TIDMARM
RNS Number : 1906Z
ARM Holdings PLC
04 February 2014
ARM HOLDINGS PLC REPORTS RESULTS FOR THE FOURTH QUARTER AND FULL
YEAR 2013
A presentation of the results will be webcast today at 09.30 GMT
at www.arm.com/ir
CAMBRIDGE, UK, 4 FEBRUARY 2014 - ARM Holdings plc announces its
unaudited financial results for the fourth quarter and full year
ended 31 December 2013.
Q4 2013 - Financial Normalised* IFRS
Summary
--------------------------- ----------------------------- --------------------------
Q4 2013 Q4 2012 % Change Q4 2013 Q4 2012
------- ------------------ --------------- ------------ -------------- ------------- -----------
Revenue ($m) 302.9 262.8 15% 302.9 262.8
Revenue (GBPm) 189.1 164.2 15% 189.1 164.2
Operating expenses (GBPm) 88.1 79.7 11% 170.3 98.9
Operating margin 48.8% 46.6% 5.0% 34.5%
Profit before tax (GBPm) 95.5 80.0 19% 12.2 59.5
Earnings per share (pence) 5.3 4.1 30% (0.4) 3.0
Net cash generation (GBPm)
** 77.9 74.1
--------------------------- --------------- ------------ -------------- ------------- -----------
Effective revenue fx rate
($/GBP) 1.60 1.60
FY 2013 - Financial Normalised* IFRS
Summary
--------------------------- ---------------------- --------------------------
FY 2013 FY 2012 % Change FY 2013 FY 2012
------- ------------------ --------------- ------------ -------------- ------------- -----------
Revenue ($m) 1,117.7 913.1 22% 1,117.7 913.1
Revenue (GBPm) 714.6 576.9 24% 714.6 576.9
Operating expenses (GBPm) 326.5 284.2 15% 521.8 336.9
Operating margin 49.1% 45.6% 21.5% 36.1%
Profit before tax (GBPm) 364.0 276.5 32% 162.6 221.0
Earnings per share (pence) 20.6 14.7 40% 7.4 11.5
Net cash generation (GBPm)
** 344.5 267.3
--------------------------- --------------- ------------ -------------- ------------- -----------
Effective revenue fx rate
($/GBP) 1.56 1.58
* Normalised figures are based on IFRS, adjusted for acquisition-related charges, share-based
payment costs, profit or loss on disposal and impairment of available-for-sale investments,
share of results in joint venture, Linaro(TM)-related charges, intangible amortisation, and
exceptional items. For reconciliation of IFRS measures to normalised non-IFRS measures detailed
in this document, see notes 12.13 to 12.16.
** Net cash generation is defined as movement on cash, cash equivalents, short-term and long-term
deposits, adding back dividend payments, investment and acquisition consideration, other
acquisition-related
payments, share-based payroll taxes, investment in joint venture, payments to Linaro, cash
impact of exceptional items and deducting inflows from share option exercises and investment
disposal proceeds - see notes 12.8 to 12.12.
Q4 Financial Highlights
-- Group revenues in US$ up 15% year-on-year (GBP revenues up 15% year-on-year)
-- Processor licensing revenue in US$ up 26% year-on-year
-- Processor royalty revenue in US$ up 7% year-on-year (relevant
industry revenues up 2-3% year-on-year1)
-- Normalised operating expenses of GBP88.1 million. IFRS
operating expenses of GBP170.3 million include a non-cash
exceptional charge of GBP59.5 million related to the impairment of
an asset (see page 5 for details)
-- Normalised profit before tax and earnings per share up 19%
and 30% year-on-year respectively
-- IFRS PBT down 79% year-on-year as a result of the exceptional
charge; IFRS loss per share of 0.4 pence in Q4 2013 compared to
earnings per share of 3.0 pence in Q4 2012
-- Full year 2013 dividend increased by 27% to 5.7p
Progress on key growth drivers in Q4
-- Growth in adoption of ARM(R) processor technology
o 26 processor licences signed for a broad range of applications
from smartphones and mobile computers to medical devices, wearables
and the Internet of Things
o Momentum continues in computing, servers and networking
applications with the signing of an ARMv8 architecture licence and
two ARMv8 processor licences
-- Growth in shipments of chips based on ARM processor technology
o 2.9 billion chips shipped, up 16% year-on-year with faster
growth in low-cost chips in entry-level mobile devices,
microcontrollers and smart sensors
Outlook
After a strong licensing performance in 2013 which saw ARM make
good progress across its established markets as well as making
significant in-roads in servers and smart embedded applications, we
enter 2014 with a strong opening order backlog and a healthy
pipeline of licensing opportunities.
ARM's full year 2013 processor royalty revenue grew faster than
the overall semiconductor industry by 18 percentage points,
demonstrating ARM's continuing market share gains, although the
degree of outperformance was impacted by slower sales of chips for
high-end smartphones in the second half of the year. Despite slower
growth in one end market we expect full year 2014 processor royalty
revenues to grow at a similar rate to that reported over the last
three years.
Assuming the outlook for the semiconductor industry improves as
generally anticipated, we expect Group dollar revenues for the full
year 2014 to be in line with market expectations.
Simon Segars, Chief Executive Officer, said:
"ARM's strategy is for our technology to continue to gain share
in long-term growth markets, such as smartphones, tablets,
enterprise equipment and embedded computing, and to increase the
royalty percentage ARM receives from each device. ARM saw good
progress in Q4 as our latest technology was chosen by major
companies in all our target markets, with further licenses signed
for our latest ARMv8-A processors, Mali graphics processors and
physical IP technology. These design wins will help to drive ARM's
future royalty revenues.
ARM's Partners reported that they had shipped 2.9 billion
ARM-based chips, a record number despite slower growth of chips for
premium smartphones. This takes our cumulative shipments since 1993
to more than 50 billion chips, with over 10 billion reported as
shipped in 2013 alone.
In 2013, we continued to improve profitability and increase
returns to shareholders at the same time as investing in both
R&D and the business infrastructure that underpins our future
growth.
2014 brings exciting opportunities and challenges as ARM
competes in new markets where we are well positioned to succeed
with our leading technology, innovative business model and thriving
ecosystem of Partners."
Q4 2013 - Revenue Analysis Revenue ($m)*** Revenue (GBPm)
----------------------------- -----------------------------
Q4 2013 Q4 2012 % Change Q4 2013 Q4 2012 % Change
---------------------------- -------- -------- ---------
Technology Licensing
Processors 107.2 85.2 26% 67.7 53.1 27%
Physical IP 20.2 15.4 31% 12.5 9.7 29%
Total Technology Licensing 127.4 100.6 27% 80.2 62.8 28%
Technology Royalty
Processors 130.4 121.8 7% 80.8 76.1 6%
Physical IP 16.0 15.0 7% 9.9 9.4 5%
Total Technology Royalty 146.4 136.8 7% 90.7 85.5 6%
Services 14.0 11.5 22% 8.9 7.2 23%
Software and Tools 15.1 13.9 8% 9.3 8.7 7%
Total Revenue 302.9 262.8 15% 189.1 164.2 15%
---------------------------- -------- -------- --------- -------- -------- ---------
FY 2013 - Revenue Analysis Revenue ($m)*** Revenue (GBPm)
----------------------------- -----------------------------
FY 2013 FY 2012 % Change FY 2013 FY 2012 % Change
---------------------------- -------- -------- --------- -------- -------- ---------
Technology Licensing
Processors 382.6 287.1 33% 244.4 181.1 35%
Physical IP 65.3 52.2 25% 41.2 32.9 25%
Total Technology Licensing 447.9 339.3 32% 285.6 214.0 33%
Technology Royalty
Processors 495.1 417.7 19% 317.5 264.4 20%
Physical IP 63.8 56.2 13% 40.8 35.4 15%
Total Technology Royalty 558.9 473.9 18% 358.3 299.8 20%
Services 53.8 45.0 20% 34.3 28.4 20%
Software and Tools 57.1 54.9 4% 36.4 34.7 5%
Total Revenue 1,117.7 913.1 22% 714.6 576.9 24%
---------------------------- -------- -------- --------- -------- -------- ---------
*** Dollar revenues are based on the Group's actual dollar invoicing
and on the rate of exchange applicable on the date of the transaction
for invoicing in currencies other than dollars. Over 95% of the
Group's invoicing is in dollars.
CONTACTS:
Sarah West/Rob Mindell Ian Thornton/Phil Sparks
Brunswick ARM Holdings plc
+44 (0)207 404 5959 +44 (0)1628 427800
Financial review
(IFRS unless otherwise stated)
Total revenues
Total dollar revenues in Q4 2013 were $302.9 million, up 15%
versus Q4 2012. Q4 sterling revenues of GBP189.1 million were up
15% year-on-year.
Full year dollar revenues were $1,117.7 million, up 22% on
2012.
License revenues
Total dollar license revenues in Q4 2013 increased by 27%
year-on-year to $127.4 million, representing 42% of Group revenues.
License revenues comprised $107.2 million from Processors and $20.2
million from Physical IP.
During Q4, additional Partners entered into long-term
commitments to use ARM technology; the revenue associated with
these agreements goes into backlog and will be recognised in future
quarters when engineering and delivery milestones are achieved.
These agreements included an ARMv8 architecture licence and two
licences with Partners for ARM's
Cortex-A50 series processors. Group order backlog at the end of
Q4 2013 was down slightly when compared to Q3 2013, and up 17% when
compared to Q4 2012.
Full-year dollar licensing revenues were $447.9 million, up 32%
on 2012.
Royalty revenues
Royalties are recognised one quarter in arrears, hence royalties
in Q4 2013 were generated from semiconductor unit shipments in Q3
2013. Total dollar royalty revenues in Q4 2013 increased by 7%
year-on-year to $146.4 million, representing 48% of Group revenues.
