A Conference Call Discussing These Results Will be Audiocast Today
at 08:30 BST at http://www.arm.com/ir CAMBRIDGE, England, April 29
/PRNewswire-FirstCall/ -- ARM Holdings plc [(LSE:ARM);
(NASDAQ:ARMH)] announces its unaudited financial results for the
first quarter ended 31 March 2008 Highlights(US GAAP unless
otherwise stated) - Q1 dollar revenues at $134.3m, up 4%
year-on-year - Processor Division (PD) total revenue at $91.1m, up
11% year-on-year - PD royalty revenue at $54.8m, up 22%
year-on-year - 889 million units shipped - Physical IP Division
(PIPD) total revenue at $20.9m, up 7% sequentially - PIPD
underlying royalty revenue up 20% year-on-year - Group backlog flat
quarter-on-quarter, remaining at record high - Normalised PBT and
EPS at GBP21.3m (US GAAP GBP12.2m) and 1.17p (US GAAP 0.69p)
respectively - Net cash of GBP55m at end Q1 - GBP13m spent on share
buybacks in Q1 - Normalised cash generation of GBP14m in Q1 - FY
2008 guidance unchanged Commenting on the results, Warren East,
Chief Executive Officer, said: "ARM has made an encouraging start
to 2008. Our Q1 results demonstrate robust operational execution,
with sequential revenue growth in PIPD and continued strong demand
for our Cortex(R) family of microprocessors with a further seven
licenses being signed in the quarter. Growth in underlying royalty
revenues in both PD and PIPD of more than 20% year-on-year provides
further evidence of the increasing use of ARM's technology in the
rapidly broadening range of consumer electronics products." Q1 2008
- Revenue Analysis Revenue ($M)*** Revenue (GBPM) Q1 2008 Q1 2007 %
Change Q1 2008 Q1 2007 % Change PD Licensing 36.3 37.4 -3% 18.3
19.4 -6% Royalties 54.8 45.0 22% 27.8 23.0 21% Total PD 91.1 82.4
11% 46.1 42.4 9% PIPD Licensing 11.8 16.9 -30% 5.9 8.7 -32%
Royalties 9.1(1) 8.4(1) 9% 4.7(1) 4.3(1) 9% Total PIPD 20.9 25.3
-17% 10.6 13.0 -18% Development Systems 14.2 13.5 5% 7.1 6.9 3%
Services 8.1 8.0 2% 4.1 4.2 -3% Total Revenue 134.3 129.2 4% 67.9
66.5 2% (1) Includes catch-up royalties in Q1 2008 of $0.8m
(GBP0.4m) and in Q1 2007 of $1.5m (GBP0.8m). Q1 2008 - Financial
Summary Normalised* US GAAP GBPM Q1 2008 Q1 2007 % Change Q1 2008
Q1 2007 Revenue 67.9(1) 66.5 2% 67.9 66.5 Income before income tax
21.3 21.6 -1% 12.2 12.7 Operating margin 30.6% 30.3% 17.2% 16.9%
Earnings per share (pence) 1.17 1.14 3% 0.69 0.70 Net cash
generation** 13.7 15.6 Effective fx rate ($/GBP) 1.98 1.94 (1)
Equivalent to GBP69.1m at Q1 2007 effective $/GBP rate Current
trading and prospects ARM has made an encouraging start to 2008
with sequential revenue growth in PIPD and positive momentum in
both PD and PIPD royalty revenues. We remain cautious in the short
term given the uncertainty in both the semiconductor industry and
the wider macroeconomic environment. Against this backdrop and
given the potential impact of industry seasonality on royalty
revenues, total dollar revenues in Q2 are unlikely to be higher
than Q1. However, consistent with our guidance in February,
assuming no marked deterioration in the trading environment, we
continue to expect to increase dollar revenues in FY 2008 by at
least the growth rate achieved in 2007. * Normalised figures are
based on US GAAP, adjusted for acquisition-related, share-based
remuneration and restructuring charges. For reconciliation of GAAP
measures to normalised non-GAAP measures detailed in this document,
see notes 6.1 to 6.21. ** Before dividends and share buybacks, net
cash flows from share option exercises and acquisition
consideration - see notes 6.12 to 6.15. *** Dollar revenues are
based on the group's actual dollar invoicing, where applicable, and
using the rate of exchange applicable on the date of the
transaction for invoicing in currencies other than dollars.
