Final Results
Final Results
LONDON--(BUSINESS WIRE)--Feb. 5, 2003--
ARC INTERNATIONAL PLC
PRELIMINARY RESULTS FOR THE FOURTH QUARTER & FULL YEAR ENDED
31 DECEMBER 2002
ARC International plc (LSE: ARK), a world leader in semiconductor and
software technology licensing, announces its unaudited financial
results for the fourth quarter and full year ended 31 December 2002.
Financial and Operational Highlights:
Fourth Quarter ended 31 December 2002:
o Turnover up 41% quarter on prior year quarter and 16% sequentially
to £3.2 million (Q4 2001: £2.3m, Q3 2002: £2.8m)
o Pre-exceptional net loss of £4.9m, a 22% year on year improvement
(Q42001: £6.2m) and a 8% sequential improvement (Q3 2002: £5.3m)
o Completed strategic review and announced £50m share repurchase
o 6 new design licences and 4 new customers won for ARCtangent(TM)
processor
o Strong performance on USB Now(TM) product sales, booked 6 licenses
o Software and development tools products shipped to more than 50
customers
o Successful launch into Asia
Twelve months ended 31 December 2002:
o Turnover up 7% at constant exchange rates and 2% after currency
impact to £11.7m (2001: £11.4m)
o Operating expenses before exceptionals, amortisation and
depreciation reduced by 18% to £29.3 m (2001: £35.8m)
o Pre-exceptional net loss reduced by 16% to £20.5m (2001: £24.4m)
o Cash burn down 20% to £20m, (2001: £25m)
o Expanded customer base: 29 design wins, 20 new ARCtangent customers
and 13 new USB customers
o Successfully diversified product offering with USB On-the-Go and
WLAN launches
o Recruitment of management team complete
Commenting on the results, Mike Gulett, Chief Executive Officer, said:
"2002 was a year of achievement for ARC and we reported the highest
annual turnover in the Company's history. Despite the very challenging
conditions being experienced by the worldwide semiconductor industry,
we performed strongly and grew revenues in the fourth quarter by 41%
year on year.
It was also an important transitional year. Under the leadership of a
new, experienced management team, we refocused the business and
product strategies, completed a major restructuring and accelerated
the launch of important new products to expand our customer base
beyond our traditional markets.
Our growth in 2003 will be driven by new products and by expansion
into Asia. Our customer activity has significantly increased over the
past year and we are working with a record number of prospective new
customers. We believe that this will lead to continued organic growth
as we convert prospective licensees into new, valued customers.
Looking ahead, we do not anticipate any significant changes in market
conditions in the near term. However, with our expanded product
offering and renewed focus, we believe that we are well positioned to
enhance our market position and to benefit from any upturn in demand.
For further information, please contact:
ARC International plc
Mike Gulett Chief Executive Officer, +44 (0) 20 8236 2800
Monica Johnson Chief Financial Officer, +44 (0) 20 8236 2800
Natalie Godfrey Senior Communications Executive, +44 (0) 20 8236 2838
Tulchan Communications
Andrew Grant/Tim Lynch Consultant, +44 (0) 20 7353 4200
An analyst presentation will be held at 0915-0930 at WestLB Panmure
Ltd, Woolgate Exchange, 25 Basinghall Street, EC2V 5HA. The
presentation will be available on the website www.ARC.com and a
dial-in number will be available on the morning. A recording of this
meeting will also be available on the ARC website.
Chief Executive Officer's Review
Overview
2002 was a year of achievement for ARC and we reported the highest
turnover in the Company's history at £11.7m from £11.4m in 2001. At
constant exchange rates, this represented a 7% increase. Despite very
challenging market conditions, tight management of costs resulted in a
pre-exceptional net loss of £20.5m, down 16% (2001: £24.4m). Operating
expenses before exceptionals, amortisation and depreciation were also
reduced by 18% to £29.3m.
Many of our current and prospective customers continue to delay new
product development, which delays the signing of new licensees for our
products. Set against this, we performed strongly in the fourth
quarter of 2002, reporting a 41% increase in turnover year on year and
a 16% sequential increase to £3.2m. Pre-exceptional net loss reduced
by 22% to £4.9m. During the fourth quarter, we secured 6 new design
licences and 4 customers for the ARCtangent processor and reported 6
licenses for USB. We were pleased with our performance in Asia, a
market which presents us with significant opportunities for the
future. Sales in Asia, during the fourth quarter, accounted for 6% of
total revenue.
