ARC International plc Announces Unaudited Preliminary Results For the Year Ended December 31, 2007.Dollar Revenue Increases 17% Dollar Royalties Increase 54% Strategic Acquisitions Position ARC for Continued Growth SAN JOSE San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif. & ST. ALBANS, England -- ARC International This article is about the publicly traded processor company. For the privately held French housewares company of the same name, see ARC International (household). (LSE LSE - Language Sensitive Editor : ARK ark, in the Bible. 1 Boat of Noah, which he built at God's command to preserve his family and certain creatures from the Deluge. 2 Ark of the Covenant, the sacred wooden chest of the Hebrews, representative of God or identified with Him. ), the world leader in multimedia subsystems and configurable CPU/DSP cores, today announced its unaudited preliminary results for the full year ended December 31, 2007. [TABLE OMITTED] 1 Revenue of $28.9 million excluded an estimated $0.8 million of revenues from an acquisition made during the year. As a result of the completion of purchase accounting analysis these revenues have been offset against acquired goodwill. 2 On a dollar basis [TABLE OMITTED] Commenting on the company's performance, Carl Schlachte, president and chief executive officer, said, "2007 was a year of important achievements and solid growth for ARC International. ARC's revenue growth again outpaced the semiconductor market. Royalties increased to a record high and contracts completed since 2004 began to contribute royalty revenue during the year. Two of the largest customer agreements in the company's history were announced, including Intel, and ARC enters 2008 with record highs in backlog and the sales pipeline. "Three acquisitions were completed and integrated in 2007, and already are contributing to ARC's ability to build deeper relationships with a greater number of high value semiconductor companies. The additions of Teja, Tenison, and Alarity fill out ARC's technology. Management now is focusing on more vertical solutions and adding new types of customers and revenue channels to leverage the existing business with semiconductor companies. Sonic Focus is the first such acquisition: For the first time in ARC's history the company will derive licensing and royalty fees directly from OEMs, which typically are higher than those obtained from chip firms and creating more demand for ARC-Based products." Commenting on the financial results, Victor Young
Statement from the President and Chief Executive Officer Overview In 2007 ARC International continued to make good progress in expanding the use of its products and brand. The company's revenue growth again outperformed the semiconductor industry and many competitors. More high value customers took licensing agreements in the year, including Intel, and three strategic acquisitions were completed and integrated. ARC introduced several new multimedia subsystems and configurable cores, and contracts completed since 2004 started to contribute to ARC's royalty stream as planned. Strategic Direction and 2007 Acquisitions The consumer electronics market continues to drive much of the semiconductor industry. But many devices, such as camera-enabled cell phones and MP3 players A digital music player that supports the MP3 format, which was the audio format that started a revolution in online music downloads and distribution. All portable music players, the iPod being the most popular, support MP3 along with one or more other audio formats. , still offer mediocre me·di·o·cre adj. Moderate to inferior in quality; ordinary. See Synonyms at average. [French médiocre, from Latin mediocris : medius, middle; see medhyo- quality video and audio. Delivering the highest quality multimedia experience to consumers - regardless of form factor - presents a significant market opportunity and is a key part of ARC's strategy. I call this "Enabling the YouTube Generation," which was outlined in my keynote keynote /key·note/ (ke´not) in homeopathy, the characteristic property of a drug that indicates its use in treating a similar symptom of disease. presentation at the ConfigCon([TM]) Silicon Valley developer conference December 2007. A highlight video of the conference is available on ARC's Website. To bolster This article is about the pillow called a bolster. For other meanings of the word "bolster", see bolster (disambiguation). A bolster (etymology: Middle English, derived from Old English, and before that the Germanic word bulgstraz ARC's multimedia products serving these opportunities in the semiconductor market and to further increase revenues, ARC acquired Teja, Tenison, and Alarity. These acquisitions were a cost-effective way for ARC to obtain important tools and software, which combined with ARC's subsystems and cores provide the basis for ARC to develop more of a vertically integrated solution for chip designers. By