Arkle Res Regulatory News (ARK)

14 Feb 2007 07:00

ARC International (LSE:ARK), the world leader in configurablemultimedia subsystems and CPU/DSP processor cores, today announced itsunaudited financial results for the full year ended 31 December 2006. £ Highlights from Year Ended 31 December 2006 (compared to financialyear 2005): \* T-- Year of Record Growth -- Revenue up 28% to a record high of GBP 13.4 million; 47% increase for 2H 2006 compared to 2H 2005 -- Royalties up 30% to GBP 3.4 million -- Bookings up 37% to GBP 16.5 million -- Backlog (including deferred revenue) up 69% to GBP 4.3 million -- Median deal sizes increased by 36% -- Revenue from customers in Asia up 239% to GBP 3.0 million -- Net loss improved 74% to GBP 1.1 million (2005: GBP 4.3 million) -- Loss before tax was reduced by 50% from GBP 5.4 million to GBP 2.7 million -- Positive cash flow from operating activities; Closing cash and short term investments position of GBP 31.6 million -- Significant increase in new customers: now 137 -- 25 new customers, 56% increase as compared to new customers in 2005 -- 37 processor and subsystem contracts completed, up from 36 in 2005 -- Completed a multiyear license agreement expected to be valued in the region of $11 million with one of the largest U.S.-based semiconductor companies -- Industry leading provider of multimedia solutions -- Released two new ARC(R) Media Subsystems -- ARC Video Subsystem -- ARC Sound Advanced Subsystem -- Introduced the VRaptor(TM) Media Architecture, which will form the basis for future Media Subsystem development\* T £ Commenting on the company's performance, Carl Schlachte, presidentand chief executive officer, said, "2006 was a year of record growthfor ARC International. ARC's revenue exceeded expectations and grew ata faster rate than the overall market and its principal competitors byincreasing 28 percent in financial year 2006, and 47 percent in thesecond half. Royalties increased to a record high, and ARC's growingportfolio of Media Subsystems have quickly evolved into the company'smost-popular products and helped drive ASPs to their highest levels.We are pleased with the results and our leadership position within theindustry, and the company is well positioned for continued growth." £ Commenting on the financial results, Victor Young, chief financialofficer, said, "We are pleased with the top line results for financialyear 2006, and the management of costs and cash flow. We effectivelystreamlined the company's outside consultants and better managedoperations activities to increase overall effectiveness. As we movetoward breakeven these efforts will continue, and we will implementfocused programs and spending to drive the next stage of ourstrategy." £ Statement from the President and Chief Executive Officer £ Overview £ ARC's strategy of becoming the leading provider of configurablemedia subsystems and processors helped make 2006 the strongest in itshistory, and a year that marked an important stage in the evolution ofARC as a global business and leader within the semiconductor industry.Revenues, royalties, bookings, backlog, and median deal size weresignificantly higher than in financial year 2005. As expected, ARC'snewer products comprised of 92 percent of processor license revenue,which bodes well for future royalty growth. £ Furthermore, ARC's strategy has solidly differentiated it from itsprincipal competitors. ARC is the industry's only company providing acomplete configurable intellectual property (IP) solution for thedevelopment of advanced system-on-chips (SoCs) targeting multimediaconsumer applications. As a result, ARC completed contract agreementswith 56 percent more new customers than in the previous financialyear, beating its principal competitors in overall embedded multimediadesign wins. £ Configurable Media Subsystems: Hitting the Industry Sweet Spot £ Advanced consumer devices, such as digital televisions and mobilemedia players, are placing tremendous pressures on semiconductorcompanies to create more differentiated solutions at lower pricepoints. Combined with ever-tightening market windows, companiesthroughout the global chip industry are looking for new ways to createnext-generation SoCs to meet these stringent requirements. £ ARC's configurable Media Subsystems are satisfying this demand.They reduce the need for SoC designers to select and integrate thedisparate hardware IP and software components that are typically foundwithin