19th Apr 2005 07:01
ARM Holdings PLC19 April 2005 EMBARGOED UNTIL 7.00am BST 19 April 2005 ARM HOLDINGS PLC - RESULTS FOR THE QUARTER ENDED 31 MARCH 2005 Dollar revenues* in Q1 2005 of $103.2 million, up 23% on aggregate ARM andArtisan revenues of $83.6 million reported in Q1 2004 - combined businessremains on track for at least 20% dollar revenue growth in 2005 CAMBRIDGE, UK, 19 April 2005-ARM Holdings plc ((LSE: ARM); (Nasdaq: ARMHY))announces its unaudited financial results for the first quarter ended 31 March 2005 HIGHLIGHTS (Figures in US GAAP) First quarter ended 31 March 2005 • Total revenues in Q1 2005 at £55.0 million. Total dollar revenues* at $103.2 million, up 23% on aggregate ARM and Artisan revenues in Q1 2004 • At $79.2 million, dollar revenues* from the original ARM business up 6% sequentially and 27% ahead of Q1 2004. Licensing and royalty revenues up in dollar terms* 23% and 31% respectively on Q1 2004. Seventeen licenses for microprocessor cores signed in the quarter • At $24.0 million, dollar revenues* from the Physical Intellectual Property Division (PIPD) up 12% on Q1 2004. Licensing and royalty revenues up in dollar terms* 6% and 28% respectively on Q1 2004. PIPD backlog remains near an historically high level at end Q1 2005 • PIPD license bookings in Q1 2005 include the first two instances of PIPD technology being licensed to existing ARM partners since completion of the merger • Total operating expenses in Q1 2005 of £37.2 million, including acquisition-related charges of £6.0 million and other deferred stock-based compensation of £0.3 million • Operating margin, excluding acquisition-related charges of £6.0 million and other deferred stock-based compensation of £0.3 million, at 32.4% (see note 4.1), comprising 31.7% in the original ARM business and 34.9% in PIPD • Income before income tax at £12.5 million, including acquisition-related charges of £6.0 million and other deferred stock-based compensation of £0.3 million. Income before income tax, excluding these charges, at £18.8 million • Consolidated cash position of £141.8 million(4.4) at 31 March 2005, compared to £128.5 million at the start of 2005, after adjusting for £14.3 million of transaction costs paid in Q1. Pro forma net cash generation of £13.2 million in the quarter(4.6) • Earnings per fully diluted share in Q1 2005 of 0.6 pence (3.6 cents per ADS**). Earnings per fully diluted share, before acquisition-related charges of £6.0 million and other deferred stock-based compensation of £0.3 million, at 1.0 pence(4.7) (5.4 cents per ADS**) * Dollar revenues are based on the group's actual dollar invoicing, whereapplicable, and using the rate of exchange applicable on the date of thetransaction for invoicing in currencies other than dollars. Approximately 95%of invoicing is in dollars ** Each American Depositary Share (ADS) represents three shares Commenting on the first quarter results, Warren East, Chief Executive Officer,said: "I am pleased to announce that the integration of Artisan and ARM is progressingto plan and that the momentum in the business continues, with dollar revenues up23% on the aggregate ARM and Artisan revenues in Q1 2004. We are well placed tocapitalise on the opportunities that the combination of ARM and Artisan bringsand are encouraged that Q1 has seen the first instances of existing ARMlicensees taking Artisan's physical IP. This progress gives us furtherconfidence that both underlying businesses can achieve at least 20% growth indollar revenues as outlined at our Q4 results." Tim Score, Chief Financial Officer, added: "Operating margins in excess of 30% in both the original ARM business and in thePhysical IP division demonstrate the robust condition of the business as a wholeas well as the attractive business model and financial profile of the enlargedARM group." Operating and financial review(US GAAP unless otherwise stated) Market conditions, current trading and prospects We expressed confidence in January that, notwithstanding a likely flattertrading environment in 2005 for the semiconductor industry as a whole, both theoriginal ARM business and PIPD were capable of growing dollar revenues by atleast 20% in 2005 (assuming a normalized base for PIPD in calendar 2004 ofapproximately $95 million). Total group dollar revenues in the first quarter of 2005 are 23% ahead of theaggregate revenues reported by ARM and Artisan in Q1 2004 with the original ARMbusiness up by 27% and PIPD 12% ahead. Having accomplished the integrationobjectives that we set out to achieve in Q1, including the combination of theARM and PIPD sales forces into one integrated