Third quarter 2012: Strong revenue growth, continued deleveraging, Amplify 2015 on track

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October 25, 2012
The Board of Directors of Technicolor met to review the Group’s revenues for the third quarter of 2012

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

Q3 2012 revenue highlights

Group revenues from continuing operations reached €928 million in the third quarter of 2012, up 10.9% at current currency and up 6.0% at constant currency compared to the third quarter of 2011.  On a proforma basis (excluding Broadcast Services disposal, completed on 3 July 2012), revenues were up 15.4% at current currency and 10.3% at constant currency.

    Technology: Solid growth in Licensing revenues, driven by good performances across the different licensing programs.
    Entertainment Services: Revenues year-over-year impacted by Photochemical Film activities. Stable DVD Services revenues, some softness in Creation Services.
    Digital Delivery: The Connected Home division posted revenues up 42% at constant currency, driven by volume growth across all regions and product categories.

Q3 2012 Amplify 2015 highlights

    Significant progress on M-GO, the Group’s new platform to help end-users discover, view and share all forms of media: signed agreements with major studios – NBC Universal, Paramount Pictures, Sony Pictures Home Entertainment, Twentieth Century Fox, Warner Brothers, DreamWorks Animation and Relativity Media. The deals will enable rentals or purchase the day of release of new home entertainment titles, catch up TV and back catalog for movies and TV shows with UltraViolet compatibility, across an open device ecosystem. Open beta in the fourth quarter of 2012.
    The Group accelerated its Technology Licensing initiative in Image Fidelity & Enhancement with the launch of its Color Certification Program aiming at leveraging Technicolor’s science for the benefit of prosumers and consumers. Technicolor is partnering with Portrait Displays, a visual enhancement software provider, to offer a Color Certification Program to makers of PC, laptop and tablet displays. It is also leveraging the traction created around its CineStyle color profile, to develop a full suite of PC and mobile applications that bring the “Hollywood” color-style to the prosumers.
    Technicolor established Magic Ruby, a venture around “second screen” innovations, to create new inroads into the multi-screen e-commerce and targeted advertising space. Fox is now offering this service through a downloadable iPad, iPhone and Android application to its clients for the second season of Sons of Anarchy in the US.
    In collaboration with Warner Bros. and its other major studio customers, Technicolor announced the launch of its digital studio backbone to integrate studios, Technicolor and third-party service providers on an open platform with key functionality and tools to meet the demands of content creators and distributors. Technicolor’s solution provides a unified set of features to manage, monitor and enable an integrated pipeline of individual services from clients, Technicolor and other approved, trusted third-party service providers on a platform of common tools for the creation and distribution of content.

Financial update: continued focus on improving financial structure

Following the capital increases, estimated gross debt at the end of September 2012 amounted to €1,249 million, a decrease compared to end of June 2012 mainly resulting from €200 million of debt repayments, of which €162 million of prepayments resulting from the capital increases and Broadcast Services disposal. The level of cash was slightly up compared to the end of June 2012.

    Following the completion of the capital increases and the performance improvement posted in the first half of 2012, Standard & Poor’s and Moody’s reviewed Technicolor’s rating. S&P upgraded its rating from B-/stable to B/stable and Moody’s changed its outlook from negative to stable while maintaining its B3 rating. Nevertheless, both agencies clearly stated that the Group’s financial structure needs to be further improved.
    The Group reiterates its focus on free cash flow generation and debt deleveraging.

2012 objectives

Technicolor reconfirms its 2012 objectives:

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

Frederic Rose, Chief Executive Officer of Technicolor, stated:

“Our focus on operational performance over the last 12 months is bearing fruits as reflected in our strong revenue growth in the third quarter. We are particularly pleased by the growth in Licensing revenues, the continued strength of DVD Services and the confirmation of Connected Home’s turnaround. Moreover, Technicolor continues to strengthen its financial structure and reduce its indebtedness, which has led to improved ratings. We are on track to attain our 2012 objectives and deliver on our Amplify 2015.”

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

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