today's consumer electronic devices. This reduces overalldevelopment and chip costs and helps bring ARC-Based(TM) SoCs tomarket more quickly. Increasingly global semiconductor companies arerecognizing the value of ARC's configurable Media Subsystems and noware actively evaluating and adopting our technology. £ The success of ARC's Media Subsystems also is reflected in thecompany's changing revenue composition. Since their introduction twoyears ago, ARC's Media Subsystems have grown to comprise close to 50percent of core license revenue in financial year 2006. Thisunderscores the value customers see in our subsystems and how they arehelping transform ARC into the "solution of choice" for multimediaconsumer applications. £ In 2006 ARC released 2 new configurable subsystems to meet marketdemand: the ARC Video and ARC Sound Advanced. ARC also introduced theVRaptor(TM) Media Architecture, from which all future ARC MediaSubsystems will be based. £ Customers that announced they had taken licenses for ARC's MediaSubsystems in 2006 included: £ -- Atmel Corporation - has taken a license for the ARC Video Subsystem, which was selected after Atmel evaluated several alternatives because it found the ARC Video Subsystem met the necessary criteria of low-cost and small size, while observing Atmel's tight power budget. £ -- AVID Electronics - has taken a license for the ARC Video Subsystem, which AVID will use to create multimedia, multi-formatted solutions that offer single- to high-definition audio and video functionality. £ -- Oki Electric Industry Co. - has taken a license for the ARC Sound Advanced Subsystem, which Oki plans to incorporate into an application specific standard product (ASSP) targeting next generation in-car audio applications. £ -- Skymedi Corporation - has taken a license for the ARC Video Subsystem to create a fully integrated SoC targeting the burgeoning multimedia player market. £ -- VXIS Technology - has taken a license for the ARC Video Subsystem, which VXIS will use to create SoCs for the high-growth portable digital TV market. £ "Tier 1" Leaders Adopting ARC and Configurability £ Another important indicator of the success of ARC's configurablesolutions is their adoption by industry leaders. In 2006 ARC announceda strategic collaboration with Toshiba, the world's 4th largestsemiconductor company according to Gartner Dataquest. Under the termsof the agreement, Toshiba has taken a multiyear license for theARChitect(TM) Processor Configurator, and ARC and Toshiba willcollaborate on the development of a next-generation version ofARChitect that is suited to Toshiba's Media embedded Processor (MeP).Throughout 2006 other "Tier 1" semiconductor companies also tooklicenses for ARC's configurable Media Subsystems and processors. £ Customers that announced they had taken licenses for ARC'sconfigurable processors in 2006 included: £ -- Unnamed industry leader - one of the largest U.S.-based semiconductor companies has taken a multiyear license expected to be valued in the region of $11 million for ARC's patented multimedia subsystems and configurable processors. £ -- Abilis Systems - adopted the configurable ARC 605 processor for the development of a single-chip TV receiver solution targeted at mobile TV terminals. £ -- BiTMICRO Networks - has taken a license for the ARC 700 family of configurable cores. BiTMICRO will use ARC's configurable processors to develop low cost, next-generation SoC devices for their state-of-the-art E-Disk(TM) solid state storage solutions. £ -- Boston Circuits, Inc. - has taken a license for the ARC 750D configurable CPU for integration into Boston Circuits' gCORE(TM) family of multi-core processors. £ -- Honeywell - has taken a license for the configurable ARC 725D core, which Honeywell will incorporate into a satellite application that requires semiconductor chips with high levels of security and reliability, as well as the ability to consume as little power as possible over extended periods of time. £ -- Motorola (formerly known as TTPCom Limited) - has taken a license for a configurable ARC 700 family core. Motorola has incorporated an ARC 700 processor together with TTPCom's proven baseband technology to develop a highly optimized SoC design for the 3G Cellular Baseband Engine (CBEmacro) product. £ -- RF Micro Devices - has signed a license agreement for the configurable ARC 600 core family, which will power future products in RFMD's fast-growing product