Approximately 95% of invoicing is in dollars. **** Each American
Depositary Share (ADS) represents three shares. Financial review
(US GAAP unless otherwise stated) Total revenues Total dollar
revenues in Q1 2008 were $134.3 million, up 4% versus Q1 2007.
Sterling revenues of GBP67.9 million were up 2% year-on-year after
a 2% weakening of the dollar against sterling (ARM's effective rate
of $1.98 in Q1 2008 compared to $1.94 in Q1 2007). At the Q1 2007
effective rate, Q1 2008 sterling revenues would have been GBP69.1
million. License revenues Total dollar license revenues in Q1 2008
fell by 12% to $48.1 million, representing 36% of group revenues,
compared to $54.3 million in Q1 2007. License revenues comprised
$36.3 million from PD and $11.8 million from PIPD. Royalty revenues
Total dollar royalty revenues in Q1 2008 grew by 20% to $63.9
million, representing 47% of group revenues, compared to $53.4
million in Q1 2007. Royalty revenues comprised $54.8 million from
PD and $9.1 million from PIPD. Against the backdrop of growth in
more sophisticated mobile phones, underlying PD royalties grew 12%
sequentially and 22% compared to Q1 2007. Total PIPD royalties grew
9% to $9.1 million including $0.8 million of catch-up royalties.
Underlying royalties were up by 20% year-on-year. Development
Systems and Service revenues Sales of development systems in Q1
2008 were $14.2 million, representing 11% of group revenues,
compared to $13.5 million in Q1 2007. Service revenues in Q1 2008
were $8.1 million, representing 6% of group revenues, compared to
$8.0 million in Q1 2007. Gross margins Gross margins in Q1 2008,
excluding the FAS123(R) charge of GBP0.3 million (see below), were
88.8% compared to 89.4% in Q4 2007 and 89.5% in Q1 2007. The lower
gross margin in Q1 2008 is due primarily to the higher revenue
contribution from technology which includes payments to
collaborative partners recorded as a cost of sale. Operating
expenses and operating margin Total operating expenses in Q1 2008
were GBP48.4 million (Q1 2007: GBP48.0 million) including
amortisation of intangible assets and other acquisition-related
charges of GBP4.5 million (Q1 2007: GBP5.1 million), GBP3.6 million
(Q1 2007: GBP3.6 million) in relation to the fair value of
share-based remuneration and related payroll taxes and
restructuring charges of GBP0.7 million (Q1 2007: nil). Total
share-based remuneration and related payroll tax charges of GBP3.9
million in Q1 2008 were included within cost of revenues (GBP0.3
million), research and development (GBP2.6 million), sales and
marketing (GBP0.5 million) and general and administrative (GBP0.5
million). Normalised income statements for Q1 2008 and Q1 2007 are
included in notes 6.20 and 6.21 below which reconcile US GAAP to
the normalised non-GAAP measures referred to in this earnings
release. Operating expenses (excluding acquisition-related,
share-based remuneration and restructuring charges) in Q1 2008 were
GBP39.5 million compared to GBP39.3 million in Q1 2007 and GBP37.2
million in Q4 2007. The sequential increase in operating expenses
from Q4 2007 to Q1 2008 is due primarily to salary inflation
effective from the beginning of the year, the quarterly phasing
profile of certain vacation pay and sabbatical accruals and a
negative quarter-on-quarter foreign exchange impact on opex. Cost
management remains a key focus with opex in the remaining quarters
of 2008 expected to be lower than the Q1 level, subject to the
potential negative impact on opex arising from movements in
exchange rates. Normalised research and development expenses were
GBP16.3 million in Q1 2008, representing 24% of revenues, compared
to GBP15.1 million in Q4 2007 and GBP16.6 million in Q1 2007.