Royalty revenues comprised $130.4 million from Processors and $16.0
million from Physical IP. Processor dollar royalty revenues in Q4
2013 increased by 7% year-on-year, compared with industry revenues
which were up 2-3% over the relevant shipment period (i.e. Q3 2013
compared to Q3 2012).
Full-year Group dollar royalty revenues were $558.9 million, up
18% on 2012. Processor dollar royalty revenues for the full-year
increased 19% year-on-year. This compares with industry revenues
that increased 1% over the relevant shipment period, being the four
quarters from Q3 2012 to Q3 2013.
In Q4 2013 ARM's processor royalty revenue grew faster than the
overall semiconductor industry, however the degree of
outperformance was impacted by slower sales of chips for high-end
smartphones. ARM's full-year 2013 processor royalty revenue
outperformed the semiconductor industry by 18 percentage points,
demonstrating ARM's continuing market share gains over the last 12
months.
Services, Software and Tools revenues
Service revenues were $14.0 million in Q4 2013, up 22%
year-on-year, and $53.8 million for the full-year, up 20%
year-on-year. For both Q4 2013 and full-year 2013 service revenues
represented 5% of total revenues.
Sales of software and tools in Q4 2013 were $15.1 million, an
increase of 8% year-on-year and representing 5% of Group revenues.
Full-year software and tools revenues were $57.1 million, up 4%
year-on-year.
Gross margins
Gross margin in Q4 2013, excluding share-based payments charges
of GBP0.6 million, was 95.4% compared to 95.1% in Q3 2013 and 95.1%
in Q4 2012.
Full-year gross margin, excluding share-based payment charges of
GBP2.1 million, was 94.8%, the same as in 2012.
Operating expenses and operating margin
Normalised income statements for Q4 2013, full-year 2013, Q4
2012 and full-year 2012 are included in notes 12.13 to 12.16 below,
which reconcile IFRS to the normalised non-IFRS measures referred
to in this earnings release.
Normalised operating expenses were GBP88.1 million in Q4 2013,
compared to GBP85.6 million in Q3 2013 and GBP79.7 million in Q4
2012. Normalised operating expenses in Q4 2013 included charges
relating to the foreign exchange revaluation of monetary items and
the impact of a weaker dollar on the accounting for derivative
instruments, and the write-off of bad debts of about GBP2 million
in aggregate. Normalised operating expenses in Q1 2014 (assuming
effective exchange rates similar to current levels) are expected to
be in the range GBP84-86 million as we continue to invest in our
research and development teams and in our business
infrastructure.
Normalised operating margin was 48.8% in Q4 2013, compared to
48.6% in Q3 2013 and 46.6% in Q4 2012.
Normalised research and development expenses were GBP38.9
million in Q4 2013, representing 21% of revenues, compared to
GBP35.7 million in Q3 2013 and GBP36.7 million in Q4 2012.
Normalised sales and marketing expenses were GBP21.3 million in Q4
2013, being 11% of revenues, compared to GBP19.3 million in Q3 2013
and GBP18.4 million in Q4 2012. Normalised general and
administrative expenses were GBP27.9 million in Q4 2013 (including
the foreign exchange charge referred to above), representing 15% of
revenues, compared to GBP30.6 million in Q3 2013 and GBP24.6
million in Q4 2012.
Total IFRS operating expenses in Q4 2013 were GBP170.3 million
(Q4 2012: GBP98.9 million) including share-based payment charges
and related payroll taxes of GBP19.4 million (Q4 2012: GBP15.6
million), amortisation of intangible assets and other
acquisition-related charges of GBP2.9 million (Q4 2012: GBP2.4
million), investment impairments, net of profit on disposals, of
GBP0.4 million(Q4 2012: GBP1.2 million), and a non-cash exceptional
charge of GBP59.5 million (Q4 2012: GBPnil) (see below).
Total share-based payment charges and related payroll tax
charges of GBP20.0 million in Q4 2013 were included within cost of
revenues (GBP0.6 million), research and development (GBP12.4
million), sales and marketing (GBP3.2 million) and general and
administrative (GBP3.8 million).
Total IFRS operating expenses for the full-year 2013 were
GBP521.8 million compared to GBP336.9 million in 2012.
Impairment of available-for-sale financial asset
In December 2012 it was announced that a consortium of
technology companies had formed a company, Bridge Crossing LLC
("BC"), to acquire rights to MIPS Technologies Inc's portfolio of
patents (the Patents) for a total of $350 million. This transaction
was completed on 6 February 2013. ARM's total contribution amounted
to $167.5 million, of which $100.5 million was classified within
current assets as available-for-sale and $67 million was classified
within other intangibles. The available-for-sale financial asset
represented ARM's right to receive cash from the Group's financial
interest in the consortium as BC anticipated that a programme of
licensing the Patents to third parties would be undertaken. The
other intangible asset consists of intellectual property rights
that are being amortised over a period of eight and a half years,
being the average remaining life of the underlying patent
portfolio.
In Q4 2013, BC made a strategic decision not to pursue a
licensing programme. As ARM believes that there is significant
long-term strategic advantage in owning this intellectual property,
the Patents were purchased outright in Q1 2014 for $4m (GBP2.5m).
The patents acquired (approximately 500, granted and pending) are
now part of ARM's portfolio of more than 3,500 patents. As ARM now
owns the Patents, there is no future cash to be received from BC,
so the available-for-sale financial asset has been impaired, giving
rise to a non-cash exceptional charge of GBP59.5 million.
Earnings and taxation
Profit before tax was GBP12.2 million in Q4 2013 compared to
GBP59.5 million in Q4 2012. Normalised profit before tax in Q4 2013
was GBP95.5 million compared to GBP80.0 million in Q4 2012.
The Group's effective normalised tax rate was 21% in Q4 2013,
giving a full-year normalised tax rate of 20% (IFRS: 36% due
primarily to the exceptional charge of GBP59.5 million giving rise
to an unrecognised deferred tax asset). The Group's full-year
normalised effective tax rate in 2014 is expected to be around
18%.
In Q4 2013 and including exceptional items, fully diluted losses
per share were 0.4 pence (2.2 cents per ADS2) compared to earnings
per share of 3.0 pence (14.8 cents per ADS) in Q4 2012. Normalised
fully diluted earnings per share in Q4 2013 were 5.3 pence (26.4
cents per ADS) compared to 4.1 pence (19.9 cents per ADS) in Q4
2012.
Full-year 2013 fully diluted earnings per share prepared under
IFRS were 7.4 pence compared to earnings per share of 11.5 pence in
2012. Normalised fully diluted earnings per share for 2013 were
20.6 pence per share compared to 14.7 pence per share in 2012.
Balance sheet
Intangible assets were GBP608.8 million at 31 December 2013,
comprising goodwill of GBP525.9 million and other intangible assets
of GBP82.9 million, compared to GBP519.4 million and GBP11.2
million respectively at 31 December 2012.
Total accounts receivable were GBP136.2 million at 31 December
2013, compared to GBP124.5 million at 31 December 2012.
Cash flow and dividend
Net cash generation in Q4 2013 was GBP77.9 million. Net cash at
31 December 2013 was GBP706.3 million compared to GBP670.5 million
at 30 September 2013 and GBP520.2 million at the end of 2012.
The directors recommend payment of a final dividend in respect
of 2013 of 3.6p pence per share, up 27%. Taken together with the
interim dividend of 2.1 pence per share paid in October 2013, this
gives a total dividend in respect of 2013 of 5.7 pence per share,
an increase of 27% on the total dividend of 4.5 pence per share in
2012. Subject to shareholder approval, the final dividend will be
paid on 16 May 2014 to shareholders on the register on 22 April
2014.
As well as continuing to grow the dividend, the Board intends to
undertake a limited share buyback programme to maintain a flat
share count over time.
Technology Licensing
Processor licensing
26 processor licences were signed in Q4 2013, with 22 companies.
The technology licensed includes ARM's latest Cortex--A,
Cortex-M(TM) and Mali processors and will be used in a broad range
of end applications, including mobile computers, servers and smart
embedded applications.
More than half of the 22 companies were licensing ARM technology
for the first time. Many of these new customers are planning to use
ARM technology in emerging applications such as healthcare,
Internet of Things, and wearable digital devices. During the
quarter we signed technology licences with a wide range of
companies including telecoms operators, major software companies,
equipment manufacturers and OEMs.
Three of the licences signed were for ARM's ARMv8-A 64-bit
technology including one architecture licence and two Cortex-A50
series processors. These technologies can be deployed into a broad
range of end-markets, including smartphones, tablets, display
devices, digital TVs, enterprise networking and low-power server
applications.
Demand for ARM's processors for the embedded market remained
strong, with 15 licences signed for ARM's Cortex-M series
technology. ARM has now signed more than 200 Cortex-M licences with
over 150 companies. Many of these licences will be used in
microcontrollers or applications for the Internet of Things.
ARM also signed four further licences for its Mali graphics
processors, including an existing Mali licensee upgrading to the
latest Mali-T700 series, and a major semiconductor company
licensing Mali for the first time, also choosing the Mali-T700
series.
