thomson Consumer Electronics (Bermuda), Ltd., Technicolor USA,
does not consider them as valid. Inc. (formerly Thomson Inc.), Technicolor SA (formerly Thomson SA),
and General Electric Company (“GE”) as defendants. The Company is
France VAT audit vigorously defending the case, and it is unclear how the addition of
French Tax Authorities audited Technicolor SA for the fiscal year defendants will impact the progress of the case. It is the Company’s
2009 and issued, at the end of 2012, an assessment amounting position that GE has indemnity obligations to Technicolor SA and its
€5.6 million. An amount off €1.6 million concerns VAT which was subsidiaries with respect to certain liabilities resulting from activities that
wrongly charged by a former subsidiary which was collecting a subsidy occurred prior to the 1987 agreement with General Electric. GE denies
from Technicolor, as per a 2009 Share Sale Agreement. Technicolor the existence off any such obligations to Technicolor.
will ask the former subsidiary to recover that VAT. An amount of
€3.7 million concerns the VAT recoverability of the holding company, Cathode Ray Tubes (“CRT”) Investigations
which Technicolor is contesting. On November 28, 2007, Technicolor USA, Inc. (US) (formerly
Thomson, Inc.) received a subpoena issued on behalf of the Antitrust
Division of the U.S. Department of Justice investigating alleged
anticompetitive conduct in the Cathode Ray Tubes (“CRT”) industry,
including Color Picture Tubes (“CPT”) and Color Display Tubes
(“CDT”) businesses.

The Group sold its CPT business in 2005 and never had activity in the Environmental matters
CDT business.
A certain number of Technicolor’s current and previously-owned
In addition, class action law suits asserting private antitrust claims were manufacturing sites have an extended history of industrial use. Soil and
filed in early 2008 in the United States (one group brought by indirect groundwater contamination, which occurred at some sites, may occur or
purchasers and one group brought by direct purchasers) that originally be discovered at other sites in the future. Industrial emissions at sites
named Technicolor and others as defendants, although Technicolor was that Technicolor has built or acquired expose the Group to remediation
dropped as a named defendant when amended complaints were filed in costs. The Group has identified certain sites at which chemical
the spring of 2009. In November 2011, Technicolor USA and contamination has required or will require remedial measures.
Technicolor SA executed tolling agreements with the indirect purchaser
Soil and groundwater contamination was detected at a former
plaintiffs and the direct purchaser plaintiffs tolling the statute of
manufacturing facility in Taoyuan, Taiwan that was acquired in the 1987
limitations to bring actions against Technicolor. In August 2012, the
transaction with GE, and TCETVT, as an affiliate of Technicolor SA,
indirect purchaser plaintiffs moved the Court to join Technicolor SA
owned the facility from approximately 1988-1992 when it was sold to
and Technicolor USA to the pending class action. In October 2012,
an entity outside the Technicolor Group. In 2002, the Taoyuan
Technicolor SA, Technicolor USA, and the indirect purchaser plaintiffs
County Environmental Protection Bureau (“EPB”) ordered remediation
executed an amendment to the tolling agreement which extended the
off the groundwater underneath the former facility. The groundwater
original tolling agreement, prohibited indirect purchaser plaintiffs from
remediation process is underway. It is the Company’s position that GE
bringing Technicolor into the present class action, and required
has a contractual obligation to indemnify Technicolor SA and its
Technicolor to provide certain sales documents.
subsidiaries with respect to certain liabilities resulting from activities that
On January 9, 2008, Technicolor received a request under art 18 (2) occurred prior to the 1987 agreement with General Electric.
off Council Regulation n°1/2003 from the European Commission (the
In addition to soil and groundwater contamination, the Group sells or
“EC”) also relating to anti-competitive conduct in the CRT industry
has sold in the past products which are subject to recycling requirements
from 1999 to 2005. On November 25, 2009, Technicolor received a
and is exposed to changes in environmental legislation affecting these
Statement of Objections (“SO”) from the European Commission. On
requirements in various jurisdictions.
March 3, 2010, Technicolor filed its written response to the “SO”. On
December 5, 2012, Technicolor was notified by the European The Group believes that the amounts reserved and the contractual
Commission of its decision to impose a fine of €38.6 million to guaranties provided by its contracts for the acquisition off certain
Technicolor. This amount is classified in the “Net loss from discontinued production assets will enable it to reasonably cover its safety, health and
operations” caption of the consolidated statement of operations as it environmental obligations. However, potential problems cannot be
relates to a business discontinued by the Group in 2005. Following the predicted with certainty and it cannot be assumed that these reserve
European Commission decision, purchasers may bring individual claims amounts will be precisely adequate.
against the Company seeking compensation for alleged loss suffered as
a result of the anti-competitive conduct. In addition, future developments such as changes in governments or in
safety, health and environmental laws or the discovery of new risks could
In parallel, on April 29, 2010 Technicolor’s Brazilian affiliate received result in increased costs and liabilities that could have a material effect
notice from the Brazilian Ministry of Justice indicating Brazilian on the Group’s financial condition or results of operations. Based on
authorities are initiating an investigation of possible cartel activity within current information and the provisions established for the uncertainties
the CRT industry in Brazil. described above, the Group does not believe it is exposed to any
material adverse effects on its business, financial condition or result of
On September 10, 2012, Technicolor SA received notice from the
operations arising from its environmental, health and safety obligations
Mexican Federal Competition Commission indicating Mexican
and related risks.
authorities had completed an investigation of possible cartel activity
within the CRT industry in Mexico and on December 3, 2012,
Technicolor SA has provided a response and evidence responding to
the allegations.

NOTE 33 RELATED PARTY TRANSACTIONS

The main transactions completed with, receivable from and payable to related parties are detailed as follows:

Trade receivables
SV Holdco 3 4
Other joint-ventures 2 -
Other related parties
The Weinstein Company(5) N/A 7
Trade payables
ST Microelectronics(1) 3 1
Thalès Group and its subsidiaries(1) - 1
Revenues
Screenvision Europe - 1
SV Holdco 11 15
Indoor Direct(2) 3 -
Other joint-ventures 2 -
The Weinstein Company(5) N/A 32
ST Microelectronics(1) 1 2
Expenses
SV Holdco - (1)
ST Microelectronics(1) ((23)) (9)
Thalès Group and its subsidiaries(1) - (4)
Thomson Angers(3)(4) (20) N/A
Contractual obligations and other commitments
Commitments given to Thomson Angers(3) ( )
(2) N/A
(1) Since March 2011, Mr. Lombard, Director of Technicolor, is Board Member of Thalès and Member of the Supervisory Board of ST Microelectronics. As a consequence, Thalès and ST
Microelectronics are still related parties of Technicolor.
(2) Following the acquisition of 50% of Indoor Direct in 2012, Technicolor accounts for its investment in this joint venture using the equity method. Indoor Direct is therefore a new related
party to Technicolor in 2012.
(3) Technicolor lost the control of Thomson Angers and stopped the consolidation of this entity from June 1, 2012. Thomson Angers is therefore a new related party to Technicolor in
2012.
(4) This amount corresponds to restructuring costs for €13 million and other losses for €7 million related to the commitments taken by Technicolor SA towards its former subsidiary.
(5) Since 2012, the Weinstein Company is not anymore related party of Technicolor.

Key Management Personnel Compensation Directors and advisors in respect to fiscal year 2012 will be paid in
2013.
The 2012 and 2011 directors’ fees and compensation expenses (incl.
Social security costs) amounted respectively to €0.7 million and Compensation expenses allocated by the Group to Members of the
€0.7 million. The amounts due to Directors who are non-resident for Executive Committee (including those who left this function during
French tax purposes are subject to a withholding tax. Fees due to 2012 and 2011), during 2012 and 2011 are shown in the table below:

Short-term employee benefits(1) 14 9
Termination benefits - -
Share-based payment 2 -
TOTAL 16 9
(1) In addition, as of December 31, 2012, the Group has an obligation of €4 million in case of retirement.
The Members of the Executive Committee can benefit from severance packages in case of an involuntary termination and in absence of fault,
which represent a total estimated amount of €8 million.
NOTE 34 SUBSEQUENT EVENTS

As part of the Strategic Alliance with Village Roadshow Ltd announced On January 21, 2013, Technicolor sold its VoIP business to ANL
in December 2012, Technicolor finalized in February 2013 the ENTREPRISES for €2 million, subject to working capital adjustments
acquisition of the Village Roadshow distribution business in Australia and with a potential earn-out payment of €1 million. VoIP assets and
for a fixed amount of 9 million Australian Dollars (equivalent to liabilities are classified as held for sale in the Group consolidated
€7 million at closing exchange rate) and a variable amount dependent statement of financial position as of December 31, 2012. This disposal
on future level of activities of the acquired business. This business has won't have any significant impact in the Group 2013 consolidated
responsibilities for Warner Bros. and Paramount Home Entertainment financial statements.
as well as Roadshow Entertainment. The impacts of this acquisition on
the consolidated financial statements have not yet been finalized, but
they are not considered to be potentially significant.

NOTE 35 LIST OF MAIN CONSOLIDATED SUBSIDIARIES

The following is a list of the principal consolidated holding entities and subsidiaries:
% share held by Technicolor (% rounded to one decimal)

COMPANY – (Country) 2012 2011
1) Fully consolidated
Technicolor SA (France) 1-5 rue Jeanne d’Arc, 92130 Parent company Parent company
Issy-les-Moulineaux – France
Immobilière Le Gallo SAS (France) ((*)) 100.0
MediaNavi Co LLC (U.S) 89.1 89.1
Th. multimedia Distrib.(Netherlands) BV (Netherlands) 100.0 100.0
Technicolor Disc Services International Ltd.
(Hammersmith) (UK) 100.0 100.0
Technicolor Export de Mexico, S. de R.L. (Mexico) 100.0 100.0
Technicolor Home Ent.Serv LLC of America (U.S.) 100.0 100.0
Comercializadora Thomson de Mexico SA de CV
(Mexico) 100.0 100.0
Thomson Sales Europe SA (France) 100.0 100.0
Technicolor Delivery Technologies SAS (France) 100.0 100.0
Technicolor USA Inc (U.S.) 100.0 100.0
Thomson Telecom Mexico, S.A. de C.V. (Mexico) 100.0 100.0
Technicolor Delivery Technologies Australia Pty Limited
(Australia) 100.0 100.0
Thomson Licensing LLC (U.S.) 100.0 100.0
Thomson Angers (France) ((**)) 100.0
Technicolor Brasil Midia E Entretenimento LTDA (Brazil) 100.0 100.0
Technicolor Asia Pacific Holdings Pte. Ltd. (Singapore) 100.0 100.0
Technicolor Asia Pacific Investments Pte Ltd. (Singapore) 100.0 100.0
Technicolor Inc. (U.S.) 100.0 100.0
Technicolor Home Entertainment Services Inc. (U.S.) 100.0 100.0
Technicolor Home Entertainment Services de Mexico, S.
de R.L. de C.V. (Mexico) 100.0 100.0
Technicolor Videocassette of Michigan, Inc. (U.S.) 100.0 100.0
Technicolor Media Services UK Ltd. (UK) 100.0 100.0
Technicolor India Pvt Ltd. (India) 100.0 100.0
IZ ON Media, LLC (U.S.) 100.0 100.0
Technicolor Creative Services U.S. Inc. (U.S.) 100.0 100.0
Technicolor Holdings of Canada Inc. (Canada) 100.0 100.0
Technicolor Canada Inc. (Canada) 100.0 100.0
Technicolor Australia Investments Ltd. (UK) 100.0 100.0
Technicolor, Pty, Ltd. (Australia) 100.0 100.0
RCA Trademark Management SA (France) 100.0 100.0
Technicolor Holdings Ltd. (UK) 100.0 100.0
Technivision Ltd. (UK) 100.0 100.0
Technicolor Videocassette Holdings Ltd. (UK) 100.0 100.0
Technicolor Video Serv.(UK) Ltd. (UK) 100.0 100.0
Technicolor Ltd. (UK) 100.0 100.0
Technicolor Distribution Services France EURL (France) 100.0 100.0
Technicolor SpA (Italy) 100.0 100.0
Technicolor Entertainment Services Spain (Spain) 100.0 100.0
Technicolor (Thailand) Ltd. (Thailand) 100.0 100.0
MPC The Moving Picture Company Limited (UK) (UK) 100.0 100.0
Technicolor Europe Ltd. (UK) 100.0 100.0
Thomson multimedia Ltd. (Canada) 100.0 100.0
Thomson multimedia Digital Holding (BVI) Limited
(China) 100.0 100.0
Technicolor China investment (BVI) Ltd. (China) 100.0 100.0
Technicolor Network Services UK Ltd. (UK) ((**)) 100.0
NOB NV (Netherlands) ((**)) 100.0
TCE Television Taiwan Ltd. (Taiwan) 100.0 100.0
Thomson Licensing SAS (France) 100.0 100.0
Technicolor International SAS (France) 100.0 100.0
Technicolor Network Services France SAS (France) ((**)) 100.0
Gallo 8 SAS (France) 100.0 100.0

% share held by Technicolor (% rounded to one decimal)