regionally-based worldwide salesforce, we remain confident of achieving dollar revenue growth of at least 20% inboth underlying businesses in the full year 2005, with license revenuesunderpinned by both a healthy order backlog and a robust sales opportunitypipeline, good underlying momentum in royalty revenues and continued steadygrowth in development systems revenues. Total revenues Total revenues for the first quarter of 2005 amounted to £55.0 million. In USdollar terms*, first quarter revenues of $103.2 million were 23% up on theaggregate ARM and Artisan revenues of $83.6 million(4.10) in Q1 2004. Theeffective US dollar to sterling exchange rate for ARM in Q1 2005 was $1.875compared to $1.80 in Q4 2004 and $1.78 in Q1 2004. License revenues Total license revenues in the first quarter were £24.7 million representing 45%of group revenues. License revenues comprised £16.3 million from the originalARM business and £8.4 million from PIPD. In US dollar terms*, license revenuesfrom the original ARM business of $30.0 million in Q1 2005 were 4% ahead of Q42004 and 23% up on Q1 2004. Seventeen licenses for microprocessor cores were signed in the first quarter of2005. Eight new partners took a total of nine licenses, comprising two per uselicenses from the ARM7TM family, five per use licenses from the ARM9TM family,one license for the SC100TM processor and one license for the next-generationCortexTM-M3 processor. Five existing partners took licenses for a further eightcores, comprising one derivative and one upgrade to the ARM7 family, onederivative and two upgrades to the ARM9 family and three upgrades to the ARM11TMfamily. Following a 15% sequential increase in the ARM standalone order backlog in Q42004, the backlog at the end of Q1 is some 10% lower than at the end of Q4.Based on the sales opportunity pipeline, however, we remain confident that thepositive trend in order backlog experienced in recent quarters will continue into the medium term. Royalty revenues Total royalty revenues in the first quarter were £20.9 million representing 38%of total group revenues. Royalty revenues comprised £16.8 million from theoriginal ARM business and £4.1 million from PIPD. In US dollar terms*, royaltyrevenues from the original ARM business of $31.6 million in Q1 2005 were 7% upsequentially and 31% up on Q1 2004. Royalty revenues recognized in the original ARM business in the quarter ended 31March 2005 (we receive and report royalty data one quarter in arrears) were$31.6 million based on unit shipments of 389 million, up 40% on the same perioda year ago. The average royalty rate per unit reported in the first quarter was8.1 cents compared to 8.0 cents per unit in Q4 2004. Of the total unit shipmentsreported in the first quarter, 29% related to units based on ARM9 familytechnology. Unit shipments based on the ARM926EJ-STM microprocessor accountedfor approximately 5% of total shipments in the quarter. In Q1 2005, the proportion of total unit shipments accounted for by the wirelesssegment was 65%, representing 252 million units. The 35% relating to theaggregate shipments in all sectors other than wireless represents 137 millionunits in Q1 2005, an increase of 68% on Q1 2004. In Q1 2005 unit shipments havegrown particularly strongly compared to Q4 2004 in the consumer and storagesegments. Development Systems and Service revenues Sales of development systems were £5.7 million, representing 10% of total grouprevenues. In US dollar terms, development systems revenues were $11.0 millionthis quarter, 6% up sequentially and 53% up on Q1 2004. Consistent growth inrecent quarters in development systems sales has been enhanced by sales ofelectronic system level (ESL) tools following the acquisition of Axys in thesecond half of 2004. Service revenues were £3.6 million, representing 7% oftotal group revenues. PIPD developments Total revenues earned by PIPD in Q1 2005 were $24.6 million (before a reductionof $0.6 million as a result of fair value adjustments made to deferred revenueon acquisition), compared to $15 million in Q4 2004 and $21.4 million in Q12004. Reported revenues in Q1 2005 comprised license revenues of $16.2 millionand royalty revenues of $7.8 million, compared to $7.0 million and $8.0 millionrespectively in Q4 2004. License bookings in Q1 2005 include the first two instances, since thecombination of ARM and Artisan, of PIPD technology being licensed to existingARM semiconductor partners. The order backlog at the end of Q1 2005 remains nearan historically high level. As with the original ARM business, PIPD receive and report royalty data onequarter in arrears. PIPD also carries out