1st Quarter Results
Arc International PLC
25 April 2002
ARC INTERNATIONAL PLC
RESULTS FOR THE FIRST QUARTER ENDED 31 MARCH 2002
TURNOVER UP 20% ON Q4 2001; 8 NEW ARCTANGENT(TM) LICENCES SIGNED
Elstree, UK - 25 April 2002: ARC International plc (LSE: ARK.L), a system
provider and leader in user-customizable processors and software for
communications and consumer products, today announced results for the first
quarter ended 31 March 2002.
Highlights
• Turnover increased 20% quarter-on-quarter to £2.7 million (Q4 2001: £2.3
million)
• 8 design licences and 6 new customers for the ARCtangent processor won in
Q1
• Strong increase in new order bookings
• Shipped software and development tools products to more than 50 customers
in Q1
• Net loss reduced to £5.5 million from £6.2 million in Q4 2001 (before
exceptional costs)
• £115.6 million cash in hand at the end of March 2002
Commenting on the results, Mike Gulett, Chief Executive Officer of ARC
International, said:
"I am very pleased to report further healthy revenue growth and an encouraging
level of customer activity that resulted in a strong increase in bookings of new
orders. We also successfully concluded eight new design licence agreements for
the ARCtangent processor. Six new ARCtangent customers were added, including a
significant supplier to the wireless communications market, and two of our
established customers re-licensed the technology. I am also pleased that we had
more than fifty customers who licensed our software or development tools in Q1.
Our continuing tight cost control contributed to a further reduction in both
cash burn and the quarterly net loss.
"The new management team is making good progress in implementing the strategic
and operational changes announced in February. We remain focused on delivering
sustained revenue growth and accelerating our progress towards profitability. I
am cautiously optimistic about the next few quarters' outlook for continuing
gradual improvements in sequential quarterly revenue"
For further information, please contact:
Mike Gulett
CEO, ARC International
020 8236 2800
Simon Poulton
CFO, ARC International
020 8236 2800
Sue Pemberton
Citigate Dewe Rogerson
020 7638 9571
Freida Davidson
Citigate Dewe Rogerson
020 7638 9571
Financial Review
Total turnover for the first quarter was 20% higher than in the fourth quarter
of 2001 at £2.7 million (Q4 2001: £2.3 million) although it was below the level
of a year previously (Q1 2001: £3.7 million). Licence income was £2.1 million
(Q4 2001: £1.8 million; Q1 2001: £3.0 million), maintenance and service income
was £0.5 million (Q4 2001: £0.4 million; Q1 2001: £0.5 million) and royalties
were £0.1 million (Q4 2001: £0.1 million; Q1 2001: £0.1 million). The number of
ARCtangent designs being shipped by our customers remained unchanged at 11.
Cost of sales was £0.4 million (Q4 2001: £0.4 million), resulting in an increase
in gross margin to 85% (Q4 2001: 83%). Total operating expenses, including cost
of sales but excluding exceptional costs, amortisation of goodwill and
depreciation, were £7.5 million, a reduction of 4% from £7.9 million in the
previous quarter.
The Company had 227 employees at 31 March 2002 compared with 223 at 31 December
2001. Research and development costs were £3.0 million (Q4 2001: £3.3 million),
sales and marketing costs were £2.7 million (Q4 2001: £2.9 million) and general
and administration costs were £1.4 million (Q4 2001: £1.3 million).
The accrual for National Insurance contributions on the exercise of share
options has been reduced slightly, principally due to the fall in the Company's
share price during the quarter. This has resulted in a credit of £0.1 million
(Q4 2001: a debit of £0.1 million) to the profit and loss account.
Interest income was lower at £1.1 million (Q4 2001: £1.3 million) principally as
a result of the lower cash balance and the fall in average interest rates.
The increased turnover and lower costs resulted in the net loss before
exceptional costs being 12% lower at £5.5 million (Q4 2001: £6.2 million).
The net cash outflow from operations was £6.0 million (Q4 2001: £7.1 million).