COMPANY - (Country) 2012 2011
Thomson multimedia Sales UK Ltd. (UK) 100.0 100.0
Technicolor Polska (Poland) 100.0 100.0
Sté Fr.d'Invest.et d'Arbitrage – Sofia SA (France) 100.0 100.0
Deutsche Thomson OHG (Germany) 100.0 100.0
2) Accounted for under the equity method
SV HOLDCO (U.S.) 18.3 18.8
Techfund Capital Europe (France) 20.0 20.0
Indoor Direct, LLC (U.S.) 50.0 -
Beijing Thomson CITIC Digital Technology Co., Ltd.
(China) 50.0 (***)
(*) Entity merged into one other.
(**) Entity sold, liquidated or deconsolidated.
(***) Entity consolidated under the equity method since January 1, 2012 and previously consolidated by pro-rata method

Statutory Auditors' report on the Consolidated Financial Statements
8.3 STATUTORY AUDITORS' REPORT ON THE

CONSOLIDATED FINANCIAL STATEMENTS
This is a free translation into English of the Statutory Auditors’ report on the consolidated financial statements issued in the French language and is
provided solely for the convenience of English speaking users.
The Statutory Auditors’ report includes information specifically required by French law in such reports, whether modified or not. This information
presented below is the opinion on the consolidated financial statements and includes explanatory paragraphs discussing the auditors’ assessments of
certain significant accounting and auditing matters. These assessments were made for the purpose of issuing an audit opinion on the consolidated
financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the
This report also includes information relating to the specific verification of information given in the management report.
This report should be read in conjunction with, and is construed in accordance with, French law and professional auditing standards applicable in France.
In compliance with the assignment entrusted to us by your Annual General Shareholders’ Meeting, we hereby report to you, for the year ended
December 31, 2012, on:
the audit off the accompanying consolidated financial statements of Technicolor;
the justification of our assessments;
the specific verification required by law.
These consolidated financial statements have been approved by the Board of Directors, Our role is to express an opinion on these consolidated
financial statements based on our audit.
1. OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS

We conducted our audit in accordance with professional standards applicable in France; those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit involves
performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made, as well as the overall presentation of the consolidated financial statements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the
Group formed by the entities included in the scope of consolidation as at December 31, 2012 and of the results of its operations for the year
then ended in accordance with International Financial Reporting Standards as adopted by the European Union.
Without qualifying our opinion, we draw your attention to Note 3.1 to the consolidated financial statements which describes the reasons for
applying the going concern assumption to approve the consolidated fiancial statements.

Statutory Auditors' report on the Consolidated Financial Statements
2. JUSTIFICATION OF OUR ASSESSMENTS

In accordance with the requirements of article L. 823-9 of the French Commercial Code (Code de commerce) relating to the justification of our
assessments, we bring to your attention the following matters:
On the basis of our work performed and based on the information obtained to date, and in the context of our assessment of the adequacy of the
accounting policies used by your Company, we believe that Note 3.1 to the consolidated financial statements, discloses the appropriate
information on the Company’s situation in relation to the going concern assumption applied to approve the consolidated financial statements.
Note 3 to the consolidated financial statements describes the situations where management of Technicolor has made assumptions and used
estimates. This note describes that circumstances and actual results may differ from these assumptions and estimates. Amongst the significant
estimates, there are goodwill, intangibles, deferred tax assets as well as retirement benefit obligation and provisions for risks and litigation:
As described in note 3, the Company systematically performs, each financial year, impairment tests on goodwill and assets with indefinite useful
lives, and also assesses whether there is any indication of impairment off long-term assets, according to the methods described in this note. We
examined the methods used to test for impairment as well as cash flow projections and assumptions used and ensured that Note 13 provides
appropriate disclosures thereon.
In relation to the deferred tax assets described in note 10, we have assessed the adequacy of the information and assumptions used as the basis
for the estimates retained, reviewed the calculations performed by the Company and ensured that note 10 provides appropriate disclosures
thereon.
Note 24 describes the methods used to evaluate the retirement benefit obligations. These obligations have been evaluated by external
actuaries. Our procedures have consisted in reviewing the information used, assessing the assumptions retained and ensuring that note 24
provides appropriate disclosure thereon.
Regarding risks and litigation, we have reviewed the procedures used by the group to identify, evaluate and account for them. We have also
ensured that the uncertainties identified while performing these procedures were adequately disclosed in note 32.
These assessments were made as part of our audit of the consolidated financial statements taken as a whole, and therefore contributed to the
opinion we formed which is expressed in the first part of this report.
3. SPECIFIC VERIFICATION
As required by law, we have also verified in accordance with professional standards applicable in France the information presented in the
Group’s management report.
We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.

Neuilly-sur-Seine, March 20, 2013 Courbevoie, March 20, 2013

Technicolor SA parent company financial statements
8.4 TECHNICOLOR SA PARENT COMPANY

FINANCIAL STATEMENTS
8.4.1 STATEMENT OF OPERATIONS

Year ended December 31
Revenues (3) 83 83
Other operating revenues 3 3
Total operating income 86 86
Wages and salaries ((58)) (58)
Other operating expenses ((70)) (68)
Depreciation, amortization and provisions ((7)) (12)
Loss from operations (49) (52)
Interest income 115 182
Interest expense ((179)) (229)
Dividends from subsidiaries 332 277
Other net financial losses ((270)) (580)
Net finance expense (4) (2) (350)
Net loss after financial loss (51) (402)
Capital gain (loss) on asset disposals and contributions 2,165 (2)
Other exceptional expenses ((66)) (1)
Exceptional profit (expense) (5) 2,099 (3)
Income tax (6) 56 67
NET INCOME (LOSS) 2,104 (338)
The accompanying notes on pages 227 to 244 are an integral part of these financial statements.

8.4.2 STATEMENT OF FINANCIAL POSITION

ASSETS
Non-current assets
Intangible assets 22 24
Net value of intangible assets (7) 9 10
Property and Equipment 15 15
Net value of Property and Equipment (7) 10 11
Shares in subsidiaries 7,436 7,467
Provisions on shares in subsidiaries ((6,895)) (6,684)
Other shares 1 1
Other financial assets 204 81
Net value of financial assets (8) 746 865
Total non-current assets 765 886
Current assets
Trade Receivables 34 46
Current accounts and loans with subsidiaries (9) 3,513 1,512
Impairment of Group company current accounts and loans ((78)) (76)
Other current assets 41 45
Cash and cash equivalents 211 145
Total current assets (9) 3,721 1,672
Prepayments and deferred charges (10) 15 21
TOTAL ASSETS 4,501 2,579


EQUITY AND LIABILITIES
Equity
Common stock (335,543,841 shares at December 31, 2012 at per value of €1.00) (12) 336 224
Additional paid-in capital (12) 1,161 1,072
Other reserves 100 100
Retained earnings ((2,179)) (1,841)
Net profit for the year 2,104 (338)
Total shareholders' equity (12) 1,522 (783)
Other equity instruments (12) 500 520
Total shareholders’ equity and equity instruments 2,022 (263)
Provisions for losses and contingencies (14) 48 95
Financial liabilities
Payables to other Group companies 1,035 1,130
Financial debts 1,226 1,480
Total financial liabilities (13) 2,261 2,610
Current liabilities
Trade payables 20 19
Other current liabilities 141 107
Total current liabilities (15) 161 126
Deferred income 9 11
TOTAL EQUITY AND LIABILITIES 4,501 2,579
8.4.3 STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Net income
Common Additional Legal Other Retained (loss) for the
(in € millions) Stock paid-in capital reserves reserves earnings year Total
At December 31, 2010 175 749 - 100 (1,341) (500) (817)
Changes in 2011
Allocation of 2010 balance - - - - (500) 500 -
NRS I, II and IIC redeemed into equity
(December 30, 2011) 49 323 - - - - 372
Net loss of the year - - - - - (338) (338)
At December 31, 2011 224 1,072 - 100 (1,841) (338) (783)
Changes in 2012
Allocation of 2011 balance - - - - (338) 338 -
July 16, 2012 increase in capital 47 48 - - - - 95
August 14, 2012 increase in capital 62 34 - - - - 96
Fees related to capital increases - (10) - - - - (10)
NRS II and IIC redeemed into equity
(December 27, 2012) 3 17 - - - - 20
Net profit of the year - - - - - 2,104 2,104
AT DECEMBER 31, 2012 336 1,161 - 100 (2,179) 2,104 1,522

Notes to the parent company financial statements
8.5 NOTES TO THE PARENT COMPANY FINANCIAL

STATEMENTS
Note 1 General information and main events.............................................................................................. 227 Note 13 Financial debts .......................................................................................................................................................................................... 238
Note 2 Summary of accounting policies...................................................................................................................... 228 Note 14 Provisions for losses and contingencies .................................................................................... 240
Note 3 Revenues..................................................................................................................................................................................................................... 230 Note 15 Current liabilities ................................................................................................................................................................................... 240
Note 4 Net finance expense ...................................................................................................................................................................... 231 Note 16 Accrued charges ..................................................................................................................................................................................... 241
Note 5 Exceptional profit (expense) ................................................................................................................................... 231 Note 17 Information on average number of employees ......................................................... 241
Note 6 Income tax ............................................................................................................................................................................................................... 232 Note 18 Contractual obligations and other off-balance
commitments ............................................................................................................................................................................................ 241
Note 7 Property, equipment and intangible assets .......................................................................... 233
Note 19 Contingencies .......................................................................................................................................................................................... 242
Note 8 Financial assets ......................................................................................................................................................................................... 233
Note 20 Management compensation ................................................................................................................................... 243
Note 9 Current assets ........................................................................................................................................................................................... 234
Note 21 Related party transactions ................................................................................................................................................ 243
Note 10 Prepayments and deferred charges ........................................................................................................ 234
Note 22 Fees paid to Statutory Auditors ...................................................................................................................... 244
Note 11 Accrued income ..................................................................................................................................................................................... 235
Note 23 Subsequent events .............................................................................................................................................................................. 244
Note 12 Shareholders’ equity and equity instruments .................................................................... 235
226 | TECHNICOLOR | ANNUAL REPORT 2012 |

NOTE 1 GENERAL INFORMATION In addition, following the redemption of 16,380,569 Notes

AND MAIN EVENTS Redeemable in Shares (NRS) II and IIC at the end of 2012, the share
capital of Technicolor SA increased by 2,669,936 shares (see
note 12).
1.1 General information
The Technicolor Group is a technology-driven company supporting its Disposal of Thomson Licensing SAS to
Media & Entertainment (M&E) customers in shaping their digital future.
Technicolor International SAS
Technicolor SA is the holding company of the Group and manages the On December 21, 2012, Technicolor SA sold its 100% direct
cash off the Group’s subsidiaries. subsidiary, Thomson Licensing SAS (the Licensing Company of
Technicolor group located in France), through an intra-group
The financial statements were approved by the Board of Directors of transaction to another 100% affiliate (Technicolor International SAS).
Technicolor SA on February 21, 2013. Pursuant to French law, the The sale price was the fair value of Thomson Licensing SAS determined
financial statements will be considered as definitive when approved by by an independent appraiser using a Discounted Cash Flow approach
Company’s shareholders at the Ordinary Shareholders’ Meeting which backed-up by a multiple market approach. This transaction allowed
should take place in May 2013. Technicolor SA to recognize a net gain of €2.16 billion on disposal.
After this transaction, the equity of Technicolor SA is therefore back to
a positive situation, well above its share capital.
1.2 Main events of the year
Changes in Technicolor share capital Thomson Angers “règlement judiciaire”
On June 20, 2012, Technicolor’s shareholders approved the At the end of May 2012, Thomson Angers SAS filed for insolvency
resolutions relating to the transaction proposed by Vector Capital (“cessation de paiement”) with the Nanterre Commercial Court in
Corporation (“Vector Capital ”) in its offer dated May 25 and amended France (the “Court”) and has petitioned the Court to open
on June 13. The transaction, agreed by the General Shareholders’ rehabilitation proceedings (“redressement judiciaire”) for Thomson
Meeting, took place in July and August 2012. Angers SAS, which was approved by the Court on June 1, 2012 for a
duration of 6 months.
Technicolor issued 47,471,506 shares through a reserved capital
increase to Vector TCH (Lux) 1, S.à.r.l (previously Petalite Investments An independent legal administrator (“administrateur judiciaire”) was
S.à.r.l), an investment vehicle controlled by Vector Capital, at a price of named by the Court on June 1, 2012. In June 2012 Technicolor paid
€2.00 per share (the “Reserved Capital Increase”) and representing to Thomson Angers €2 million in order to finance the activity during
gross proceeds of €94,943,012. The settlement of this capital increase the observation period and undertook some other losses for €1 million.
occurred on July 16, 2012.
As no offer was presented the Court ordered on October 11, 2012 the
Technicolor issued 61,643,316 shares in a capital increase with liquidation of Thomson Angers SAS. On October 16, 2012, Thomson
preferential subscription rights at a price off €1.56 per share (the “Rights Angers’s liquidator sued Technicolor and on November 16, 2012 an
Issue”) and representing gross proceeds of €96,163,573. The agreement was signed by which Technicolor will finance the Social Plan
settlement of this capital increase occurred on August 14, 2012. Vector for €10 million, employees supports costs for €3 million and funding
Capital, following its participation in the two capital increases, has additional liabilities for €3 million.
become the largest shareholder of Technicolor, with a shareholding of
These amounts were recognized as expenses and classified in the
20.9% (20.7% at December 31, 2012 after NRS redemption).
“Other exceptional expenses” caption of our statements of operations.
In accordance with the terms of Technicolor Group’s credit agreements,
80% of the net proceeds off these capital increases and 100% of the net European Cathode Ray Tubes (CRT) litigation
proceeds from disposal of Broadcast business (sold by affiliated
On December 5, 2012, the European Commission has fined a cartel in
companies of the Group Technicolor) have been used to repay the
the Cathode Ray Tubes (CRT) industry including Technicolor
Reinstated Debt. These repayments, without penalty, took place during
(Thomson at the time off the alleged acts), Samsung, Philips, LG,
the third quarter off 2012. The repayments reduced debt by
Panasonic and Toshiba, among others. The European Commission’s
€162 million on a nominal basis (see note 13).
main reproach is that these electronic manufacturers had an
understanding to fix prices between 1999 and 2005.