Q4 2013 and Cumulative Processor Licensing Analysis
Existing New Quarter Cumulative
Licensees Licensees Total Total**
----------- ----------- -------- -----------
Classic
ARM* 529
Cortex-A 3 3 6 162
Cortex-R 41
Cortex-M 6 9 15 212
Mali 4*** 4 86
Architecture 1 1 16
Subscription 16
-------------- ----------- ----------- -------- -----------
Total 14 12 26 1,062
-------------- ----------- ----------- -------- -----------
* Includes ARM7, ARM9, ARM10 and ARM11
**Adjusted for licences that are no longer expected to generate
royalties
*** Includes 1 existing ARM customer taking their first Mali
licence
Four Mali subscription licences reclassified from "Mali" to
"Subscription"
Physical IP licensing
ARM's physical IP is used by fabless semiconductor companies to
implement their chip designs. Platform licences are royalty bearing
licences that enable foundries to manufacture chips using ARM's
physical IP. Each foundry requires a platform licence for each
process node. ARM has signed a full range of platform licences with
leading foundries, from 250nm to 14nm.
ARM continues the development of advanced technology physical IP
for FinFET process technologies at multiple foundries, and this
quarter another two fabless semiconductor companies started to
design chips with ARM's physical IP for use in a FinFET process
technology. Four companies are now designing chips using ARM's
physical IP for FinFET.
In addition, ARM signed a new licence to provide physical IP at
90nm to a foundry choosing to use ARM physical IP for the first
time, and an existing customer signed a licence for 40nm physical
IP.
ARM also continues to see strong demand for physical IP
optimised for use with processors (POP IP). POP IP enables a
licensee to more readily achieve high-performance, low-power
processor implementations through specially optimised physical IP
technology. For every chip implemented using POP IP, ARM receives a
royalty both for the processor in the chip and for the physical IP.
This quarter ARM signed four further POP licences for Cortex-A
processors and one for Mali graphics technology. This included POP
licences for our latest Cortex-A50 series processors and Mali-T700
series graphics processors, both for use on 28nm manufacturing
processes.
Number of Physical IP Licences*
Total for the Cumulative
Quarter Total
------------------- -------------- -----------
Platform Licences 2 101
------------------- -------------- -----------
POP IP 5 57
------------------- -------------- -----------
*Adjusted for licences that are no longer expected to generate
royalties
Customers Licensing Multiple ARM Technologies
In some end markets, such as application processors in mobile
phones, mobile computers and digital TVs there can be synergies
from using multiple ARM technologies in the same system-on-chip
design. The system benefits that can be generated include faster
time-to-market, reduced development risk and lower cost and higher
performance of the resultant chip. For example, this can include
two Cortex-A processors combined in a big.LITTLE configuration,
coupled with Mali graphics and implemented using ARM's physical IP
(possibly in the form of POP IP). To date ARM has signed 162
Cortex-A licences, 86 Mali licences and 57 POP IP licences. ARM
typically receives a percentage of the chip price for each ARM
technology included within the chip, so chips that contain multiple
ARM technologies can enhance ARM's overall royalty opportunity.
Processor Design Wins and Ecosystem Development
Many leading technology companies have announced details of
their ARM-based product developments in recent months. These
included:
-- Altera announced a quad-Core ARMv8-A 64-bit chip,
manufactured on 14nm Tri-Gate process, for data centre and
communications infrastructure.
-- AMD announced the imminent sampling of its low-power server SOCs, based on Cortex-A57.
-- Amlogic introduced an SOC for digital TVs and set top boxes
incorporating a six-core ARM Mali-450 MP graphics processor and a
quad-core ARM Cortex-A9 processor, both implemented with ARM
Artisan(R) Physical IP.
-- Broadcom announced a new ARMv8-A 64-bit chip for enterprise networking applications.
-- IBM announced that it has licensed a broad range of ARM
technology for custom chips aimed at wired and wireless
communications.
-- NVIDIA announced the Tegra K1 for premium mobile computing
featuring a Quad-Core ARM Cortex-A15.
-- Microchip launched the SSC7102 sensor hub for the Internet of
Things containing an ARM Cortex-M4 processor
-- Rockchip announced that it has entered into a subscription
licence, including ARM's latest Cortex-A50 series processors and
Mali graphics processors, to develop chips for mobile computing and
smart home devices.
-- ST Microelectronics' released details of its STi8K family for
digital home applications based on ARM Cortex-A50 series
processors
-- Telenor Connexion licensed ARM's Sensinode software for use in ARM-based Internet of Things technologies. Telenor Connexion will use these devices to provide standards-based, energy-efficient and secure machine-to-machine (M2M) services.
Many more Partner announcements can be found on the ARM website
at www.arm.com/news.
Technology Royalties
Processor royalties
Q4 revenue came from the sales of about 2.9 billion ARM-based
chips, up 16% year-on-year.
ARM continued to gain share across target markets. Sales of ARM
processor-based chips into embedded electronics, including
microcontrollers, smartcards and wearable computing, grew 35%
year-on-year. Enterprise networking also did well, growing nearly
three-fold year-on-year.
Chips using Cortex-A class and Mali graphics processors grew
strongly in Q4. More than 520m Cortex-A class processors were
reported as shipped, nearly twice the number as a year ago, and
about 140m Mali graphics processors were reported as shipped,
taking the total for the year to about 400m, up from 150m in
2012.
ARM's average royalty revenue per chip in Q4 was 4.5c compared
with 4.8c a year ago. This decline is mainly due to the mix of
chips sold with an increase in the number of ARM based
microcontrollers and smartcards, where the chip average price is
less than one US dollar, and also lower than is typical
year-on-year growth in higher value applications processors in
premium smartphones. ARM's average royalty revenue per chip for
full year 2013 was 4.8c, the same as in 2012.
Q4 2013 Processor Unit Shipment Analysis
Processor Unit Shipments Market Unit Shipments
Family
----------- --------------- ----------- ---------------
ARM7 28% Mobile 46%
----------- --------------- ----------- ---------------
ARM9 16% Enterprise 17%
----------- --------------- ----------- ---------------
ARM11 4% Home 5%
----------- --------------- ----------- ---------------
Cortex-A 18% Embedded 32%
----------- --------------- ----------- ---------------
Cortex-R 4%
----------- ---------------
Cortex-M 30%
----------- ---------------
Physical IP royalties
Royalties are recognised one quarter in arrears, with royalties
in Q4 generated from wafer shipments in Q3. Physical IP royalty
revenues in Q4 2013 were $16.0 million, up 7% year-on-year.
People
At 31 December 2013, ARM had 2,833 full-time employees, a net
increase of 441 since the start of the year. More than 70% of these
new employees are engineers joining ARM's processor R&D teams.
At the end of the quarter, the Group had 1,185 employees based in
the UK, 669 in the US, 355 in Continental Europe, 395 in India and
229 in the Asia Pacific region.
Principal risks and uncertainties
The principal risks and opportunities faced by the Group are
included within the "Risks and risk management" section of the 2012
Annual Report and Accounts filed with Companies House in the UK.
Details of other risks and uncertainties faced by the Group are
noted within the Annual Report on Form 20-F for the year ended 31
December 2012 which is on file with the Securities and Exchange
Commission (the "SEC") and is available on the SEC's website at
www.sec.gov. These risks include but are not limited to: ARM's
quarterly results may fluctuate significantly and be unpredictable
which could adversely affect the market price of ARM ordinary
shares; general economic conditions may reduce ARM's revenues and
harm its business; we depend largely on a small number of customers
and products; failure by ARM to achieve the performance under a
licence or failure of a customer to make an obligated milestone
payment could materially impact our revenues; we operate in an
intensely competitive industry and our customers may choose to use
their own or competing technology; ARM has grown its operations
significantly over recent years and ARM's business could be
adversely impacted if these changes are not managed successfully;
ARM's technology is used in a wide range of electronic products,
any bug or fault in our technology could lead to significant damage
to our brand and reputation; ARM may have to protect its
intellectual property or defend the technology against claims that
we have infringed others' proprietary rights; and an infringement
claim against ARM's technology may result in a significant damages
award which would adversely impact ARM's operating results.