line £ -- SMSC - has taken a license for the ARC 600 family of configurable processors for computing applications. £ -- TaifaTech - has taken a license for a configurable ARC 700 core to develop ARC-Based SoCs for next-generation consumer devices. Taifatech's pioneering design will leverage a member from ARC's patented configurable 700 CPU family to eliminate inflexible hardwired logic and consume less power than is possible using fixed architecture processors. £ Expansion in Asia £ China has one of the world's largest and fastest growingcommunities of semiconductor companies. To take advantage of thisgrowing market opportunity and as part of the company's internationalexpansion plan, in September of 2006 ARC officially launched intoChina. Within a few months ARC already had its first customer inChina, which underscores the attractiveness of ARC's configurablesolutions to customers in that region. £ As a result of ARC's expansion and momentum in Asia, customersthere contributed a record 26 percent of processor revenue infinancial year 2006. China complements ARC's ongoing businessoperations in Asia in Japan, Korea, and Taiwan. ARC is consideringexpanding to other parts of Asia that would benefit from the company'sconfigurable Media Subsystems and processors. £ Growing Ecosystem Supporting Configurability £ SoC design in the 21st century is complex and multifaceted. Manydifferent types of tools are required to complete an SoC, and havingan ecosystem of companies supporting ARC's configurable solutions isessential. Throughout 2006 an increasing number of tools and solutionsbecame available from companies supporting ARC's configurableproducts. Composed of close to 30 companies such as Microsoft, Dolby,DTS, Cadence Design Systems, this growing ecosystem is furtherevidence of the increasing adoption of configurability by thesemiconductor industry, and the trend of third party companies toprovide design tools and solutions needed for advanced SoC designusing configurability. £ Third party companies that announced support for ARC's patentedconfigurable solutions in 2006 included: £ -- Azuro, Inc. - announced that its PowerCentric low power methodology now is available for ARC licensees designing audio- or video-centric digital chips for embedded applications. £ -- Cadence Design Systems - has integrated the Cadence(R) Encounter(R) digital integrated circuit (IC) design platform into ARC's patented ARChitect(TM) Processor Configuration tool. ARC also joined Cadence's OpenChoice IP Program and became one of Cadence's featured intellectual property (IP) partners. £ -- Semiconductor Manufacturing International Corporation (SMIC) - one of the leading semiconductor foundries in the world, SMIC entered into a strategic partnership that will help bring the benefits of ARC's patented configurable technology to mainland China. £ -- Tenison Design Automation - Tenison's VTOC products will be integrated into the ARChitect Processor Configurator. This will enable ARC customers to generate SystemC cycle accurate models of ARC's configurable processors and subsystems earlier in the SoC design process, thereby enabling creation of optimized software for ARC-Based SoC implementations. £ Marketing Excellence £ An important element of ARC's achievements in financial year 2006was the focused marketing programs it executed in key regions. Inparticular, ARC's ConfigCon(TM) Developer Conference series attractedmore than 1,000 SoC designers from Taiwan, China, and Silicon Valleyto learn about why configurability and ARC's Media Subsystems arebeing rapidly adopted by companies around the world. ConfigCon alsohelped contribute to the revenue base in financial year 2006 and goingforward. £ Another indicator of the effectiveness of ARC's worldwidemarketing programs was recognition by Cadence Design Systems of ARC's"proactive and innovative marketing campaigns that attractedindustry-wide recognition." Accordingly, ARC was presented the"Collaboration Award for Excellence in Joint Marketing" by Cadence'schief executive officer after Cadence evaluated more than 200companies in its partner network. £ Embedded Systems Business Unit £ ARC's Embedded Systems Business products comprised 17 percent ofoverall revenue for year 2006. ARC will now concentrate on enhancingthese products for ARC's Media Subsystems as part of ARC's overallbusiness, not as a separate business unit. £ Board Transitions £ ARC's Chairman, Dr. Peter van Cuylenburg, has