Technicolor was notified by the European Commission of its decision to Functional and presentation currency
impose a fine off €38.6 million to Technicolor. This amount is classified
These financial statements are presented in euro, the functional
in the “Other exceptional expenses“ caption of our statement of
currency of Technicolor SA. All financial information presented in euro
operations as it relates to a business sold by the Company in 2005.
has been rounded to the nearest million, unless otherwise stated.
Use of estimates
NOTE 2 SUMMARY OF ACCOUNTING The process of drawing up the parent company financial statements
POLICIES involves using certain estimates and assumptions to calculate the figures
presented in the Statements off Financial Position and of Operations.
Going concern The Company periodically reviews its valuations and estimates based on
The parent company financial statements for the year ended December its past experience and various other factors considered reasonable and
31, 2012 were approved by the Board of Directors on February 21, relevant for the determination off the fair estimates off the assets and
2013 on the basis of going concern. liabilities’ carrying value and of the revenues and expenses. The actual
results could significantly differ from these estimates depending on
The Board of Directors considered the Group’s cash flow projections, different conditions and assumptions.
which support the operating performance, and believes that the Group
can meet its expected cash requirements and address potential financial
consequences off ongoing litigation, until at least December 31, 2013.
Translation of foreign currency transactions
(a) Holding activities
Having considered the above, the Board of Directors determined that it
Foreign currency transactions are translated into euros at the exchange
was appropriate for these financial statements to be prepared on a
rate effective at the trade date. Receivables and payables in foreign
going concern basis.
currency are revalued at the rate of exchange prevailing at the balance
sheet date. The differences arising on the translation compared to the
Basis of preparation historical rate are recorded as translation adjustments in the balance
The annual financial statements are drawn up according to the sheet (a provision for exchange risk is recognized when adverse
accounting standards defined by the French General Chart of Accounts translation differences occur on receivables or debt).
(Plan Comptable Général)
l and to the provisions contained in the French
Commercial Code. The guidelines and recommendations of the (b) Global cash management
Autorité des normes comptables (further to the merger of the Conseil Management of the Group's market and liquidity risks is centralized in
National de la Comptabilité and the Comité de la règlementation its Group treasury department in France.
comptable), the Ordre des Experts Comptables and the Compagnie
Nationale des Commissaires aux Comptes are also applied. Market risk is managed by Group treasury, in accordance with Group
procedures covering, among other aspects, responsibilities,
The valuation methods used in the 2012 financial statements are authorizations, limits, authorized financial instruments and tracking tools.
consistent with those followed last year. All financial market risks are monitored on a permanent basis. Periodic
reports are made to the CFO, the Executive Committee and the Audit
These notes are an integral part of these annual financial statements.
Committee providing details on the Group's exposure to different risks
They contain additional information relating to the statements of
and the operations carried out to reduce such risks.
financial position and off operations and give a true and fair view off the
Company's assets, financial position and results. Information which is To reduce interest rate and exchange rate risk, the Group enters into
not mandatory is disclosed only if material. hedging transactions by using derivative instruments. To limit liquidity
risk, the Group has set up long-term financing facilities consisting of
debt and equity instruments.

Because of the different natures of the Group’s U.S. dollar exposure Ongoing software development projects are classified under
related to its licensing activity and other segments which buy “Intangibles in progress”. Once development is achieved, the software is
components in Asia drawn up in U.S. dollar, the Group may hedge capitalized or delivered to the subsidiaries concerned. Software
separately the U.S. dollar licensing exposure. Apart from these developed or used internally is amortized from the date of use. Other IT
exceptions, the Group tries to net offsetting and to hedge only the net development costs are capitalized and amortized on a straight-line basis
exposure with banks. over a maximum of three years, with some exceptions. Minor IT
expenses are amortized over the financial year they are put in use.
The Group does not use derivatives instruments for any purpose other
than for hedging its commercial and financial exposures. This policy Software acquired or developed as well as licenses are amortized on a
does not permit the Group or its subsidiaries to take speculative straight-line basis over the duration of their protection or over their
positions. useful life, whichever is shorter.
Forward foreign currency contracts (set up between subsidiaries and the

Group treasury department to cover their trade exposures) as well as
(b) Property, plant and equipment
Tangible assets consist mainly of furniture and expenses for setting up
external transactions with banks are accounted for by the Group
and remodeling the head office in Issy-les-Moulineaux. They are
treasury department. They are valued at market price at closing rate
amortized for the most part over nine years, the lease term for the
with gains and losses booked entirely in the statement of operations.
building, on a straight-line basis.
Forward foreign currency contracts used to hedge trade receivables and
trade payables in foreign currencies are valued at market price at the (c) Financial assets
closing rate with gains and losses booked entirely into the statement of This item includes shares of companies which operating businesses are
operations together with the result on the underlying hedged item. complementary to those off the Group and/or companies that the
Group intends to keep. They are valued at cost of acquisition. If that
Gains and losses on foreign exchange transactions are booked under
cost is higher than the useful value, an impairment charge is recorded to
“Other net financial gains/(losses)”.
reflect the difference. Provision for current accounts and loans are made
The Sauvegarde proceeding did not have a direct impact on the if the net financial position is negative. In addition, a provision for risk is
Group’s outstanding derivatives. However the 2009 events, including set aside for the surplus over the residual net negative balance. The
the Sauvegarde Plan, have impacted Group’s management of financial value in use is equivalent to the portion of equity represented by the
risks as the Group has had a more limited access to the shares. The equity value of companies consolidated under the
over-the-counter derivatives markets and is currently only able to Technicolor Group is equivalent to their consolidated shareholders'
execute operations on a short-term, cash collateralized basis. equity after potential adjustments.
Property and equipment Trade receivables and other operating assets

Since January 1, 2005, Technicolor has applied the rules and Trade receivables and other current operating assets are valued at
guidelines off the French Accounting organizations CRC and CNC historical cost. An impairment charge is recorded when recoverable
concerning recognition off assets, particularly CRC Rule No. 2002-10 value is lower than book value.
on amortization and depreciation off assets, recommending a
sum-of-the-parts approach, and CRC Rule No. 2004-06 on the Securities held for sale
definition, recognition and valuation of assets. Securities held for sale are valued at the lowest between purchase cost
and market value.
(a) Intangible assets
Intangible assets consist mainly of capitalized IT development projects,
the cost of software and use of patents.
Treasury shares
Treasury shares are recorded at purchase cost. An impairment charge is
recorded when the purchase cost is higher than the average stock price
for the last month of the financial period. Gains and losses on disposal
are booked under exceptional result.

Provisions (b) Post-employment obligations

Provisions are recorded at the balance sheet date when the Company Since January 1, 2005, the Company has applied recommendation No.
has an obligation as a result of a past event and when it is probable that 2003-R.01 dated April 1, 2003 concerning accounting rules and
an outflow of resources embodying economic benefits will be required valuation of post-employment retirement obligations and similar
to settle the obligation and a reliable estimate can be made of the benefits.
amount of the obligation.
The costs for employee retirement pensions at Technicolor are
The obligation may be legal, regulatory or contractual or it may accounted for progressively as employees acquire their rights to
represent a constructive obligation deriving from the Company's benefits. The valuation method applied takes into account future
actions where, by an established pattern of past practice, published changes in payroll obligations. Post-employment benefits are accounted
policies or a sufficiently specific current statement, the Company has for when rights to benefits are acquired and payment thereof becomes
indicated to other parties that it will accept certain responsibilities, and probable.
as a result, has created a valid expectation on the part of those other
Such payments and provisions are based on the estimated salaries and
parties that it will discharge those responsibilities.
seniorities of employees at their date of departure.
The recorded provision represents the best estimate of the expenditure
Actuarial assumptions are as follows:
required to settle the obligation at the closing date. If a reliable estimate
cannot be made of the amount of the obligation, no provision is discount rate: 2.8%;
recorded but details of the potential obligation are disclosed in the
notes to the financial statements. projected long-term inflation rate: 2%;
salary rate of increase: 3.5%.

(a) Restructuring provisions
Provisions for restructuring costs are recognized when the Company has The Company records its commitments for jubilee awards (médailles du
a constructive obligation towards third parties, which results from a travail)
l according to CNC bulletin ((Avis) No. 2004-05. These charges
decision made by the Company before the closing date and supported are recognized separately from retirement provisions and actuarial
by the following items: differences are booked immediately in the statement off operations.
The existence off a detailed and finalized plan identifying the sites
concerned, the location, the role and the approximate number of Income tax
headcounts concerned, the nature of the expenses that are to be Under French tax law, Technicolor SA is the head company off the tax
incurred and the effective date of the plan; and integration group consisting in 14 companies.
The announcement of this plan to those affected by it. Due mainly to the disposal off the Tubes activity in 2005, the Company
has tax losses to carry forward indefinitely, estimated at €2,404 million
The restructuring provision only includes the costs directly linked to the as of December 31, 2012.
plan. Restructuring costs encompass estimated shut-down costs, the
impact of shorter useful life for property and equipment and the costs
linked to employees’ lay-off.
Exceptional income (expense)
Exceptional items include income or charges off which the nature and
amount are not recurring or exceptional.
NOTE 3 REVENUES
France 51 58
E.U. (outside France) 7 4
Other countries 25 21
TOTAL REVENUES 83 83
Revenues consist mainly in intra-group re-invoicing (€79 million), royalties on trademarks (€2 million) and other external revenues
(€2 million).

NOTE 4 NET FINANCE EXPENSE

Depreciation on financial investments, treasury shares, current accounts and risk provisions regarding subsidiaries,
net of reversal(1) ((266)) (563)
Reversal of depreciation
p on financial investments, current accounts and provisions for risks regarding shares sold
or liquidated(2) 51 230
Dividends received(3) 332 277
Net losses on foreign exchange - (2)
Net interest expenses ((64)) (44)
Other expenses (11) (18)
Subtotal 42 (120)
Transferred to exceptional result(4) (44) (230)
TOTAL NET FINANCE EXPENSE (2) (350)
(1) In 2012, impairment on financial investments (see paragraph 8.a(4)) and current accounts mainly applies to the subsidiaries Technicolor USA, Inc. (€151 million of impairment on
shares and €16 million of impairment on current account) and Technicolor International SAS (€93 million of impairment on shares).
In 2011, impairment on financial investments and current accounts mainly applies to the subsidiaries Technicolor International SAS (€ 365 million of net impairment) and Technicolor
USA, Inc. (€178 million of impairment on financial investments).
(2) Include in 2012 the reversal of provisions on Japan subsidiary (now liquidated) and on some other disposal of affiliates of Technicolor SA within Technicolor group. Such reversal is
transferred to exceptional income (note 5) to match with the loss on disposal of the affiliates concerned.
(3) Mainly from Thomson Licensing SAS (€319 million and €269 million in 2012 and 2011, respectively).
(4) Corresponds to transfer of charges (i) on reversal of provisions on shares in subsidiaries sold or liquidated of €51 million, and (ii) on a net loss of €7 million on debt forgiveness (part of
Other expenses) regarding Thomson Angers subsidiary (see note 5).
NOTE 5 EXCEPTIONAL PROFIT (EXPENSE)

Capital gains/(losses) on disposals of intangible and financial assets(1) 2,165 (2)
Gains/(losses) on business disposals ((2)) 4
Costs of restructuring (accruals net of reversals and charges for the year) - (6)
Other net exceptional (charges)/income(2) (64) 1
TOTAL EXCEPTIONAL PROFIT (EXPENSE) 2,099 (3)
(1) Technicolor SA was the direct holding of Thomson Licensing SAS until December 21, 2012 when the subsidiary was disposed of at its fair value to Technicolor International SAS , a
100% subsidiary of Technicolor SA. Thomson Licensing SAS is the patents holder of the group and its fair value was appraised by an independent evaluator based on existing licensing
programs and forecast.
The large gain on disposal which amounted to €2,157 million is explained by the fact that Thomson Licensing SAS shares were in Technicolor SA books at their historical value and
have been sold for their fair value to Technicolor International SAS.
Include €51 million of provision reversal on affiliates disposed or liquidated mentioned in note 4 (which offset the loss on disposal or liquidation of the affiliates concerned).
(2) Including a fine of €38.6 million from the European Commission regarding Cathode Ray Tubes (see notes 1.2 and 19) and a net loss of €26 million regarding Thomson Angers
subsidiary in the process of being liquidated. The loss includes restructuring costs together with the financing of the subsidiary losses on the first semester of 2012.

NOTE 6 INCOME TAX
(a) Breakdown of booked income tax

Technicolor SA is the head company of the French tax consolidation. Therefore Technicolor SA is responsible vis-à-vis the French Tax
Authorities for all corporate income tax matters. Technicolor SA is allowed to collect from other members of the tax consolidation the amount
of corporate income tax they would have paid were they taxable separately on a standalone basis.