Capital expenditure was £1.3 million (Q4 2001: £0.4 million). The movement in
net funds during the quarter was an outflow of £5.3 million (Q4 2001:£5.8
million). Net assets at 31 March 2002 were £131.7 million (at 31 December 2001:
£136.1 million), including net cash of £115.6 million (at 31 December 2001:
£120.8 million).
Management
Bernard Glasauer has recently been appointed Senior Vice President of Worldwide
Engineering. He was previously Vice President of Operations at GlobespanVirata
Corporation and prior to that worked for Cypress Semiconductor, Samsung and
Motorola.
Consolidated profit and loss account
for the quarter ended 31 March 2002
3 months ended 3 months ended Year ended
31 March 31 March 31 December
2002 2001 2001
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Turnover 2,731 3,673 11,450
Operating costs
Goodwill amortisation (1,022) (1,019) (4,075)
Exceptional costs 73 780 (5,526)
Other operating costs (8,288) (9,791) (38,277)
(9,237) (10,030) (47,878)
Total operating loss (6,506) (6,357) (36,428)
Interest receivable and similar income 1,125 1,976 6,586
Interest payable and similar charges - - (2)
--------------- ---------------- -----------------
Loss on ordinary activities before tax (5,381) (4,381) (29,844)
Tax on loss on ordinary activities (2) - (81)
---------------- ----------------- -----------------
Retained loss for the period (5,383) (4,381) (29,925)
======= ======== ========
Basic loss per share (10.83)p
Diluted loss per share (10.83)p
Pre-exceptional loss per share (8.83)p
Summary of operating expenses
Operating expenses
Cost of sales (397) (276) (1,683)
Research and development (3,043) (3,511) (13,291)
Sales and marketing (2,734) (3,782) (14,294)
General and administration (1,372) (1,840) (6,583)
Exceptional costs - restructuring - - (6,552)
Exceptional costs - NIC on share options 73 780 1,026
Depreciation of fixed assets (742) (382) (2,426)
Amortisation of goodwill (1,022) (1,019) (4,075)
----------------- ------------------ -----------------
Total operating expenses (9,237) (10,030) (47,878)
---------------- ------------------ -----------------
Consolidated statement of total recognized gains and losses
for the quarter ended 31 March 2002
3 months ended 3 months ended Year ended
31 March 31 March 31 December
2002 2001 2001
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Retained loss for the period (5,383) (4,381) (29,925)
Currency translation difference 462 286 71
-------------- --------------- ---------------
Total loss for the period (4,921) (4,095) (29,854)
-------------- --------------- ----------------
Consolidated balance sheet
as at 31 March 2002
As at As at
31 March 31 December
2002 2001
(unaudited) (audited)
£'000 £'000
Fixed Assets
Intangible assets 11,336 12,280
Tangible assets 7,213 6,702
---------------- ----------------
18,549 18,982
---------------- ----------------
Current Assets
Stocks 160 156
Debtors 4,608 3,710
Investments - bank deposits 113,540 119,401
Cash at bank and in hand 2,025 1,449
---------------- -----------------
120,333 124,716
Creditors' amounts falling due within one year (4,928) (5,198)
--------------- ----------------
Net current assets 115,405 119,518
Total assets less current liabilities 133,954 138,500
Creditors' amounts falling due after more than one year (2) (2)
Provisions for liabilities and charges (2,238) (2,433)
--------------- ----------------
Total Net Assets 131,714 136,065
======= =======
Capital and reserves
Called-up share capital 289 283
Share premium account 151,812 151,033
Exchangeable shares 4,081 4,286
Merger reserve 107 107
Other reserves 24,692 24,702
Profit and loss account (49,267) (44,346)
----------------- ------------------
Total shareholders' funds 131,714 136,065
======== ========
Consolidated cash flow statement
for the quarter ended 31 March 2002
3 months ended 3 months ended Year ended
31 March 31 March 31 December
2002 2001 2001
note (unaudited) (unaudited) (audited)
£000 £000 £'000
Net cash outflow from operating activities 1 (5,963) (6,009) (27,304)
Returns on investments and servicing of finance
Interest received 1,317 1,724 6,365
Interest element of finance lease rentals - (1) (2)
----------------- ----------------- ---------------