decided not to offerhimself for re-election at the forthcoming AGM. During his three and ahalf years as Chairman, Peter has made an invaluable contribution tothe turnaround and strategic re-positioning of the company. I wouldlike to thank Peter personally for all his support and guidance, andon behalf of the staff and shareholders for his contribution to thecompany. The Nomination Committee of the Board has recommended,following a selection process, that Richard Barfield be appointed toreplace Dr. Peter van Cuylenburg after the AGM, and this has beenapproved by the Board. Richard Barfield is a Chartered Accountant whohas been a non-executive director at ARC for over three years and iscurrently the Chairman of ARC's Audit Committee. Furthermore, VictorYoung has been appointed to the Board. Victor has successfullyfulfilled the role of Chief Financial Officer since joining ARC inDecember of 2005, and his promotion to the Board is well deserved.There are no details regarding Richard Barfield's or Victor Young'sappointments to the Board required to be disclosed under Rule 16.4 ofthe Listing Rules of the UK Listing Authority. £ 2007 Outlook £ Due to the strengths of the multimedia market and the increasingdemand for configurable technology, financial year 2006 was a year ofrecord growth for ARC International. All key financial metricsimproved, revenue exceeded market expectations with 28 percent growth,and the company generated positive cash flow from operations. TodayARC International increasingly is seen as the "solution of choice" forSoC designs targeting multimedia consumer devices. £ In 2007 ARC sees continued strength in the multimedia market. As aresult, ARC will continue to focus on enhancing its leadership inmultimedia subsystems and configurable processor technology. ARC alsowill cultivate further the growing ecosystem of optimized solutionsprovided by third party companies. £ CHIEF FINANCIAL OFFICER'S REVIEW £ Year ended 31 December 2006 £ Revenue £ Total revenue in 2006 was GBP 13.4 million, up 28% over the sameperiod last year (2005: GBP 10.5 million). Prior to currencytranslation, with virtually all sales in US dollars, revenue was up30% over 2005. License and engineering revenue was GBP 7.9 million(2005: GBP 6.1 million). Maintenance and service revenue was GBP 2.1million (2005: GBP 1.7 million). Royalties were GBP 3.4 million (2005:GBP 2.7 million). £ Sales in North America were 65% of total sales, Europe 13% andAsia 22%. Revenue in Asia increased 239% to GBP 3.0 million in 2006(2005: GBP 0.9 million). From a product line perspective, 83% ofrevenue was from the SoC products and the remaining 17% was from theembedded software products. £ With the increase and growth in revenue, total revenue per averageheadcount improved to GBP 108k (2005: GBP 82k). £ Costs £ Cost of revenue was down 3% to GBP 1.6 million (2005: GBP 1.6million). Average headcount in the business for financial year 2006was 124 employees compared with 128 for 2005. Research and developmentcosts, net of amounts capitalised, were up 4% to GBP 6.7 million(2005: GBP 6.4 million); sales and marketing costs were up 11% to GBP5.0 million (2005: GBP 4.5 million), and general and administrationcosts were up 7% to GBP 3.3 million (2005: 3.0 million). £ Operating expenses increased 1% to GBP 17.6 million (2005: GBP17.4 million). Loss before interest, taxation, depreciation andamortisation improved 39% to GBP 3.2 million (2005: GBP 5.2 million). £ Interest £ Interest income was GBP 1.5 million (2005: GBP 1.5 million). £ Net loss £ Net loss improved significantly to GBP 1.1 million (2005: GBP 4.3million). Loss per share improved to 0.78p (2005: 3.05p loss). £ Cash flow and balance sheet £ Cash used in operations was GBP 1.7 million (2005: GBP 4.3million). Capital expenditure was GBP 0.9 million (2005: GBP 0.8million). The outflow of cash and short-term investment (cash held ondeposit) was GBP 0.4 million (2005: GBP 1.5 million). Net assets at 31December 2006 were GBP 32.0 million (2005: GBP 32.8 million),including cash and short-term investments of GBP 31.6 million (2005:GBP 32.0 million). £ Dividend £ No dividend payment will be made for the year ended 31 December2006. \* TConsolidated profit and loss accountfor the year ended 31 December 2006 Year ended Year ended 31 December 31 December 2006 2005 (unaudited) (audited) GBP '000 GBP '000 -------------------------------------------- ------------ ------------Revenue 13,411 