Current tax booked by French subsidiaries and passed on to the holding company(1) 74 62
Subsidiaries' research tax credit 20 25
Provision for tax-integrated companies in 2012(2) ((14)) (5)
Unused foreign tax credits for 2012 ((5)) (1)
Other(3) (19) (14)
TOTAL INCOME TAX 56 67
(1) Under French tax integration system, Technicolor owns a fiscal debt towards integrated French subsidiaries, in particular towards Thomson Licensing SAS (€62 million).
(2) Following December 2012 French Tax regulation, French Group can now only offset 50% of its taxable profit with its tax losses carried forward (instead of 60% in 2011).
In addition, the French tax regulation limits to 85% the deductibility of net interest expenses.
The provision for the income tax expense under tax integration for 2012 will be offset to the amount of €9 million against foreign tax credits in connection with Thomson
Licensing SAS.
(3) Corresponds mainly to research tax credit to repay to subsidiaries.
In December 2012, Technicolor SA paid an installment on income tax of €10 million.
In the absence of tax integration, the Company would show net income tax expense of €20 million.
(b) Variation of deferred or latent tax bases

Certain or potential tax items to carry forward are the following:
(in € millions) December 31, 2011 Variation December 31, 2012

non-deductible expenses
To be deducted the following year:
Paid vacations 4 - 4
Restructuring costs 5 2 7
Other 22 - 22
To be deducted at a later date:
Provisions for retirement 7 - 7
Provisions for subsidiary risks 5 (5) -
Impairment on current accounts 21 2 23
Other 59 2 61(1)
To be deducted
Tax losses carried forward 2,482 (78) 2,404
(1) including € 43 million related to depreciation on assets.

NOTE 7 PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS

(in € millions) Intangible assets Property and Equipment
Cost 24 15
Accumulated deprecation (14) (4)
AT DECEMBER 31, 2011, NET 10 11
2012
Opening net amount 10 11
Depreciation and amortization (1) (1)
Cost 22 15
Accumulated deprecation (13) (5)
NOTE 8 FINANCIAL ASSETS
(a) Variation of financial assets

(in € millions) Shares in subsidiaries Other financial assets(1) Total financial assets
Cost 7,467 183 7,650
Accumulated depreciation and impairment (6,684) (101) (6,785)
AT DECEMBER 31, 2011, NET 783 82 865
2012
Opening net amount 783 82 865
Acquisitions/recapitalizations 105(2) 18 123
Disposals (136)(3) (20) (156)
Reclassification - 168* 168
Impairment provisions (258)(4) (44) (302)
Reversals of impairment provisions 47(5) 1 48
At December 31, 2012, net 541 205 746
Cost 7,436 349 7,785
Accumulated depreciation and impairment (6,895) (144) (7,039)
AT DECEMBER 31, 2012, NET 541 205 746
* In 2012, two current loans of €168 million with affiliates Technicolor Videocassette Holdings (UK) and Technicolor Europe Ltd., were reclassified from caption “current accounts”
short-term to “others financial assets” long-term (See note 9).
(1) In 2012, includes €1 million of other shares held by the company, €198 million of borrowings (of which €33 million outside the Group), €6 million of collateral and guarantees
(see due dates for these receivables in note 8.b below).
(2) Corresponds mainly to recapitalizations of subsidiaries, notably Technicolor USA, Inc. (€105 million).
(3) Corresponds mainly to the disposal of Thomson Licensing SAS of which book value was €43 million, Immobilière Le Gallo SAS for €48 million, Technicolor R&D France SNC
for €15 million and to the liquidation of Thomson Japan Acquisition, Inc. for €27 million.
(4) In 2012, impairment on shares in subsidiaries concerns mainly the subsidiaries Technicolor USA, Inc. (€151 million) and Technicolor International SAS (€93 million).
(5) In 2012, reversals of impairment on financial investments concern mainly the subsidiaries Technicolor R&D France SNC (€15 million) and Thomson Japan Acquisition, Inc.
(€27 million) following their disposal and liquidation, respectively.

Accumulated impairment of Technicolor's treasury shares as of December 31, 2012 amounted to €97 million.
Accumulated impairment of current accounts and loans to subsidiaries amounted to €78 million as of December 31, 2012.
(b) Maturities of gross receivables included in other financial assets

(in € millions)
2013 1
2014 and later 250
TOTAL 251
Accumulated impairment of gross receivables amounted to €47 million as of December 31, 2012.
(c) Subsidiaries and investments at December 31, 2012

Equity before Gross advances,
(in € millions, except number allocation of Revenues loans and current
of shares) % stake Number of shares Gross value Net value results of the year Net income accounts
Holding companies
Technicolor USA, Inc. 100.00 1,005 3,700 - 29(2) 1,543 (158) 687
Technicolor
(2)
International SAS 100.00 87,041,097 3,015 472 427 2,198 280 2,745
Thomson Multimedia
Distribution
(Netherlands) BV 100.00 500 162 - (7) 55 5 20
Industrial companies
Thomson Angers SAS 100.00 4,630,001 289 - N/A(1) N/A(1) N/A(1) -
Thomson Television
España SAU 100.00 9,928,478 128 - (56) - - 56
Other companies
Technicolor Trademark
Management SAS 100.00 9,004,000 90 37 37 - 9 133
RCA Trademark
Management SAS 100.00 1,668,025 25 25 38 20 11 -
Thomson Investment
India Ltd. 51.00 51 4 2 2 - - -
TechFund Capital
Europe FCPR 20.00 500 3 3 4 - - -
Thomson Sales
Scandinavia AB 100.00 7,000 14 2 2 - 1 -
Miscellaneous N/A N/A 6 0 N/A N/A N/A N/A
TOTAL N/A N/A 7,436 541 N/A N/A N/A N/A
N/A: Not Applicable
When shares are those of a consolidated Technicolor sub-group, the figures correspond to those in the books of such sub-group.
(1) Thomson Angers is in the process of being liquidated.
(2) In 2011, a portion of goodwill and customer relationship (47M€) was reallocated from Technicolor USA, Inc. to Technicolor International SAS. In 2012 this presentation was no more
retained.
NOTE 9 CURRENT ASSETS reclassified from the “current accounts” caption (short-term) to “others
financial assets” (long-term) (see note 8).
Net current assets with maturities of less than one year amount to
€3,710 million.
Current assets are mainly related to current accounts of Group’s NOTE 10 PREPAYMENTS AND
subsidiaries. In 2012, current accounts increase of €2 billion due to the DEFERRED CHARGES
sale of Thomson Licensing SAS, which was settled by a current account
movement. In 2012 this caption comprises essentially prepaid charges on treasury
hedging instruments caps (see note 13) and expenses incurred for the
In 2012, two current loans of €168 million with affiliates Technicolor purpose of renegotiating some terms of the debt restructuring
Videocassette Holdings (UK) and Technicolor Europe Ltd., were agreement.

NOTE 11 ACCRUED INCOME

Loans 9 6
Accounts receivable (primarily with related entities) 7 6
Other operating receivables 31 31
TOTAL 47 43
NOTE 12 SHAREHOLDERS’ EQUITY AND EQUITY INSTRUMENTS
(a) Capital and additional paid in capital

On 31 December 2012, the capital of Technicolor SA was €335,543,841 (335,543,841 shares with a par value €1). Changes in capital and
additional paid in capital were as follows:
Additional paid-in
(in € other than for number of shares) Number of shares Nominal value Capital in euros capital in euros Total in euros
At January 1, 2011 174,846,625 1 174,846,625 748,690,889 923,537,514
Share capital increase after NRS I, II, IIC
redemption(1) 48,912,458 1 48,912,458 323,376,246 372,288,704
SHARE CAPITAL AND
ADDITIONAL PAID IN CAPITAL AS
OF DECEMBER 31, 2011 223,759,083 1 223,759,083 1,072,067,135 1,295,826,218
2012
Share reserved capital increase to Vector
Capital(2) 47,471,506 1 47,471,506 47,471,506 94,943,012
Share capital increase with preferential
subscription rights(2) 61,643,316 1 61,643,316 34,520,258 96,163,574
Fees regarding increases in capital above (10,103,209) (10,103,209)
Share capital increase after NRS II, IIC
redemption(3) 2,669,936 1 2,669,936 17,156,285 19,826,221
SHARE CAPITAL AND
ADDITIONAL PAID IN CAPITAL AS
OF DECEMBER 31, 2012 335,543,841 1 335,543,841 1,161,111,975 1,496,655,816
(1) In accordance with the Sauvegarde Plan, on May 26, 2010, the company issued Notes Redeemable in Shares (NRS) for a total of €638 million (NRS I, II and IIC). 313,890,656
NRS I and the accrued interest were redeemed into share capital on December 31, 2010. The NRS I, whose conversion had been postponed to December 31, 2011, the NRS II and
IIC, including accrued interest were redeemed into new shares leading to a capital increase of €49 million plus an additional paid in capital of €323 million, on December 31, 2011.
The redemption upon the request of their owners of 10,191,567 NRS II and 6,189,002 NRS IIC has been postponed to December 31, 2012.
(2) On June 20, 2012, Technicolor’s shareholders approved the resolutions relating to the transaction proposed by Vector Capital Corporation (“Vector Capital”) in its offer dated May
25 and amended on June 13. The transaction, agreed by the General Shareholders’ Meeting, took place in July and August 2012:
on July 16, 2012, the company issued 47,471,506 shares through a reserved capital increase to Vector TCH (Lux) 1, S.à.r.l (previously Petalite Investments S.à.r.l), an investment
vehicle controlled by Vector Capital, at a price of €2.00 per share, leading to a capital increase of €47.5 million plus an additional paid in capital of €47.5 million (see note 1.2).
on August 14, 2012, the company issued 61,643,316 shares in a capital increase with preferential subscription rights at a price of €1.56 per share, leading to a capital increase of
€62 million plus an additional paid in capital of €34 million (see note 1.2).
(3) On December 27, 2012, NRS II and IIC, whose conversion had been postponed to December 31, 2012, including accrued interest, were redeemed into new shares leading to a
capital increase of €3 million plus an additional paid in capital of €17 million (of which €3,4 million of interest).
(b) Treasury shares

2012 2011
Carrying amount (in euros)(1) 1,171,495 699,926
Number of treasury shares 605,687 605,687
Of which:
Allocated/sold in the year - (12,018)
(1) The gross value of treasury shares held at December 31, 2012 was €98,100,191, depreciated by €96,928,696.
Treasury shares are hold for the purpose of meeting the obligations under debt securities giving access to capital or stock option schemes or any
other form of allocation of shares to employees and Directors of the Company.

(c) Stock option plans rights under the plan shall vest either partially or in full for each
beneficiary in the proportions set by the Board off Directors.
In February 2011, the Board off Directors approved the principles of a
Long-Term Incentive Plan (LTIP) that has been implemented during Stock options will vest on the date the Board of Directors approves
the first semester of 2011. As part of this plan, free performance the accounts for the fiscal year ended December 31, 2012 (“the first
shares may be awarded in 2012, 2013 and 2014 to some senior vesting date”) and become exercisable as off June 17, 2014. The
executives subject to and proportionally to fulfillment of specified duration of the plan is eight years.
performance conditions based both on market performance criteria
and on Technicolor performance achieved respectively on December For French-tax domicile beneficiaries, free shares will be acquired on
31, 2011, 2012 and 2013 as approved by the Board of Directors. the date the Board off Directors approves the accounts for the fiscal
For free performance shares that would be awarded based on 2011 year ended December 31, 2012 (“the first vesting date”, estimated to
and 2012 performance, final vesting is still conditional to senior be in April 2013) and will be subject to additional two-years holding
executives staying in the company at least until June 8, 2013. period. For non-French tax domiciled beneficiaries, free shares will be
acquired and exercisable on June 17, 2014. Beneficiaries need to be
On June 17, 2010, the Board approved a Mid-term Incentive Plan continuously employed for the plan’s entire vesting period.
(MIP) granting non-market performance units made up of a
combination of cash and, depending on Management level, either As off December 31, 2012 the total number of outstanding stock
stock options or free shares. Subject to the presence condition and options amounted to a maximum off 1,576,446 options and
fulfillment of specified non-market performance conditions on 1,508,861 free shares granted to employees and Directors. The
December 31, 2012 as approved by the Board off Directors, the details of these options are disclosed hereafter.
Number of Number of Initial

options initially options number of Contractual Exercise
(2)
Type of plan Grant date granted outstanding beneficiaries Vesting date option life price(2)
50% as of Sept. 22, 2007
Plan 3 Subscription options Sept. 22, 2004 736,659 319,396 574 50% as of Sept. 22, 2008 10 years € 131.38
April 19, 50% as of April 19, 2008
Plan 4 Purchase options 2005 71,940 35,796 93 50% as of April 19, 2009 10 years € 170.99
50% as of Dec. 8, 2008
Plan 5 Purchase options Dec. 8, 2005 199,317 55,313 390 50% as of Dec. 8, 2009 10 years € 145.60
50% as of Sept. 21, 2008
Plan 6 Subscription options Sept. 21, 2006 273,974 87,711 485 50% as of Sept. 21, 2009 8 years €102.53
50% as of Dec. 14, 2009
Plan 7 Subscription options Dec. 14, 2007 130,710 61,086 482 50% as of Dec. 14, 2010 8 years €85.64
MIP* Free Shares June 17, 2014 for other
Free Share (existing shares) June 17, 2010 492,020(1) 297,620 64 countries - -
MIP* June 17, 2014 for other
Options Subscription options June 17, 2010 1,216,700(1) 1,017,144 18 countries 8 years € 6.52
Free Shares April 28, 2011
LTIP (existing shares or and June 30, June 2013 (50%)
Free Share shares to be created) 2011 1,637,152(1) 1,211,241 63 and March 2014 (50%) - -
* Management Incentive Plan (MIP) see description above.
(1) Maximum potential number.
(2) Exercise prices and number of options were modified following the 2012 capital increases.