an ongoing dialogue with its foundrypartners to ensure that royalty payments are accurate and up to date. Thisprocess includes regular audits being carried out by third party accountingfirms. As a result, reported quarterly royalty revenues will often includeamounts which relate to shipments made in prior periods ("catch-up" royalties).Such amounts are hard to forecast and have varied significantly from quarter toquarter. Royalty revenues in Q1 2005 of $7.8 million included approximately $0.8million of "catch-up" royalties, implying a base level of royalties of $7million. The base level of royalties has been growing steadily over recentquarters. The integration of ARM and Artisan is progressing to plan. The ARM and Artisansales teams have been combined into one regionally structured worldwide salesforce and have achieved the first sales of PIPD licenses to existing ARMsemiconductor partners. We have also rationalized and consolidated offices andsupport activities, including the closure of the ARM office in Los Gatos,California and relocated its employees to Artisan's Sunnyvale facility, the newheadquarters for ARM in the US. Further, we have started to expand thecapability of the Bangalore Design Centre acquired as part of the Artisantransaction by supplementing the PIPD engineering team already there with 22new employees, who have been hired in the last 6 weeks, to work on engineeringand support activities relating to the original ARM business, including embeddedsoftware, CPU design verification, customer support and engineering work fordevelopment systems. We plan to grow headcount further in Bangalore during 2005. We have also introduced the first innovative business model to result from thecombination of ARM and Artisan, with the announcement on 11 April 2005 of thelaunch of the ARM DesignStartTM programme, a potentially significant broadeningof the reach of ARM's existing Foundry Programme, which allows developers accessto the ARM7TDMI(R) processor for the TSMC, UMC, SMIC and Chartered Semiconductorprocess technologies at no initial charge. By leveraging the web-baseddistribution channel developed by Artisan, developers are able to gain earlyaccess to ARM technology to complete the design process all the way through tochip-level verification. Once the design is finished and ready for fabrication,a single-use design license can be purchased from ARM to receive a full set ofdeliverables, enabling tape out and manufacture at any of the supportedfoundries. The initial response to the launch of DesignStart has been veryencouraging. ARM launched the original Foundry Programme in 2000, since whichtime 90 single use licenses have been signed with 68 companies. Following the completion of the ARM and Artisan combination at the end of 2004and the achievement of our initial integration objectives in the first quarter,the PIPD management organization has been developed to reflect PIPD's status asa semi-autonomous division of ARM rather than a standalone public company. Mark Templeton, former President and Chief Executive Officer of Artisan, whojoined the Board of ARM Holdings plc in December 2004, becomes Chief StrategyOfficer of the ARM group and President of ARM Inc and will focus on thestrategic development of ARM as a whole and be closely involved in thedevelopment of ARM's profile in the US, both within the semiconductor industryand within financial markets. Brent Dichter, formerly the VP of Engineering at Artisan, has been appointed asthe General Manager of PIPD. Brent reports to Tudor Brown, Chief OperatingOfficer of ARM. Gross margins Group gross margins for the first quarter were 89%, comprising 93% for theoriginal ARM business and 75% for PIPD. The increased gross margin compared toQ4 2004 in the original ARM business reflects the decreased proportion oflicense revenues earned in Q1 from strategic relationships which include revenuesharing arrangements. Operating expenses Total group operating expenses in the quarter were £37.2 million, includingacquisition-related charges of £6.0 million and other deferred stock-basedcompensation of £0.3 million. Excluding these charges, operating expenses in thequarter were £30.9 million of which £25.9 million related to the original ARMbusiness and £5.0 million to PIPD. Total research and development expenses were £14.7 million in Q1 2005,representing 27% of revenues. This compares to £13.0 million or 31% of revenuesin Q4 2004 for the original ARM business. Total sales and marketing costs in Q12005 were £8.3 million or 15% of revenues compared to £6.3 million or 15% ofrevenues in Q4 2004 for the original ARM