FORM 20-F THOMSON multimedia - Technicolor

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25%. We have the control of the business and began consolidating this activity on February 15, 2001. On March 16, 2001, we acquired the Technicolor businesses, which comprised 70 legal entities and involved the direct acquisition of all the shares of five holding companies. We started consolidating these activities on March 17, 2001. In July 2001, we and Carlton joined our screen advertising business into a 50-50 joint venture called ‘‘Technicolor Cinema Advertising’’ (doing business as ‘‘ScreenVision’’). We have joint control over the venture with Carlton. We began consolidating this company using the pro rata consolidation method in July 2001. This joint venture was included in the New Media Services division in 2001. On July 31, 2001, we acquired 100% of a company called ‘‘Miles O’ Fun’’, an audio post-production company which complements our post-production businesses acquired with Technicolor. We started consolidating this company at that date. The above mentioned changes in scope of consolidation affected our Digital Media Solutions division and had a material impact on our results of operations in 2001. Changes in scope of consolidation are analyzed in further detail in Note 2 to our consolidated financial statements. On December 17, 2001, we acquired from Alcatel its DSL modem activity and started consolidating this activity at January 1, 2002. Changes in accounting principles Until January 1, 2001, we amortized our RCA˛ trademark over 20 years. Beginning 2001 we adopted the policy of not amortizing intangible assets with indefinite economic life (excluding goodwill) in order to conform with the accounting method widely used in France. The RCA˛ trademark is the only previously amortized intangible asset that is no longer being amortized. Such intangibles are subject to an impairment test when there is indication of decline in value. The change in amortization has been accounted for prospectively, and previously recorded as accumulated amortization charges have not been reversed. If the same amortization policy had been used in 1999 and 2000, cost of sales would have been reduced by 0 5.8 and 0 4.1 million, respectively. Analysis by division Digital Media Solutions Consolidated net sales for the Digital Media Solutions division totaled 0 1,821 million in 2001 compared with 0 148 million in 2000. This division, for which we reported results for the first time in 2001, combined our existing professional equipment and infrastructure activities (formerly included in the Consumer Products division) and the businesses that we acquired or formed during the first half of 2001, which include the Technicolor and Philips Broadcast businesses and Nextream. Due to the acquisition dates of the Technicolor businesses and creation of Nextream, the division’s results for 2001 reflect the results of these businesses for only part of the year. For the acquisition dates of these businesses, please see ‘‘— Changes in scope of consolidation’’ above. The businesses in the Digital Media Solutions division posted positive net sales performance with the exception of Broadcast Solutions and Nextream. More particularly, compared to 2000, Technicolor posted a 6% year-on-year unit growth in pre-recorded DVD and videocassette shipments. This increase in DVD and videocassette sales volumes primarily resulted from an increase in DVD unit sales compared to the previous year driven by major releases of new movies such as Shrek and Pearl Harbor and the increase in DVD catalog titles, which more than offset a gradual decline in videocassette sales volumes. The increase in DVD sales volumes also more than offset the reductions in average selling prices of DVDs. In addition, Technicolor content services net sales were stable despite the negative impact of the Hollywood Screen Actors Guild dispute and the 40
effect of the events of September 11, which resulted in the postponement of certain box-office releases. In 2001, Broadcast Solutions net sales were negatively impacted by a difficult advertising environment for broadcasters, to which was added the negative effect of the events of September 11 which led to a significant reduction in their equipment investments. Nextream also was negatively impacted by very difficult market conditions in 2001. However, both Broadcast Solutions and Nextream maintained their global value market share positions in 2001. Operating income for the Digital Media Solutions division amounted to 0 239 million in 2001 compared with 0 3 million in 2000, with all businesses contributing to operating results except Singingfish, which suffered an operating loss. This performance mainly reflects the consolidation of the Technicolor and Philips Broadcast businesses but also increases in DVD shipment volume, economies of scale and operational synergies during the period, which more than offset the significant average unit price reductions in DVDs. Displays and Components Total net sales for the Displays and Components division amounted to 0 2,398 million in 2001, including internal sales of 0 756 million to the Consumer Products division. This represents a decrease in total net sales of 6.0% compared with 0 2,550 million in 2000. Consolidated net sales for Displays and Components totaled 0 1,642 million in 2001, a decrease of 2.6% compared with 0 1,686 million in 2000. At constant 2000 exchange rates, consolidated net sales in 2001 would have totaled 0 1,615 million, representing a decrease of 4.2% compared with 2000. This foreign exchange impact is mainly linked to the rise of the U.S. dollar compared to the euro in this period. The 4.2% decrease in consolidated net sales reflected a decrease of 5.8% in sales volumes, primarily attributable to the difficult tube market in the United States. This negative factor was partially offset by an increase of 1.7% in average selling prices for the division in 2001 resulting mainly from a product mix improvement in our tube and optical component businesses. Following strong demand in 2000, net sales in the tube business in North America were severely impacted by overcapacity in all segments, compounded by a weak general economic environment, which led to significant price decreases. In the context of these very difficult market conditions, we pursued our repositioning towards high-end tubes, increasing our value market share in the higher margin, very-large tube size segment in the United States by approximately three percentage points. Tube net sales continued to grow in Europe, reflecting an 11% increase in large and very large-size tube unit sales and resulting in a one percentage point gain in value market share. The optical components business posted net sales growth driven by sales of Xbox modules to Microsoft at the end of the year. Operating income for the Displays and Components division amounted to 0 105 million in 2001, compared with 0 262 million in 2000. This decrease reflected primarily reduced net sales of the division resulting from a decline in tube net sales in the United States. This negative factor was partly offset by improved tube net sales in Europe and a reduced fixed and direct labor cost base. In addition, our tube activity operations in the United States were impacted by a significant temporary interruption in a glass production line in our Circleville, Ohio plant related to defects in components, for which we have filed an insurance claim. In response to these operating conditions and in order to improve further its cost structure, we accelerated the implementation of the TIGER reengineering program in North America in 2001, which aims to improve product mix, improve the division’s fixed cost structure and reduce overhead. In July 2001, we closed our large tube manufacturing facility in Scranton (Pennsylvania). Additionally, in October 2001, we discontinued mid-size tube production at our Marion, Indiana 41
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 and 12: we have limited operating history,
Page 13 and 14: projects that such shareholder may
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: Accordingly, under U.S. GAAP, the g
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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FORM 20-F THOMSON multimedia - Technicolor

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