The exercise prices of the various plans were set without the application the payment of the coupon is subordinated to certain conditions such
off a discount, and calculated on the basis of the average share price on as the distribution off a dividend to shareholders or the repurchase or
the 20 trading days preceding the Board of Directors’ meeting, except cancellation of treasury shares in the six months preceding the issue
for the MIP (the exercise price was set at €6.52 after 2012 anniversary date. As a result, in accordance with French accounting
adjustments). principles, these notes are classified under the heading “Other
Shareholders’ Equity” in the balance sheet.
In accordance with Article L. 225-184 of the French Commercial
Code, no option has been exercised at December 31, 2012. The notes carry an optional annual coupon off 5.75% up to the tenth
year, then will switch to a rate of 3-month EURIBOR +3.625%
(d) Other Equity thereafter. Interest payments not made on the payment date are
definitively lost to the investor.
Deeply subordinated perpetual notes –
TSS (Titres Super Subordonnés) These notes were included in the debt restructuring process. In 2010,
On September 26, 2005, Technicolor issued deeply subordinated the payment of the interest claims off the TSS holders against the
perpetual notes in a nominal amount off €500 million. The Company in cash for an amount of €25 million definitely extinguished
characteristics of these notes are as follows: these interest claims.
the notes are not repayable other than at Technicolor’s initiative from
September 2015 or as the result of specific contractually defined NRS (Notes Redeemable in Shares)
events; On May 26, 2010, €638 million of NRS were issued by way of set-off
debts of senior creditors. The number of NRS issued and redeemed was
as follows:
NRS I NRS II NRS IIC

maturity maturity maturity
12/31/2010 12/31/2011(1) 12/31/2011(1) Total NRS
Number of bonds issued on May 26, 2010 319,218,837 200,069,100 119,150,196 638,438,133
NRS I redeemed by issued shares on December 31, 2010 (313,890,656) - - (313,890,656)
TOTAL NRS ON DECEMBER 31, 2010 5,328,181 200,069,100 119,150,196 324,547, 477
NRS I, II, and IIC redeemed by issued shares on December 30, 2011 (5,328,181) (189,877,533) (112,961,194) (308,166,908)
TOTAL NRS ON DECEMBER 31, 2011 - 10,191,567 6,189,002 16,380,569
NRS II, and IIC redeemed by issued shares on December 27, 2012 - (10,191,567) (6,189,002) (16,380,569)
TOTAL NRS ON DECEMBER 31, 2012 - - - -
(1) NRS II and NRS IIC holders could defer the redemption until December 31, 2012.
At December 27, 2012, NRS II and IIC submitted for redemption were (f) Loss of half of the share capital
repaid through an increase in shareholders’ equity for €3 million and an
As of December 31, 2012 shareholders’ equity is positive and amounts
issue premium of €17 million. These NRS gave the right to 0.163 share
to €1,522 million, prior to the €500 million TSS.
in repayment of capital and payment of interests on capital (coupon of
10%). Due to the accumulated losses, Technicolor SA’s shareholders’ equity
was negative from December 2008 to December 2011. As
(e) Dividends and other distributions Technicolor SA is under a Sauvegarde Plan, Article L225-48 of the
French Commercial Code (rules for Limited Liability company in case
The Board of Directors has decided not to propose the payment of a
of loss in excess of half of the share capital) is not applicable to
dividend. Under the internal rules of the Board adopted in connection
Technicolor SA until the end of the plan which will end on February 17,
with the Sauvegarde Plan, any decision to propose a dividend needs to
2017(Article L. 225-248 al.5 of the French Commercial Code).
be approved by at least a two-thirds majority of the Board of Directors.

NOTE 13 FINANCIAL DEBTS

Financial debts are set out below:
2012
Borrowings (see details below) 1,215
Other debt(1) 11
TOTAL 1,226
(1) Interest rate and maturity are not yet defined for this debt.
(a) Borrowings
Currency Amount(1) (in € millions) Type of rate Nominal rate Average
USD 346 Fixed 9.35%
USD 283 Floating(3) 7.73%(2)
GBP 18 Fixed 9.55%
EUR 460 Floating(3) 7.73%(2)
EUR 108 Fixed 9.00%
TOTAL 1,215
(1) Nominal values, accrued interest included.
(2) Rate at December 31, 2012.
(3) 3-month EURIBOR/LIBOR with a floor of 2% and an average margin of 5.73%. The margin steps down if certain leverage ratios are hit.
(b) Main features of Technicolor SA’s debt

By maturity
Current debt (under one year)
Fixed-term borrowing 31 38
Bonds 49 25
Other debt to subsidiaries 838 973
Other debt to third parties 29 11
Sub-total current debt 947 1,047
Non-current debt (more than one year)
Fixed-term borrowing 441 857
Bonds 693 548
Other debt to subsidiaries 180 158
Sub-total non-current debt 1,314 1,563
TOTAL DEBT 2,261 2,610
of EBITDA on a trailing twelve month basis (“leverage covenant”) on

Financial covenants and other limitations June 30 and December 31 of each financial year, and (iii) that the
The fixed-term loans and new bonds contain financial covenants
Group’s total capital expenditure shall not be more than a certain
requiring that (i) the Group’s EBITDA(1) shall not be smaller than a
amount in each financial year. These financial covenants become more
given multiple of net total interest of the Group on a twelve-month
restrictive each year.
basis on June 30 and December 31 of each financial year (the “interest
cover covenant”), (ii) total net debt is not more than a certain multiple At December 31, 2012, Technicolor met all its covenants.
(1) EBITDA is contractually defined and includes a certain number of adjustments.

(c) Details of Technicolor SA’s Reinstated Debt

At December 31, 2012 the Reinstated Debt was as follows:
Amount in local Amount

(in € millions) currency Currency in euros(1) Interest rate type Interest rate Maturity
Bonds 332 USD 252 Fixed 9.35% 2017
Bonds 11 GBP 13 Fixed 9.55% 2017
Bonds 79 EUR 79 Fixed 9.00% 2017
Fixed-term loan 335 EUR 335 Floating EURIBOR +600bp(2) 2017
Fixed-term loan 272 USD 206 Floating LIBOR +600bp(2) 2017
Bonds 124 USD 94 Fixed 9.35% 2016
Bonds 4 GBP 5 Fixed 9.55% 2016
Bonds 29 EUR 29 Fixed 9.00% 2016
Fixed-term loan 125 EUR 125 Floating EURIBOR +500bp(2) 2016
Fixed-term loan 102 USD 77 Floating LIBOR +500bp(2) 2016
TOTAL N/A N/A 1,215 N/A N/A N/A
(1) Exchange rate as of December 31, 2012.
(2) This margin steps down if certain leverage ratios are hit, the EURIBOR and LIBOR rates used are subject to a minimum level of 2%.
Maturity of Reinstated Debt

Within one year 91
1 to 2 years 95
2 to 3 years 103
3 to 4 years 53
4 to 5 years 884
More than 5 years -
TOTAL DEBT 1,226
Analysis of Reinstated Debt by currency

Euro 575
U.S. dollar 633
Other currencies 18
TOTAL 1,226
(d) Interest rate caps

In April 2010, in anticipation of the finalization of the Reinstated Debt, rate, the bank counterparty will pay Technicolor the difference between
Technicolor purchased interest rate caps with a nominal value of the market interest rate and exercise rate of 3%. The caps mature in
$480 million and €270 million to protect the Group if 3-month 2014. The fair value of these caps at December 31, 2012 was almost
LIBOR or EURIBOR exceeds 3%. If the reference rates exceed this cap nil.

NOTE 14 PROVISIONS FOR LOSSES AND CONTINGENCIES

Usage during the Reversals and
(in € millions) As of December 31, 2011 Increases period reclassifications As of December 31, 2012
Provisions for retirement benefit 7 1 - (1) 7
Other provisions for contingencies
Subsidiaries and other risks 5 - - (5) -
Restructuring measures relating to
employees 5 14 (12) - 7
Related to activities disposed of (1) 76 1 (3) (44)(2) 30
Other 2 3 - (1) 4
Sub-total 88 18 (15) (50) 41
TOTAL PROVISIONS FOR LOSSES
AND CONTINGENCIES 95 19 (15) (51) 48
(1) Provision relating to the disposal of businesses, especially the Tubes activity.
(2) Reclassification of a provision for contingencies as a depreciation of other financial assets for €41millions.
NOTE 15 CURRENT LIABILITIES

“Current liabilities” mainly consist of debts with a maturity of less than one year (notably tax and social security liabilities, trade payables and a
fine from the European Commission regarding Cathode Ray Tubes industry for €38.6 million, (see note 19). There are also in this caption,
debts to subsidiaries regarding the disposal of Grass Valley business with a maturity date to December 30, 2016 (€59 million).
Trade payables split by payment terms are as follows:
Overdue
Not falling Overdue Overdue Overdue above
As of December 31, 2012 (in € millions) due 0 to 30 days 30 to 60 days 60 to 90 days 90 days Total
impacted by the Sauvegarde proceeding - - - - 0.5 0.5
Of which French suppliers - - - - 0.5 0.5
Invoices not impacted by the Sauvegarde proceeding
(including provisions) 9.6 6.7 1.8 0.5 1.2 19.8
Of which French suppliers 8.3 1.7 1.5 0.3 0.8 12.6
Of which Foreign suppliers 1.3 5.0 0.3 0.2 0.4 7.2
TOTAL(1) 9.6 6.7 1.8 0.5 1.7 20.3
Overdue
Overdue Overdue Overdue above
As of December 31, 2011 (in € millions) Not falling due 0 to 30 days 30 to 60 days 60 to 90 days 90 days Total
Invoices impacted by the Sauvegarde proceeding - - - - 0.5 0.5
Of which French suppliers - - - - 0.5 0.5
Invoices not impacted by the Sauvegarde proceeding
(including provisions) 12.1 3.8 1.6 0.2 0.5 18.2
Of which French suppliers 9.6 2.1 1.4 0.2 0.5 13.8
Of which Foreign suppliers 2.5 1.7 0.2 - - 4.4
TOTAL(1) 12.1 3.8 1.6 0.2 1 18.7
(1) Excluding fixed assets payables.
In 2012, the average number of days for the payment of suppliers is 64 days.

NOTE 16 ACCRUED CHARGES

Bond loans and loans from private institutions 1 1
Trade payables 7 7
Tax and social security liabilities 29 29
Other debts 24 17
TOTAL 61 54
NOTE 17 INFORMATION ON AVERAGE NUMBER OF EMPLOYEES

2012 2011
Engineers and managers 309 333
Employees and supervisory staff 79 88
TOTAL 388 421
NOTE 18 CONTRACTUAL OBLIGATIONS AND OTHER OFF-BALANCE

COMMITMENTS
(a) Off balance-sheet contractual obligations and commercial commitments

Unconditional future payments
Operating Leases 59 67
Other unconditional future payments 1 1
TOTAL UNCONDITIONAL FUTURE PAYMENTS 60 68
Conditional future payments
Guarantees given regarding undertakings by related entities 167 106
Other conditional future payments 4 3
TOTAL CONDITIONAL FUTURE PAYMENTS 171 109
Technicolor would be liable for 50% of any depollution costs of performance guarantees have been made to Warner, Anglia TV,
Thomson Angers factory site, should it be imposed by a public authority Verizon Group, BSkyB and AstroGroup.
or a Court decision, until the property is sold.
Technicolor’s liabilities to its employees relating to Individual Training
As part of its business activities, Technicolor may issue performance Rights were considered as non-significant on December 31, 2012.
guarantees for its subsidiaries as well as comfort letters. The main
(b) Commitments relating to financial instruments

(€ in millions) December 31, 2012 December 31, 2011
Cap(1) 634 641
Currency futures (banks and subsidiaries) 1,197 669
TOTAL UNDERTAKINGS GIVEN 1,831 1,310
Cap(1) 634 641
Currency futures (banks and subsidiaries) 1,200 673
TOTAL UNDERTAKINGS RECEIVED 1,834 1,314
(1) See note 13 on interest rate caps.
(c) Guarantees granted by subsidiaries and intra-group loans and pledges of material cash-pooling accounts was
security interests granted to secure the put in place to secure the obligations of the borrower’s and each
Reinstated Debt guarantor’s obligations under the Credit Agreement and Note Purchase
Agreement. These assets will remain pledged until the final payment of
A security package consisting of share pledges, pledges of certain
all the amounts due by the Group to its creditors.
receivables under material customer contracts, pledges of material

