2009 Report2010 O tl k2010 Outlook

Apr 2010

1

1. Turnaround strategyL i t hi- Leveraging partnerships

- Expanding to 3 product lines (2 new)F R&D A d id & PC t bl t- Focus R&D on Android & PC tablets

2. 2009 3 Q1 20103. Q1 20104. What’s next

2

2007-2009 ARCHOS niched in high-end >300€

F 2007 t 2009 ARCHOS i hi h d f k t ith d t 300€From 2007 to 2009, ARCHOS was in high-end of market with products > 300€

Niched in high-end price segment representing less than 10 % of the overall market

4

2

3

4

t size B€

1

2

Segm

ent

0

0 50 100 150 200 250 300 350 400

Price segmentation €

Expand the product range to reconquer the centre of the market

3

Expand the Product Range by leveragingP hi i h Chi ODM

Up to 2008

Partnerships with Chinese ODMs

• Up to 2008…– All developments: IN HOUSE

INDUSTRIAL DESIGN ARCHITECTURE

HARDWARE DEVELOPMENT

SOFTWARE DEVELOPMENT

MANUFACTURINGQUALITY CONTROL

• Starting Q4 2008…– Most innovative developments : IN HOUSE

INDUSTRIAL DESIGN ARCHITECTURE

HARDWARE DEVELOPMENT

SOFTWARE DEVELOPMENT

MANUFACTURINGQUALITY CONTROL

• Other developments : PARTNERSHIP

QUALITY INDUSTRIAL DESIGN ARCHITECTURE

HARDWARE DEVELOPMENT

SOFTWARE DEVELOPMENT

MANUFACTURINGQUALITY CONTROL

4

Expand the Product Range by launching2 d li2 new product lines

ENTERTAINMENT

Positioning

MOBILITYCONNECTIVITY

3 markets, 3 product lines3 markets, 3 product lines

Internet TabletsNetbooks

Internet TabletsMP3 & MP4 Players

5

Expanding the range by focusing R&D onA d id I T bl & PC T blAndroid Internet Tablets & PC Tablets

1st to introduce Android tablets in September 2009

Best Multimedia experience with Android

ARCHOS Multimedia Google Android • HD Video - Music - Photos

• TV Recording

• Web TV & Web Radio

• Standard & Open System• Web browsing • Email• Web TV & Web Radio

• 3D GPS Navigation • Android Apps6

Outcome of turnaround strategy

Product range considerably expanded between 2008 and 2010

<100€ 100€ 200€ 200€ 300€ >300€20092008

<100€ 100€ - 200€ 200€ - 300€ >300€2010

MP3/MP4

I t t Internet Tablets

Netbooks

2010: conquer the center of the market with Internet & PC Tablets7

1 T d t t 1. Turnaround strategy

2. 20092. 2009- 2009 achievements- P&L and Balance SheetP&L and Balance Sheet- Conclusions

3. Q1 2010 3. Q1 2010 4. What’s next

8

2009 achievements

• Innovation : introduce 1st Internet & PC Tablets

Turnaround • Diversify product range to entry level MP3/MP4

• Penetrate PC Shelf with PC Tablets & Netbooks

Ch M f t i f i t t t k

Gross Margin

• Change Manufacturing from consignment to turnkey

• Leverage partnerships with Chinese ODM’s

• Restore 20 23 % Gross margin in line with industry• Restore 20 - 23 % Gross margin in line with industry

Operating Expenses

• Decreased OPEX along with revenue

• Built up competence center in China

9

Profit & Loss Statement (M€)

M€ FY 2009 FY 2008 Δ % / M€ Comments

Net Sales 57,9 73,9 (21,6%)Net sales impacted by a product range too concentrated and high-end (>300€) and cash restrictions in Q4

Gross Margin 7,8 10,1 (22,7%) Gross margin impacted by cash constraint

% GM / Net Sales 13,5% 13,7%

Operating Expenses 18,7 24,3 (22,8%) Significant cut in support functions

Current Operating income (10 9) (14 1) +3 2Current Operating income (10,9) (14,1) +3,2

Financial costs (1,3) (3,5) +2,2 Mainly Echostar Corporation interest on debt

Non recurring expenses (6,3) - (6,3)Change of strategy to turnkey implied exceptionnaldepreciation of all non finished products inventory

Net Income (18,6) (17,7)

