ARM Holdings plc Reports Results for the Second Quarter and Half Year Ended 30 June 2007

The financial information prepared in accordance with the Company's US GAAP accounting policies comprises the consolidated balance sheets as of 30 June 2007 and 31 December 2006 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 2006, except in relation to accounting for sabbatical leave following the adoption of EITF 06-2 on 1 January 2007, whereby the related costs are now accrued over the requisite service period.

International Financial Reporting Standards

The financial information prepared in accordance with the Group's IFRS accounting policies comprises the consolidated balance sheets as of 30 June 2007, 30 June 2006 and 31 December 2006 and related consolidated statements of income and cash flows for the periods then ended, together with related notes. This financial information has been prepared in accordance with the Listing Rules of the Financial Services Authority. In preparing this financial information management has used the principal accounting policies as set out in the Group's annual financial statements for the year ended 31 December 2006. The 2006 results have been restated to harmonize the Group's treatment of accounting for provisions for sabbatical leave under IFRS and US GAAP following the adoption of EITF 06-2 under US GAAP (as previously no provision for sabbatical leave had been made under IFRS). This has resulted in shareholders' equity at 31 December 2006 being reduced by GBP2.3 million and the profit for the year ended 31 December 2006 reducing by GBP0.4 million. The impact on the six months ended 30 June 2007 is a reduction in profit for the period of GBP0.3 million and a corresponding reduction in shareholders' equity. The Group has chosen not to adopt IAS 34, 'Interim financial statements', in preparing its 2007 interim statements and, therefore, this interim financial information is not in compliance with IFRS.

(2) Stock-based compensation charges and acquisition-related expenses

Included within the US GAAP income statement for the quarter ended 30 June 2007 are stock-based compensation charges of GBP4.8 million: GBP0.3 million in cost of revenues, GBP2.8 million in research and development costs, GBP0.9 million in sales and marketing costs and GBP0.8 million in general and administrative costs.

Included within the IFRS income statement for the six months ended 30 June 2007 are total share-based payment costs of GBP9.2 million (six months ended 30 June 2006: GBP7.5 million; year ended 31 December 2006: GBP17.4 million), allocated GBP0.5 million (30 June 2006: GBP0.5 million; 31 December 2006: GBP1.0 million) in cost of revenues, GBP5.4 million (30 June 2006: GBP4.3 million; 31 December 2006: GBP10.1 million) in research and development costs, GBP1.8 million (30 June 2006: GBP1.5 million; 31 December 2006: GBP3.5 million) in sales and marketing costs and GBP1.5 million (30 June 2006: GBP1.2 million; 31 December 2006: GBP2.8 million) in general and administrative costs.

Also included within IFRS operating costs for the six months ended 30 June 2007 is amortization of intangibles of GBP9.8 million (six months ended 30 June 2006: GBP9.5 million; year ended 31 December 2006: GBP19.3 million), allocated GBP5.1 million (30 June 2006: GBP4.5 million; 31 December 2006: GBP9.5 million) in research and development costs, GBP4.4 million (30 June 2006: GBP4.7 million; 31 December 2006: GBP9.1 million) in sales and marketing costs and GBP0.3 million (30 June 2006: GBP0.3 million; 31 December 2006: GBP0.7 million) in general and administrative costs.

(3) Accounts receivable

Included within accounts receivable at 30 June 2007 are GBP30.8 million (31 March 2007: GBP27.9 million; 31 December 2006: GBP23.8 million) of amounts recoverable on contracts.

    (4) Consolidated statement of changes in shareholders' equity (US GAAP)

                                  Additional                    Unrealized
                          Share   paid-in    Treasury Retained  holding
                          capital capital    stock    earnings  gain
                          GBP'000 GBP'000    GBP'000  GBP'000   GBP'000

    At 1 January 2007       695   446,005    (58,245) 197,874     394
    Shares issued on
    exercise of options       5     5,504          -        -       -
    Net income                -         -          -   18,424       -
    Dividends                 -         -          -   (8,013)      -
    Cumulative effect as a
    result of adopting
     EITF 06-2, net of tax*   -         -     (2,278)       -       -
    Tax effect of option
    exercises                 -       740          -        -       -
    Amortization of deferred
    compensation              -     7,975          -        -       -
    Conversion of liability
    award to equity award     -     1,396          -        -       -
    Issuance of shares from
    treasury                  -         -     15,265   (8,779)      -

    Purchase of own shares    -         -    (45,736)       -       -

    Other comprehensive income:
    Unrealized holding losses
    on available-for-sale
    securities (net of tax
    benefit of GBP162,000)    -         -          -        -    (375)
    Currency translation
     Adjustment               -         -          -        -       -

    At 30 June 2007         700   461,620    (88,716) 197,228      19


                                                               Cumulative        Total
                                                                              translation
                                                                              adjustment
                                                                              GBP'000              GBP'000

        At  1  January  2007                                    (12,076)            574,647
        Shares  issued  on
        exercise  of  options                                            -                  5,509
        Net  income                                                              -                18,424
        Dividends                                                                -                (8,013)
        Cumulative  effect  as  a
        result  of  adopting
          EITF  06-2,  net  of  tax*                                    -                (2,278)
        Tax  effect  of  option
        Exercises                                                                -                      740
        Amortization  of  deferred
        Compensation                                                          -                  7,975
        Conversion  of  liability
        award  to  equity  award                                        -                  1,396
        Issuance  of  shares  from
        treasury                                                                  -                  6,486
        Purchase  of  own  shares                                      -              (45,736)
        Other  comprehensive  income:
        Unrealized  holding  losses  on
        available-for-sale  securities
        (net  of  tax  benefit  of  GBP162,000)              -                    (375)

        Currency  translation  adjustment        (11,450)            (11,450)
        At  30  June  2007                                        (23,526)            547,325
 


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