business. Total general andadministration expenses in Q1 2005 were £7.8 million, representing 14% ofrevenues compared to £6.8 million or 16% of revenues in Q4 2004 for the originalARM business. Operating margins Operating margin in Q1 2005 was 20.9% compared to 8.2% in Q4 2004. Operatingmargin, excluding acquisition-related charges of £6.0 million and other deferredstock-based compensation of £0.3 million, was 32.4%(4.1) in Q1 2005 compared to29.4%(4.2), excluding non-recurring and acquisition-related charges of £8.2million and other deferred stock-based compensation of £0.6 million, in Q4 2004for the original ARM business. Operating margin of 32.4% in Q1 comprises 31.7%in the original ARM business and 34.9% in PIPD. Interest receivable Total interest receivable in Q1 2005 was £1.0 million, compared to £1.9 millionin Q4 2004. The reduction arises from lower average cash balances in Q1 comparedto Q4 2004 as the total cash paid in consideration and transaction expenses onthe acquisition of Artisan at the end of 2004 was greater than the cash acquiredwith Artisan. Further, of the net group cash position of £141.8 million at 31March 2005, £83.7 million was held in US dollar bank accounts which typicallyearn interest at lower rates than sterling cash deposits. Earnings and taxation Income before income tax in Q1 2005 was £12.5 million compared to £5.3 millionin Q4 2004. Income before income tax, excluding acquisition-related charges of£6.0 million and other deferred stock-based compensation of £0.3 million, was£18.8 million. The group's effective tax rate under US GAAP in Q1 2005 was27.6%, reflecting the availability of research and development tax credits inthe UK and the US. First quarter fully diluted earnings per share prepared under US GAAP were 0.6pence (3.6 cents per ADS**) compared to earnings per share of 0.4 pence (2.4cents per ADS**) in Q4 2004. Earnings per fully diluted share in Q1 2005, beforeacquisition-related charges of £6.0 million and other deferred stock-basedcompensation of £0.3 million, were 1.0(4.7) pence per share (5.4 cents per ADS**) compared to 1.1 pence(4.8) (6.4 cents per ADS**) in Q4 2004, beforenon-recurring and acquisition-related charges of £8.2 million and other deferredstock-based compensation of £0.6 million. Balance sheet and cash flow Intangible assets at 31 March 2005 were £419.8 million, comprising goodwill of£348.8 million and other intangible assets of £71.0 million, compared to £340.4million and £74.6 million respectively at 31 December 2004. The increase ingoodwill in Q1 2005 is due primarily to foreign exchange movements. Goodwill isno longer amortized under US GAAP but is subject to impairment on at least anannual basis. The other intangible assets are being amortized through the profitand loss account over a weighted average period of 5 years. Accounts receivable at 31 March 2005 were £43.9 million, compared to £34.3million at 31 December 2004 due primarily to the different timing profile ofinvoicing in Q1 2005 compared to Q4 2004. The allowance against receivables was£1.2 million at 31 March 2005 compared to £1.5 million at 31 December 2004.Deferred revenues were £21.8 million at the end of Q1 2005 compared to £21.4million at 31 December 2004. Pro forma net cash generation in the quarter, before cash costs of £14.3 millionrelated to the acquisition of Artisan, was £13.2 million(4.6). The consolidatedcash, cash equivalents, short-term investments and marketable securities balancewas £141.8 million(4.4) at 31 March 2005. Introduction of International Financial Reporting Standards (IFRS) ARM reports results quarterly in accordance with US GAAP. At 30 June and 31December each year, in addition to the US GAAP results, ARM has also disclosedresults under UK GAAP. Following the introduction of IFRS with effect from 1January 2005, ARM will continue to report quarterly results under US GAAP butwill now disclose results additionally under IFRS at 30 June and 31 December.ARM will disclose IFRS numbers for the first time in July 2005 for the six monthperiod to 30 June 2005. The principal impact on ARM's results of the introduction of IFRS in the placeof UK GAAP is expected to arise as a result of IFRS 2, whereby the fair value ofemployee stock options issued after 7 November 2002 and outstanding at 31December 2004 will be charged to the profit and loss account. Under UK GAAP thefair value of stock options was not charged to the profit and loss account. ARMhas, however, disclosed in the US GAAP section of its Annual Report since 1998,the effect on net income and earnings per share if the company had applied thefair value recognition