10,494Net operating expenses (note 2) (17,636) (17,442)-------------------------------------------- ------------ ------------Operating loss (4,225) (6,948)-------------------------------------------- ------------ ------------Interest receivable 1,509 1,530-------------------------------------------- ------------ ------------Loss before income tax (2,716) (5,418)-------------------------------------------- ------------ ------------Tax credit (note 3) 1,583 1,077-------------------------------------------- ------------ ------------Loss for the year attributable to equity shareholders (1,133) (4,341)-------------------------------------------- ------------ ------------ Basic and diluted loss per share (pence) (0.78) (3.05)\* T \* TConsolidated balance sheetas at 31 December 2006 31 December 31 December 2006 2005 (unaudited) (audited) GBP '000 GBP '000 -------------------------------------------- ------------ ------------Assets Non current assetsIntangible assets 843 1,284Property, plant and equipment 424 329Trade and other receivables 372 --------------------------------------------- ------------ ------------ 1,639 1,613-------------------------------------------- ------------ ------------ Current assetsInventory 203 -Trade and other receivables 2,959 3,679Current corporation tax receivable 700 -Short term investments 13,500 10,534Cash and cash equivalents 18,146 21,476-------------------------------------------- ------------ ------------ 35,508 35,689-------------------------------------------- ------------ ------------ Total assets 37,147 37,302 Liabilities Current liabilitiesTrade and other payables (note 5) 4,762 4,009Other liabilities - 218Provision (note 6) 306 77-------------------------------------------- ------------ ------------ 5,068 4,304-------------------------------------------- ------------ ------------Net current assets 30,440 31,385Non-current liabilitiesProvision (note 6) 38 209-------------------------------------------- ------------ ------------ 38 209-------------------------------------------- ------------ ------------Net assets 32,041 32,789-------------------------------------------- ------------ ------------ Shareholders' equityOrdinary shares 151 149Share premium 3,256 2,923Capital redemption reserve 162 162Merger reserve 107 107Other reserves 60,482 60,205Cumulative translation adjustment (457) (190)Retained earnings (31,660) (30,567)-------------------------------------------- ------------ ------------Total shareholders' equity 32,041 32,789-------------------------------------------- ------------ ------------\* T \* TConsolidated cash flow statementfor the year ended 31 December 2006 Year ended Year ended 31 December 31 December 2006 2005 (unaudited) (audited) GBP '000 GBP '000-------------------------------------------- ------------ ------------ Cash flows from operating activitiesCash used in operations (note 4) (1,678) (4,330)Interest received 1,474 1,535Taxes paid (97) (83)Tax refund 755 1,059-------------------------------------------- ------------ ------------Net cash generated/(used) in operating activities 454 (1,819)-------------------------------------------- ------------ ------------ Cash flows from investing activitiesPurchase of property, plant and equipment (353) (220)Purchase of intangible assets (552) (466)Capitalisation of R&D assets (21) (96)Movements on short term investments (2,966) (1,834)Proceeds from sale of business - 327-------------------------------------------- ------------ ------------Net cash used in investing activities (3,892) (2,289)-------------------------------------------- ------------ ------------ Cash flows from financing activitiesNet proceeds from issue of ordinary shares 375 727Finance lease principal payments - (4)-------------------------------------------- ------------ ------------Net cash generated from financing activities 375 723-------------------------------------------- ------------ ------------ Effects of exchange rate changes (267) 29-------------------------------------------- ------------ ------------ Net decrease in cash and cash equivalents (3,330) (3,356)-------------------------------------------- ------------ ------------Cash and cash equivalents at 1 January 21,476 24,832-------------------------------------------- ------------ ------------Cash and cash equivalents at 31 December 18,146 21,476-------------------------------------------- ------------ ------------\* T \* TStatement of changes in shareholders' equity