ARM Holdings plc
Consolidated balance sheet - IFRS
31 December 31 December
2013 2012
Unaudited Audited
------------ ------------
GBPm GBPm
Assets
Current assets:
Cash and cash equivalents 43.8 46.3
Short-term deposits 544.1 340.0
Fair value of currency exchange contracts 5.1 1.4
Accounts receivable 136.2 124.5
Available-for-sale financial assets 1.2 -
(see note 6)
Prepaid expenses and other assets (see
note 6) 39.8 135.6
Current tax assets 6.9 13.9
Inventories: finished goods 3.0 2.3
Total current assets 780.1 664.0
------------ ------------
Non-current assets:
Long-term deposits 125.6 141.3
Loans and receivables 3.0 2.1
Available-for-sale financial assets 13.9 13.8
Investment in joint venture (see note
8) 6.5 6.8
Prepaid expenses and other assets 1.6 2.0
Property, plant and equipment 33.6 36.1
Goodwill 525.9 519.4
Other intangible assets (see note 6) 82.9 11.2
Deferred tax assets 65.3 70.1
------------ ------------
Total non-current assets 858.3 802.8
------------ ------------
Total assets 1,638.4 1,466.8
------------ ------------
Liabilities
Current liabilities:
Accounts payable 7.0 5.9
Embedded derivatives 7.0 2.5
Finance lease liabilities 2.7 2.9
Accrued and other liabilities (see
note 7) 90.7 79.3
Current tax liabilities 18.8 16.6
Deferred revenue 156.7 126.4
Total current liabilities 282.9 233.6
------------ ------------
Non-current liabilities:
Finance lease liabilities 1.5 2.9
Deferred tax liabilities 0.1 -
Deferred revenue 42.5 24.2
------------ ------------
Total non-current liabilities 44.1 27.1
Total liabilities 327.0 260.7
------------ ------------
Net assets 1,311.4 1,206.1
------------ ------------
Capital and reserves attributable to the
owners of the Company
Share capital 0.7 0.7
Share premium account 18.1 12.2
Capital reserve 354.3 354.3
Share option reserve 61.4 61.4
Retained earnings 820.6 703.3
Cumulative translation adjustment 56.3 74.2
------------ ------------
Total equity 1,311.4 1,206.1
------------ ------------
ARM Holdings plc
Consolidated income statement - IFRS
Quarter Quarter
ended ended Year ended Year ended
31 December 31 December 31 December 31 December
2013 2012 2013 2012
Unaudited Unaudited Unaudited Audited
------------ ------------ ------------- -------------
GBPm GBPm GBPm GBPm
Revenues 189.1 164.2 714.6 576.9
Cost of revenues (9.3) (8.6) (39.3) (31.9)
Gross profit 179.8 155.6 675.3 545.0
------------ ------------ ------------- -------------
Research and development (53.8) (46.3) (202.9) (166.3)
Sales and marketing (24.7) (21.3) (89.4) (72.9)
General and administrative (32.3) (31.3) (128.2) (97.7)
Total operating expenses before
exceptional items (110.8) (98.9) (420.5) (336.9)
------------ ------------ ------------- -------------
Exceptional items
Impairment of available-for-sale
financial asset (see note 6) (59.5) - (59.5) -
IP indemnity and similar charges - - (41.8) -
(see note 9)
Total operating expenses after
exceptional items (170.3) (98.9) (521.8) (336.9)
------------ ------------ ------------- -------------
Profit from operations 9.5 56.7 153.5 208.1
Investment income, net 3.2 3.5 13.1 13.6
Share of post tax results in
joint venture (0.5) (0.7) (4.0) (0.7)
Profit before tax 12.2 59.5 162.6 221.0
Tax (18.4) (17.0) (57.8) (60.3)
(Loss)/profit for the period (6.2) 42.5 104.8 160.7
------------ ------------ ------------- -------------
Earnings per share
Basic and diluted earnings (6.2) 42.5 104.8 160.7
Number of shares (millions)
Basic weighted average number
of shares 1,399.9 1,380.0 1,396.4 1,375.1
Effect of dilutive securities:
Share options and awards 13.9 18.6 15.4 20.7
------------ ------------ ------------- -------------
Diluted weighted average number
of shares 1,413.8 1,398.6 1,411.8 1,395.8
------------ ------------ ------------- -------------
Basic EPS (pence) (0.4) 3.1 7.5 11.7
Diluted EPS (pence) (0.4) 3.0 7.4 11.5
Diluted earnings per ADS (cents) (2.2) 14.8 36.9 56.1
All activities relate to continuing operations.
All of the profit for the period is attributable to the owners
of the Company.
ARM Holdings plc
Consolidated statement of comprehensive income - IFRS
Quarter Quarter
ended ended Year ended Year ended
31 December 31 December 31 December 31 December
2013 2012 2013 2012
Unaudited Unaudited Unaudited Audited
------------ ------------ ------------- -------------
GBPm GBPm GBPm GBPm
(Loss)/profit for the period (6.2) 42.5 104.8 160.7
------------------------------------ ------------ ------------ ------------- -------------
Other comprehensive income:
Unrealised holding loss on
available-for-sale
financial asset (net of tax
of GBPnil)* - (0.3) - (0.3)
Currency translation adjustment* (16.3) (3.9) (17.9) (26.8)
------------------------------------ ------------ ------------ ------------- -------------
Other comprehensive loss for
the period (16.3) (4.2) (17.9) (27.1)
Total comprehensive (loss)/income
for the period (22.5) 38.3 86.9 133.6
------------------------------------ ------------ ------------ ------------- -------------
*These items may be reclassified to income statement if certain
conditions are met.
ARM Holdings plc
Consolidated cash flow statement - IFRS
Year ended Year ended
31 December 31 December
2013 2012
Unaudited Audited
------------ ------------
GBPm GBPm
Operating activities
Profit before tax 162.6 221.0
Investment income (net of interest payable
and similar charges) (13.1) (13.6)
Share of results in joint venture 4.0 0.7
------------ ------------
Profit from operations 153.5 208.1
Depreciation and amortisation of property,
plant, and equipment, and intangible
assets 28.0 17.4
Compensation charge in respect of share-based
payments 59.2 37.1
Profit on disposal of available-for-sale
financial assets (3.3) (0.8)
Loss on disposal of property, plant 0.6 -
and equipment
Provision for impairment of available-for-sale
financial assets (including non-cash
exceptional item of GBP59.5 million) 66.3 1.4
Provision for doubtful debts 4.0 0.4
Non-cash foreign currency gains and
losses (3.6) (0.7)
Movement in fair value of currency exchange
contracts (3.7) (2.9)
Movement in fair value of embedded derivatives 4.4 3.7
Changes in working capital:
Accounts receivable (19.8) (5.7)
Inventories (0.7) 0.1
Prepaid expenses and other assets (8.8) (104.8)
Accounts payable 1.1 (2.8)
Deferred revenue 53.1 37.3
Accrued and other liabilities 8.3 (4.8)
Cash generated by operations before
tax 338.6 183.0
Income taxes paid (23.3) (26.1)
Net cash from operating activities 315.3 156.9
------------ ------------
Investing activities
Interest received 13.4 11.5
Interest paid (0.2) (0.3)
Purchases of property, plant and equipment (13.5) (20.2)
Purchases of other intangible assets (31.8) (5.4)
Purchases of available-for-sale financial
assets (8.9) (3.0)
Proceeds on disposal of available-for-sale
financial assets 5.5 11.8
Purchase of short and long-term deposits (188.5) (76.8)
Purchases of subsidiaries, net of cash (21.1) -
acquired
Investment in joint venture (3.7) (7.5)
Provision of long-term loan (0.7) -
Net cash used in investing activities (249.5) (89.9)
------------ ------------
Financing activities
Proceeds from borrowings - 99.8
Proceeds received on issuance of shares 5.9 5.6
Refund of costs related to share issue - 2.7
Dividends paid to shareholders (68.9) (51.8)
Repayment of borrowings (1.1) (99.8)
Repayment of finance leases (3.3) (3.3)
Net cash used in financing activities (67.4) (46.8)
------------ ------------
Net (decrease)/increase in cash and
cash equivalents (1.6) 20.2
Cash and cash equivalents at beginning
of period 46.3 26.8
Effect of foreign exchange rate changes (0.9) (0.7)
------------ ------------
Cash and cash equivalents at end of
period 43.8 46.3
------------ ------------
ARM Holdings plc
Consolidated statement of changes in shareholders' equity -
IFRS
Share Share Reval- Cumulative
Share premium Capital option Retained -uation translation
capital account reserve reserve** earnings reserve adjustment Total
*
-------- -------- -------- ---------- --------- -------- ------------ --------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2012 (audited) 0.7 6.6 351.6 61.4 539.6 0.3 101.0 1,061.2
------------------------------- -------- -------- -------- ---------- --------- -------- ------------ --------
Profit for the period - - - - 160.7 - - 160.7
Other comprehensive income:
Unrealised holding gain on
available-for-sale
financial assets - - - - - (0.3) - (0.3)
Currency translation
adjustment - - - - - - (26.8) (26.8)
------------------------------- -------- -------- -------- ---------- --------- -------- ------------ --------
Total comprehensive income for
the year - - - - 160.7 (0.3) (26.8) 133.6
------------------------------- -------- -------- -------- ---------- --------- -------- ------------ --------
Shares issued on exercise of
share options
and awards - 5.6 - - - - - 5.6
Dividends (see note 5) - - - - (51.8) - - (51.8)
Credit in respect of employee
share schemes - - - - 37.1 - - 37.1
Movement on tax arising on
share options
and awards - - - - 17.7 - - 17.7
Refund of costs related to
share issue *** - - 2.7 - - - - 2.7
- 5.6 2.7 - 3.0 - - 11.3
At 31 December 2012 (audited) 0.7 12.2 354.3 61.4 703.3 - 74.2 1,206.1
------------------------------- -------- -------- -------- ---------- --------- -------- ------------ --------
Profit for the period - - - - 104.8 - - 104.8
Other comprehensive income:
Currency translation
adjustment - - - - - - (17.9) (17.9)
------------------------------- -------- -------- -------- ---------- --------- -------- ------------ --------
Total comprehensive income for
the year - - - - 104.8 - (17.9) 86.9
------------------------------- -------- -------- -------- ---------- --------- -------- ------------ --------
Shares issued on exercise of
share options
and awards - 5.9 - - - - - 5.9
Dividends (see note 5) - - - - (68.9) - - (68.9)
Credit in respect of employee
share schemes - - - - 59.2 - - 59.2
Movement on tax arising on
share options
and awards - - - - 22.2 - - 22.2
- 5.9 - - 12.5 - - 18.4
At 31 December 2013
(unaudited) 0.7 18.1 354.3 61.4 820.6 - 56.3 1,311.4
------------------------------- -------- -------- -------- ---------- --------- -------- ------------ --------
* Capital reserve. In 2004, the premium on the shares issued in
part consideration for the acquisition of Artisan Components Inc.
was credited to reserves on consolidation in accordance with
Section 131 of the Companies Act 1985. The reserve has been
classified as a capital reserve to reflect the nature of the
original credit to equity arising on acquisition. This capital
reserve is clearly distinguished from the share premium arising on
share issues.
** Share option reserve. The share option reserve represents the
fair value of options granted on the acquisition of Artisan
Components Inc. in 2004.
*** Refund of costs related to share issue. During 2012, it was
confirmed by HMRC that they would not challenge a ruling that the
stamp duty incurred on the issue of shares of a UK company to a
depositary or clearance system outside the EU was in breach of EU
law. ARM has therefore been able to claim a full refund of GBP2.7
million for stamp duty incurred on the issue of shares for the
acquisition of Artisan Components Inc. in 2004.