provisions of FASB Statement No.123 ("Accounting forstock-based compensation") to stock-based employee compensation. It is expected that ARM will continue to write off research and developmentexpenditure to the profit and loss account as incurred under IFRS. Goodwill andother intangible assets are also reported differently under IFRS than under UKGAAP, with goodwill being capitalized but not amortized and separatelyidentifiable intangible assets being capitalized on acquisition and amortizedover their estimated useful lives. The IFRS treatment is similar to the currenttreatment under US GAAP. People ARM had 1,179 full time employees at the end of Q1 2005, compared to 1,171 atthe end of 2004. At 31 March 2005, the group had 541 employees based in the UK,458 in the US, 81 in Continental Europe, 59 in India and 40 in the Asia Pacificregion. Legal matters In May 2002, Nazomi Communications, Inc. filed suit against ARM alleging willfulinfringement of Nazomi's US Patent No. 6,332,215. ARM answered Nazomi'scomplaint in July 2002 denying infringement. ARM moved for summary judgment anda ruling that the accused technology does not infringe. In September 2003, theUnited States District Court of Northern California granted ARM's motion,holding that the accused technology does not infringe Nazomi's patent. Nazomiappealed the District Court's ruling. On 7 September 2004, the Court of Appealsfor the Federal Circuit heard the appeal. On 11 April 2005, the Court of Appeals sent the case back to the District Courtfor a more detailed analysis of the original claim construction and furtheranalysis in support of its non-infringement ruling. The Court of Appeals did notreject the District Court's ultimate conclusion, but held that the DistrictCourt had not provided sufficient information for a proper appellate review.Based on legal advice received to date, ARM has no cause to believe that theeffect of the original ruling by the District Court will not be upheld. CONTACTS:Sarah Marsland/James Melville-Ross/Juliet Clarke Tim ScoreFinancial Dynamics ARM Holdings plc+44 (0) 207 831 3113 +44 (0)1628 427800 ARM Holdings plc First Quarter Results - US GAAP Quarter Quarter Quarter ended ended ended 31 March 31 March 31 March 2005 2004 2005 (1) Unaudited Unaudited Unaudited £'000 £'000 $'000Revenues Product revenues 51,372 31,382 97,093 Service revenues 3,645 3,606 6,889Total revenues 55,017 34,988 103,982 Cost of revenues Product costs (4,913) (1,378) (9,286) Service costs (1,410) (1,322) (2,665)Total cost of revenues (6,323) (2,700) (11,951) Gross profit 48,694 32,288 92,031 Research and development (14,723) (12,099) (27,826) Sales and marketing (8,284) (5,704) (15,657) General and administration (7,837) (6,291) (14,812) Deferred stock-based compensation (2,360) (258) (4,460) Amortization of intangibles purchased through business combination (3,967) (25) (7,498)Total operating expenses (37,171) (24,377) (70,253) Income from operations 11,523 7,911 21,778Interest, net 1,009 1,504 1,907 Income before income tax 12,532 9,415 23,685Provision for income taxes (3,453) (2,782) (6,526) Net income 9,079 6,633 17,159 Net income 9,079 6,633 17,159Other comprehensive income: Foreign currency adjustments 8,744 (249) 16,526 Unrealized holding gain /(loss) on available-for-sale securities, net of tax of £692,000 (2004: £17,000) (1,614) 353 (3,050) Total comprehensive income 16,209 6,737 30,635 Earnings per share (assuming dilution)Shares outstanding ('000) 1,424,612 1,043,795Earnings per share - pence 0.6 0.6Earnings per ADS (assuming dilution)ADSs outstanding ('000) 474,871 347,932Earnings per ADS - cents 3.6 3.5 (1) US dollar amounts have been translated from sterling at the 31 March2005 closing rate of $1.89=£1 (see note 1) ARM Holdings plc Consolidated balance sheet-US GAAP 31 March 31 December 31 March 2005 2004 2005 (1) Unaudited Audited Unaudited £'000 £'000 $'000Assets Current assets: Cash and cash equivalents 93,816 110,561 177,312 Short-term investments 24,956 5,307 47,167 Marketable securities 21,975 21,511 41,533 Accounts receivable, net of allowance of £1,165,000 in 2005 and £1,451,000 in 2004 43,875 34,347 82,924 Inventory: finished goods 909 897 1,718 Prepaid expenses and other assets 17,198 16,001 32,504 Total current assets 202,729 188,624 383,158 Long-term marketable securities 1,038 5,438 1,961 Deferred income taxes 3,324 2,529 6,282 Property and equipment, net 13,202 14,117 24,952 Goodwill 348,801 340,416 659,234 Other intangible assets 71,040 74,578 134,266 Investments 9,659 12,235 18,256 Total assets 649,793 637,937 1,228,109 Liabilities and shareholders' equity Accounts payable 