Capital Share Share Merger redemption Group capital premium reserve reserve(unaudited) GBP '000 GBP '000 GBP '000 GBP '000------------------------------- -------- --------- -------- ----------At 1 January 2006 149 2,923 107 162Shares issued 2 333Change in value of ESOP reserveShare based award reserveExchange lossLoss for the year------------------------------- -------- --------- -------- ----------At 31 December 2006 151 3,256 107 162------------------------------- -------- --------- -------- ---------- Cumulative Other translation Retained Group reserves adjustment earnings Total(unaudited) GBP '000 GBP '000 GBP '000 GBP '000------------------------------- -------- ----------- -------- --------At 1 January 2006 60,205 (190) (30,567) 32,789Shares issued 335Change in value of ESOP reserve 40 40Share based award reserve 277 277Exchange loss (267) (267)Loss for the year (1,133) (1,133)------------------------------- -------- ----------- -------- --------At 31 December 2006 60,482 (457) (31,660) 32,041------------------------------- -------- ----------- -------- --------\* T £ 1 Basis of preparation £ The Preliminary Report is unaudited and does not constitutestatutory accounts within the meaning of s240 of the Companies Act1985. The statutory accounts for the year ended 2005 have beendelivered to the Registrar of Companies. The auditors' opinion onthese accounts was unqualified and did not contain a statement madeunder s237 (2) or s237 (3) of the Companies Act 1985. £ The consolidated financial statements of ARC International plchave been prepared in accordance with the EU Endorsed InternationalFinancial Reporting Standards (IFRS), IFRIC interpretations and theCompanies Act 1985 applicable to companies reporting under IFRS. Theconsolidated financial statements have been prepared under thehistorical cost convention, except in respect of certain financialinstruments. £ The preparation of financial statements in conformity with IFRSrequires the use of certain critical accounting estimates. It alsorequires management to exercise its judgment in the process ofapplying the Group's accounting policies. Although these estimates arebased on management's best knowledge of the amount, event or actions,actual results ultimately may differ from those estimates. \* T2 Summary of operating expenses Year ended Year ended 31 December 31 December 2006 2005 (unaudited) (audited) GBP '000 GBP '000 ------------------------------------------ ------------- -------------Operating expenses Cost of sales (1,591) (1,638)Research and development (6,716) (6,432)Sales and marketing (5,023) (4,523)General and administrative (3,254) (3,033)Other expenses (1,052) (1,816)------------------------------------------ ------------- -------------Net operating expenses (17,636) (17,442)------------------------------------------ ------------- ------------- Year ended Year ended 31 December 31 December 2006 2005 (unaudited) (audited) GBP '000 GBP '000------------------------------------------ ------------- ------------- Loss before interest, taxation, depreciation and amortisation (3,173) (5,236)Depreciation (229) (318)Amortisation (823) (1,199)Impairment of goodwill - (195)------------------------------------------ ------------- -------------Operating loss (4,225) (6,948)------------------------------------------ ------------- -------------\* T \* T3 Tax credit for the period Year ended Year ended 31 December 31 December 2006 2005 (unaudited) (audited) GBP '000 GBP '000 UK Adjustments in respect of prior periods (research and development credit) (1,673) (1,166)Foreign tax On profits for the period 2 60 Irrecoverable withholding tax 88 29 ------------- ------------- (1,583) (1,077) ============= =============\* T £ The research and development tax credit of GBP 1,673,000 in 2006includes the claim for 2003 and 2004 (2005: GBP 1,166,000 included thecredit for 2002). The claim for 2004, GBP 700,000, is included inamounts receivable as it was outstanding at 31 December 2006 (2005:nil). \* T4 Cash used in operations Year ended Year ended 31 December 31 December 2006 2005 (unaudited) (audited) GBP '000 GBP '000 ------------------------------------------ ------------- ------------- Net loss for the year (1,133) (4,341)Adjustments for:Gain on business disposal - (327)Interest receivable (1,509) (1,530)Tax credit (1,583) (1,077)Amortisation 823 1,199Depreciation 229 318Goodwill impairment - 195Loss on disposal of property, plant and equipment 