Notes to the Financial Information
(1) Basis of preparation and accounting policies
The financial information prepared in accordance with the
Group's IFRS accounting policies (consistent with those stated in
the financial statements for the year ended 31 December 2012 with
the exception of government grants and exceptional items, as
described below) comprises the consolidated balance sheets as at 31
December 2013 and 2012, consolidated income statements and
consolidated statements of comprehensive income for the three
months and years ended 31 December 2013 and 2012, and consolidated
cash flow statements and consolidated statements of changes in
shareholders' equity for the years ended 31 December 2013 and 2012,
together with related notes. This condensed set of consolidated
financial information for the year ended 31 December 2013 has been
prepared in accordance with the Disclosure and Transparency Rules
of the Financial Conduct Authority and with regard to the guidance
in IAS 34, "Interim financial reporting", as adopted by the
European Union. This financial information should be read in
conjunction with the annual financial statements for the year ended
31 December 2012, which have been prepared in accordance with IFRSs
as adopted by the European Union.
Government grants
Grants in respect of specific research and development projects
are recognised as receivable when there is reasonable assurance
that they will be received and the conditions to obtain them have
been complied with. They are credited to the income statement in
the same period as the related research and development costs for
which the grant is compensating. The grant income is presented as a
deduction from the related expense.
Exceptional items
Exceptional items are disclosed separately in the financial
statements where it is necessary to do so to provide further
understanding of the financial performance of the Group. They are
material items of income or expense that have been shown separately
due to the significance of their nature.
New standards, amendments and interpretations
The following new standards and amendments have been applied for
the first time during the year commencing 1 January 2013:
IFRS 13 "Fair value measurement". IFRS 13's measurement and
disclosure requirements are applicable for the financial year
commencing 1 January 2013. The Group has included the relevant
disclosure requirements within note 3 'Financial risk
management'.
Amendments to IAS 1 "Presentation of financial statements" are
applicable for the financial year commencing 1 January 2013. The
Group has included the relevant disclosure requirements within the
condensed financial statements.
In addition, IAS 19 "Employee benefits", IFRS 10 "Consolidated
financial statements", IFRS 11 "Joint arrangements" and IFRS 12
"Disclosure of interests in other entities" are applicable for the
financial year commencing 1 January 2013 and have not had a
material impact on the Group.
Critical accounting estimates and judgements
The preparation of financial statements requires management to
make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expense. Actual results may differ
from these estimates.
In preparing these condensed financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 31 December 2012, other than those
related to the participation in the trust to acquire patent
rights.
Participation in trust to acquire patent rights
During the year, the Group has participated in a consortium, via
a trust, to acquire certain patent rights and has made various
judgements regarding these transactions.
The directors believe that the Group does not control or have
significant influence over the trust since, amongst other factors
it does not have voting rights on the board or significant
influence over the relevant activities of the trust. The results of
the trust have therefore not been consolidated or equity accounted
in the Group accounts. The Group has determined that the
participation in the consortium conferred on the Group two separate
rights: an intangible asset, conferring the right to use the assets
in the Group's own business, and an available for sale ('AFS')
financial asset conferring the right to certain potential future
revenue streams arising from the licensing activities of the trust.
The amount expected to be recovered through this licensing
programme was estimated by the Group in conjunction with the
management of the trust, which has considerable experience of
managing the assets of similar trusts.
The Group assesses its intangible assets for impairment at each
reporting date and has reviewed the valuation of the patent rights
acquired in this transaction. Given the design freedom that these
rights provide and the size of the future opportunity afforded, the
directors have concluded that no impairment of the patent rights is
required.
The licensing programme that was originally intended to generate
revenue streams for the consortium did not take place and instead
an auction was held on 21 January 2014 to sell the patent rights
held by the trust. These patent rights were acquired by the Group
for $4 million and have been accounted for as an additional
intangible asset. The auction process means that there are no
further potential cash flows in relation to the AFS financial
asset. This asset has therefore been impaired down to the value of
the Group's share of the auction proceeds, resulting in a non-cash
exceptional charge of $98.5m.
(2) Going concern
After dividend payments of GBP68.9 million in 2013, the highly
cash generative nature of the business enabled the Group to
increase its cash, cash equivalents and deposits to GBP706.3
million (net of accrued interest of GBP7.2 million) at the end of
2013. This was an increase from GBP520.2 million (net of accrued
interest of GBP7.4 million) at the start of the year.
After reviewing the 2014 budget and longer term plans and
considering any reasonably likely scenarios that may occur, the
directors are satisfied that, at the time of releasing these
condensed financial statements, it is appropriate to adopt the
going concern basis in preparing the financial statements of the
Group.
(3) Financial risk management
(3.1) Financial risk factors
The Group's operations expose it to a variety of financial risks
that include currency risk, interest rate risk, securities price
risk, credit risk and liquidity risk. This condensed set of
consolidated financial information does not include all financial
risk management information and should be read in conjunction with
the Group's annual financial statements for the year ended 31
December 2012.
There have been no changes to the risk management policy since
the year ended 31 December 2012.
(3.2) Fair value estimation
The table below shows the financial instruments carried at fair
value by valuation method:
31 December 2013 Level Level Level Total
1* 2* 3*
GBPm GBPm GBPm GBPm
Assets
Fair value through the income
statement:
Currency exchange contracts - 5.1 - 5.1
------- ------ ------ ------
- 5.1 - 5.1
--------------------------------------- ------ ------ ------
Available-for-sale:
Current investments - - 1.2 1.2
Other long-term investments - - 13.9 13.9
------- ------ ------ ------
- - 15.1 15.1
--------------------------------------- ------ ------ ------
Total assets - 5.1 15.1 20.2
------- ------ ------ ------
Liabilities
Embedded derivatives - (7.0) - (7.0)
Total liabilities - (7.0) - (7.0)
------- ------ ------ ------
31 December 2012 Level Level Level Total
1* 2* 3*
Assets GBPm GBPm GBPm GBPm
Fair value through the income
statement:
Currency exchange contracts - 1.4 - 1.4
------- ------ ------ ------
- 1.4 - 1.4
--------------------------------------- ------ ------ ------
Available-for-sale:
Other long-term investments - - 13.8 13.8
------- ------ ------ ------
- - 13.8 13.8
--------------------------------------- ------ ------ ------
Total assets - 1.4 13.8 15.2
------- ------ ------ ------
Liabilities
Embedded derivatives - (2.5) - (2.5)
------- ------ ------ ------
Total liabilities - (2.5) - (2.5)
------- ------ ------ ------
*Level 1 valued using unadjusted quoted prices in active markets
for identical instruments. Level 2 valued using techniques based
significantly on observable market data. Level 3 valued using
information other than observable market data.
(3) Financial risk management (continued)
(3.2) Fair value estimation
Valuation techniques used to derive Level 2 and Level 3 fair
values
Level 2 currency exchange contracts comprise forward exchange
contracts and foreign currency options. The fair value of the
forward exchange contracts is determined using forward exchange
rates as quoted in an active market. The fair value of foreign
currency options is based upon valuations performed by management
and the respective banks holding the currency instruments.
Level 2 embedded derivatives are fair valued using forward
exchange rates that are quoted in an active market.
Level 3 available-for-sale financial assets consist of unlisted
equity investments and other current investments. The estimated
fair value of the unlisted equity investments approximates to cost
less any permanent diminution in value (based on management's
estimate of forecast profitability and achievement of set
objectives by the relevant entity), except where independent
valuation information is obtained, e.g. through the occurrence of
funding or other transactions in the relevant entity's equity
instruments.
The current investment was initially held at the value of the
expected licensing programme related to the MIPs patent portfolio.
This was estimated by reference to the amounts that it was expected
certain potential licensees would be prepared to pay for a license.
At 31 December 2013 the value of the current investment has been
based on the amount that is recoverable from an auction process
which was held in January 2014.
Whilst it is conceivable that a key assumption in the Level 3
calculation could change, the directors believe that no reasonably
foreseeable changes to key assumptions would result in a
significant change in fair value.
Available-for-sale financial assets (current
and non-current) 2013 2012
------- -------
GBPm GBPm
Fair value at 1 January 13.8 27.3
Additions (including current investment additions
of GBP63.4 million) 72.3 3.2
Revaluation recognised through other comprehensive
income - (0.4)
Disposals (1.7) (14.9)
Impairment recognised in general and administrative
expenses (6.8) (1.4)
Impairment of other current investment recognised (59.5) -
as an exceptional item
Foreign exchange translation (3.0) -
Fair value at 31 December 15.1 13.8
------- -------
Group's valuation process
The Group has a team that performs the valuations of financial
assets required for financial reporting purposes, including Level 3
fair values. This team reports to the Chief Financial Officer and
to the Audit Committee.
The fair value of the following financial assets and liabilities
approximate to their carrying amount:
-- Accounts and other receivables
-- Other current financial assets
-- Cash and cash equivalents, short and long-term deposits
-- Accounts and other payables
(4) Share-based payment costs
Included within the consolidated income statement for the
quarter ended 31 December 2013 are total share-based payment costs
(including related payroll taxes) of GBP20.0 million (Q4 2012:
GBP16.2 million), allocated GBP0.6 million (Q4 2012: GBP0.6
million) in cost of revenues, GBP12.4 million (Q4 2012: GBP8.3
million) in research and development expenses, GBP3.2 million (Q4
2012: GBP2.6 million) in sales and marketing expenses and GBP3.8
million (Q4 2012: GBP4.7 million) in general and administrative
expenses.