Normalised sales and marketing costs in Q1 2008 were GBP11.0
million, being 16% of revenues, compared to GBP11.1 million in Q4
2007 and GBP11.1 million in Q1 2007. Normalised general and
administrative expenses in Q1 2008 were GBP12.2 million,
representing 18% of revenues, compared to GBP11.1 million in Q4
2007 and GBP11.6 million in Q1 2007. Normalised operating margin in
Q1 2008 was 30.6% (6.1) compared to 31.5% (6.2) in Q4 2007 and
30.3% (6.3) in Q1 2007.Operating margins in Q1 2008 were slightly
ahead of Q1 2007 despite the weakening of the US dollar against
sterling. Earnings and taxation Income before income tax in Q1 2008
was GBP12.2 million compared to GBP12.7 million in Q1 2007. After
adjusting for acquisition-related, share-based remuneration and
restructuring charges, normalised income before income tax in Q1
2008 was GBP21.3 million (6.5) compared to GBP21.6 million (6.7) in
Q1 2007. The group's effective tax rate under US GAAP in Q1 2008
was 27% (Q1 2007: 25%) reflecting the availability of research and
development tax credits and a reduction in the benefits arising
from the structuring of the Artisan(R) acquisition. In Q1 2008,
fully diluted earnings per share prepared under US GAAP were 0.7
pence (4.1 cents per ADS****) compared to earnings per share of 0.7
pence (4.1 cents per ADS****) in Q1 2007. Normalised fully diluted
earnings per share in Q1 2008 were 1.17 pence (6.16) per share (7.0
cents per ADS****) compared to 1.14 pence (6.18) (6.7 cents per
ADS****) in Q1 2007. Balance sheet Intangible assets at 31 March
2008 were GBP380.4 million, comprising goodwill of GBP345.2 million
and other intangible assets of GBP35.2 million, compared to
GBP344.7 million and GBP39.4 million respectively at 31 December
2007. Total accounts receivable were GBP72.0 million at 31 March
2008, comprising GBP53.9 million of trade receivables and GBP18.1
million of amounts recoverable on contracts, compared to GBP68.2
million at 31 December 2007, comprising GBP43.7 million of trade
receivables and GBP24.5 million of amounts recoverable on
contracts. Days sales outstanding (DSOs) were 52 at 31 March 2008
compared to 49 at 31 December 2007 and 41 at 31 March 2007. Having
been temporarily higher at the end of Q1 2008, DSOs are now back to
more typical levels following strong cash receipts in April. Cash
flow and share buyback programme Net cash at 31 March 2008 was
GBP55.2 million (6.9) compared to GBP51.3 million (6.10) at 31
December 2007. Normalised free cash flow in Q1 2008 was GBP13.7
million (6.12). During the quarter, GBP13.0 million of cash was
returned to shareholders through the purchase of 15 million shares.
It is anticipated that the buyback programme will resume after the
announcement of these results. Operating review Backlog Group order
backlog at the end of Q1 2008 remained at the record high level
that was achieved in Q4 2007 and was up more than 20% on the level
at the end of Q1 2007. PD licensing Fifteen processor licenses were
signed in Q1 across the entire range of processor technology. Seven
Cortex licenses were signed, including one further license for our
newest microprocessor, the Cortex-A9 core. Interest in ARM's 3D
Mali(TM) graphics technology continued to develop, with Broadcom
taking a license in the quarter, further demonstrating ARM's
success in selling specialist processor technologies beyond the
traditional ARM(R) microprocessors. Q1 2008 PD Licensing Analysis -
542 cumulative processor licenses Multi-use Term Per-use Cumulative
U D N U D N U D N Total Total ARM7 1 1 154 ARM9 1 1 1 1 4 243 ARM11
1 1 65 Cortex-M3 1 2 1 4 18 Cortex-R4 1 1 11 Cortex-A8 1 1 10
Cortex-A9 1 1 5 Mali 1 1 6 Other 1 1 30 Total 15 542 U:Upgrade
D:Derivative N:New PD royalties PD unit shipments grew strongly in
Q4 2007 (our partners report royalties one quarter in arrears)
buoyed by growth in smartphones, audio players and other consumer
electronics. Reported processor unit shipments were 889 million, up
7% sequentially and up 23% compared to Q1 2007. The ARM11(TM)
family achieved 80% sequential growth and now represents
approximately 3% of all units shipped. Shipments of new
Cortex-based devices gathered pace with more than a quarter of a
million units being shipped in a quarter for the first time. The
ARM7(TM) and ARM9(TM) families now represent 57% and 40% of total
shipments respectively. Not only does this demonstrate the
longevity of ARM technology but it also underscores the material
additional value to be derived from the significant license sales