5 -Share based award expense 277 431(Increase) in inventories (203) -(Increase)/decrease in trade and other receivables 393 (56)Increase in trade and other payables 965 1,096Increase/(decrease) in provisions 58 (238)------------------------------------------ ------------- -------------Cash used in operations (1,678) (4,330)------------------------------------------ ------------- -------------\* T \* T5 Trade and other payables-current 31 December 31 December 2006 2005 (unaudited) (audited) GBP '000 GBP '000------------------------------------------ ------------- ------------- Trade payables 768 611Other taxes and social security costs 122 158Accruals 2,038 2,013Deferred revenue 1,834 1,227------------------------------------------ ------------- -------------Trade and other payables-current 4,762 4,009------------------------------------------ ------------- -------------\* T \* T6 Provisions Non- Total Current current provision(unaudited) GBP '000s GBP '000s GBP '000s----------------------------------- ---------- ----------- ----------- At 1 January 2006 77 209 286Utilised (77) - (77)Reclassified from non-current to current 209 (209) -Charges to the income statement 97 38 135----------------------------------- ---------- ----------- -----------At 31 December 2006 306 38 344----------------------------------- ---------- ----------- -----------\* T £ The utilisation of the provisions in 2006 relates to onerous leasecommitments in Elstree, UK. A provision of GBP 135,000 was establishedfor the onerous lease commitment in Santa Cruz, USA, as the facilitywas closed in January 2007. The balance of the provision GBP 209,000represents an onerous lease commitment and the associated restorationcosts for the Elstree, UK facility. Management anticipates theutilisation of the Elstree provision over the next year, as the leaseterminates in July 2007, and the Santa Cruz provision over the nexttwo years, as the lease terminates in May 2008. £ About ARC International plc £ ARC International is the world leader in configurable subsystemsand CPU/DSP processors that are used by semiconductor companiesworldwide for next-generation system-on-chip (SoC) design. ARC'spatented configurable processor technology enables the development ofconsumer, networking, mass storage and other cost-sensitive devicesthat are smaller and provide a higher degree of differentiation overwhat can be created using "fixed architecture" core alternatives. £ ARC International maintains a worldwide presence with corporateand research and development offices in California, USA, and Elstree,UK. For more information visit www.ARC.com. ARC International islisted on the London Stock Exchange as ARC International plc(LSE:ARK). £ ARC, ARC-Based, ARChitect, and the ARC logo are trademarks orregistered trademarks of ARC International. All other brands orproduct names contained herein are the property of their respectiveowners. This release may contain "forward-looking statements"including statements concerning plans, future events or performanceand underlying assumptions and other statements that are other thanstatements of historical fact. ARC's actual results for future periodsmay differ materially from those expressed in any forward-lookingstatements made by or on behalf of ARC. The factors that could causeactual results to differ materially include, without limitation,general economic and business conditions; potential for fluctuationsin and unpredictability of ARC's quarterly results; assumptionsregarding ARC's future business strategy; the ability of semiconductorpartners to manufacture and market microprocessors based on the ARC(R)architecture; the acceptance of ARC technology by systems companies;the availability of development tools, systems software and operatingsystems; the rapid change in technology in the semiconductor industryand ARC's ability to develop new products in a timely manner;competition from other architectures; ARC's ability to protect itsintellectual property; regulatory policies adopted by governmentalauthorities; risks associated with ARC's international operations;management of ARC's growth; ARC's ability to attract and retainemployees; and other uncertainties that are discussed in the"Investment Considerations" section of ARC's listing particulars dated28 September 2000 filed with the United Kingdom Listing Authority andthe Registrar of Companies in England and Wales. 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