10

Year End Balance sheet

Assets Liabilities

Fixed assets & other non current assets 6,5 Equity 30,2

Deffered taxes 14 9 Echostar debt 6 4Deffered taxes 14,9 Echostar debt 6,4

Cash on hand 20,8 Bank debt 5,1

In entor 11 4 Factors liabilities 3 3Inventory 11,4 Factors liabilities 3,3

Trade receivables 12,0 Trade payables 11,3

Suppliers advance paiements 3,7 Accruals and credits to customers 5,7

Tax & social receivables 3,8 Tax & social liabilities 6

Others receivables 1,1 Others liabilities 6,2

TOTAL 74,2 TOTAL 74,2

11

Conclusions

2008 & 2009 mainly impacted byNew strategy fully implemented in 

20102010

• Niched above 300 €• Company covers large range from 30€ to 500 €

• Covered only 1 market segment• Coverage of 3 growing segments with right entry barriers

• Consignement manufacturing• Full turnkey and no more Material costs in the B/S

• Expenses down from 28M€ in 2007 to • Company aiming at reducing its operating Expenses down from 28M€ in 2007 to 24,3M€ in 2008 and 18,7M€ in 2009

Company aiming at reducing its operating expenses

12

1. Turnaround strategy 2. 2009 Report 2. 2009 Report

3. Q1 2010 - Q1 Report- Breakeven pointp

4. What’s next

13

Q1 2010: strategy starting to pay off

M€ Q1 2010 Q1 2009 Δ %

EUROPE 11,3 9,7 +16,6%

USA 3,0 2,4 +24,9%

ASIA 0 8 1 0 20 5%ASIA 0,8 1,0 - 20,5%

TOTAL 15,1 13,1 + 15,3%

14

ARCHOS Simulation of break-even point

Revenue

Revenue 80M€ 100%

Revenue1. Expanded tablet range2. Developed MP3/MP4 and Netbooks range3. Expand in Italy and Spain4 New Chinese partnerships4. New Chinese partnerships…

Gross Margin 16M€ 20%

Gross Margin1. New china partnerships, improved competitivity2. Turnkey model versus consignement3. Increased rotation of product range and better product

life cycle

Operating expenses1 ¼ R& D

Operating Expenses

16M€ 20%1. ¼ R& D2. ¼ Sales 3. ¼ Marketing 4. ¼ Support functions

Operating Results 0M€ 0%

15Note: These elements are just a simulation of an economic model. They do not express a forecast, a forward

looking statement or an estimate of future revenue or results.

1 T d t t 1. Turnaround strategy 2. 2009 3 Q1 2010 3. Q1 2010 4. What’s next

- Renew entire MP3/MP4 range- Home Tablets

R i PC T bl t - Revamping PC Tablet - Gen 8 of Internet Tablets

16

Complete redeployment of product range

Full product range covering all price segments from 30€ to 500€

<100€ 100€ 200€ 200€ 300€ >300€<100€ 100€ - 200€ 200€ - 300€ >300€2010

MP3/MP4

I t t Internet Tablets

Netbooks

Deploy a full line of Internet Tablets ranging from 100€ to 350€17

Full range of MP3/MP4 players

Target: renewing entire range before year’s end Note: pictures above are not representative of future product design

18

Just introduced ARCHOS Home Tablets

Simple Android tablets for the home

Ultra Low Cost: 150€ to 200€19

Revamping ARCHOS 9 PC tablet

16 lt thi16 mm ultra-thin

Note: pictures above are not representative of future product design 20

To come: Gen 8 of Internet Tablets

Lineup of 6 new Internet tablets

Screen size from 3” to 10”

Retail prices ranging from 100€ to 350€e a p ces a g g o 00€ o 350€

Ultra performing: ARM Cortex 800MHz to 1GHz, 3G OpenGL, Multitouch, etc…

Note: pictures above are not representative of future product design 21

S f h b t t tSafe harbour statement

ARCHOS is a company listed on NYSE Euronext Paris, and this presentationt i t i t t t th t tit t "f d l ki t t t ” S hcontains certain statements that constitute "forward‐looking statements”. Such

forward‐looking statements are based on management's current expectationsand beliefs and are subject to a number of risks, uncertainties, assumptionsand other factors beyond ARCHOS’s control that could cause actual results toand other factors beyond ARCHOS s control that could cause actual results todiffer materially from the future results expressed, forecasted or implied bysuch forward‐looking statements due to changes in global economic andbusiness forward conditions and risks related to its operations in general.

For further and more detailed financial information and informations regardingthe risks please refer to the company’s documentation registered and

d b th F h t k k t th iti “A t ité d M héapproved by the French stock market authorities “Autorité des MarchésFinanciers”.

22