Included within the consolidated income statement for the year
ended 31 December 2013 are total share-based payment costs
(including related payroll taxes) of GBP74.0 million (2012: GBP45.4
million), allocated GBP2.1 million (2012: GBP2.1 million) in cost
of revenues, GBP45.1 million (2012: GBP25.8 million) in research
and development expenses, GBP12.1 million (2012: GBP7.7 million) in
sales and marketing expenses and GBP14.7 million (2012: GBP9.8
million) in general and administrative expenses.
(5) Dividends
Year ended Year ended
31 December 31 December
2013 2012
------------- -------------
GBPm GBPm
Final 2011 paid at 2.09 pence per share - 28.8
Interim 2012 paid at 1.67 pence per
share - 23.0
Final 2012 paid at 2.83 pence per share 39.5 -
Interim 2013 paid at 2.1 pence per share 29.4 -
------------- -------------
68.9 51.8
------------- -------------
In respect of the year to 31 December 2013, the directors are
declaring a final dividend of 3.6 pence per share (an estimated
cost of GBP51 million). This final dividend will be paid on 16 May
2014 to shareholders who are on the register of members on 22 April
2014.
(6) Available-for sale financial assets, prepaid expenses and
other assets, and other intangible assets
Prepaid expenses and other assets at 31 December 2012 included
an advance payment amounting to $167.5 million (GBP103.7 million),
being the Group's contribution to a consortium to acquire rights to
MIPS Technologies, Inc's portfolio of patents (the Patents). This
transaction was completed on 6 February 2013. Of the Group's total
contribution, $100.5 million was classified within current
available-for-sale financial assets (GBP60.7 million after
translation at 31 December 2013 exchange rates) and $67 million was
classified within other intangible assets (GBP37.4 million after
amortisation to 31 December 2013). The available-for-sale financial
asset represented ARM's right to receive cash from the Group's
financial interest in the consortium as it was anticipated that a
programme of licensing the Patents to third parties would be
undertaken by Bridge Crossing. The other intangible asset consists
of intellectual property rights that are being amortised over a
period of eight and a half years, being the average remaining life
of the underlying patent portfolio.
In Q4 2013, Bridge Crossing made a strategic decision not to
pursue a licensing programme and the portfolio was put up for sale
by auction. ARM acquired the Patents in January 2014 for $4.0
million which will be accounted for as an additional intangible
asset. As there is no longer an expectation of any future cash
flows with respect to licensing of the Patents by Bridge Crossing,
the available-for-sale financial asset has been impaired down to
the value of the Group's share of the auction proceeds, giving rise
to a non-cash exceptional charge of $98.5 million (GBP59.5
million).
(7) Accrued and other liabilities
Included within accrued and other liabilities is GBP15.1 million
(31 December 2012: GBP16.5 million) relating to the provision for
payroll taxes on share awards, and GBP26.5 million (31 December
2012: GBP23.8 million) relating to employee bonus and sales
commission provisions.
(8) Related party transactions/Investment in joint venture
During the year ended 31 December 2013 the Group incurred
subscription costs of GBP7.0 million from Linaro Limited, an
associated company of the Group, representing ARM's committed
aggregate contributions to Linaro for a period of two years. In
respect of the subscription fees, the Group was invoiced GBP4.3
million during the year to 31 December 2013 (2012: GBP4.2 million).
As at 31 December 2013, GBP1.0 million (2012: GBP1.0 million) was
owing to Linaro.
In addition the Group provided consulting and other services to
Linaro amounting to GBP1.6 million (2012: GBP1.7 million). All fees
have been charged in accordance with the terms of the agreement. As
at 31 December 2013, GBP0.3 million (2012: GBP1.0 million) was owed
to the Group.
In 2012 the Group invested GBP7.5 million ($12.0 million) in a
joint venture, Trustonic Limited, representing a 40% shareholding.
During 2013 the Group invested a further GBP3.7 million (EUR4.4
million) into the joint venture, maintaining the 40%
shareholding.
2013 2012
Investment in joint venture GBPm GBPm
Balance at 1 January 6.8 -
Additional investment 3.7 7.5
Share of results for the period to 31
December (4.0) (0.7)
------ ------
Balance at 31 December 6.5 6.8
------ ------
(9) Financial contingencies
It is common industry practice for licensors of technology to
offer to indemnify their licensees for loss suffered by the
licensee in the event that the technology licensed is held to
infringe the intellectual property of a third party. Consistent
with such practice, the Group provides such indemnification to its
licensees. The obligation for the Group to indemnify its licensees
is subject to certain provisos and is usually contingent upon a
third party bringing an action against the licensee alleging that
the technology licensed by the Group to the licensee infringes such
third party's intellectual property rights. The indemnification
obligations typically survive any termination of the licence and
will continue in perpetuity.
The Group does not provide for any such indemnities unless it
has received notification from the other party that they are likely
to invoke the indemnity. A provision is made if both of the
following conditions are met: (i) information available prior to
the issuance of the financial statements indicates that it is
probable that a liability had been incurred at the date of the
financial statements; and (ii) the amount of the liability can be
reasonably estimated. Any such provision is based upon the
directors' estimate of the fair value of expected costs of any such
claim.
At present, the Group is not a party in any legal proceedings in
which the directors believe that it is probable that the resolution
of such proceedings will result in a material liability for the
Group.
As noted in prior financial statements, the Group had been in
discussions with a licensee to re-negotiate the terms upon which
the Group would indemnify that licensee. During the second quarter
of 2013 terms were executed and the Group incurred indemnification
costs amounting to $18.0 million. Further in relation to legal
proceedings regarding the same patent portfolio, on 3 July 2013,
for consideration of $45.4 million, ARM entered into a licence
agreement with a third party covering patents being asserted
against ARM technology in litigation between the patentee and a
number of licensees of ARM technology. The licence was entered into
in full and final settlement of any indemnity claims with respect
to the asserted patents and will prevent any future assertion of
the patents against ARM technology. Total indemnification,
settlement and licence costs of $63.4 million (GBP41.8 million)
were expensed, as an exceptional item, in 2013.
(10) Acquisitions
On 12 December 2013, the Group purchased the entire share
capital of Geomerics Limited for GBP13.4 million. This purchase has
been accounted for as an acquisition.
Geomerics, a company based in Cambridge, United Kingdom, is a
leader in lighting technology for the gaming and entertainment
industries. The acquisition expands ARM's position at the forefront
of the visual computing and graphics industries. Additionally, the
agreement enables Geomerics to build on their existing partnerships
as well as accelerate their development in mobile.
For these reasons, combined with the ability to hire the
workforce of Geomerics, including the founders and the management
team, the Group paid a premium for the company giving rise to
goodwill. All intangible assets were recognised at their fair
values, with the residual excess over net assets being recognised
as goodwill.
The following table summarises the consideration and provisional
fair values of the assets acquired and liabilities assumed as at 12
December 2013.
GBPm
Cash, accounts receivable and
other current assets 0.2
Intangible assets 5.0
Accrued and other liabilities (0.8)
Deferred tax liabilities (1.0)
Net assets acquired 3.4
Goodwill 10.0
------
Consideration 13.4
------
The consideration was all paid in cash. All transaction expenses
incurred by the Group have been charged to the income
statement.
On 19 July 2013, the Group purchased the entire share capital of
Sensinode Oy for $11.7 million. This purchase has been accounted
for as an acquisition.
Sensinode, a company based in Oulu, Finland, is a provider of
software technology for the Internet of Things (IoT). Sensinode is
a pioneer in software for low cost low power internet connected
devices and has been a key contributor to open standards for IoT.
This acquisition enables Sensinode's expertise and technology to be
accessible to the ARM Partnership and through the ARM mbed project
it will enable rapid deployment of new and innovative IoT
applications.
For these reasons, combined with the ability to hire the
workforce of Sensinode, including the founders and the management
team, the Group paid a premium for the company giving rise to
goodwill. All intangible assets were recognised at their fair
values, with the residual excess over net assets being recognised
as goodwill.
The following table summarises the consideration and fair values
of the assets acquired and liabilities assumed as at 19 July
2013.
GBPm $m
Cash, accounts receivable and
other current assets 0.3 0.5
Intangible assets 2.8 4.3
Deferred tax assets 0.5 0.8
Accrued and other liabilities (0.5) (0.8)
Loans payable (1.1) (1.6)
Deferred tax liabilities (0.7) (1.1)
Net assets acquired 1.3 2.1
Goodwill 6.4 9.6
------ ------
Consideration 7.7 11.7
------ ------
The consideration was all paid in cash. All transaction expenses
incurred by the Group have been charged to the income
statement.
(11) Segmental reporting
At 31 December 2013, the Group was organised on a worldwide
basis into three main business segments:
Processor Division (PD), encompassing those resources that are
centred on microprocessor cores, including specific functions such
as graphics IP, fabric IP and embedded software and configurable
digital signal processing IP.
Physical IP Division (PIPD), concerned with the building blocks
necessary for translation of a circuit design into actual
silicon.
System Design Division (SDD), focused on the tools and models
used to create and debug software and system-on-chip (SoC)
designs.
This was based upon the Group's internal organisation and
management structure and was the primary way in which the Chief
Operating Decision Maker was provided with financial information.
Whilst revenues are also reported into four main revenue streams
(namely licensing, royalties, software and tools, and services),
the costs, operating results and balance sheets are only analysed
into these three divisions.