2002 was an important transitional year, and under the leadership of a
new, experienced management team, the Company has recently completed a
major restructuring. In November 2002, WestLB Panmure Ltd was
appointed as joint corporate broker and financial adviser to the
Company. They contributed in a review to address the capital
requirements of the business that was underway. The review showed that
ARC had sufficient working capital funding to bring the Company to
profitability on the basis of reasonably prudent assumptions and we
announced the intention to repurchase £50m of ARC's stock, thereby
optimising shareholders' potential for future returns. Once the
process is concluded, we will still have a strong balance sheet with
sufficient cash resources, as well as the flexibility to make
complimentary acquisitions where appropriate.
A shareholder circular will be sent out shortly, setting out details
of a reduction of capital and a tender offer. The circular will
convene an extraordinary meeting of shareholders to vote on the
proposals and following this ARC will apply to the Court for a
reduction in the capital of the company. We previously stated that the
repurchase of stock would be complete within the first half of 2003
and remain on track to deliver this.
Product Strategy and Customer Focus
Our goal is to be the leading supplier of embedded systems technology.
We have reduced the number of intellectual property (IP) vendors that
our customers need, which reduces their design risk, their development
time and their costs. Unlike our competitors in the IP space, ARC can
ensure that all the key hardware and software components, for a
specific design, will work together because we provide most of the
technology.
During 2002, we maintained a diversified product offering; 47% of
revenues came from processor cores, 20% from peripherals and 33% from
software products. This diversification resulted in the expansion of
our customer base and we have begun actively targeting the larger
semiconductor and systems businesses. In the last year, we won 29 new
ARCtangent processor design wins and 16 peripheral licensees. In
addition, we shipped software and development tools to more than 50
customers in each quarter.
Our customers continue to develop products for our traditional markets
of wired and wireless communications as well as consumer electronics,
but our new systems-level approach opened opportunities in computer
security and encryption, as well as the rapidly growing storage area
network market.
Last year, we announced relationships with Intel Microelectronics
Services, Oak Technologies, Hifn, Amlogic, Synopsys, Mentor Graphics
and others. In early 2003 we will announce the details of our
relationships with several other companies. We are developing products
that expand our capability in consumer electronics, wired and wireless
communications, and some new markets including computer security,
encryption and storage area networking.
ARCtangent(TM) Processor
ARC was the first company to introduce a user-customisable RISC/DSP
processor. The ARCtangent is sythesizable, configurable and
extensible, so users can readily modify and extend the architecture
for their specific applications. ARC currently provides two families
of ARCtangent processor cores, the A4 and the A5. We are on target to
introduce two more processor families in 2003. ARC is the world leader
in delivering user-customisable RISC/DSP processors - we have secured
more than 120 design wins since this product was introduced.
The Company achieved 29 new design licenses for the ARCtangent
processor in 2002; 20 of these licensees were new customers.
In October 2002, ARC introduced the ARCtangent-A5 that is targeted at
those designers developing communications and consumer electronic
products with design cycles of six months or less. This product
integrates a single-software development chain and
application-specific extensions with the ARCtangent-A5 processor.
USB Now(TM)
In June 2002, ARC introduced the world's first USB 2.0 high-speed
On-The-Go controller and as of today, we are the only supplier of this
vital new technology. In the fourth quarter, we added six licensees
for this product, for a six-month total of thirteen.
According to InStat, an industry analyst firm, the market for
Universal Serial Bus (USB) in non-PC applications is growing twice as
fast as demand in the PC market. ARC's USB On-the-Go (USB-OTG) product
is strategically positioned to leverage the growing demand for
mobility. USB-OTG eliminates the need to connect peripherals through a
PC.
WLAN Now(TM)
With the broadening acceptance of 802.11 as the wireless LAN
technology of choice, there is rapidly increasing market demand to
enable all electronic devices with wireless technology. This includes,
but is not limited to, PDA's, consumer electronics (audio, video,
games), wireless terminals, home networking devices, and broadband
gateways (DSL, cable, set top boxes). Existing products are served
with 802.11 chipsets. These chipsets are too expensive, require too
much power and occupy too much area to be used effectively within
consumer, handheld and embedded products.