of ARM11 and later technology that have already been made. The
proportion of total units shipped in mobile devices grew to 70%, up
from 67% in the previous quarter. The cause of this shift was a
significant increase in the proportion of smartphones shipped
during the Christmas season which contain more ARM technology per
phone than less feature-rich devices. For the quarter, an ARM
technology-based mobile phone contained an average of 1.7 ARM
microprocessors. As smartphones typically use more sophisticated
semiconductor devices with higher average selling prices per chip
and as ARM's royalties are typically based on a percentage of the
selling price of the semiconductor chip, the overall average
royalty per ARM microprocessor increased from 5.9c in Q4 2007 to
6.2c in Q1 2008. In Q1 2008, shipments in ARM-based chips in
embedded devices continued to grow compared to the previous
quarter. Microcontrollers continued to grow, up 55% compared with
Q1 2007, and ARM powered smartcards, used in secure identity cards,
credit cards and SIM cards grew 25% sequentially to 30m units. The
contribution from units shipped in home and enterprise was flat
with growth in units shipped in digital TV being offset by falls in
digital still cameras. PIPD licensing PIPD license revenue
increased sequentially to $11.8 million in Q1 from $10.8 million in
Q4 2007. Thirteen physical IP licenses were signed in the quarter
for products across the technology portfolio, including two further
licenses with top ten semiconductor companies. The attractiveness
of ARM's combined processor and physical IP offer was illustrated
again in Q1 with additional business being signed which included
technology from both divisions. In February, we described how the
PIPD business is transitioning from the technology catch-up phase
which has been a key strategic focus since the acquisition of
Artisan, to a more business-as-usual state for the development of
leading-edge technology. In order to facilitate this transition, a
reorganization of the business was undertaken in Q1 which included
the creation of dedicated design centres to align better the skill
sets of each centre with the challenges of customer centric
development of leading-edge technology. This alignment included the
elimination of 30 positions from our US operation in the quarter
resulting in a restructuring charge of GBP0.7 million. Also in Q1,
we have strengthened PIPD's ability to capitalise on the
longer-term growth opportunity by investing both in key engineering
and commercial management and in the infrastructure to improve
internal processes to drive increased productivity and improved
product delivery to customers. We have increased the breadth of our
product offering through the addition of products available via our
web channel and achieved significant milestones in the delivery of
advanced technology to tier-1 customers. Q1 2008 PIPD Licensing
Analysis - 363 cumulative physical IP licenses Process Node (nm)
Total Platform Licenses Metro 180/130 2 Advantage 65 1 Standard
Cell Libraries Advantage 65/90 3 Metro 180 1 Memory Compilers
Advantage 90 1 Velocity PHYs 90/65 5 Quarter Total 13 Cumulative
Total 363 PIPD royalties PIPD royalties in Q1 2008 were $9.1
million, up 4% from $8.7 million in Q4 2007 and up 9% from $8.4
million in Q1 2007. Underlying royalties for PIPD were $8.3 million
up 20% year-on-year. Sequentially, underlying royalties were
broadly flat, representing market share gains given the 2.3%
decline (source - Gartner Dataquest, January 2008) in foundry
utilization rates during the corresponding period. People At 31
March 2008, ARM had 1,707 full-time employees, a net reduction of
21 since the year end, following the restructuring activities in
PIPD in the first quarter. At the end of Q1, the group had 659
employees based in the UK, 494 in the US, 188 in Continental
Europe, 293 in India and 73 in the Asia Pacific region. Change to
ARM's NASDAQ ticker On 14 April 2008, ARM American Depositary
Receipts (ADR) started trading on NASDAQ under the new ticker
symbol "ARMH". This change makes ARM ADRs compatible with the new
NASDAQ platform and better aligns ARM with other leading NASDAQ
semiconductor companies such as BRCM, INTC, MRVL and QCOM. The 3:1
ratio between ARM ordinary shares and an American Depositary Share
(ADS) remains unchanged. Legal matters ARM is currently involved in
ongoing litigation proceedings with Technology Properties Limited,
Inc. Details are set out in the 2007 Annual Report on Form 20-F
filed with the Securities and Exchange Commission on 7 April 2008.