Business segment information
Physical System
Processor IP Design
Division Division Division Unallocated Group
Year ended 31 December 2013 GBPm GBPm GBPm GBPm GBPm
Segmental income statement
Revenues (GBP) 596.2 82.0 36.4 - 714.6
Operating costs (426.6) (90.7) (42.6) (1.2) (561.1)
Investment income, net - - - 13.1 13.1
Share of results in joint venture - - - (4.0) (4.0)
Profit/(loss) before tax 169.6 (8.7) (6.2) 7.9 162.6
Tax - - - (57.8) (57.8)
------------------------------------------------------ ---------- ---------- ---------- ------------ --------
Profit/(loss) for the period 169.6 (8.7) (6.2) (49.9) 104.8
------------------------------------------------------ ---------- ---------- ---------- ------------ --------
Reconciliation to normalised profit
before tax
Intangible amortisation and other acquisition-related
charges 9.6 2.0 - - 11.6
Share-based payment costs including
payroll taxes 54.5 12.1 7.4 - 74.0
Impairment of investments, net of profit
on disposal 3.5 - - - 3.5
Exceptional items 101.3 - - - 101.3
Share of results in joint venture and
Linaro-related charges 7.0 - - 4.0 11.0
Normalised profit for the period before
tax 345.5 5.4 1.2 11.9 364.0
------------------------------------------------------ ---------- ---------- ---------- ------------ --------
Goodwill 152.0 360.2 14.2 - 526.4
Total assets 389.4 400.1 31.6 817.3 1,638.4
Revenues (USD) 931.5 129.1 57.1 - 1,117.7
------------------------------------------------------ ---------- ---------- ---------- ------------ --------
As part of the ongoing evolution of the business, the Group's
divisional structure was re-organised on 1 January 2014. As a
result of this change, the Group's business segments may change for
future reporting periods in order to reflect this new
organisation.
(11) Segmental reporting (continued)
System
Processor Physical IP Design
Division Division Division Unallocated Group
Year ended 31 December 2012 GBPm GBPm GBPm GBPm GBPm
Segmental income statement
Revenues (GBP) 473.9 68.3 34.7 - 576.9
Operating costs (243.3) (82.8) (40.1) (2.6) (368.8)
Investment income, net - - - 13.6 13.6
Share of results in joint venture - - - (0.7) (0.7)
Profit/(loss) before tax 230.6 (14.5) (5.4) 10.3 221.0
Tax - - - (60.3) (60.3)
-------------------------------------------------------- ---------- ------------ ---------- ------------ --------
Profit/(loss) for the period 230.6 (14.5) (5.4) (50.0) 160.7
-------------------------------------------------------- ---------- ------------ ---------- ------------ --------
Reconciliation to normalised profit/(loss) before tax
Intangible amortisation and other acquisition-related
charges 5.5 2.5 - 0.8 8.8
Share-based payment costs including payroll taxes 30.0 8.6 6.8 - 45.4
Profit on sale of investments, net of impairment 0.6 - - - 0.6
Share of results in joint venture - - - 0.7 0.7
Normalised profit/(loss) for the period before tax 266.7 (3.4) 1.4 11.8 276.5
-------------------------------------------------------- ---------- ------------ ---------- ------------ --------
Goodwill 138.0 367.0 14.4 - 519.4
Total assets 284.6 409.2 32.5 740.5 1,466.8
Revenues (USD) 749.8 108.4 54.9 - 913.1
--------------- ------ ------ ----- ------ --------
There are no inter-segment revenues. The results of each segment
have been prepared using accounting policies consistent with those
of the Group as a whole. Unallocated assets include cash and cash
equivalents, short and long-term deposits, available-for-sale
investments, loans and receivables, embedded derivatives, current
and deferred tax, and VAT. Unallocated operating costs consist of
foreign exchange gains and losses, and share of results in joint
venture.
(12) Non-GAAP measures
The following non-GAAP measures, including reconciliations to
the IFRS measures, have been used in this earnings release. These
measures have been presented as they allow a clearer comparison of
operating results that exclude intangible amortisation,
acquisition-related charges, share-based payment costs,
profit/(loss) on disposal and impairment of available-for-sale
investments, share of results in joint venture, Linaro-related
charges, and exceptional items. Full reconciliatioans of Q4 2013,
Q4 2012, FY 2013 and FY 2012, are shown in notes 12.13 to 12.16.
All figures in GBPm unless otherwise stated.
(12.1) (12.2) (12.3) (12.4) (12.5)
Summary normalised figures Q4 2013 Q4 2012 Q3 2013 FY 2013 FY 2012
------------------------------- -------- -------- -------- -------- --------
Revenues 189.1 164.2 184.0 714.6 576.9
Revenues ($m) 302.9 262.8 286.7 1,117.7 913.1
ARM's effective exchange rate
($/GBP) 1.60 1.60 1.56 1.56 1.58
Gross margin 95.4% 95.1% 95.1% 94.8% 94.8%
Operating expenses 88.1 79.7 85.6 326.5 284.2
Profit from operations 92.3 76.5 89.4 350.9 262.9
Operating margin 48.8% 46.6% 48.6% 49.1% 45.6%
Profit before tax 95.5 80.0 92.6 364.0 276.5
Earnings per share (diluted) 5.31p 4.08p 5.11p 20.59p 14.70p
Cash 706.3 520.2 670.5 706.3 520.2
Normalised cash generation 77.9 74.1 111.6 344.5 267.3
------------------------------- -------- -------- -------- -------- --------
(12.6) (12.7)
31 December 31 December
2013 2012
Cash and cash equivalents 43.8 46.3
Short-term deposits 544.1 340.0
Long-term deposits 125.6 141.3
Less: Interest accrued (7.2) (7.4)
------------------------------------------ ------------ ------------
Total net cash 706.3 520.2
------------------------------------------ ------------ ------------
(12.8) (12.9) (12.10) (12.11) (12.12)
Q4 2013 Q4 2012 Q3 2013 FY 2013 FY 2012
Cash at end of period (as above) 706.3 520.2 670.5 706.3 520.2
Less: cash at beginning of period (670.5) (477.9) (613.1) (520.2) (424.0)
Add back: Cash outflow from advance
payment (see note 6) - - - - 104.5
Add back: Cash outflow/(inflow)
from investments and acquisitions
(net of cash acquired) 13.3 0.2 8.4 25.6 (8.8)
Add back: Cash outflow from investment
in joint venture - 7.5 - 3.7 7.5
Add back: Cash outflow from acquisition-related
charges 0.5 0.5 2.8 4.6 3.8
Add back: Cash outflow from payment
of dividends 29.4 23.0 - 68.9 51.8
Add back: Cash outflow from share-based
payroll taxes 0.3 0.4 1.2 16.3 14.4
Add back: Cash outflow from payments
related to Linaro 0.9 0.9 0.9 3.5 3.5
Add back: Cash outflow from IP
indemnity and similar charges - - 41.8 41.8 -
Less: Cash inflow from exercise
of share options (2.3) (0.7) (0.9) (6.0) (5.6)
Normalised net cash generation 77.9 74.1 111.6 344.5 267.3
------------------------------------------------- -------- -------- -------- -------- --------
(12.13) Normalised income statement for Q4 2013
Intangible
amortisa-tion Impairment
Normalised and of Share
Share-based incl acquisition investments of
payments share-based related net of results Exception-al
Normalised payments charges profit in items IFRS
on joint
disposals venture
------------ ------------- ------------- --------------- ------------- --------- -------------- ----------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenues 189.1 - 189.1 - - - - 189.1
Cost of revenues (8.7) (0.6) (9.3) - - - - (9.3)
Gross profit 180.4 (0.6) 179.8 - - - - 179.8
------------ ------------- ------------- --------------- ------------- --------- -------------- ----------
Research and
development (38.9) (12.4) (51.3) (2.5) - - - (53.8)
Sales and marketing (21.3) (3.2) (24.5) (0.2) - - - (24.7)
General and
administrative (27.9) (3.8) (31.7) (0.2) (0.4) - - (32.3)
Total operating
expenses
------------ ------------- ------------- --------------- ------------- --------- -------------- ----------
before exceptional
items (88.1) (19.4) (107.5) (2.9) (0.4) - - (110.8)
------------ ------------- ------------- --------------- ------------- --------- -------------- ----------
Exceptional item
Impairment of
available-for-sale
financial asset - - - - - - (59.5) (59.5)
Total operating
expenses
--------------
after exceptional
items (88.1) (19.4) (107.5) (2.9) (0.4) - (59.5) (170.3)
------------ ------------- ------------- --------------- ------------- --------- -------------- ----------
Profit from
operations 92.3 (20.0) 72.3 (2.9) (0.4) - (59.5) 9.5
Investment income,
net 3.2 - 3.2 - - - - 3.2
Share of post tax
results in joint
venture - - - - - (0.5) - (0.5)
Profit before tax 95.5 (20.0) 75.5 (2.9) (0.4) (0.5) (59.5) 12.2
Tax (20.5) (1.1) (21.6) 0.6 (0.3) - 2.9 (18.4)
Profit/(loss) for
the period 75.0 (21.1) 53.9 (2.3) (0.7) (0.5) (56.6) (6.2)
-------------- ----------
Earnings per share
(assuming dilution)
Shares outstanding
(millions) 1,413.8 1,413.8 1,413.8
Earnings per share
- pence 5.31 3.81 (0.44)
ADSs outstanding
(millions) 471.3 471.3 471.3
Earnings per ADS
- cents 26.4 18.9 (2.2)
(12.14) Normalised income statement for Q4 2012
Normalised Share
Share-based incl Intangible Acquisition Impairment of
payments share-based amortisa-tion related of results
Normalised payments charges investments in IFRS
joint
venture
------------ ------------- ------------- --------------- ------------- ------------- --------- ----------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenues 164.2 - 164.2 - - - - 164.2
Cost of revenues (8.0) (0.6) (8.6) - - - - (8.6)
Gross profit 156.2 (0.6) 155.6 - - - - 155.6
------------ ------------- ------------- --------------- ------------- ------------- --------- ----------
Research and
development (36.7) (8.3) (45.0) (0.5) (0.8) - - (46.3)
Sales and
marketing (18.4) (2.6) (21.0) (0.2) (0.1) - - (21.3)
General and
administrative (24.6) (4.7) (29.3) - (0.8) (1.2) - (31.3)
---------
Total operating