1,317 1,723 6,363
----------------- ---------------- ----------------
Net cash inflow from returns on investments and
servicing of finance
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,322) (1,565) (5,315)
Sale of tangible fixed assets - - 8
----------------- ------------------- -----------------
(1,322) (1,565) (5,307)
------------------ ------------------ -----------------
Net cash outflow before management of liquid (5,968) (5,851) (26,248)
resources and financing
------------------ ------------------- ------------------
Management of liquid resources
Movement on term deposits 2 5,861 6,285 23,888
------------------ ------------------ ------------------
Financing
Issue of ordinary share capital - IPO and options 592 345 1,243
Capital element of finance lease rentals (1) (2) (20)
Decrease in borrowings - (9) (17)
----------------- ------------------- -------------------
Net cash inflow from financing 591 334 1,206
----------------- ------------------ -------------------
Increase/(Decrease) in cash during the period 2 484 768 (1,154)
----------------- ------------------ ----------------
1. Reconciliation of operating loss to operating cash flow
for the quarter ended 31 March 2002
3 months ended 3 months ended Year ended
31 March 31 March 31 December
2002 2001 2001
(unaudited) (unaudited) (audited)
£000 £000 £'000
Operating loss (6,506) (6,357) (36,428)
Depreciation charge 742 382 2,427
Disposal of fixed assets 44 - 237
Amortisation of goodwill 1,022 1,019 4,075
Increase in stocks (2) (296) (159)
Share option grant credit (11) 27 39
(Increase)/decrease in debtors (398) (897) 2,910
(Decrease)/increase in creditors (659) 113 (2,838)
(Decrease)/increase in provisions (195) - 2,433
----------------- --------------------- -------------------
Net cash outflow from operating (5,963) (6,009) (27,304)
activities ----------------- -------------------- -------------------
2. Analysis of net funds
Cash at bank Investments Finance leases Total
(unaudited) £000 £000 £000 £000
At 31 December 2001 1,449 119,401 (7) 120,843
Exchange 92 - - 92
Cash flow 484 (5,861) 2 (5,375)
------------ -------------- -------------- --------------
At 31 March 2002 2,025 113,540 (5) 115,560
------------ -------------- -------------- --------------
3. Reconciliation of net cash flow to movement in net funds
3 months ended 3 months ended Year ended
31 March 31 March 31 December
2002 2001 2001
(unaudited) (unaudited) (audited)
£000 £000 £000
Increase/(decrease) in cash in the period 484 768 (1,154)
Cash outflow from increase in liquid resources (5,861) (6,285) (23,888)
----------------- ----------------- -----------------
(5,377) (5,517) (25,042)
Movement in borrowings 2 11 37
Exchange movements 92 87 32
---------------- ----------------- -----------------
Movement in net funds (5,283) (5,419) (24,973)
Net funds at beginning of period 120,843 145,816 145,816
----------------- ---------------- ----------------
Net funds at end of period 115,560 140,397 120,843
----------------- ---------------- ----------------
About ARC International
ARC International is a leading developer of user-customizable, high-performance
32-bit RISC/DSP processor cores (including ARCtangentTM), with integrated
development tools, peripherals and software. Its integrated intellectual
property solutions assist customers in rapidly developing next generation
wireless, networking and consumer electronics products, reducing time to market
for system-on-chip products. Products based on ARC's technology include digital
still cameras, set-top boxes, and network processors.
ARC International employs over 200 people in research and development, sales,
and marketing offices across North America, Europe and Israel, with key offices
in Elstree (England) and San Jose (CA, USA). 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 press release 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.
ARC, the ARC logo, and ARCtangent, are trademarks of ARC International. All
other brands or product names are the property of their respective holders.
This information is provided by RNS
The company news service from the London Stock Exchange
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