Based on independent legal advice, ARM does not expect any
significant liability to arise in respect of these proceedings. ARM
had been involved in ongoing litigation proceedings with Nazomi
Communications, Inc. The litigation has now been concluded with a
ruling granted in ARM's favour. ARM Holdings plc First Quarter
Results - US GAAP Quarter Quarter ended ended 31 March 31 March
2008 2007 Unaudited Unaudited GBP'000 GBP'000 Revenues Product
revenues 63,817 62,300 Service revenues 4,071 4,192 Total revenues
67,888 66,492 Cost of revenues Product costs (5,800) (5,638)
Service costs (2,040) (1,590) Total cost of revenues (7,840)
(7,228) Gross profit 60,048 59,264 Research and development
(18,966) (18,997) Sales and marketing (11,554) (11,906) General and
administrative (12,702) (12,462) Restructuring costs (718) -
Amortization of intangibles purchased through (4,430) (4,655)
business combination Total operating expenses (48,370) (48,020)
Income from operations 11,678 11,244 Interest, net 571 1,457 Income
before income tax 12,249 12,701 Provision for income taxes (3,307)
(3,124) Net income 8,942 9,577 Earnings per share (assuming
dilution) Shares outstanding ('000) 1,301,123 1,377,589 Earnings
per share - pence 0.7 0.7 Earnings per ADS (assuming dilution) ADSs
outstanding ('000) 433,708 459,196 Earnings per ADS - cents 4.1 4.1
ARM Holdings plc Consolidated balance sheet - US GAAP 31 March 31
December 2008 2007 Unaudited Audited GBP'000 GBP'000 Assets Current
assets: Cash and cash equivalents 55,191 49,509 Short-term
investments 36 232 Marketable securities - 1,582 Accounts
receivable, net of allowance of GBP1,528,000 in 2008 and
GBP1,504,000 in 2007 72,018 68,232 Inventory: finished goods 2,112
2,339 Income taxes receivable 7,492 6,552 Prepaid expenses and
other assets 15,578 13,089 Investments - 1,180 Total current assets
152,427 142,715 Deferred income taxes 11,139 11,309 Prepaid
expenses and other assets 2,492 2,860 Property and equipment, net
11,224 12,042 Goodwill 345,192 344,663 Other intangible assets
35,188 39,375 Investments 3,701 3,701 Total assets 561,363 556,665
Liabilities and shareholders' equity Accounts payable 2,468 2,230
Income taxes payable 8,306 3,704 Personnel taxes 1,777 1,751
Accrued liabilities 20,837 25,670 Deferred revenue 28,282 27,543
Total current liabilities 61,670 60,898 Deferred income taxes 1,346
2,027 Total liabilities 63,016 62,925 Shareholders' equity Ordinary
shares 672 672 Additional paid-in capital 371,876 367,680 Treasury
stock, at cost (91,463) (90,000) Retained earnings 234,494 234,455
Accumulated other comprehensive income: Unrealized holding loss on
available-for-sale securities, net of tax of GBPnil (2007:
GBP85,000) (68) (214) Cumulative translation adjustment (17,164)
(18,853) Total shareholders' equity 498,347 493,740 Total
liabilities and shareholders' equity 561,363 556,665 Notes to the
Financial Information (1) Basis of preparation US GAAP The
financial information prepared in accordance with the Company's US
GAAP accounting policies comprises the consolidated balance sheets
as of 31 March 2008 and 31 December 2007 and related income
statements for the periods then ended, together with related notes.