expenses (79.7) (15.6) (95.3) (0.7) (1.7) (1.2) - (98.9)
------------ ------------- ------------- --------------- ------------- ------------- --------- ----------
Profit from
operations 76.5 (16.2) 60.3 (0.7) (1.7) (1.2) - 56.7
Investment income,
net 3.5 - 3.5 - - - - 3.5
Share of post tax
results in joint
venture - - - - - - (0.7) (0.7)
Profit before tax 80.0 (16.2) 63.8 (0.7) (1.7) (1.2) (0.7) 59.5
Tax (23.0) 4.9 (18.1) 0.2 0.5 0.4 - (17.0)
Profit for the
period 57.0 (11.3) 45.7 (0.5) (1.2) (0.8) (0.7) 42.5
--------- ----------
Earnings per share
(assuming dilution)
Shares outstanding
(millions) 1,398.6 1,398.6 1,398.6
Earnings per share
- pence 4.08 3.27 3.04
ADSs outstanding
(millions) 466.2 466.2 466.2
Earnings per ADS
- cents 19.9 15.9 14.8
(12.15) Normalised income statement for FY 2013
Linaro
Intangible related
amortisa-tion Impairment charges
Normalised and of and
Share-based incl acquisition investments share
payments share-based related net of Exceptional of
Normalised payments charges profit items results IFRS
on in
disposals joint
venture
------------ ------------- ------------- --------------- ------------- ------------- --------- ----------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenues 714.6 - 714.6 - - - - 714.6
Cost of revenues (37.2) (2.1) (39.3) - - - - (39.3)
Gross profit 677.4 (2.1) 675.3 - - - - 675.3
------------ ------------- ------------- --------------- ------------- ------------- --------- ----------
Research and
development (148.3) (45.1) (193.4) (9.5) - - - (202.9)
Sales and marketing (76.7) (12.1) (88.8) (0.6) - - - (89.4)
General and
administrative (101.5) (14.7) (116.2) (1.5) (3.5) - (7.0) (128.2)
Total operating
expenses
------------ ------------- ------------- --------------- ------------- ------------- --------- ----------
before exceptional
items (326.5) (71.9) (398.4) (11.6) (3.5) - (7.0) (420.5)
------------ ------------- ------------- --------------- ------------- ------------- --------- ----------
Exceptional items
Impairment of
available-for-sale
financial asset - - - - - (59.5) - (59.5)
IP indemnity and
similar charges - - - - - (41.8) - (41.8)
Total operating
expenses
---------
after exceptional
items (326.5) (71.9) (398.4) (11.6) (3.5) (101.3) (7.0) (521.8)
------------ ------------- ------------- --------------- ------------- ------------- --------- ----------
Profit from
operations 350.9 (74.0) 276.9 (11.6) (3.5) (101.3) (7.0) 153.5
Investment income,
net 13.1 - 13.1 - - - - 13.1
Share of post tax
results in joint
venture - - - - - - (4.0) (4.0)
Profit before tax 364.0 (74.0) 290.0 (11.6) (3.5) (101.3) (11.0) 162.6
Tax (73.4) 1.5 (71.9) 1.7 (0.3) 11.3 1.4 (57.8)
Profit for the
period 290.6 (72.5) 218.1 (9.9) (3.8) (90.0) (9.6) 104.8
--------- ----------
Earnings per share
(assuming dilution)
Shares outstanding
(millions) 1,411.8 1,411.8 1,411.8
Earnings per share
- pence 20.59 15.45 7.43
ADSs outstanding
(millions) 470.6 470.6 470.6
Earnings per ADS
- cents 102.3 76.8 36.9
(12.16) Normalised income statement for FY 2012
Profit
Normalised on sale Share
Share-based incl Intangible Acquisition of of
payments share-based amortisa-tion related investments, results
Normalised payments charges net of in IFRS
impairment joint
venture
------------ ------------- ------------- --------------- ------------- ------------- --------- ----------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenues 576.9 - 576.9 - - - - 576.9
Cost of revenues (29.8) (2.1) (31.9) - - - - (31.9)
Gross profit 547.1 (2.1) 545.0 - - - - 545.0
------------ ------------- -------------
Research and
development (134.0) (25.8) (159.8) (2.2) (4.3) - - (166.3)
Sales and
marketing (64.3) (7.7) (72.0) (0.5) (0.4) - - (72.9)
General and
administrative (85.9) (9.8) (95.7) - (1.4) (0.6) - (97.7)
------------ ------------- ------------- --------------- ------------- ------------- --------- ----------
Total operating
expenses (284.2) (43.3) (327.5) (2.7) (6.1) (0.6) - (336.9)
------------ ------------- ------------- --------------- ------------- ------------- --------- ----------
Profit from
operations 262.9 (45.4) 217.5 (2.7) (6.1) (0.6) - 208.1
Investment income,
net 13.6 - 13.6 - - - - 13.6
Share of post tax
results in joint
venture - - - - - - (0.7) (0.7)
Profit before tax 276.5 (45.4) 231.1 (2.7) (6.1) (0.6) (0.7) 221.0
Tax (71.3) 7.7 (63.6) 0.9 1.9 0.5 - (60.3)
Profit for the
period 205.2 (37.7) 167.5 (1.8) (4.2) (0.1) (0.7) 160.7
----------
Earnings per share
(assuming dilution)
Shares outstanding
(millions) 1,395.8 1,395.8 1,395.8
Earnings per share
- pence 14.70 12.00 11.51
ADSs outstanding
(millions) 465.3 465.3 465.3
Earnings per ADS
- cents 71.7 58.5 56.1
Notes
The results shown for Q4 2013, Q3 2013, Q4 2012 and FY 2013, are
unaudited. The results shown for FY 2012 are audited. The
consolidated financial information contained in this announcement
does not constitute statutory accounts within the meaning of
Section 434 of the Companies Act 2006. Statutory accounts of the
Company in respect of the financial year ended 31 December 2012
were approved by the Board of directors on 27 February 2013 and
delivered to the Registrar of Companies. The report of the auditors
on those accounts was unqualified and did not contain an emphasis
of matter paragraph nor any statement under Section 498 of the
Companies Act 2006.
The results for ARM for Q4 2013 and previous quarters as shown
reflect the accounting policies as stated in Note 1 to the
financial statements in the Annual Report and Accounts filed with
Companies House in the UK for the fiscal year ended 31 December
2012 and in the Annual Report on Form 20-F for the fiscal year
ended 31 December 2012.
This preliminary announcement was approved by the Board of
directors on 3 February 2014.
This document contains forward-looking statements as defined in
section 102 of the Private Securities Litigation Reform Act of
1995. These statements are subject to risk factors associated with
the semiconductor and intellectual property businesses. When used
in this document, the words "anticipates", "may", "can",
"believes", "expects", "projects", "intends", "likely", similar
expressions and any other statements that are not historical facts,
in each case as they relate to ARM, its management or its
businesses and financial performance and condition are intended to
identify those assertions as forward-looking statements. It is
believed that the expectations reflected in these statements are
reasonable, but they may be affected by a number of variables, many
of which are beyond our control. These variables could cause actual
results or trends to differ materially and include, but are not
limited to: failure to realize the benefits of our recent
acquisitions, unforeseen liabilities arising from our recent
acquisitions, price fluctuations, actual demand, the availability
of software and operating systems compatible with our intellectual
property, the continued demand for products including ARM's
intellectual property, delays in the design process or delays in a
customer's project that uses ARM's technology, the success of our
semiconductor partners, loss of market and industry competition,
exchange and currency fluctuations, any future strategic
investments or acquisitions, rapid technological change, regulatory
developments, ARM's ability to negotiate, structure, monitor and
enforce agreements for the determination and payment of royalties,
actual or potential litigation, changes in tax laws, interest rates
and access to capital markets, political, economic and financial
market conditions in various countries and regions and capital
expenditure requirements.
More information about potential factors that could affect ARM's
business and financial results is included in ARM's Annual Report
on Form 20-F for the fiscal year ended 31 December 2012 including
(without limitation) under the captions, "Risk Factors" (on pages 6
to 13) which is on file with the Securities and Exchange Commission
(the "SEC") and available at the SEC's website at www.sec.gov.
About ARM
ARM designs the technology that lies at the heart of advanced
digital products, from wireless, networking and consumer
entertainment solutions to imaging, automotive, security and
storage devices. ARM's comprehensive product offering includes
microprocessors, graphics processors, video engines, enabling
software, cell libraries, embedded memories, high-speed
connectivity products, peripherals and development tools. Combined
with comprehensive design services, training, support and
maintenance, and the company's broad Partner community, they
provide a total system solution that offers a fast, reliable path
to market for leading electronics companies. More information on
ARM is available at http://www.arm.com.
ARM is a registered trademark of ARM Limited. Cortex is a
trademark of ARM Limited. All other brands or product names are the
property of their respective holders. "ARM" is used to represent
ARM Holdings plc; its operating company ARM Limited; and the
regional subsidiaries ARM Inc.; ARM KK; ARM Korea Limited.; ARM
Taiwan Limited; ARM France SAS; ARM Consulting (Shanghai) Co. Ltd.;
ARM Germany GmbH; ARM Embedded Technologies Pvt. Ltd.; ARM Norway,
AS; ARM Sweden AB; ARM Finland Oy and Geomerics Ltd.
1 Source: Semiconductor Industry Association, December 2013
2 Each American Depositary Share (ADS) represents three
shares.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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