To secure its obligations under the Reinstated Debt, certain subsidiaries NOTE 19 CONTINGENCIES
off the Company have agreed, severally and not jointly, irrevocably and
unconditionally to guarantee the Company’s and each other guarantor’s
Banco Finantia case
obligations off payment and performance under the Reinstated Debt. All
In the course off the Sauvegarde proceeding, the Mandataires Judiciaires
material group Members as defined in the Credit Agreement are
in charge of Technicolor’s Sauvegarde contested the claim in an amount
required to provide such guarantee. In addition, the guarantor coverage
off €9.9 million off Banco Finantia, a Portuguese bank, due to a
must represent at least 90% off Covenant Group EBITDA and/or 70%
declaration outside of the legal time limit. Banco Finantia had acquired
off consolidated assets and/or 50% of consolidated revenues.
such claim from the French branch of Bank of America, which held the
New material group Members and additional guarantors must accede as claim at the opening of the Sauvegarde proceeding, and which did not
guarantors in order to maintain the guarantor coverage on the basis of declare the claim prior to the transfer to Banco Finantia. Banco Finantia
the annual audited accounts for the year ended December 31, 2010 declared its claim on the last day of the 4-month deadline applicable to
and each financial year-end thereafter. foreign creditors under Article R. 622-24 of the French Commercial
Code. The Company and its Mandataires Judiciaires consider that, as
As off the closing date of the Reinstated Debt, the guarantors under the this claim was held by a French creditor on the date the Sauvegarde
Credit Agreement and the Note Purchase Agreement comprised 18 proceeding was opened (the French branch of Bank of America), it
entities mainly located in UK, France and USA. In 2011, 8 additional should have been declared within the two-month deadline applicable to
subsidiaries have granted guarantees to secure the Reinstated Debt. French creditors rather than the four-month deadline applicable to
foreign creditors.
Shares of subsidiaries pledged
Technicolor SA and the main guarantors, which include Technicolor On February 22, 2011, the Juge-Commissaire rendered a decision in
International SAS (formerly Thomson Multimedia Sales International favor off Banco Finantia, holding that Banco Finantia benefited from the
SAS), Technicolor Delivery Technologies SAS, Technicolor Inc. and four-month deadline for the purposes off filing a claim. The Company
Technicolor USA, Inc. (formerly Thomson Inc.) have pledged the has appealed against this decision.
shares of 38 off their subsidiaries to secure part of the Reinstated Debt.
On May 10, 2012, the Versailles Court of Appeals rejected the
Company’s claims. The Company lodged an appeal with the French
Receivables from material contracts pledged
Supreme Court (Cour de cassation) on June 29, 2012.
Receivables of Thomson Licensing SAS were pledged under a Patent
Licensing Agreement dated December 23, 2009 with Koninklijke
Philips Electronics N.V.. France VAT audit
French Tax Authorities audited Technicolor SA for the fiscal year
Cash pooling accounts pledged 2009 and issued, at the end of 2012, an assessment amounting
Pursuant to six different Cash Pooling Pledge Agreements, the cash €5.6 million. An amount off €1.6 million concerns VAT which was
pooling accounts of Technicolor SA and Technicolor USA, Inc. were wrongly charged by a former subsidiary which was collecting a subsidy
pledged. The Cash Pooling Agreements relate to the domestic and from Technicolor, as per a 2009 Share Sale Agreement. Technicolor
international centralization off Group Treasury, a bilateral target will ask the former subsidiary to recover that VAT. An amount of
balancing agreement, an automatic dollar transfer agreement, a North €3.7 million concerns the VAT recoverability of the holding company,
American target balancing agreement for multiple legal entities and a which Technicolor will vigorously contest.
domestic UK cash concentration daily sweep arrangement.
Cathode Ray Tubes (“CRT”) Investigations
Intragroup loans pledged
On November 28, 2007, Technicolor USA, Inc. (US) (formerly
Pursuant to an Intragroup Loans Receivables Pledge Agreement,
Thomson, Inc.) received a subpoena issued on behalf of the Antitrust
Intragroup loans receivables were pledged from Technicolor Trademark
Division of the U.S. Department of Justice (“DOJ”) investigating
Management, Technicolor Europe Ltd., Technicolor Videocassette
alleged anticompetitive conduct in the Cathode Ray Tubes (“CRT”)
Holdings (UK) Limited and Technicolor Entertainment Services Spain,
industry, including Color Picture Tubes (“CPT”) and Color Display
SA.
Tubes (“CDT”) businesses. Technicolor sold its CPT business in 2005
and never had activity in the CDT business.
In addition, class action law suits asserting private antitrust claims were
filed in early 2008 in the United States (one group brought by indirect
purchasers and one group brought by direct purchasers) that originally
named Technicolor (Thomson at the time off the alleged acts) and
others as defendants, although Technicolor was dropped as a named

defendant when amended complaints were filed in the spring of 2009. In parallel, on April 29, 2010 Technicolor’s Brazilian affiliate received
In November 2011, Technicolor USA and Technicolor SA executed notice from the Brazilian Ministry of Justice indicating Brazilian
tolling agreements with the indirect purchaser plaintiffs and the direct authorities are initiating an investigation of possible cartel activity within
purchaser plaintiffs tolling the statute of limitations to bring actions the CRT industry in Brazil.
against Technicolor. In August 2012, the indirect purchaser plaintiffs
moved the Court to join Technicolor SA and Technicolor USA to the On September 10, 2012, Technicolor SA received notice from the
pending class action. In October 2012, Technicolor SA, Technicolor Mexican Federal Competition Commission indicating Mexican
USA, and the indirect purchaser plaintiffs executed an amendment to authorities had completed an investigation of possible cartel activity
the tolling agreement which extended the original tolling agreement, within the CRT industry in Mexico and on December 3, 2012,
prohibited indirect purchaser plaintiffs from bringing Technicolor into Technicolor SA has provided a response and evidence responding to
the present class action, and required Technicolor to provide certain the allegations.
sales documents.
On January 9, 2008, Technicolor received a request under Art. 18 (2) NOTE 20 MANAGEMENT
off Council Regulation n°1/2003 from the European Commission (the
COMPENSATION
“EC”) also relating to anti-competitive conduct in the CRT industry
from 1999 to 2005. On November 25, 2009, Technicolor received a Total compensation paid to Board Members of the Company for the
Statement of Objections (“SO”) from the European Commission. On 2012 financial year amounted to €655,270. The amounts due to
March 3, 2010, Technicolor filed its written response to the “SO”. On non-resident for French tax purposes are subject to a withholding tax.
December 5, 2012, Technicolor was notified by the European
Compensation expenses paid to CEO of Technicolor SA amount to
Commission of its decision to impose a fine of €38.6 million to
€1.25 million in 2012.
Technicolor. This amount is classified in exceptional result caption of
the statements of operations of Technicolor SA as it relates to a The Company has no specific retirement benefits program for its
business discontinued by the Group in 2005. Directors.
Following the European Commission decision, purchasers may bring
individual claims against the Company seeking compensation for
alleged loss suffered as a result of the anti-competitive conduct.
NOTE 21 RELATED PARTY TRANSACTIONS

Related party transactions are transactions with companies which are in the consolidation scope of Technicolor Group.
The main related party transactions and the amounts due to these companies are as follows:

Shares in subsidiaries net of provisions 541 778
Trade receivables 33 44
Other receivables 3,600(1) 1,436
Financial debt 1,035 1,130
Other debts 66 62
Financial income 443 455
Financial expense 60 58
(1) Technicolor International SAS financed the acquisition of Thomson Licensing SAS through the current account with Technicolor SA.

NOTE 22 FEES PAID TO STATUTORY AUDITORS

Mazars Deloitte KPMG
(in € millions) 2012 2011 2012 2011 2012 2011
Audit services(1) 1 1 1 - - 1
Other services relating to the audit function(2) - - - - - -
TOTAL 1 1 1 - - 1
(1) Audit services include all services charged by the Statutory Auditors in completion of their audit of annual consolidated financial statements and the services provided by the Statutory
Auditors in meeting the Group’s legal and regulatory requirements, including the review of interim financial statements and the audit of the Company’s financial statements.
(2) Other services relating to the audit function include, for example, consultation on the accounting standards to be used in the distribution of financial information and due diligence
processes conducted as part of acquisitions.
NOTE 23 SUBSEQUENT EVENTS

No significant event occurred between December 31, 2012 and February 21, 2013.

Parent company financial data over the five last years
8.6 PARENT COMPANY FINANCIAL DATA OVER

THE FIVE LAST YEARS (UNDER ARTICLES
R. 225-81 AND R. 225-102 OF THE FRENCH
COMMERCIAL CODE)
TYPE OF INFORMATION
(in € millions, except number of shares, earning per share
and number of employees) 2012 2011 2010 2009 2008
I - FINANCIAL POSITION AT YEAR END
a) Share capital 336 224 175 1,012 1,012
b) Number of shares issued 335,543,841 223,759,083 174,846,625 269,890,028 269,890 028
c) Maximum number of shares to issue in the future:
Share-based payment 1,485,337 1,494,156(1) 1,911,757(1) 7,389,930 9,544,340
Free shares 1,211,241 1,494,270(1) 431,100(1) 174,460 368,000
Notes Redeemable in Shares (NRS) - 2,604,511 51,523,126 - -
II - STATEMENTS OF OPERATIONS
a) Revenues (excluding VAT) 83 83 98 114 146
b) Profit (Loss) before tax, amortization and provisions 2,260 (52) (265) 152 240
c) Income tax profit 56 67 66 53 45
d) Profit (Loss) after tax, amortization and provisions 2,104 (338) (500) (572) (2,327)
e) Dividend paid and distributions - - - - -
III - EARNING (LOSS) PER SHARE*(2) (3)
a) Profit (Loss) after tax, but before amortization and provisions 8.60 0.09 (0.79) 0.76 1.05
b) Profit (Loss) after tax, amortization and provisions 7.81 (1.93) (1.97) (2.12) (8.62)
c) Dividend paid and distributions - - - - -
IV - EMPLOYEES
a) Average number of employees 388 421 483 542 630
b) Wages and salaries 39 41 52 54 71
c) Social security costs 19 17 23 21 24
* Changes in the number of shares in capital during 2012:
As of January 01, 2012 223,759,083 shares
Increase in capital on July 16, 2012 47,471,506 shares
Increase in capital on August 14, 2012 61,643,316 shares
NRS redemption on December 27, 2012 2,669,936 shares
As of December 31, 2012 335,543,841 shares
The average number of shares in capital during the year 2012 was 269,294,871.
(1) Previous years statements showed a line named "Retention Plan" which has been incorporated into two lines "Share-based payment" and "Free Share" in 2012 presentation.
The line "Retention Plan" for the year 2010 showed a number of shared to issue of 1,560,890 split on line "Share-based payment" for 1,144,490 and "Free share" for 416,400.
The line "Retention Plan" for the year 2011 showed a number of shared to issue of 2,499,000 split on line "Share-based payment" for 1,004,730 and "Free share" for 1,494,270
(2) Before reverse share split for years 2008 and 2009
(3) 2012 "earning (loss) per share" are calculated per reference to the average number of share during the year.
Previous years statements showed an "earning (loss) per share" calculated per reference to the number of share as of December 31.
Profit (loss) after tax, but before amortization and provisions for the years 2010 and 2011 were respectively (1.14)€ and 0.07€.
Profit (loss) after tax, amortization and provisions for the years 2010 and 2011 were respectively (2.86)€ and (1.51)€.
"Eearning (loss) per share" for years 2008 and 2009 do not differ under the two methods of calculation.

Statutory Auditors' report on the financial statements for the year ended December 31, 2012
8.7 STATUTORY AUDITORS’ REPORT ON THE

ENDED DECEMBER 31, 2012
This is a free translation into English of the Statutory Auditors’ report on the financial statements issued in French and it is provided solely for the
convenience of English speaking users.
The Statutory Auditors’ report includes information specifically required by French law in such reports. This information presented below is the audit
opinion on the financial statements and includes an explanatory paragraph discussing the auditors’ assessments of certain significant accounting and
auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the financial statements taken as a whole and not to
provide separate assurance on individual account balances, transactions, or disclosures.
This report also includes information relating to the specific verification of information given in the management report and in the documents addressed
to shareholders.
This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
In compliance with the assignment entrusted to us by your Annual General Shareholders’ meetings, we hereby report to you, for the year ended
December 31,2012, on:
the audit off the accompanying financial statements of Technicolor SA;
the justifications of our assessments;
the specific verifications and information required by law.
These financial statements have been approved by your Board of Directors. Our role is to express an opinion on these financial statements
based on our audit.
I. OPINION ON THE FINANCIAL STATEMENTS
We conducted our audit in accordance with professional standards applicable in France; those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing
procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the
financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made, as well as the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as at
December 31, 2012 and of the results of its operations for the year then ended in accordance with French accounting principles.
Without qualifying our opinion, we draw your attention to note 2 to the financial statements which describes the reasons for applying the going
concern assumption to approve the financial statements.