In preparing this financial information management has used the
principal accounting policies as set out in the Company's annual
financial statements and Form 20-F for the year ended 31 December
2007. (2) Share-based remuneration charges and acquisition-related
expenses Included within the US GAAP income statement for the
quarter ended 31 March 2008 are share-based remuneration charges of
GBP3.6 million: GBP0.2 million in cost of revenues, GBP2.4 million
in research and development costs, GBP0.5 million in sales and
marketing costs and GBP0.5 million in general and administrative
costs. (3) Accounts receivable Included within accounts receivable
at 31 March 2008 are GBP18.1 million (31 December 2007: GBP24.5
million) of amounts recoverable on contracts. (4) Consolidated
statement of changes in shareholders' equity (US GAAP) Additional
paid-in Share capital Treasury Retained capital GBP'000 stock
earnings GBP'000 GBP'000 GBP'000 At 1 January 2008 672 367,680
(90,000) 234,455 Net income - - - 8,942 Tax effect of - (524) - -
option exercises Amortization of deferred compensation - 3,469 - -
Conversion of liability award to equity award - 1,251 - - Issuance
of shares from treasury - - 11,556 (8,903) Purchase of own shares -
- (13,019) - Other comprehensive income: Realized gain on
available-for-sale security (net of - - - - tax of GBP85,000)
Unrealized holding losses on available-for-sale - - - - securities
Currency - - - - translation adjustment At 31 March 2008 672
371,876 (91,463) 234,494 (4) Consolidated statement of changes in
shareholders' equity (US GAAP) Continued. Unrealized Cumulative
holding translation gain/(loss) adjustment GBP'000 GBP'000 Total
GBP'000 At 1 January 2008 (214) (18,853) 493,740 Net income - -
8,942 Tax effect of - - (524) option exercises Amortization of
deferred compensation - - 3,469 Conversion of liability award to
equity award - - 1,251 Issuance of shares - - 2,653 from treasury
Purchase of own - - (13,019) shares Other comprehensive income:
Realized gain on available-for-sale security (net of 214 - 214 tax
of GBP85,000) Unrealized holding losses on available-for-sale (68)
- (68) securities Currency - 1,689 1,689 translation adjustment At
31 March 2008 (68) (17,164) 498,347 (5) Consolidated statement of
comprehensive income (US GAAP) Q1 2008 Q4 2007 Q1 2007 FY 2007
GBP'000 GBP'000 GBP'000 GBP'000 Net income 8,942 9,859 9,577 36,842
Realized gain on 214 - - - available-for-sale security, net of tax
Unrealized holdings gains / (losses) on (68) 237 (230) (608)
available-for-sale securities, net of tax Currency translation
adjustment 1,689 10,543 (927) (6,777) Total comprehensive income
10,777 20,639 8,420 29,457 (6) Non-GAAP measures The following
non-GAAP measures, including reconciliations to the US GAAP
measures, have been used in this earnings release. These measures
have been presented as they allow a clearer comparison of operating
results that exclude acquisition-related charges, share-based
remuneration and restructuring charges and profit on disposal and
impairment of available-for-sale investments. All figures in
GBP'000 unless otherwise stated. (6.1) (6.2) (6.3) (6.4) Q1 2008 Q4
2007 Q1 2007 FY 2007 Income from operations (US GAAP) 11,678 10,482
11,244 42,838 Restructuring costs 718 138 - 1,037
Acquisition-related charge - 4,430 4,397 4,655 18,226 amortization
of intangibles Acquisition-related charge - other 45 857 397 1,735
payments Share-based remuneration and 3,899 3,230 3,872 16,341
related payroll taxes Impairment of available-for-sale - 1,162 -
1,162 security Normalised income from operations 20,770 20,266
20,168 81,339 As % of revenue 30.6% 31.5% 30.3% 31.4% (6.5) (6.6)
(6.7) (6.8) Q1 2008 Q4 2007 Q1 2007 FY 2007 Income before income
tax (US GAAP) 12,249 11,529 12,701 48,240 Restructuring costs 718
138 - 1,037 Acquisition-related charge - 4,430 4,397 4,655 18,226
amortization of intangibles Acquisition-related charge - other 45
857 397 1,735 payments Share-based remuneration and 3,899 3,230
3,872 16,341 related payroll taxes Impairment of available-for-sale
- 1,162 - 1,162 investment Normalised income before income tax
21,341 21,313 21,625 86,741 (6.9) (6.10) (6.11) 31 March 31 31 2008
December March 2007 2007 Cash and cash equivalents 55,191 49,509
92,595 Short-term investments 36 232 19,069 Short-term marketable