ARC launched WLAN Now(TM), the 802.11 multi protocol MAC and baseband
product, in early 2003.This is a low cost, small footprint, low power
technology offering, that is suitable for integration at the chip
level into consumer, handheld and embedded products.
Other New Products
ARC is on target to introduce several additional products during the
rest of 2003. ARC will continue to innovate in an ongoing effort to
make it easy for our customers to create embedded systems, by
simplifying the complexity of designing, verifying and producing
integrated circuits and the software that runs on these integrated
circuits.
Asia Sales Expansion
Asia offers a huge opportunity for ARC. Through strategic alliances
and partnerships ARC is bringing its entire portfolio of intellectual
property to the Asian market. In May, we hired a sales manager for
Asia. In July, we established a partnership with e-MDT and Hynix
Semiconductor to provide full turnkey design services for products
based on our products in China and Korea. In August, we signed EDOM
Technology as the distributor of ARC's products in Taiwan and China.
In November, we announced the opening of our office in Taiwan and
announced plans to open an office in Japan. This preliminary effort
resulted in an increase in our Asia revenue from zero in the first
half of the year to 6% of total revenue in the fourth quarter.
Strategic Alliances
Strategic alliances are very important for ARC to achieve the goal of
building a long-term profitable business. We have announced several
strategic alliances this year and will continue to partner with those
companies that provide "Best of Breed" technology, to complement our
approach to product design. In addition to relationships with
Synopsys, Standard Microsystems, Hynix, e-MDT and Denali Software, we
negotiated alliances with:
o Metrowerks, an independently operated subsidiary of Motorola, Inc.,
that signed an agreement in July to distribute ARC software products
to its worldwide customer base.
o Mentor Graphics which announced co-verification model support for
the family of ARCtangent user-customisable RISC/DSP cores in early
December.
o Ashling Microsystems, a recognized expert in embedded software
development tools, agreed in October to extend its suite of emulators
and trace development tools to the ARCtangent user-customisable 32-bit
RISC/DSP microprocessor.
Business Integration
In June, we announced that we had completed the integration of ARC's
subsidiary operations into a single functional organization.
VAutomation, Precise Software and MetaWare now all operate under the
ARC International brand name. This has resulted in significant
improvements in ARC's product offering and image in the marketplace.
For customers, such as SanDisk, Hifn, Qlogic, RF Micro Devices,
Fujitsu, Infineon Technologies, Sun Microsystems and many others, ARC
is a one-stop shop for embedded RISC/DSP processors, RTOS, software,
peripherals and development tools. ARC has a unique product portfolio
and we offer integrated products that are not available from any other
company.
During the second half of the year, we consolidated ARC's software
engineering teams to promote synergies in software product development
and reduce the overall cost structure. The transition was completed in
early 2003. Our engineering facility in Ottawa was closed and a number
of the Ottawa based RTOS and protocol software engineers were
relocated to Santa Cruz, California, where ARC's software development
team is headquartered.
People
Our Chairman, Jan Tufvesson, has informed the company of his intention
to resign effective at the AGM in May. The Board will announce the
appointment of a new Chairman shortly. "Jan has made an important
contribution to ARC and the Board of ARC thanks him for his hard work
over the past 3 years," said Mike Gulett, CEO.
In the past twelve months, ARC's management team has been
significantly strengthened; we now have a new management team with the
experience and skills to lead ARC to profitability.
Headcount at the end of 2002 was 198 compared to 223 at the end of
2001, a reduction of 11% over the year. We centralised and streamlined
many functions, which has led to improved results and reduced costs.
Outlook
Our growth in 2003 will be driven by new products, and increased
market penetration. Our customer activity has significantly increased
over the past year and we are working with a record number of
prospective new customers. We believe that this will lead to continued
organic growth as we convert prospective licensees into new, valued
customers.
Looking ahead, we do not anticipate any significant changes in market
conditions. However, with our expanded product offering and renewed
focus, we believe that we are well positioned to benefit from any
upturn in demand.
