Product defects resulting in a large-scale product recall or successful product liability claims against us could result in significant costs or negatively impact our reputation and could adversely affect our business results and financial condition. We are sometimes exposed to warranty and product liability claims in cases of product failure. There can be no assurance that we will not experience material product liability losses arising from such claims in the future and that these will not have a negative impact on our reputation and, consequently, our sales. We maintain insurance against such product liability claims and record warranty provisions in our accounts based on its historical defect rates, but there can be no assurance that these coverage and warranty provisions will be adequate for liabilities ultimately incurred. In addition, there is no assurance that insurance will continue to be available on terms acceptable to us. A successful claim that exceeds our available insurance coverage or a product recall could have a material adverse impact on our financial condition and results of operations. The performance of several of our businesses is dependant in large part on the long-term maintenance of contractual arrangements with our customers. Our financial results may suffer if we are unable to renew these contracts when they expire or if we are only able to renew them under significantly less favorable terms. The net sales of certain of our business activities, particularly those in our Digital Media Solutions and Patents and Licensing divisions, depend on contracts that may have a duration of several years or are expected to be renewed at their expiration. In addition, in certain cases these contractual relationships may be with a relatively limited number of customers. Although most of our major client relationships are typically the result of multiple contractual arrangements of varying terms, in any given year certain of these contracts come up for renewal. For example, the performance of <strong>Technicolor</strong>, the largest contributor to the net sales of our Digital Media Solutions division, currently depends on a concentrated customer base that accounts for a substantial portion of the division’s net sales, including several contracts with major U.S. film studios, software and games manufacturers and television studios, with whom we generally negotiate exclusive, long-term contracts. The licensing agreements that generate our Patents and Licensing division’s net sales typically have a duration of five years, and our top-ten licensees account for approximately 60% of the division’s total licensing revenues. If several major contracts were to come up for renewal at the same time, and we were unable to renew them under similar or more favorable terms, our financial results could suffer. Our success depends upon recruiting and retaining key personnel. Our products, services and technologies are complex, and our future growth and success depend to a significant extent on the skills of capable engineers and other key personnel. Continued re-training of currently competent personnel is also necessary to maintain a superior level of innovation and technological advance. The ability to recruit, retain and develop quality staff is a critical success factor for us. Our major shareholders retain significant voting rights and representation on our Board of Directors, giving them the ability to influence our affairs. Thomson S.A., Alcatel, DIRECTV, Microsoft and NEC have significant shareholdings in Thomson. Carlton became a significant shareholder as of March 16, <strong>20</strong>02, upon the mandatory conversion of outstanding redeemable bonds (ORAs). Furthermore, as part of the industrial partnerships developed with leaders in related industries in order to strengthen our position in different markets, we have worked on several business initiatives with Alcatel, DIRECTV, Microsoft and NEC since 1997 and with Carlton since <strong>20</strong>01. Each of these entities is represented on our Board of Directors, and while none of these shareholders individually has the ability to control the our affairs, each may have some ability to influence our decision making and to directly impact the 12
projects that such shareholder may be implementing jointly with us. For more detailed information on our shareholders, see Item 7: ‘‘Major Shareholders and Related Party Transactions’’. Our share price has been volatile in recent years. The stock market in recent years has experienced extreme price and volume fluctuations which have particularly affected the market prices of technology companies. Volatility in our share price has also been significant during this period. This volatility can result in losses for investors in a relatively short period of time. 13
- Page 1 and 2: As filed with the Securities and Ex
- Page 3 and 4: INTRODUCTION In this Annual Report
- Page 5 and 6: PART I ITEM 1 — IDENTITY OF DIREC
- Page 7 and 8: 1997 1998 1999 2000 2001 (1) 2001 1
- Page 9 and 10: B — Exchange Rate Information Our
- Page 11: we have limited operating history,
- Page 15 and 16: publishers, network operators and e
- Page 17 and 18: division. Our relative decrease in
- Page 19 and 20: we initiated at the end of 2001 our
- Page 21 and 22: approval. Nextream combines busines
- Page 23 and 24: ) Digital Optical Components We pro
- Page 25 and 26: our presence with global retailers
- Page 27 and 28: product. Through Nextream, we will
- Page 29 and 30: ) Within personal media services, w
- Page 31 and 32: We have obtained significant price
- Page 33 and 34: Location Division Products Asia: Ba
- Page 35 and 36: ITEM 5 — OPERATING AND FINANCIAL
- Page 37 and 38: and 10% in 1999. The acquisition of
- Page 39 and 40: Accordingly, under U.S. GAAP, the g
- Page 41 and 42: effect of the events of September 1
- Page 43 and 44: labor costs resulting from the impl
- Page 45 and 46: Our operating income under U.S. GAA
- Page 47 and 48: offerings, the accounting treatment
- Page 49 and 50: GROWL in the United States. These p
- Page 51 and 52: Other income and expense Other inco
- Page 53 and 54: In evaluating our cash flow perform
- Page 55 and 56: Guarantees given by subsidiaries of
- Page 57 and 58: ITEM 6 — DIRECTORS, SENIOR MANAGE
- Page 59 and 60: Initially Other business Principal
- Page 61 and 62: Charles Dehelly was appointed Chief
- Page 63 and 64:
The following table, sets forth the
- Page 65 and 66:
French subsidiaries will pay bonuse
- Page 67 and 68:
our shares and have a nominal value
- Page 69 and 70:
exclusive right to grant licenses t
- Page 71 and 72:
In connection with the investigatio
- Page 73 and 74:
consumers who acquired certain tele
- Page 75 and 76:
are also permitted to offer investo
- Page 77 and 78:
The tables below set forth, for the
- Page 79 and 80:
ITEM 10 — ADDITIONAL INFORMATION
- Page 81 and 82:
general meeting affecting these rig
- Page 83 and 84:
oth for a period of up to five year
- Page 85 and 86:
an ordinary general meeting, or by
- Page 87 and 88:
that Euroclear France provide us at
- Page 89 and 90:
The shareholders, at an extraordina
- Page 91 and 92:
This discussion is intended only as
- Page 93 and 94:
) a tax-exempt organization, ) a li
- Page 95 and 96:
A simplified certificate must state
- Page 97 and 98:
ITEM 11 — QUANTITATIVE AND QUALIT
- Page 99 and 100:
Sensitivity To Exchange Rate Fluctu
- Page 101 and 102:
December 31, 2000 December 31, 2001
- Page 103 and 104:
ITEM 17 — FINANCIAL STATEMENTS No
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