securities - 1,582 15,117 Normalised cash 55,227 51,323 126,781
(6.12) (6.13) (6.14) (6.15) Q1 2008 Q4 2007 Q1 2007 FY 2007
Normalised cash at end of period 55,227 51,323 126,781 51,323 (as
above) Less: Normalised cash at (51,323)(99,284)(128,494)(128,494)
beginning of period Add back: Cash outflow from 931 100 2,618 6,014
acquisitions (net of cash acquired) Add back: Cash outflow from -
10,534 - 18,547 payment of dividends Add back: Cash outflow from
13,019 49,568 20,159 128,561 purchase of own shares Less: Cash
inflow from exercise (2,653) (1,740) (5,509) (18,892) of share
options Less: Cash inflow from sale of (1,478) - - -
available-for-sale investments Normalised cash generation 13,723
10,501 15,555 57,059 (6.16) (6.17) (6.18) (6.19) Q1 2008 Q4 2007 Q1
2007 FY 2007 Net income (US GAAP) 8,942 9,859 9,577 36,842
Restructuring costs 718 138 - 1,037 Acquisition-related charge -
4,430 4,397 4,655 18,226 amortization of intangibles
Acquisition-related charge - 45 857 397 1,735 other payments
Share-based remuneration and 3,899 3,230 3,872 16,341 related
payroll taxes Impairment of available-for-sale - 1,162 - 1,162
investment Estimated tax impact of above (2,816) (2,928) (2,849)
(11,523) charges Normalised net income 15,218 16,715 15,652 63,820
Dilutive shares ('000) 1,301,123 1,335,144 1,377,589 1,366,384
Normalised diluted EPS 1.17p 1.25p 1.14p 4.67p (6.20) Normalised
income statement for Q1 2008 Other Share- Intang acquisi based
-ible -tion Restruct- remuner amortiza -related -uring Normalised
-ation -tion charges charges US GAAP GBP'000 GBP'000 GBP'000
GBP'000 GBP'000 GBP'000 Revenues Product 63,817 - - - - 63,817
revenues Service 4,071 - - - - 4,071 revenues Total revenues 67,888
- - - - 67,888 Cost of revenues Product costs (5,800) - - - -
(5,800) Service costs (1,772) (268) - - - (2,040) Total cost of
(7,572) (268) - - - (7,840) revenues Gross profit 60,316 (268) - -
- 60,048 Research and (16,312) (2,616) - (38) - (18,966)
development Sales and (11,048) (508) - 2 - (11,554) marketing
General and (12,186) (507) - (9) - (12,702) administrative
Restructuring - - - - (718) (718) costs Amortization of intangibles
purchased through - - (4,430) - - (4,430) business combination
Total (39,546) (3,631) (4,430) (45) (718) (48,370) operating
expenses Income from 20,770 (3,899) (4,430) (45) (718) 11,678
operations Interest 571 - - - - 571 Income before 21,341 (3,899)
(4,430) (45) (718) 12,249 income tax Provision for (6,123) 841
1,672 16 287 (3,307) income taxes Net income 15,218 (3,058) (2,758)
(29) (431) 8,942 Earnings per share (assuming dilution) Shares
1,301,123 1,301,123 outstanding ('000) Earnings per 1.17 0.69 share
- pence Earnings per ADS (assuming dilution) ADSs 433,708 433,708
outstanding ('000) Earnings per 6.97 4.10 ADS - cents (6.21)
Normalised income statement for Q1 2007 Other Share acquis -based
-ition remuner Intangible -related Normalised -ation amortization
charges US GAAP GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Revenues
Product 62,300 - - - 62,300 revenues Service 4,192 - - - 4,192
revenues Total revenues 66,492 - - - 66,492 Cost of revenues
Product costs (5,638) - - - (5,638) Service costs (1,358) (232) - -
(1,590) Total cost of (6,996) (232) - - (7,228) revenues Gross
profit 59,496 (232) - - 59,264 Research and (16,589) (2,246) -
(162) (18,997) development Sales and (11,132) (774) - - (11,906)
marketing General and (11,607) (620) - (235) (12,462)
administrative Amortization of intangibles purchased through - -
(4,655) - (4,655) business combination Total (39,328) (3,640)
(4,655) (397) (48,020) operating expenses Income from 20,168
(3,872) (4,655) (397) 11,244 operations Interest 1,457 - - - 1,457
Income before 21,625 (3,872) (4,655) (397) 12,701 income tax
Provision for (5,973) 937 1,796 116 (3,124) income taxes Net income
15,652 (2,935) (2,859) (281) 9,577 Earnings per share (assuming
dilution) Shares 1,377,589 1,377,589 outstanding ('000) Earnings
per 1.14 0.70 share - pence Earnings per ADS (assuming dilution)
ADSs 459,196 459,196 outstanding ('000) Earnings per 6.69 4.09 ADS
- cents Note The results shown for Q1 2008, Q4 2007 and Q1 2007 are
unaudited. The results shown for FY 2007 are audited. The financial
information contained in this announcement does not constitute
statutory accounts within the meaning of Section 240(3) of the