Financial Review
Fourth Quarter ended 31 December 2002
Turnover
Total turnover for the fourth quarter was £3.2 million, up 41% from
the prior year quarter (Q4 2001: £2.3 million) and up 16% from the
third quarter revenue of £2.8 million. Prior to currency translation,
with virtually all sales in US$, underlying turnover was up 54% year
over the previous year and 18% sequentially. License income was up 19%
over the previous quarter at £2.5 million (Q3 2002: £2.1 million).
Maintenance and service income was the same as the previous quarter at
£0.5million (Q3 2002: £0.5 million). Royalty income was unchanged at
£0.2 million (Q3 2002: £0.2 million). Within the turnover base, 22% of
sales were in Europe, 72% in North America and the remaining 6% in
Asia. From a product perspective, 39% were processor shipments,
software sales represented 24% of turnover and the remaining 37% was
peripheral products.
Costs
Cost of sales increased slightly to £0.3 million (Q3 2002: £0.2
million, Q4 2001: £0.4 million), which resulted in a gross margin of
89% (Q3 2002: 91% Q4 2001: 83%). Total operating expenses (excluding
exceptional costs, amortisation of goodwill and depreciation) were
down 2% to Q3 at £7.2 million and down 9% year over year (Q3 2002:
£7.3 million, Q4 2001: £7.9 million).
Research and development costs decreased 8% to £3.3 million (Q3 2002:
£3.6 million, Q4 2001: £3.3 million). Sales and marketing costs
increased 17% to £2.6 million (Q3 2002: £2.2 million, Q4 2001: £2.9
million) to fund additional promotional costs. General and
administration costs declined 25% to £1.0 million (Q3 2002: £1.3
million, Q4 2001: £1.3 million).
The Company had 198 employees at 31 December 2002 compared with 223 at
31 December 2001and 200 at 30 September 2002
Interest
Interest income declined slightly to £1.0 million based on the lower
cash balance (Q3 2002: £1.1 million).
Net loss
The net loss prior to restructuring decreased 8% sequentially to £4.9
million and decreased 22% from the year ago quarter (Q3 2002: £5.3
million Q4 2001: £6.2 million). Loss per share prior to restructuring
improved to (1.6)p (Q2 2002:(1.7)p). Net loss including the net
restructuring charge was £4.3 million (Q3 2002: £7.5 million, Q4 2001:
£4.9 million).
Cash flow and balance sheet
The net cash outflow from operations was £4.3 million, (Q3 2002 an
outflow of £4.5 million). Capital expenditure was £1.6 million
including a technology investment of £1.0m. There was also purchase of
the company's shares for £1.7 million. The movement in net funds
during the quarter was an outflow of £7.1 million. Net assets at 31
December 2002 were £114.8 million, including net cash of £101 million.
Twelve months ended 31 December 2002
Total turnover at £11.7 million was up 7% from the previous year
before currency impact and up 2% after currency impact (2001: £11.4
million). Licence income increased to £9.1 million (2001: £8.9
million). Maintenance and service income was £2.0 million (2001: £2.0
million) and royalties were also unchanged at £0.5 million (2001: £0.5
million). Within the turnover base, 28% of sales were in Europe, 69%
in North America and the remaining 3% in Asia. From a product
perspective, 46% were processor shipments, software sales represented
33% of turnover and the remaining 20% was peripheral products.
Costs
Cost of sales was down 21% to £1.3 million (2001: £1.7 million),
resulting in a gross margin of 89% (2001: 85%). Total operating
expenses (excluding exceptional costs, amortisation of goodwill and
depreciation) decreased 18% to £29.3 million (2001: £35.8 million).
Research and development costs were down 2% to £13.1 million (2001:
£13.3 million), sales and marketing costs were down 30% to £10.1
million (2001: £14.3 million) and general and administration costs
were down 25% to £4.9 million (2001: £6.6 million).
Interest
Interest income was £4.4 million (2001: £6.6 million).
Net loss
Net loss before exceptional items was £20.5 million (2001: £24.3).
Including net exceptional charges of £1.5 million, net loss decreased
26% to £22.0 million (2001: £29.8 million).
Cash flow and balance sheet
The net cash outflow from operations was £19.6 million (2001: £27.3
million). Capital expenditure was £3.3 million (2001: £5.3 million).