offering more of the solution ARC can command a higher premium on licensing fees. Customer feedback from these acquisitions has been positive, and as a result ARC already is engaged with a greater number of high value companies building chips for audio and video applications. Management expects to be able to announce the first licensing agreements as a result of these discussions within the next few quarters. Entering Complementary Markets ARC's ability to develop and deliver integrated multimedia solutions to the semiconductor industry is established. Now ARC can target a new class of customers and add new sources of revenue to complement ARC's existing semiconductor licensing business. The acquisition of Sonic Focus in 2008 brings these opportunities to ARC. Sonic Focus licenses its award-winning sound enhancement software directly to OEMs. By obtaining royalties directly from the OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and rather than semiconductor suppliers, Sonic Focus products can command much higher per unit royalty revenue than semiconductor intellectual property (IP) companies normally obtain. Furthermore, the acquisition of Sonic Focus provides additional leverage for ARC's traditional licensing business with chip designers. By having an OEM select Sonic Focus's audio software to semiconductor firms, those semiconductor suppliers looking to win business with that OEM are more motivated mo·ti·vate tr.v. mo·ti·vat·ed, mo·ti·vat·ing, mo·ti·vates To provide with an incentive; move to action; impel. mo to adopt an ARC solution for their chip design. Announced acquisitions: [TABLE OMITTED] Market Adoption of ARC([R]) Multimedia Subsystem A unit or device that is part of a larger system. For example, a disk subsystem is a part of a computer system. A bus is a part of the computer. A subsystem usually refers to hardware, but it may be used to describe software. and Configurable Cores During 2007 ARC announced licensing agreements with over 20 semiconductor companies located in Asia, North America, and Europe. In particular, ARC announced one of the largest agreements in the history of the semiconductor IP industry and a new agreement with long-time customer Intel. While not all of the 20-plus contracts were completed during the trading period, the quantity reflects the ongoing appeal of ARC's multimedia subsystems and configurable cores for a variety of growing end markets. [TABLE OMITTED] Board Changes Steven Gunders was appointed to the Board of Directors as Non-Executive Director A non-executive director (NED, also NXD) or outside director is a member of the board of directors of a company who does not form part of the executive management team. He or she is not an employee of the company or affiliated with it in any other way. in June, 2007. He became Chairman of the Remuneration REMUNERATION. Reward; recompense; salary. Dig. 17, 1, 7. Committee and a member of the Audit Committee. Outlook ARC enters 2008 with the strongest backlog and sales pipeline in the company's history. This is a reflection of the increasing market recognition and adoption of ARC's vertically integrated multimedia solutions for growing end markets. The acquisition of Sonic Focus announced February 12, 2008 adds a new, higher-value revenue channel and complementary customer base to ARC. This and the continuing strength of the business give management confidence about the trading prospects for the year. CHIEF FINANCIAL OFFICER'S REVIEW For the year ended December 31, 2007 Revenue Total revenue in 2007 in U.S. dollars was up 17% to $28.9 million (2006: $24.8 million). Total revenue in sterling was PS14.4 million, up 7% over the same period last year (2006: PS13.4 million). License and engineering revenue in U.S. dollars was up 2% to $15.0 million (2006: $14.7 million). In sterling, with effects of currency translation, license and engineering revenue was down 6% at PS7.4 million (2006: PS7.9 million). Maintenance and service revenue in U.S. dollars was up 11% to $4.2 million (2006: $3.8 million). In sterling, maintenance and service revenue was up 2% at PS2.12 million (2006: PS2.07 million). In U.S. dollars, royalty revenue was up by 54% to $9.7 million (2006: $6.3 million). In sterling, royalty revenue increased 44% to PS4.9 million (2006: PS3.4 million). (Royalty income in 2007 includes advance non-refundable payments which represented 18% of the total royalties for the period). Sales in Europe were 20% (2006: 13%) of total sales, North America 65% (2006: 65%) and Asia 15% (2006: 22%). Costs Cost of sales decreased 10% to PS1.44 million (2006: PS1.59 million). Gross margin increased to 90% (2006: 88%). Net operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased by 14% to PS18.3 million (2006: PS16.0 million). The company had 196 employees at December 31, 2007 compared with 126 at December 31, 2006. The 58% growth in headcount was due to the three acquisitions. Research and development