technicolor - 2019 Universal registration document

PRESENTATION OF THE GROUP ORGANIZATION AND BUSINESS OVERVIEW

INDUSTRY TRENDS AND MARKET POSITION While at an industry level, global shipments of packaged media products have declined in recent years and are expected to continue to decline, Technicolor believes it is well positioned to outperform overall market trends, driven by increased penetration of existing customers and the addition of new customers. The package media business remains a large and profitable revenue source for content creators, and Technicolor believes there will be continuing significant consumer demand for physical ownership of content. Given a highly variable cost structure, activity optimization and cost reductions, as well as ongoing revenue diversification efforts, Technicolor expects to maintain profitability in this maturing market environment. As a global market leader, Technicolor’s key customers include major Hollywood Studios such as Warner Bros., The Walt Disney Company, Paramount, Universal, Sony, Fox and Lionsgate, independent film studios, software and games publishers, and major music publishers. Most major customers are covered by multi-year contracts (generally, two to four years), which typically contain volume exclusivity and/or time commitments. Major client relationships typically consist of multiple contractual arrangements for specific types of services within specific geographical areas. DVD Services Division-wide has launched initiatives to adapt distribution operations and related customer agreements in response to continued volume reduction and increasing order profile complexity. In 2018, Sony DADC outsourced to Technicolor a substantial majority of its CD, DVD and Blu-ray TM manufacturing, packaging and distribution requirements in both the North American and Australian markets. Sony DADC continues to maintain direct relationships with distributors and also continues to directly support its PlayStation customers. In 2019, the outsourcing relationship with Sony DADC in North America expanded to include distribution services, along with the addition of transportation management services for selected other Sony related entities. Technicolor’s key competitors in the DVD market include Sony and Arvato, both of which now have the majority of their activity concentrated in the European market. In 2019, Technicolor successfully renegotiated contract renewals and/or extensions with two of its major customers, both of which included materially improved terms for Technicolor. Additional customer contract renegotiations will occur over the next several years in line with specific contract renewal dates.

REVENUE HIGHLIGHTS Revenues totaled €882 million in 2019, down 9.7% at constant rate and 6.3% at current rate compared to 2018. Revenues decreased in the second half compared to the 2018 second half by 12.1% at constant rate. Total combined replication volumes reached 1,059 million discs, down 11.4% over 2018. Operations are supported by approximately 1 million square feet of dedicated replication and distribution space, with unique capability for the timely delivery of discs to more than 40,000 locations.

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VOLUMES BY FORMAT

CD Blu-ray™ 28 % (vs. 29% in 2018) 6 % (vs. 5% in 2018) 66 % (vs. 66% in 2018)

SD-DVD

VOLUMES BY SEGMENT

Games Music & Audio 5 % (vs. 5% in 2018) 3 % (vs. 4% in 2018) 1 % (vs. 1% in 2018) Theatrical/Broadcast 91 % (vs. 90% in 2018) Software & Kiosk

Selected major feature film titles produced by Technicolor in 2019 included: Avengers: End Game , Toy Story 4 and The Lion King from Disney; Bohemian Rhapsody and Alita: Battle Angel from Fox; John Wick: Chapter 3 from Lionsgate; Bumblebee and Gemini Man from Paramount; Spider-Man: Far from Home and Once Upon a Time in Hollywood from Sony; Fast & Furious Presents: Hobbs & Shaw and How to Train Your Dragon: The Hidden World from Universal; and A Star is Born , Fantastic Beasts: The Crimes of Grindelwald , and Shazam! From Warner Bros. Major games titles included Call of Duty: Modern Warfare from Activision, FIFA 20 from Electronic Arts and Borderlands 3 from Take Two Interactive.

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TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2019