Companies Act 1985. Statutory accounts of the Company in respect of
the financial year ended 31 December 2007, upon which the Company's
auditors have given a report which was unqualified and did not
contain a statement under Section 237(2) or Section 237(3) of that
Act, will soon be delivered to the Registrar of Companies. The
results for ARM for Q1 2008 and previous quarters as shown reflect
the accounting policies as stated in Note 1 to the US GAAP
financial statements in the Annual Report and Accounts for the
fiscal year ended 31 December 2007 and in the Annual Report on Form
20-F for the fiscal year ended 31 December 2007. This document
contains forward-looking statements as defined in section 102 of
the Private Securities Litigation Reform Act of 1995. These
statements are subject to risk factors associated with the
semiconductor and intellectual property businesses. When used in
this document, the words "anticipates", "may", "can", "believes",
"expects", "projects", "intends", "likely", similar expressions and
any other statements that are not historical facts, in each case as
they relate to ARM, its management or its businesses and financial
performance and condition are intended to identify those assertions
as forward-looking statements. It is believed that the expectations
reflected in these statements are reasonable, but they may be
affected by a number of variables, many of which are beyond our
control. These variables could cause actual results or trends to
differ materially and include, but are not limited to: failure to
realize the benefits of our recent acquisitions, unforeseen
liabilities arising from our recent acquisitions, price
fluctuations, actual demand, the availability of software and
operating systems compatible with our intellectual property, the
continued demand for products including ARM's intellectual
property, delays in the design process or delays in a customer's
project that uses ARM's technology, the success of our
semiconductor partners, loss of market and industry competition,
exchange and currency fluctuations, any future strategic
investments or acquisitions, rapid technological change, regulatory
developments, ARM's ability to negotiate, structure, monitor and
enforce agreements for the determination and payment of royalties,
actual or potential litigation, changes in tax laws, interest rates
and access to capital markets, political, economic and financial
market conditions in various countries and regions and capital
expenditure requirements. More information about potential factors
that could affect ARM's business and financial results is included
in ARM's Annual Report on Form 20-F for the fiscal year ended 31
December 2007 including (without limitation) under the captions,
"Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," which is on file
with the Securities and Exchange Commission (the "SEC") and
available at the SEC's website at http://www.sec.gov/. About ARM
ARM designs the technology that lies at the heart of advanced
digital products, from mobile, home and enterprise solutions to
embedded and emerging applications. ARM's comprehensive product
offering includes 16/32-bit RISC microprocessors, data engines,
graphics processors, digital libraries, embedded memories,
peripherals, software and development tools, as well as analog
functions and high-speed connectivity products. Combined with the
company's broad Partner community, they provide a total system
solution that offers a fast, reliable path to market for leading
electronics companies. More information on ARM is available at
http://www.arm.com/. ARM is a registered trademarks of ARM Limited.
ARM7, ARM9, ARM11, Cortex and Mali are trademarks of ARM Limited.
All other brands or product names are the property of their
respective holders. "ARM" is used to represent ARM Holdings plc;
its operating company ARM Limited; and the regional subsidiaries:
ARM, Inc.; ARM KK; ARM Korea Ltd.; ARM Taiwan Limited; ARM France
SAS; ARM Consulting (Shanghai) Co. Ltd.; ARM Belgium N.V.; ARM
Germany GmbH; Keil Elektronik GmbH; ARM Embedded Technologies Pvt.
Ltd. and ARM Norway, AS. DATASOURCE: ARM Ltd CONTACT: Contacts:
Fiona Laffan/Pavla Shaw Tim Score/Ian Thornton, Brunswick ARM
Holdings plc, +44(0)207-404-5959 +44(0)1628-427800
Copyright