FORM 20-F THOMSON multimedia - Technicolor

Accordingly, under U.S. GAAP, the goodwill amortization of 0 1 million related to the acquisitions
of Technicolor Cinema Advertising LLC and Miles O’Fun of July 1, 2001 has been eliminated in the
U.S. GAAP net income reconciliation. Had we applied SFAS 142 on January 1, 2001, we would not
have recorded amortization of 0 53 million related to goodwill and indefinite-lived intangible assets.
We have not yet determined the impact that the provisions of SFAS 142 will have on intangible
assets or whether a cumulative effect adjustment will be required upon adoption.
In August 2001, the FASB issued Statement No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets (‘‘SFAS 144’’), which is effective for our fiscal year beginning January 1, 2002.
SFAS 144 establishes a single model to account for the impairment of assets to be held or
disposed, incorporating guidelines for accounting and disclosure of discontinued operations. The
provisions of SFAS 144 are generally to be applied prospectively. We are currently determining the
overall impact of SFAS 144 on our financial statements.
In August 2001, the Emerging Issues Task Force (‘‘EITF’’), issued EITF 01-09, Accounting for
Consideration Given by a Vendor to a Customer or a Reseller of the Vendor’s Products, which
codified and reconciled EITF Issue 00-14, Accounting for Certain Sales Incentives, EITF 00-22,
Accounting for ‘Points’ and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and
Offers for Free Products or Services to Be Delivered in the Future, and EITF 00-25, Vendor Income
Statement Characterization of Consideration Paid to a Reseller of the Vendor’s Products. These
EITFs prescribe guidance regarding the timing of recognition and income statement classification of
costs incurred for certain sales incentive programs to resellers and end consumers. Companies are
required to adopt EITF 01-09 for fiscal years beginning after December 15, 2001, and are required
to reclassify all prior period amounts to conform to the current period presentation. We have not yet
determined the overall impact that EITF 01-09 will have on our financial statements.
In May 2000, the EITF issued EITF 00-14, Accounting for Certain Sales Incentives, which
addresses the recognition, measurement and income statement classification for certain sales
incentives offered by companies in the form of discounts, coupons or rebates. EITF 00-14 is
effective for the fiscal year beginning January 1, 2002. The implementation of EITF 00-14 may
require us to make certain reclassifications between Revenues and Costs and Operating Expenses
in our consolidated income statement; however, we have not yet determined the overall impact that
EITF 00-14 will have on our financial statements.
Evolution of division structure
The Digital Media Solutions division was established in 2001 and includes, among other
businesses we acquired or formed in the first half of 2001, the professional equipment and
infrastructure businesses previously managed by the Consumer Products division. See Item 4:
‘‘Information on the Company — Digital Media Solutions’’. These professional equipment and
infrastructure businesses have been consequently reclassified for 1999 and 2000 from the
Consumer Products division to the Digital Media Solutions division.
Results of Operations for 2001 and 2000
These comments on our 2001 and 2000 results present an analysis of net sales and operating
income by division, followed by comments on our consolidated results.
Changes in scope of consolidation
Effective January 1, 2001, we acquired 66.67% of the outstanding common stock of BTS
holding, under which Philips’ professional broadcast activities are grouped, and have consolidated
this business since that date.
On February 15, 2001, we and Alcatel joined our interactive video network equipment activities
by contributing our respective assets into Nextream, a business of which we hold 75% and Alcatel
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