The movement in net funds was a £19.9 million outflow (2001: £25.0
million). Net assets at 31 December 2002 were £114.8 million (2001:
£136.1 million), including net cash of £101 million. (2001:£121
million)
Dividend
No interim dividend payment will be made or declared in respect of the
twelve months ended 31 December 2002.
ARC International plc
Consolidated profit and loss account
for the year ended 31 December 2002
------------------------------------------------------------------------
3 months ended 3 months ended Year ended Year ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (audited)
£'000 £'000 £'000 £'000
------------------------------------------------------------------------
Turnover 3,195 2,272 11,702 11,450
Less: Operating costs
------------------------------------------------------------------------
Goodwill amortisation 1,024 1,017 4,093 4,075
Exceptional (credit)/costs (note 4) (600) (1,291) 1,501 5,526
Other operating costs 8,051 8,689 32,488 38,277
------------------------------------------------------------------------
8,475 8,415 38,082 47,878
Loss before interest and tax 5,280 6,143 26,380 36,428
Add: Interest receivable and similar income 1,055 1,282 4,414 6,586
Less: Interest payable and similar charges 7 - 11 2
------------------------------------------------------------------------
Loss on ordinary activities before tax 4,232 4,861 21,977 29,844
Less: Tax on loss on ordinary activities 36 77 69 81
------------------------------------------------------------------------
Retained loss for the period 4,268 4,938 22,046 29,925
=========================================================================
------------------------------------------------------------------------
Basic loss per share 1.43p 1.76p 7.34p 10.83p
Diluted loss per share 1.43p 1.76p 7.34p 10.83p
Pre-exceptional loss per share 1.63p 2.24p 6.86p 8.83p
-------------------------------------------------------------------
Summary of operating expenses
Operating costs
Cost of sales 344 377 1,323 1,683
Research and development 3,306 3,346 13,052 13,291
Sales and marketing 2,560 2,890 10,053 14,293
General and administration 973 1,257 4,913 6,583
Depreciation of fixed assets 868 819 3,147 2,427
Amortisation of goodwill 1,024 1,017 4,093 4,075
Exceptional costs - NIC on share options - 66 - (1,026)
Exceptional costs - Provision release (600) - (899) -
Exceptional costs - Restructuring - (1,357) 2,400 6,552
-------------------------------------------------------------------
Total operating expenses 8,475 8,415 38,082 47,878
-------------------------------------------------------------------
ARC International plc
Consolidated statement of total recognised gains and losses
for the year ended 31 December 2002
--------------------- -------------------- ----------------- ----------------
3 months ended 3 months ended Year ended Year ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
--------------------- -------------------- ----------------- ----------------
--------------------- -------------------- ----------------- ----------------
(unaudited) (unaudited) (unaudited) (audited)
£'000 £'000 £'000
Retained loss for the (4,268) (4,938) (22,046) (29,925)
period
Currency translation (390) (118) (664) 71
difference
--------------------- -------------------- ----------------- ----------------
Total loss for the period (4,658) (5,056) (22,710) (29,854)
--------------------- -------------------- ----------------- ----------------
ARC International plc
Consolidated balance sheet
as at 31 December 2002
--------------------------------------
As at As at
31 December 31 December
2002 2001
(unaudited) (audited)
£'000 £'000
--------------------------------------
Fixed Assets
Intangible assets 7,765 12,280
Investment in own shares 1,660 -
Tangible assets 6,419 6,702
--------------------------------------
15,844 18,982
--------------------------------------
Current Assets
Stock 88 156
Debtors 4,981 3,710
Investments - bank deposits 98,064 119,401
Cash at bank and in hand 2,921 1,449
--------------------------------------
106,054 124,716
Creditors - amounts fully due within one year (4,578) (5,198)
--------------------------------------
Net current assets 101,476 119,518
Total assets less current liabilities 117,320 138,500
Creditors - Amounts falling due after more than one year - (2)
Provision for liabilities and charges (2,566) (2,433)
--------------------------------------
Net assets 114,754 136,065
======================================
Capital and reserves
Called up share capital 300 283
Share premium account 152,661 151,033
Exchangeable shares 4,040 4,286
Merger reserve 107 107
Other reserves 23,065 24,702
Profit and loss account (65,419) (44,346)
--------------------------------------
Total shareholders' funds 114,754 136,065
--------------------------------------
ARC International plc
Consolidated cash flow statement
for the year ended 31 December 2002
