Thomson Fourth Quarter and Full Year 2006 Results

PARIS — The Board of Directors of Thomson (Euronext Paris: 18453, NYSE :TMS), chaired by Frank E. Dangeard, met on 13 February 2007 to review and approve the Group’s fourth quarter performance and full year 2006 results published today.

Systems division revenues for 4Q06 were €849 million (4Q05, €699 million). Access Products for telecom and cable customers ended the year strongly. Currency movements decreased Systems division revenues for the quarter by €25 million. Revenues for the quarter excluding currency movements therefore increased 25.1% year-on-year. Amongst key indicators, in a strong 4Q06 Thomson shipped 2.9 million satellite set-top boxes (4Q05, 2.8 million), 0.9 million cable set-top boxes (4Q05, 0.3 million), and 3.4 million access products for telecom operators, up strongly on the 4Q05 level of 2.4 million – making a total of 7.2 million access products in the quarter (4Q05, 5.5 million). The Broadcast & Networks businesses had a strong year, but some anticipated broadcast orders slipped from the end of 2006 into 2007.

Access Products

Thomson shipped 11.1 million satellite set-top boxes in 2006 (2005, 10.9 million), 2.0 million cable set-top boxes (2005, 0.6 million), and 10.0 million access products for telecom operators (2005 7.6 million) – making a total of 23.1 million access products in the year, a strong increase on the 2005 total of 19.0 million units. A significantly increased proportion of the access products for telecom operators were Advanced Service Gateways which are generally triple play enabled and command a higher average selling price (“ASP”) than traditional DSL modems. Mix also improved in satellite and cable.

In satellite, volumes in the US grew year-on-year in the second half, after falling in the first half. There was a high proportion of standard devices but new more featured devices were introduced through the year. DIRECTV remained the largest customer of this business, but the business expanded its footprint in other markets, gaining unit volumes in Europe, notably in the UK, and in the Asia-Pacific region. In Asia, our STB business is continuing to develop as operators rollout their services. Deliveries of products for Tata Sky, the Indian satellite broadcaster, began in 2006. The strategy in Asia is to pursue opportunities we expect to arise as Asian cable and satellite operators enhance featured pay and digital TV. Thomson brought featured products to market with the introduction of HD-DVR STB in Europe and next generation HD and DVR in the U.S. in 2006. Overall in satellite, this increased proportion of featured set-top boxes helped compensate for unit price reduction.

Sales of cable access products grew very well, following previous customer wins, and are showing good momentum going forward. A number of new customers were added to this product line: KDG and Premiere in Germany and StarHub in Southeast Asia, but growth was also driven by already existing customers, mainly UPC in the Netherlands and Net Servicios in Brazil. This led to significant market share gains, mainly in EMEA. Product mix was also enriched with a large share of sales achieved with featured set-top boxes. The favorable volume evolution more than offset market-driven price declines.

Thomson’s business with telecom customers grew strongly during 2006. Growth in triple and quadruple-play enabled Advanced Service Gateways continued to be the principal driver of growth in this area. As well as the continuing roll out of the France Telecom Livebox™, the ramp up of shipments of the BT Hub quadruple-play enabled gateway in the UK contributed strongly in the latter part of the year. Thomson aims to leverage its leadership in developing and launching Advanced Service Gateways, in which we currently have a high global market share, as telecom operators rollout their triple and quadruple play offerings. Revenues grew significantly in 2006, especially in the advanced gateway market, which drove an overall improvement in mix. Improved mix and volumes more than offset price erosion.

In our telephony business, although our addressable telephony handset market continued to decline in 2006 as a whole, the business maintained its level of sales. Telephony continued to experience price erosion in 2006, but was able to offset this decline with increased volumes and improved mix of sales as we capitalized on our leadership position in DECT (Digital Enhanced Cordless Telecommunications) products in Europe by expanding into the American retail market and by continuing to win placements with new and existing customers.

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