costs increased 11% to PS7.4 million (2006: PS6.7 million). Sales and marketing increased 10% to PS5.5 million (2006: PS5.0 million). General and administration costs increased 13% to PS3.7 million (2006: PS3.3 million). Other expenses, comprised of depreciation and amortization, increased to PS1.7 million (2006: PS1.1 million) due to additional amortization of intangibles purchased from the acquisitions. The incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. operating expenses excluding amortization as a result of the three acquisitions during the year were PS1.6 million in 2007. Incremental amortization expenses associated with acquired technologies and intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. were PS0.5 million in 2007. Interest Interest income was down 3% to PS1.47 million (2006: PS1.51 million) due to a decrease in the average cash balance offset by an increase in the interest rate on investments. Net loss Net loss was PS2.5 million (2006: PS1.1 million). Loss per share increased to 1.69p (2006: 0.78p). Cash flow and balance sheet The net cash outflow from operations increased to PS5.1 million (2006: PS1.7 million). Capital expenditure, including payments made for the three acquisitions and investments in associate, was PS8.1 million (2006: PS0.9 million). The movement in cash and short-term investments during the year was an outflow of PS10.4 million (2006: PS0.4 million). Total net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. at December 31, 2007 were PS30.3 million (2006: PS32.0 million), including cash and short-term investments of PS21.2 million (2006: PS31.6 million). Dividend No interim dividend payment will be made for the year ended December 31, 2007 (2006: PSNil). Acquisitions During the period ARC acquired the key assets of Teja Technologies for a total consideration of PS2.5 million, Tenison Technology EDA (1) (Electronic Design Automation) Using the computer to design, lay out, verify and simulate the performance of electronic circuits on a chip or printed circuit board. Limited for a total consideration of PS1.1 million, and Alarity Corporation, Inc. for a total consideration of PS3.0 million. See note 6 for details. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] NOTES 1. Basis of presentation The preliminary results are unaudited and do not constitute statutory accounts within the meaning of s240 of the Companies Act 1985. The statutory accounts for the year ended 2006 have been delivered to the Registrar of Companies The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. . The auditors' opinion on these accounts was unqualified and did not contain a statement made under s237 (2) or s237 (3) of the Companies Act 1985. The preliminary results of ARC International plc have been prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the EU Endorsed International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). (IFRS IFRS International Financial Reporting Standard(s) IFRS Inter Frame Relay Service IFRS Indiana Facilities Registry System ), IFRIC IFRIC International Financial Reporting Interpretations Committee IFRIC International Financial Reporting Issues Committee interpretations and the Companies Act 1985 applicable to companies reporting under IFRS. These have been prepared in accordance with the Listing Rules of the Financial Services Authority The Financial Services Authority ("FSA") is an independent non-departmental public body and quasi-judicial body that regulates the financial services industry in the United Kingdom. Its main office is based in Canary Wharf, London, with another office in Edinburgh. . In preparing the preliminary results, management have used the principal accounting policies as set out in the Group's annual report and accounts for the year ended December 31, 2006. The preliminary results have been prepared under the historical cost convention, except in respect of certain financial instruments. The preliminary results incorporate the accounts of the Company and each of its subsidiaries for the period to December 31, 2007. All new acquisitions are accounted for under the purchase method from the date of acquisition. The preparation of the preliminary results in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] The utilisation of the provisions in 2007 relates to onerous on·er·ous adj. 1. Troublesome or oppressive; burdensome. See Synonyms at burdensome. 2. Law Entailing obligations that exceed advantages. lease commitments in Elstree, UK and for the onerous lease commitment in Santa Cruz Santa Cruz, city, United States Santa Cruz (săn`tə kr  z), city (1990 pop. 49,040), seat of Santa Cruz co., W Calif., on the north shore of Monterey Bay; inc. 1866. , USA. The balance of the provision of PS183,000 represents the
restoration costs for the Elstree, UK facility. The Elstree lease
terminated in July 2007 and there is uncertainty as to the timing and
amount of the restoration payments.