Statutory Auditors' report on the financial statements for the year ended December 31, 2012
II. JUSTIFICATION OF OUR ASSESSMENTS

In accordance with the requirements of article L. 823-9 of the French Commercial Code (Code de commerce) relating to the justification of our
assessments, we bring to your attention the following matters :
On the basis of our work performed and based on information obtained to date, and in the context off our assessment of the adequacy off the
accounting policies used by your Company, we believe that note 2 to the financial statements discloses, in particular, the appropriate information
on the Company’s situation in relation to the going concern assumption applied to approve the financial statements.
Moreover, we have assessed that amongst the accounts, which are subject to significant estimates and likely to have a justification off our
assessment, there are the financial assets and the provisions for losses and contingencies:
In relation to financial assets, for which valuation method is described in note 2 to the financial statements, we have assessed the information and
assumptions used as the basis for the estimates retained to determine the value in use, reviewed the calculations performed by the Company
and reviewed the procedures used by the management to approve these estimates.
Regarding provisions for losses and contingencies described in note 14 to the financial statements, we have reviewed the procedures used by
the Company to identify them and assessed the assumptions retained to evaluate them. We have also ensured that the uncertainties identified
while performing these procedures were adequately disclosed in note 19 to the financial statements.
These assessments were made as part of our audit of the financial statements taken as a whole, and therefore contributed to the opinion we
formed which is expressed in the first part of this report.
III. SPECIFIC VERIFICATIONS AND INFORMATION

We have also performed, in accordance with professional standards applicable in France, the specific verifications required by French law.
We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the
management report of the Board of Directors, and in the documents addressed to shareholders with respect to the financial position and the
financial statements.
Concerning the information given in accordance with the requirements of article L. 225-102-1 of the French Commercial Code (Code de
commerce) relating to remunerations and benefits received by the directors and any other commitments made in their favour, we have verified
its consistency with the financial statements, or with the underlying information used to prepare these financial statements and, where applicable,
with the information obtained by your Company from companies controlling your Company or controlled by it. Based on this work, we attest
the accuracy and fair presentation of this information.
In accordance with French law, we have verified that the required information concerning the identity of the shareholders and holders of the
voting rights has been properly disclosed in the management report.


Statutory auditors' special report on regulated agreements and commitments
8.8 STATUTORY AUDITORS’ SPECIAL REPORT

ON REGULATED AGREEMENTS AND
COMMITMENTS – GENERAL MEETING OF
SHAREHOLDERS HELD TO APPROVE THE
ENDED DECECEMBER 31, 2012
This is a free translation into English of the Statutory Auditors’ special report on regulated agreements and commitments that is issued in the French language and
provided solely for the convenience of English-speaking readers.
This report should be read in conjunction with, and construed in accordance with French law and professional auditing standards applicable in France. It should be
understood that the agreements and commitments reported on are only those provided for by the French Commercial Code and that the report does not apply to
those related-party transactions described in IAS 24 or other equivalent accounting standards.
In our capacity as Statutory Auditors of your Company, we hereby report on the regulated agreements and commitments.
We are required to inform you, based on information provided to us, of the principal terms and conditions of those agreements and commitments brought
to our attention or which we may have discovered during the course of our audit, without expressing an opinion on their usefulness and appropriateness nor
ascertaining whether any other agreements and commitments exist. It is your responsibility, pursuant to article R. 225-31 of the French Commercial Code
(Code de commerce), to assess the benefits resulting from the conclusion of these agreements and commitments prior to their approval.
Moreover, it is our responsibility, if any, to give you the information specified in article R. 225-31 of the French Commercial Code (Code de commerce)
relating to the implementation, during the past year, of agreements and commitments that have already been approved by previous shareholders’ meetings.
We conducted the procedures we deemed necessary in accordance with the professional guidelines of the French National Institute of Statutory
Auditors (Compagnie Nationale des Commissaires aux comptes) relating to this engagement. These procedures consisted in agreeing the
information provided to us with the relevant source documents.
AGREEMENTS AND COMMITMENTS SUBMITTED TO THE APPROVAL OF

THE SHAREHOLDERS’ MEETING
Agreements and commitments authorized during the year
Pursuant to Article L225-40 of the French Commercial Code, the following agreements and commitments, which were previously authorized by the
Board of Directors, have been brought to our attention.
An amendment to the governance agreement that was concluded on July 10, 2012 between your Company and Vector Capital IVL.P., Vector
Entrepreneur Fund III L.P.,and Vector Capital Corporation (hereafter « Vector Capital ») was authorized by your Board of Directors on December 19th,
2012. This amendment, which was signed on December 20, 2012 allows for the appointment of a new member of the audit committee on the proposal
of Vector Capital. This amendment also stipulates the consequences on the composition of the Board of Director’s Committees of a reduction of the
participation of Vector Capital in your Company’s share capital.
This agreement did not have any impact on the Company’s financial statements for the year ended December 31, 2012. It has been approved by your
Board of Directors as Vector Capital holds more than 10% of your Company’s shares through the investment vehicle Vector TCH (Lux) 1 (formerly
Petalite Investments S.à.r.l).
AGREEMENTS AND COMMITMENTS ALREADY AUTHORIZED IN PREVIOUS

FISCAL YEARS
We inform you that we have not been advised of any agreement nor commitment previously approved by the Shareholders' Meeting which remained in
force during the fiscal year.

9 REGISTRATION DOCUMENT
CROSS REFERENCE TABLE
Under Article 28 off European Commission regulation (EC) The annual accounts off the Company for the year 2010 and the
809/2004, the following information is incorporated by reference in Statutory Auditors' reports on the annual accounts are contained in
the Regulation Document: the chapter 9: «Financial Statements» of the Registration Document
off the year 2010 (pages 265 to 292).
The consolidated financial statements of the year 2011 and the
Statutory Auditors' reports on the consolidated financial statements The Registration Document of the year 2010 was filed with the
are contained in the chapter 8: «Financial Statements» of the Autorité des marchés financiers on March 27, 2012 under No.
Registration Document of the year 2011 (pages 134 to 232); and D.12-0224.
The consolidated financial statements of the year 2010 and the The Registration Document of the year 2010 was filed with the
Statutory Auditors' reports on the consolidated financial statements Autorité des marchés financiers on March 30, 2011 under No.
are contained in the chapter 9: «Financial Statements» of the D.11-0196.
Registration Document of the year 2010 (pages 158 to 263); and
To facilitate the reading of the Annual Report, the cross reference
The annual accounts off the Company for the year 2011 and the tables below refer to the main headings required by Annex 1 of
Statutory Auditors' reports on the annual accounts are contained in European Commission Regulation 809/2004 implementing the
the chapter 8: «Financial Statements» off the Registration Document “Prospectus” Directive as well as the elements of the Management
off the year 2011 (pages 233 to 259); and Report adopted by the Board of Directors.
CROSS REFERENCE TABLE REFERRING TO THE MAIN HEADINGS

REQUIRED BY ANNEX 1 OF EUROPEAN COMMISSION REGULATION
809/2004
Corresponding sections and
Information required under Appendix 1 of regulation (EC) 809/2004 chapters of the Annual Report Page No.
1. PERSON RESPONSIBLE
1.1 Names and positions of the persons responsible for the information Chapter 7, section 7.9.2 136
1.2 Declaration by the persons responsible Chapter 7, section 7.9.1 136
2. STATUTORY AUDITORS
2.1 Name and address Chapter 7, sections 7.7.1 and 7.7.2 134 ;135
2.2 Resignation or departure of Statutory Auditors N/A
3. SELECTED FINANCIAL INFORMATION
3.1 Historical financial information Chapter 1, section 1.1 6
3.2 Interim financial information N/A
4. RISK FACTORS Chapter 3 45
5. INFORMATION ABOUT THE ISSUER
5.1 History and development of the Company
5.1.1 Legal and business name Chapter 1, section 1.2.1 8
5.1.2 Place of registration and registration number Chapter 1, section 1.2.1 8
5.1.3 Incorporation date of an issuer’s length of life Chapter 1, section 1.2.1 8
5.1.4 Domicile, legal form, applicable legislation, country of incorporation, registered office’s address and
telephone number Chapter 1, section 1.2.1 8
5.1.5 Main events in the development of the Company activities Chapter 1, section 1.2.2 8

9 - REGISTRATION DOCUMENT CROSS REFERENCE TABLE

5.2 Investments
Chapter 8, section 8.2
5.2.1 Principles investments realized during each year of the period covered by the historical financial Notes 4, 12, 13, 30 and 34 to the 161 ;173 ;174 ;
information until the date of the document consolidated financial statements 210 ;218
5.2.2 Major investments in progress, including the geographic distribution of these investments and their
financing method N/A
5.2.3 Major investments planned by the issuer and for which the management bodies have already taken a
firm commitment N/A
6. BUSINESS OVERVIEW
6.1 Principal activities
6.1.1 Nature of transactions made by the Company and its principal activities Chapter 1, sections 1.2.3 and 1.3 9; 13
6.1.2 New products/services launched on the market Chapter 1, section 1.3 13
Chapter 1, section 1.3 and Chapter 2,
6.2 Principal markets section 2.2 13; 24
6.3 Exceptional events N/A
Chapter 2, section 2.10.3 and
6.4 Dependency from certain contracts Chapter 3, section 3.3 38; 50
Statements regarding competitive
6.5 Competitive position position (preambule)
( ) 3
7. ORGANIZATIONAL STRUCTURE
7.1 Brief description Chapter 7, sections 7.5.1 and 7.5.2 131 ;133
Chapter 7, section 7.5.1 and chapter
8, section 8.2
Note 35 to the consolidated financial
7.2 List of main subsidiaries statements 131; 219
8. PROPERTY, PLANTS AND EQUIPMENT
Chapter 7, section 7.1 and chapter 8,
section 8.2
8.1 Material tangible fixed assets important or planned statements 126; 143
8.2 Environmental issues potentially affecting the use of the tangible fixed assets Chapter 6, section 6.2 113
9. OPERATING AND FINANCIAL REVIEW
Chapter 2, sections 2.3, 2.5, 2.9
9.1 Financial position and 2.10.3 25 ; 28 ; 37
9.2 Operating results
Chapter 2, section 2.2, 2.4,2.5 and
9.2.1 Significant factors affecting the income from operations 2.9 24 ; 28
9.2.2 Reasons for material changes in net sales or revenues Chapter 2, section 2.9 28
9.2.3 Policies or factors that have materially affected, or could materially affect, directly or indirectly, the
issuer’s operations N/A
10. CASH AND CAPITAL
10.1 Information concerning capital resources ((short and long term)) statements 179
Chapter 2, sections 2.10.1, 2.10.2
and 2.10.3
10.2 Sources, amounts and description of cash flows Chapter 8, section 8.1.4 36 ; 38 ;142
Chapter 2, section 2.10.3
Notes 22 and 23 to the consolidated
10.3 Information on borrowing conditions and financing structure financial statements 38 ; 186 ;190
10.4 Restrictions on use of capital resources, having materially impact on business operations Chapter 3, section 3.1 38 ; 46
10.5 Expected sources of financing N/A
Chapter 1, section 1.3.1, Chapter 2,
section 2.9.3 and Note 7 to the
11. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES consolidated financial statements 13 ; 31 ; 167
12. TREND INFORMATION
12.1 Main trends in production, sales and inventory, and in costs and selling prices, since the end of the
last fiscal year N/A
12.2 Known trends, uncertainties, demands, commitments or events that might have a material effect on
prospects for the current fiscal year Chapter 2, sections 2.2 and 2.11 24 ; 44
13. PROFIT FORECASTS OR ESTIMATES N/A
14. ADMINISTRATIVE, MANAGEMENT, AND SUPERVISORY BODIES AND SENIOR
MANAGEMENT

REGISTRATION DOCUMENT CROSS REFERENCE TABLE - 9

14.1 Information concerning Members of the administrative and management bodies (list of mandates
performed during the last five years)) Chapter 4, sections 4.1.2 and 4.1.3 62 ; 64
14.2 Conflicts of interest in administrative and management bodies Chapter 4, section 4.1.3.3 67
15. REMUNERATION AND BENEFITS
15.1 Remuneration paid and benefits in kind Chapter 4, sections 4.4 and 4.5.2 84 ; 92
15.2 Amounts of provisions booked or otherwise recognized for the payment of pensions, retirement
annuities or other benefits Chapter 4, sections 4.4.2 and 4.5.2 84 ; 92
16. BOARD PRACTICES
16.1 Expiry date of current terms of office Chapter 4, section 4.1.2 62
16.2 Service contracts with Members of administrative bodies Chapter 4, section 4.1.3.6 69
16.3 Information about the Audit Committee and the Remuneration Committee Chapter 4, section 4.2.1.4 73
16.4 Declaration – Corporate governance applicable in the home country of the issuer Chapter 4, section 4.2.1.1 70
17. EMPLOYEES
17.1 Number of employees Chapter 6, section 6.1.1 104
Chapter 4, sections 4.1.3.5 and 4.4.5
and chapter 6, sections 6.1.3 and
6.1.4
Note 26 to the consolidated financial 68 ; 87 ;105 ;
17.2 Profit sharing and stock options statements 204
17.3 Agreements for employees’ equity stake in the capital of the issuer Chapter 6, section 6.1.2 105
18. MAJOR SHAREHOLDERS
18.1 Shareholders owning more than 5% of the share capital or voting rights Chapter 5, section 5.1.1 94
18.2 Existence of specific voting rights Chapter 7, section 7.2.3 128
18.3 Control of the Company Chapter 5, section 5.1.3 96
18.4 Agreement known to the Company which could lead to a change in control if implemented N/A
19. RELATED PARTY TRANSACTIONS statements 217
20. FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS AND LIABILITIES,
FINANCIAL POSITION AND PROFITS AND LOSSES
Chapter 8, sections 8.1, 8.2, 8.4 and 138 ; 144 ;
20.1 Historical financial information 8.5 223 ; 226
20.2 Pro forma financial information N/A
20.3 Financial statement Chapter 8 137
20.4 Auditing of historical annual financial information
Chapter 7, sections 7.9; Chapter 8,
20.4.1 Statement of audit of historical financial information sections 8.3 and 8.7 136 ; 221 ; 246
20.4.2 Other information contained in the registration document and not extracted from the issuer’s audited
financial statement N/A
20.4.3 Financial data contained in the registration document and not extracted from the issuer’s audited
financial statement N/A
20.5 Age of latest audited financial information Chapter 8, section 8.1 138
20.6 Interim and other financial information N/A
20.6.1 Quarterly or half yearly financial information established since the date of the last audited financial
statement
20.6.2 Interim financial information in the event that the document was established more than nine months
after the end of the last audited financial year N/A
20.7 Dividend distribution policy Chapter 5, section 5.1.9 99
20.7.1 Dividend amount per share for each year of the fiscal year covered by the historical financial
information Chapter 5, section 5.1.9 99
Chapter 3, sections 3.1and 3.4,
20.8 Legal and arbitration proceedings statements 46; 56;213
20.9 Significant change in the financial or business situation N/A
21. ADDITIONAL INFORMATION Chapter 7 125
21.1 Share capital
21.1.1 Amount of issued capital Chapter 5, section 5.1 94
21.1.2 Shares not representing capital N/A
21.1.3 Shares held by the issuer itself Chapter 5, section 5.1.2 95
21.1.4 Convertible securities, exchangeable securities or securities with warrants Chapter 5, section 5.1.7 97
21.1.5 Terms of any acquisition right and/or commitment in respect of authorized but non-issued capital N/A
21.1.6 Information about the capital of any Group Member subject to an option or agreement providing an
option N/A