3,890 4,110 7,352 Income taxes payable 10,084 6,345 19,059 Personnel taxes 1,235 1,123 2,334 Accrued liabilities (see note 2) 19,968 38,600 37,740 Deferred revenue 21,807 21,355 41,215 Dividends payable 5,759 - 10,884 Total current liabilities 62,743 71,533 118,584 Accrued liabilities 1,759 1,732 3,325 Deferred income taxes 10,729 12,345 20,278 Total liabilities 75,231 85,610 142,187 Shareholders' equity Ordinary shares 688 675 1,300 Additional paid-in capital 423,302 414,133 800,041 Deferred compensation (9,480) (12,083) (17,917) Treasury stock, at cost (7,485) (7,485) (14,147) Retained earnings 156,741 153,421 296,241 Accumulated other comprehensive income: Unrealized holding gain on available-for-sale securities, net of tax of £1,385,000 (2004: £2,077,000) 4,561 6,175 8,620 Cumulative translation adjustment 6,235 (2,509) 11,784 Total shareholders' equity 574,562 552,327 1,085,922 Total liabilities and shareholders' equity 649,793 637,937 1,228,109 (1) US dollar amounts have been translated from sterling at the 31 March 2005 closing rate of $1.89=£1 (see note 1) Notes to the Financial Statements (1) Basis of preparation - reporting currency The Group prepares and reports its financial statements in UK sterling. Purelyfor the convenience of the reader, the US GAAP income statement and balancesheet have been translated from sterling at the closing rate on 31 March 2005 of$1.89=£1. Such translations should not be construed as representations that thesterling amounts represent, or have been or could be so converted into USdollars at that or at any other rate. (2) Accrued liabilities Accrued liabilities under US GAAP of £20.0 million (2004: £38.6 million)includes: £nil million (2004: £14.3 million) for acquisition-related expenses,£1.1 million (2004: £4.4 million) for staff costs and £2.1 million (2004: £2.8million) representing the fair value of embedded derivatives. (3) Consolidated statement of changes in shareholders' equity Additional Deferred Unrealized Cumulative Share paid-in compen- Treasury Retained holding translation capital capital -sation stock earnings gain adjustment Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2005 675 414,133 (12,083) (7,485) 153,421 6,175 (2,509) 552,327Shares issued on exercise of options 13 9,412 - - - - - 9,425Net income - - - - 9,079 - - 9,079Dividends - - - - (5,759) - - (5,759)Unrealized holding gains on available-for-sale securities - - - - - (1,614) - (1,614)Deferred compensation arising on share schemes - (181) 181 - - - - -Amortization of deferred - - 2,360 - - - - 2,360compensationReversal of unearned compensation - (62) 62 - - - - -Currency translation adjustment - - - - - - 8,744 8,744At 31 March 2005 688 423,302 (9,480) (7,485) 156,741 4,561 6,235 574,562 (4) Non-GAAP measures The following non-GAAP measures, including reconciliations to the GAAP measures,have been used in this earnings release. These measures have been presented asthey allow a clearer comparison of operating results that exclude one-offnon-recurring charges and acquisition-related charges. All figures in £'000unless otherwise stated. (4.1) (4.2) (4.3) Q1 2005 Q4 2004 Q1 2004 Income from operations 11,523 3,417 7,911Non-recurring charge - technology license agreement - 4,510 -Acquisition-related charge - in-process research and - 3,256 -developmentAcquisition-related charge - amortization of 3,967 456 25intangiblesAcquisition-related charge - deferred stock-based 2,066 - -compensationOther deferred stock-based compensation 294 565 258Pro forma income from operations 17,850 12,204 8,194As % of revenue 32.4% 29.4% 23.4% (4.4) (4.5) 31 March 31 December 2005 2004 Cash and cash equivalents 93,816 110,561Short-term investments 24,956 5,307Short-term marketable securities 21,975 21,511Long-term marketable securities 1,038 5,438Pro forma cash 141,785 142,817 (4.6) Q1 2005 Pro forma cash at 31 March 2005 (as above) 141,785Less: pro forma cash at 31 December 2004 (as above) (142,817)Add back: acquisition-related expenses 14,260Pro forma net cash generation 13,228 (4.7) (4.8) (4.9) Q1 2005 Q4 2004 Q1 2004 Net income 9,079 4,509 6,633Non-recurring charge - technology license agreement - 4,510 -Acquisition-related charge - in-process research and - 3,256 -developmentAcquisition-related charge - amortization of 3,967 456 25intangiblesAcquisition-related charge - deferred stock-based 2,066 - -compensationOther deferred stock-based compensation 294 565 258Estimated tax impact of above charges (1,831) (1,353) -Pro forma net income 13,575 11,943 6,916Dilutive shares ('000) 1,424,612 1,071,645 1,043,795Pro forma diluted EPS 1.0p 1.1p 0.7p (4.10) Q1 2004 $'000 ARM reported dollar revenues 62,250Artisan reported dollar revenues (quarter ended 31 21,368March 2004)Aggregate ARM and Artisan dollar revenues 83,618 Note The results shown for Q1 2005 are unaudited. The results for ARM for Q1 2005 and previous quarters as shown reflect theaccounting policies as stated in Note 1 to the US GAAP financial statements inthe Annual Report and Accounts filed with Companies House in the UK for thefiscal year ended 31 December 2004 and in the Annual Report on Form 20-F for thefiscal year ended 31 December 2003. This document contains forward-looking statements as defined in section 102 ofthe Private Securities Litigation Reform Act of 1995. These statements aresubject to risk factors associated with the semiconductor and intellectualproperty businesses. When used in this document, the words "anticipates", "may", "can", "believes", "expects", "projects", "intends", "likely", similarexpressions and any other statements that are not historical facts, in each caseas they relate to ARM, its management or its businesses and financialperformance and condition are intended to identify those assertions asforward-looking statements. It is believed that the expectations reflected inthese statements are reasonable, but they may be affected by a variety ofvariables, many of which are beyond our control. These variables could causeactual results or trends to differ materially and include, but are not limitedto: failure to realize the benefits of our recent acquisitions, unforeseenliabilities arising from our recent acquisitions, price fluctuations, actualdemand, the availability of software and operating systems compatible with ourintellectual property, the continued demand for products including ARM'sintellectual property, delays in the design process or delays in a customer'sproject that uses ARM's technology, the success of our semiconductor partners,loss of market and industry competition, exchange and currency fluctuations, anyfuture strategic investments or acquisitions, rapid technological change,regulatory developments, ARM's ability to negotiate, structure, monitor andenforce agreements for the determination and payment of royalties, actual orpotential litigation, changes in tax laws, interest rates and access to capitalmarkets, political, economic and financial market conditions in variouscountries and regions and capital expenditure requirements. More information about potential factors that could affect ARM's business andfinancial results is included in ARM's Annual Report on Form 20-F for the fiscalyear ended 31 December 2003 including (without limitation) under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Conditionand Results of Operations," which is on file with the Securities and ExchangeCommission (the "SEC") and available at the SEC's website at www.sec.gov. and inthe Listing Particulars dated 19 November 2004. The financial information contained in this announcement does not constitutestatutory accounts within the meaning of Section240 (3) of the Companies Act1985. Statutory accounts of the Company in respect of the financial year ended31 December 2004 have been delivered to the Registrar of Companies, upon whichthe Company's auditors have given a report which was unqualified and did notcontain a statement under Section 237(2) or Section 237(3) of that Act. 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 offeringincludes 16/32-bit RISC microprocessors, data engines, 3D processors, digitallibraries, embedded memories, peripherals, software and development tools, aswell as analog functions and high-speed connectivity products. Combined with thecompany's broad Partner community, they provide a total system solution thatoffers a fast, reliable path to market for leading electronics companies. Moreinformation on ARM is available at http://www.arm.com/ ARM and ARM7TDMI are registered trademarks of ARM Limited. ARM7, ARM9,ARM926EJ-S, ARM11, SC100, Cortex and DesignStart are trademarks of ARM Limited.Artisan Components and Artisan are registered trademarks of ARM Physical IP,Inc., a wholly owned subsidiary of ARM. All other brands or product names arethe property of their respective holders. ARM refers to ARM Holdings plc (LSE:ARM and Nasdaq: ARMHY) together with its subsidiaries including ARM Limited, ARMInc., ARM Physical IP Inc., Axys Design Automation Inc., Axys GmbH; ARM KK, ARMKorea Ltd, ARM Taiwan Ltd, ARM France SAS, ARM Consulting (Shanghai) Co. Ltd.;ARM Belgium NV.; and ARM Embedded Solutions Pvt. Ltd. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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