---------------------------------------------------------------
3 months 3 months Year ended Year ended
ended ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
note (unaudited) (unaudited) (unaudited) (audited)
£'000 £'000 £'000 £'000
---------------------------------------------------------------
Net cash outflow from operating activities 1 (4,306) (7,122) (19,627) (27,304)
Returns on investments, servicing of
finance and taxes paid
Taxes paid (81) - (81) -
Interest received 555 1,328 3,732 6,365
Bank interest paid (11) - (11) -
Interest element on finance lease rentals (2) (2)
---------------------------------------------------------------
Net cash inflow from returns on investments 463 1,326 3,640 6,363
and servicing of finance
---------------------------------------------------------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (1563) (416) (3,295) (5,315)
Purchase of intangible fixed assets (64) - (64) -
Sale of tangible fixed assets - - - 8
Investment in own shares (1,660) - (1,660)
---------------------------------------------------------------
Net cash outflow from capital expenditure (3,287) (416) (5,019) (5,307)
and financial investment
Net cash outflow before management of
liquid resources and financing (7,130) (6,212) (21,006) (26,248)
---------------------------------------------------------------
Management of liquid resources
Movement on term deposits 3 7,201 5,492 21,337 23,888
---------------------------------------------------------------
Financing
Issue of ordinary share capital - IPO and options 215 448 1,399 1,243
Capital element of finance lease rentals - (1) (5) (20)
Decrease in borrowings - - - (17)
---------------------------------------------------------------
Net cash inflow from financing 215 447 1,394 1,206
---------------------------------------------------------------
(Decrease)/Increase in net cash during the period 286 (273) 1,725 (1,154)
---------------------------------------------------------------
1. Reconciliation of operating loss to net cash flow from operating activities
---------------------------------------------------------------------
3 months ended 3 months ended Year ended Year ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (audited)
£'000 £'000 £'000 £'000
---------------------------------------------------------------------
---------------------------------------------------------------------
Operating loss (5,280) (6,143) (26,380) (36,428)
Depreciation 868 819 3,147 2,427
Amortisation of goodwill 1,024 1,017 4,093 4,075
Loss on disposal of fixed assets 112 237 156 237
Share option grant credit (183) 12 (159) 39
(Increase)/decrease in stocks 81 296 77 (159)
(Increase)/decrease in debtors 953 1,809 (458) 2,910
Increase/(decrease) in creditors (354) (368) (239) (2,838)
Increase/(decrease) in provisions (1,527) (4,801) 136 2,433
Net cash flow from operating activities (4,306) (7,122) (19,627) (27,304)
2. Analysis of net funds
(unaudited) Cash at bank Investments - Finance Total
bank deposits leases
£'000 £'000 £'000 £'000
At 31 December 2001 1,449 119,401 (7) 120,843
Exchange (253) - - (253)
Cash flow 1,725 (21,337) 5 (19,607)
-------------- ----------------- ------------------- ----------------
At 31 December 2002 2,921 98,064 (2) 100,983
-------------- ----------------- ------------------- ----------------
3. Reconciliation of net cash flow to movement in net funds
-------------------------------------------------------------------------
3 months ended 3 months ended Year ended Year ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (audited)
£'000 £'000 £'000 £'000
-------------------------------------------------------------------------
Increase/(decrease) in cash in the
period 286 (273) 1,725 (1,154)
Movement in term deposits (7,201) (5,492) (21,337) (23,888)
-------------------------------------------------------------------------
(6,915) (5,765) (19,612) (25,042)
Movement in borrowings 1 5 37
Exchange movements (55) (36) (253) 32
-------------------------------------------------------------------------
Movement in funds (6,970) (5,800) (19,860) (24,973)
Net funds at beginning of period 107,953 126,643 120,843 145,816
-------------------------------------------------------------------------
Net funds at end of period 100,983 120,843 100,983 120,843
-------------------------------------------------------------------------
Notes
4. Exceptional item
During the third quarter a provision of £2.4 million was made for
restructuring costs covering the closure of the Ottawa location and
redundancy payments. Of this amount, £0.6million related to the
projected lease termination charge was released in the fourth quarter,
as it was no longer required. This resulted in a net exceptional
charge for the year of £1.8 million. In addition, a prior year
restructuring provision related to other lease obligations of £0.3
million was released during the year.