21.1.7 History of the share capital Chapter 5, sections 5.1.5 and 5.1.6 96
21.2 Articles of incorporation and bylaws
21.2.1 Issuer’s objects and purposes Chapter 7, section 7.2.1 128
21.2.2 Administrative, management and supervisory bodies Chapter 4, section 4.1.1 62
21.2.3 Rights, privileges and restrictions attached to shares Chapter 7, section 7.2.3 128
21.2.4 Actions necessary to change the rights of shareholders Chapter 7, section 7.2.4 129
21.2.5 Calling-up of Annual General Meetings and Extraordinary General Meetings of shareholders Chapter 7, section 7.2.5 129
21.2.6 Description of any provision that would have an effect of delaying, deferring or preventing a change
in control N/A
21.2.7 Crossing thresholds Chapter 7, section 7.2.6 129
21.2.8 Changes in the shares capital N/A
22. MATERIAL CONTRACTS Chapter 7, section 7.3 130
23. THIRD-PARTY INFORMATION, STATEMENT BY EXPERTS AND DECLARATIONS OF
ANY INTEREST
23.1 Information on any statement or report included in the document N/A
23.2 Information from a third party Preambule 3
24. DOCUMENTS ON DISPLAY Chapter 7, section 7.6 134
25. INFORMATION ON HOLDINGS N/A

REGISTRATION DOCUMENT CROSS REFERENCE TABLE - 9
CROSS REFERENCE TABLE REFERRING TO THE ELEMENTS

OF THE MANAGEMENT REPORT
Information in the Management Report chapters of the Annual Report Page No.
Objective and exhaustive analysis of the business and results’ trend of the Group during the fiscal year
((Articles L. 225-100, L. 225-100-2 and L. 233-6 of the French Commercial Code)) Chapter 2, section 2.9 28
Report on the subsidiaries’ activity and results ((Article L. 233-6 al. 2 of the French Commercial Code)) Chapter 2, section 2.9 28
Objective and exhaustive analysis of the financial situation including the debt situation (Article L. 225-100
al. 3 of the French Commercial Code)) Chapter 2, sections 2.9 and 2.10 28; 36
Analysis of the Company’s situation during the last fiscal year, its expected development and the important
events occurred since the closing date ((Article L. 232-1-II of the French Commercial Code)) Chapter 2, sections 2.6 and 2.11 27; 44
Activities in research and development ((Article L. 233-26 and L. 232-1-II of the French Commercial Code)) Chapter 2, section 2.9.3 13; 31
Non financial key performance indicators (environmental information) (Articles L. 225-100, al. 3;
L. 225-102-1, al. 5 and R. 225-105 of the French Commercial Code)) Chapter 6, section 6.2 113
Non financial key performance indicators (social information) (Article L. 225-100, al. 3; L. 225-102-1, al. 5
and R. 225-104 of the French Commercial Code)) Chapter 6, section 6.1 104
Chairman’s report on corporate governance, internal control procedures and risk management
((Article L. 225-37, al.6 of the French Commercial Code)) Chapter 4, section 4.2 70
Main risks and uncertainties (Article L. 225-100 of the French Commercial Code) and indications
concerning the use of financial instruments by the Company when it’s relevant for the evaluation of its assets,
its liabilities, its financial condition and its profits and losses Chapter 3 45
Information on the risks in the event of interest rate fluctuation, exchange rate fluctuation and market price
fluctuation Chapter 3, section 3.2 48
Table of the delegations granted to the Board of Directors by the shareholders’ meetings and the use of those
delegations ((Article L. 225-129-5 of the French Commercial Code)) Chapter 5, section 5.1.8 98
List of Directorships or functions performed by each Director during the last fiscal year (Article L. 225-102-1,
al.4 of the French Commercial Code)) Chapter 4, section 4.1.3 64
Directors’ compensation and benefits in kind ((Article L. 225-102-1 of the French Commercial Code)) Chapter 4, section 4.4 84
Transactions executed by the executive officers on the shares of the Company (Article L. 621-18-2
of the Monetary and Financial Code)) Chapter 4, section 4.1.3.5 68
Retention requirement by the Executive Directors of free shares and/or stock options which were awarded
((Article L. 225-197-1-II al. 4 and L. 225-185 al.4 of the French Commercial Code)) Chapter 4, section 4.4.5 87
Stock Options awarded to employees and executive officers (Article L. 225-197-1 and L. 225-185 Chapter 4, sections 4.1.3.5 and 4.4.6
of the French Commercial Code)) and chapter 6, section 6.1.4 68; 88; 105
Shares held by employees ((Article L. 225-102 of the French Commercial Code)) Chapter 6, section 6.1.3 105
Distribution of share capital and information on the crossing thresholds declared to the Company
((Article L. 233-13 of the French Commercial Code)) Chapter 5, section 5.1.1 94
Amount of dividends and distribution for the last three fiscal years ((Tax Code Article 243 bis)) Chapter 5, section 5.1.9 99
Parent Company’s results over the last five fiscal year (Article
( R. 225-102 of the French Commercial Code) Chapter 8, section 8.6
and comments on the results Chapter 7, section 7.5.2 245; 133
Information on payment terms with suppliers ((Article L. 441-6-1 of the French Commercial Code)) statements 178
Information on the number of treasury shares on transactions executed during the fiscal year
((Article L. 225-211, al.2 of the French Commercial Code)) Chapter 5, section 5.1.2 95
Elements likely to have any influence in case of a public offer (Article L. 225-100-3
of the French Commercial Code)) Chapter 5, section 5.1.10 99
Information on participations acquired in the share capital of French companies (Article L. 233-6
of the French Commercial Code)) Chapter 2, sections 2.7 and 2.8 27
Chapter 8, section 8.5 Note 35 to
List of main consolidated subsidiaries the consolidated financial statements 219
Items of calculation and results of adjustment in case of an issuance of securities giving access to capital Chapter 5, sections 5.1.5 and 5.1.7 96
Additional tax information (Article 34-9 and 223 quater and quinquies of the Tax Code) Chapter 7, section 7.4 130

ANNUAL FINANCIAL REPORT CROSS-REFERENCE TABLE

In application of Article 222-3 of the AMF’s General Regulations, the annual financial report referred to in paragraph 1 of Article 451-1-2 of
the French Monetary and Financial Code contains the information described in the following pages of the Registration Document:

Annual financial report chapters of the Annual Report Page No.
STATEMENT OF THE PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT Chapter 7, section 7.9.1 136
MANAGEMENT REPORT
Chapter 2, sections 2.9 and 2.10
Analysis of results, financial conditions, parent company and consolidated Group risks
and list of authorizations to increase the share capital (Article L. 225-100 and L. 225-100-2 Chapter 3
of the French Commercial Code)) Chapter 5, section 5.1.8 28; 36; 45; 98
Information required by Article L. 225-100-3 of the French Commercial Code relating to factors likely
to affect the outcome of a public offer Chapter 5, section 5.1.10 99
Information about share buybacks ((Article L. 225-211, paragraph 2, of the French Commercial Code)) Chapter 5, section 5.1.2 95
FINANCIAL STATEMENT
Statutory financial statements Chapter 8, sections 8.4 and 8.5 223; 226
Statutory Auditors’ report on the statutory financial statements Chapter 8, section 8.7 246
Consolidated financial statements Chapter 8, sections 8.1 and 8.2 138; 144
Statutory Auditors’ report on the consolidated financial statements Chapter 8, section 8.3 221

This document is printed in compliance with ISO 14001.2004 for an environment management system.
ANNUAL REPORT 2012
Corporate Headquarters:
1-5, rue Jeanne d’Arc
92130 Issy-les-Moulineaux – France
E-mail: [email protected]
Tel.: +33 (0)1 41 86 50 00 – Fax: +33 (0)1 41 86 58 59
Technicolor Inc.
6040 Sunset Blvd
Hollywood, CA 90 028
USA
Tel.: +1 (323) 817 6600
www.technicolor.com
ANNUAL REPORT 2012
Technicolor S.A. with a share capital of €335,543,841 – 333 773 174 R.C.S. Nanterre including the Annual Financial Report

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ANNUAL REPORT 2012

2 OPERATING AND FINANCIAL REVIEW

9 REGISTRATION DOCUMENT CROSS

| TECHNICOLOR | ANNUAL REPORT 2012

ANNUAL REPORT 2012

TECHNICOLOR | ANNUAL REPORT 2012 | 1

(iii) the Chairman’s report on corporate governance, internal control

2 | TECHNICOLOR | ANNUAL REPORT 2012

TECHNICOLOR | ANNUAL REPORT 2012 | 3

TECHNICOLOR | ANNUAL REPORT 2012 | 5

1.1 SELECTED FINANCIAL DATA

6 | TECHNICOLOR | ANNUAL REPORT 2012

(in € millions) 2012 2011 2010

TECHNICOLOR | ANNUAL REPORT 2012 | 7

1.2 HISTORY AND STRATEGY OF THE COMPANY

1.2.1 COMPANY PROFILE 1.2.2 HISTORICAL BACKGROUND

8 | TECHNICOLOR | ANNUAL REPORT 2012

2009 Sauvegarde Plan 2012 Capital Increases

Technology Entertainment Services Connected Home

TECHNICOLOR | ANNUAL REPORT 2012 | 9

Creative Services, which includes Digital Creative Services (Digital

10 | TECHNICOLOR | ANNUAL REPORT 2012

Develop innovative solutions for media

TECHNICOLOR | ANNUAL REPORT 2012 | 11

12 | TECHNICOLOR | ANNUAL REPORT 2012

1.3 BUSINESS OVERVIEW

(in € millions, except percentages) 2012 % of total 2011 % of total

TECHNICOLOR | ANNUAL REPORT 2012 | 13

Research & Innovation Technicolor’s interests are focused on the physical, transport and

14 | TECHNICOLOR | ANNUAL REPORT 2012

TECHNICOLOR | ANNUAL REPORT 2012 | 15

16 | TECHNICOLOR | ANNUAL REPORT 2012

TECHNICOLOR | ANNUAL REPORT 2012 | 17

Technicolor achieved this by subcontracting all of its release printing

18 | TECHNICOLOR | ANNUAL REPORT 2012

TECHNICOLOR | ANNUAL REPORT 2012 | 19

1.3.3 CONNECTED HOME (FORMERLY DIGITAL DELIVERY)

* Divestiture completed in October 2012 (IPTV)

20 | TECHNICOLOR | ANNUAL REPORT 2012

TECHNICOLOR | ANNUAL REPORT 2012 | 21

Key customers in this region include Telecom Italia, Telefonica,

unallocated Corporate functions, which comprise the operation and

22 | TECHNICOLOR | ANNUAL REPORT 2012

2.11 PRIORITIES AND OBJECTIVES FOR 2013 ...................................................... 44

TECHNICOLOR | ANNUAL REPORT 2012 | 23

2.2 TRENDS IN THE M&E INDUSTRY

24 | TECHNICOLOR | ANNUAL REPORT 2012

2.3 SUMMARY OF RESULTS

TECHNICOLOR | ANNUAL REPORT 2012 | 25

2.5 GEOGRAPHIC BREAKDOWN OF

Revenues of continuing operations by destination

(in percentage) 2012 2011

Revenues of continuing operations by origin

26 | TECHNICOLOR | ANNUAL REPORT 2012

Revenues of continuing operations and effect of exchange rate fluctuations

2011 revenues at 2012 revenues 2012 revenues % change at % change at

2.6 EVENTS SUBSEQUENT TO DECEMBER 31, 2012

2.7 NOTIFICATION OF INTERESTS ACQUIRED

TECHNICOLOR | ANNUAL REPORT 2012 | 27

2.8 NOTIFICATION OF INTERESTS ACQUIRED IN