ARC International plc Announces Unaudited Preliminary Results For the Year Ended December 31, 2008

“Over the medium to long term we expect consumer demand for devices delivering increasingly higher quality multimedia content to continue to grow, driving OEM and semiconductor companies to create innovative next-generation products with better performance and lower development costs. Feedback from ARC’s worldwide customers and partners confirms our confidence that our integrated solutions and more efficient organization can continue to provide compelling value. We remain confident in our strategy and our ability to execute.”

About ARC International plc

ARC International is a world leading provider of consumer IP to OEM and semiconductor companies globally. ARC’s award-winning, vertically integrated audio and video solutions enable high quality multimedia content to be captured, shared, and played on a wide range of electronics devices. ARC’s 150+ customers collectively ship hundreds of millions of ARC-Based chips annually in products such as PCs and laptops, digital and mobile TVs, portable media players, flash storage, digital cameras, network appliances, and medical and government systems.

ARC International maintains a worldwide presence with corporate and research and development offices in San Jose and Lake Tahoe, Calif., St. Albans, England, St. Petersburg, Russia, and Hyderabad, India. For more information visit ARC International is listed on the London Stock Exchange as ARC International plc (LSE:ARK).

ARC, ARC-Based, the ARC logo and Sonic Focus are trademarks or registered trademarks of ARC International with the U.S. Patent and Trademark Office and other international trademark organizations. All other brands or product names contained herein are the property of their respective owners. This release may contain “forward-looking statements” 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 based on the ARC® architecture; the acceptance of ARC technology by systems companies; the availability of development tools, systems software and operating systems; the rapid change in technology in the semiconductor industry and ARC’s ability to develop new products in a timely manner; competition from other architectures; ARC’s ability to protect its intellectual property; regulatory policies adopted by governmental authorities; risks associated with ARC’s international operations; management of ARC’s growth; ARC’s ability to attract and retain employees; and other uncertainties that are discussed in the “Investment Considerations” section of ARC’s listing particulars dated September 28, 2000 filed with the United Kingdom Listing Authority and the Registrar of Companies in England and Wales.

ARC International plc Unaudited Preliminary Results Year Ended December 31, 2008



In 2008, ARC was able to strengthen its competitive position due to strategic acquisitions that culminated with Sonic Focus last February. Today ARC’s Sound-to-Silicon integrated solutions for OEM and chip companies are an industry first, and ARC is recognizing higher value royalties from its new class of customers – OEMs – as planned. Furthermore, ARC’s historical base of semiconductor customers are taking licenses for “Sonic Focus ready” multimedia subsystems, helping stimulate new revenue opportunities in an uncertain economic climate. Additionally, ARC’s royalty income benefitted from higher royalty rates as more post-2003 contracts contributed to the royalty stream.

For the year, these positive developments helped ARC grow the top line despite a deteriorating economic climate and reduced industry confidence. Certain ARC customers were impacted by the global financial conditions, causing them to become more conservative with cash or postpone development projects. As a consequence, two contracts were delayed into the first half of 2009.

Company Restructuring Plan

In early recognition of the worsening global economy, in Q2 2008 management undertook a strategic review of the business to ensure ARC’s strategy and resources were properly aligned with revenue opportunities. The strategic review also identified inefficiencies in the deployment of resources and recommended an improved product development model. The result was a company-wide restructuring announced on September 21, 2008 that created:

  • A new integrated worldwide sales team and field organization to accelerate engagements with OEM and semiconductor customers globally
  • An enhanced global product development organization to ensure ARC’s integrated solutions meet the needs of customers creating products for high-volume multimedia markets
  • A worldwide marketing team under new leadership with in-depth experience and understanding of the consumer electronics industry and OEM customers. These skills will assist ARC to continue its focus on delivering vertically integrated multimedia solutions
  • A centralized Chief Technology Officer function

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