Operational Update

RNS Number : 9368D

Arc International PLC

22 September 2008

 



Media Contact:                             Investor Contact:

Lee Garvin Flanagin                      Juliet Clarke/Matt Dixon

ARC International                           Financial Dynamics

[phone]                           [phone]

ARC International PLC Operational Update

Reorganization Completes the Transformation of ARC 
Into a Multimedia Company Focused on High Volume Consumer Markets

SAN JOSE, Calif., and ST. ALBANS, England, September 22, 2008 - ARC International (LSE: ARK) today announced its plan to reorganise operations, enhancing and accelerating the deployment of its new multimedia product range to high-growth consumer electronics markets, while benefiting from recent strategic investments in new lower cost development capabilities.

The reorganization comprises a number of key elements, which streamline the company's execution of its market strategy with improved operational efficiencies and a significantly reduced cost base. The plan builds on a new company structure reporting directly to CEO Carl Schlachte and includes:

• A new integrated worldwide sales and field organisation

• The formation of a multimedia software business unit

• A new system on chip (SOC) business unit

• The streamlining of the Office of the CTO into a single function 

• An increased focus on vertically integrated multimedia solutions 

• The transfer of certain product development to ARC's engineering centers in Russia and India
  

Execution of the reorganization plan will commence today and is expected to be substantially completed in 2008, with the full benefits being generated from the beginning of 2009. 

The reorganization plan is expected to necessitate a one-time charge of £3.0 million in the second half of 2008, comprising a cash cost of £1.5 million and provisions for future costs, principally relating to surplus property lease obligations of a further £1.5 million. Full year savings are expected to be in excess of £2.0 million.  While a small impact on revenue is expected over the remainder of 2008, fundamental trading conditions remain unchanged. These actions are expected to accelerate profitability and positive cash flow.

Carl Schlachte, president and CEO, said, "The strategically targeted acquisitions that ARC has successfully executed and integrated, together with continued investment in new lower cost development capabilities, have enabled the company to significantly reposition itself. ARC has an exciting range of multimedia solutions, which are attracting strong and growing interest from OEM and chip customers around the world. The proposed restructuring announced today will enable ARC to more effectively and rapidly deploy these products to high volume consumer markets, reduce our cost base, improve margins, and accelerate our transition to profitability and positive cash flow."

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 140+ customers collectively ship hundreds of millions of ARC-Based chips annually in products such as Mobile TVs, Portable Media Players, WiFi-/WiMAX-enabled computers, 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, and St. Petersburg, Russia. For more information visit www.ARC.com. ARC International is listed on the London Stock Exchange as ARC International plc (LSE: ARK).

ARC and the ARC 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" 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. 

 

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