6. Acquisitions The group purchased Tenison Technology EDA Limited on June 14, 2007 for a total consideration of PS1,107,000, Alarity Corporation, Inc. on September 21, 2007 for a total consideration of PS3,048,000 and certain assets of Teja Technologies, Inc. on March 30, 2007 for PS2,461,000. All intangible assets were recognized at their respective fair values. The residual excess over the net assets acquired is recognized as goodwill in the financial statements. The fair values are subject to adjustments in respect of achieving specified net asset amounts, which affect intangible assets for developed core technology, net tangible assets Net Tangible Assets Calculated as the total assets of a company, minus any intangible assets such as goodwill, patents and trademarks, less all liabilities and the par value of preferred stock. Also known as "net asset value" or "book value". , deferred tax, and goodwill. Fair values assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to the acquiree's identifiable assets and liabilities have been determined provisionally pro·vi·sion·al adj. Provided or serving only for the time being. See Synonyms at temporary. n. 1. A person hired temporarily for a job, typically before having taken an examination qualifying the person for permanent . Any adjustments to these provisional Temporary; not permanent. Tentative, contingent, preliminary. A provisional civil service appointment is a temporary position that fills a vacancy until a test can be properly administered and statutory requirements can be fulfilled to make a permanent appointment. values as a result of completing work on the fair values of the assets and liabilities acquired will be recognised within 12 months of the acquisition date and recognised as if they occurred as at the date of acquisition. Tenison Technology EDA Limited ARC International acquired 100% of the voting shares Voting Shares Shares that give the stockholder the right to vote on matters of corporate policy making as well as who will compose the members of the board of directors. Notes: Different classes of shares, such as preferred stock, sometimes don't allow for voting rights. in Tenison Technology EDA Limited. The fair value of the acquisition is for the net assets and includes intangible assets for developed core technology. Goodwill of PS992,000 represents the value of synergies and assembled work force. Teja Technologies In the Teja purchase, only key assets were acquired. The acquisition includes Teja's software products, key customer contracts, its engineering team, and patents for Teja's award-winning technology. The fair value of the acquisition is predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. for intangible developed core technology, and to a lesser extent, customer relationships, trade receivables, and deferred revenue. Goodwill of PS478,000 represents the value of synergies and assembled work force. Alarity Corporation, Inc. ARC International acquired 100% of the voting shares in Alarity Corporation, Inc. The fair value of the acquisition is for the net assets and for intangible developed core technology. Goodwill of PS1,944,000 represents the value of synergies and assembled work force. About ARC International plc ARC International is the world leader in multimedia subsystems and configurable CPU/DSP processors. Used by over 140 companies worldwide, ARC's configurable solutions enable the creation of highly differentiated system-on-chips (SoCs) that ship in hundreds of millions of devices annually. ARC's patented subsystems and cores are smaller, consume less power, and are less expensive to manufacture than competing products. ARC International maintains a worldwide presence with corporate and research and development offices in San Jose and Lake Tahoe, Calif., St. Albans, England, and St. Petersburg, Russia. For more information visit www.ARC.com. ARC International is listed on the London Stock Exchange London Stock Exchange London marketplace for securities. It was formed in 1773 by a group of stockbrokers who had been doing business informally in local coffeehouses. as ARC International plc (LSE: ARK). ARC, ARC-Based, ARChitect, and the ARC logo, ConfigCon, and Sonic Focus and the Sonic Focus logo are trademarks or registered trademarks of ARC International. All other brands or product names contained herein are the property of their respective owners. This release may contain "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " including the development, implementation, and release of features described herein, statements concerning plans, future events or performance and underlying assumptions and other statements that are other than statements of historical fact. These are at the sole discretion of ARC International. ARC's actual results for future periods may differ materially from those expressed in any forward-looking statements made by or on behalf of ARC. The factors that could cause actual results to differ materially include, without limitation, general economic and business conditions; potential for fluctuations in and unpredictability of ARC's quarterly results; assumptions regarding ARC's future business strategy; the ability of semiconductor partners to manufacture and market microprocessors This is a list of microprocessors. Intel
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