5. Subsequent Event - share buy back
On 22 November 2002, the Board announced that the Company intended to
return £50m of capital to shareholders in 2003 in order to optimise
the Company's capital structure and hence shareholder's potential for
future returns. On 6 December 2002 the Board determined that the
capital would be returned through the buy-back of ordinary shares. It
is expected that the share buy back will take place in the first half
of 2003.
6. Accounting policies
The accounting policies adopted in the preparation of the preliminary
announcement are consistent with those used in the financial
statements for the year ended 31 December 31, 2001 except for a change
in the accounting policy in respect of deferred taxation to comply
with "FRS19 - Deferred Tax". FRS 19 requires full provision to be made
for deferred tax, and therefore the company's previous policy of
making a partial provision for deferred taxation in accordance with
SSAP 15 has been revised. This change in accounting policy has had no
effect on the current period or prior year figures. The prior year
comparatives are derived from audited financial information for ARC
International plc as set out in the Annual Report for the year ended
31 December 2001.
The preliminary results for the year ended 31 December 2002 are
unaudited. The financial information set out in the announcement does
not constitute the Company's statutory accounts for the year ended 31
December 2002 or 31 December 2001. The financial information for the
year ended 31 December 2001 is derived from the statutory accounts for
that year, which have been delivered to the Registrar of Companies.
The auditors reported on those accounts: their report was unqualified
and did not contain a statement under either Section 237 (2) or
section 237 (3) of the Companies Act 1985. The statutory accounts for
the year ended 31 December 2002 will be finalized on the basis of the
financial information presented by the directors in this preliminary
announcement and will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.
About ARC International
ARC International is the first company to offer integrated solutions
for SoC design, in an effort to minimise design risk for customers
developing next generation wireless, networking and consumer
electronics products. In 1998, ARC introduced the industry's first
user-customisable 32-bit RISC/DSP processor core. In early 2000, ARC
became the first company to integrate the development tools,
peripherals, RTOS and software that enabled the designer to get better
design optimisation and performance. ARC's approach of providing a
single source for the major SoC building blocks reduces the number of
IP suppliers, reduces cost, reduces the risk of system-on-chip design
and reduces time-to-market.
ARC's products include the ARCtangent(TM) user-customisable 32-bit
RISC/DSP processor, the first USB 2.0 OTG high-speed controller on the
market and an 802.11 MAC and baseband multi-standard IP core. ARC
provides software development and system software for ARM, PowerPC and
MIP's processors as well as for its own ARCtangent processor family.
ARC International employs 198 people in research and development,
sales and marketing offices across North America, Europe and Asia.
Full details of the company's locations and other information are on
the company's web site, www.ARC.com. ARC International is listed on
the London Stock Exchange as ARC International plc (LSE:ARK).
Statements made in this report that are not historical facts include
forward-looking statements that involve risks and uncertainties.
Important factors that could cause actual results to differ from those
indicated by such forward-looking statements include, among others,
market acceptance of the ARC technology; fluctuations in and
unpredictability of the Company's quarterly results; general economic
and business conditions; regulatory policies adopted by governmental
authorities; assumptions regarding the Company's future business
strategy; changes in technology; competition; ability to attract and
retain qualified personnel; risks associated with the Company's
international operations; and other uncertainties that are discussed
in the "Investment Considerations" section of the Company's listing
particulars dated 28 September 2000 filed with the United Kingdom
Listing Authority and the Registrar of Companies in England and Wales.
The Company disclaims any intention or obligation to update any
forward-looking statements as a result of developments occurring after
the date such statement was first made
ARC, the ARC logo, ARCtangent, USB Now and WLAN Now are trademarks of
ARC International. All other brands or product names are the property
of their respective holders.
Short Name: Arc Intl PLC
Category Code: FR
Sequence Number: 00001806
Time of Receipt (offset from UTC): 20030204T194703+0000
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