FORM 20-F THOMSON multimedia - Technicolor

division. Our relative decrease in consumer electronics activity is a result of our repositioning
strategy.
The activities of our divisions are described in detail below in ‘‘— Business Overview’’. For
information on geographic breakdown of revenues by division, see Item 5: ‘‘Operating and Financial
Review and Prospects — Overview’’.
Historical Background
Our current business situation results from the restructuring and repositioning strategy in place
since 1997. Following the appointment of Thierry Breton as Chairman and Chief Executive Officer of
Thomson in 1997 and the arrival of a new management team in the context of a significant
deterioration in our results of operation and financial condition in the early and mid-1990s, we
benefited from a recapitalization by the French State, through Thomson S.A., and launched several
restructuring and reengineering initiatives which enabled the restoration of profitable business
operations. In the second half of 2000, we developed our repositioning strategy by expanding our
business and customer base beyond the traditional consumer electronics market to include new
segments of the video industry. Starting in the latter part of 2000 and continuing into 2002, we have
made several acquisitions, including Technicolor and Philips’ professional broadcast business, to
accelerate this strategic repositioning and to take advantage of the industry’s transition to digital
technologies.
Our restructuring and repositioning strategy has been accompanied and facilitated by a
significant shift in our equity structure. Four years ago, THOMSON multimedia was wholly owned by
Thomson S.A., which in turn is wholly owned by the French State. Following a series of offerings
and placements of our shares in the period 1998-2002, as of March 16, 2002 (and giving effect to
the payment of Carlton’s obligations remboursables en actions (‘‘ORAs’’) in newly issued shares on
this date), to the best of our knowledge our share capital was held as follows: (i) Thomson S.A.
owned 22.42%, (ii) our strategic partners (Alcatel, DIRECTV, Microsoft and NEC) together owned
15.79%, (iii) the public owned 50.83%, (iv) our employees owned 4.24%, (v) 1.20% were held by us
as treasury shares and (vi) the remaining 5.52% of our shares are held by Carlton. On
November 29, 2001, Carlton issued bonds to a number of institutional investors exchangeable for
15.5 million of our shares. For more details on our share capital, please see Item 7: ‘‘Major
Shareholders and Related Party Transactions — Distribution of Share Capital’’.
Strategic Relationships
Within the context of the digital transition and the convergence of technologies, devices and
media within the video industry, we believe it is essential to develop strategic relationships with
leaders in related industries in order to strengthen our position in various markets and to capitalize
on emerging trends that are influencing the video industry. Thus, we established strategic alliances
in 1998 with Alcatel, DIRECTV, Microsoft, NEC, and in 2001 with Carlton. Within the framework of
these alliances, we have developed significant business initiatives, which are discussed below in
‘‘— Business Overview’’.
In addition to the five companies mentioned above, which each have a seat on our Board of
Directors, we have developed other alliances which we believe enable us more effectively to
implement our strategy.
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