Strong ARM delivers revenue and earnings growth

Q4 2012 – Financial Summary	Normalised*		IFRS
Q4 2012	Q4 2011	% Change		Q4 2012	Q4 2011
Revenue ($m)	262.8	217.0	21%		262.8	217.0
Revenue (£m)	164.2	137.8	19%		164.2	137.8
Operating margin	46.6%	48.2%			34.5%	34.2%
Profit before tax (£m)	80.0	69.0	16%		59.5	49.7
Earnings per share (pence)	4.08	3.71	10%		3.04	2.40
Net cash generation**	74.1	51.5
Effective revenue fx rate ($/£)	1.60	1.58
FY 2012 – Financial Summary	Normalised*		IFRS
FY 2012	FY 2011	% Change		FY 2012	FY 2011
Revenue ($m)	913.1	785.0	16%		913.1	785.0
Revenue (£m)	576.9	491.8	17%		576.9	491.8
Operating margin	45.6%	45.1%			36.1%	30.3%
Profit before tax (£m)	276.5	229.7	20%		221.0	156.9
Earnings per share (pence)	14.70	12.45	18%		11.51	8.19
Net cash generation**	267.3	203.8
Effective revenue fx rate ($/£)	1.58	1.60

Progress on key growth drivers in Q4

· Growth in adoption of ARM® processor technology

o 36 processor licenses signed for a broad range of applications, from smartphones and mobile computers to medical devices and microcontrollers

o Momentum continues in computing, servers and networking applications with the signing of two ARMv8 architecture licenses, six ARMv8 processor licenses and three ARM Cortex™-A15 processor licenses

· Growth in shipments of chips based on ARM processor technology

o 2.5 billion chips shipped

o Processor royalty revenue grew 21% year-on-year, driven by strong growth in Cortex-A and Mali™-based chips

· Growth in outsourcing of new technology

o 7 Mali graphics processor licenses signed

o 5 physical IP based POP™ IP products licensed

Warren East, Chief Executive Officer, said: “ARM has seen good revenue and earnings growth throughout 2012. Customers are developing products to meet the needs of the post PC era and are driving demand for ARM's most advanced technology. In Q4 we again saw influential market-leaders demonstrating their commitment to ARM technology by licensing our latest products. Royalty revenue has also grown strongly during Q4 underpinned by ARM’s market share gains and an increased royalty percentage from Cortex-A class processors being deployed into smartphones and tablets.

"2013 brings exciting opportunities and challenges as ARM enters competitive new markets where we are well positioned to succeed with leading technology, an innovative business model and a thriving ecosystem of partners.”

Outlook

ARM enters 2013 with a robust opportunity pipeline for licensing and a record order backlog. Market share gains in long-term growth sectors look set to continue as our partners introduce new chips based on ARM technology. The global macro-economic environment continues to be characterised by uncertainty and the prospect of low growth for some time. The ongoing influence on consumer and enterprise spending inevitably impacts semiconductor revenues and industry confidence. However, assuming the macroeconomic situation does not deteriorate significantly, we expect group dollar revenues for the full-year to be at least in line with current market expectations.

In recent quarters, the year-on-year growth of ARM’s processor royalty revenues has outperformed the semiconductor industry by 15-20%. ARM’s royalty revenues for Q1 2013 are based on shipments in Q4 2012. Relevant data for the fourth quarter of 2012 suggests that semiconductor revenues were marginally up year-on-year. Assuming year-on-year royalty growth based on similar trends and given the positive outlook for license revenues, total revenues in the first quarter of 2013 are expected to be around $250 million.

Q4 2012 – Revenue Analysis	Revenue ($m)***		Revenue (£m)
	Q4 2012	Q4 2011	% Change	Q4 2012	Q4 2011	% Change
PD
Licensing	85.2	67.5	26%	53.1	43.0	24%
Royalties	121.8	100.4	21%	76.1	63.6	20%
Total PD	207.0	167.9	23%	129.2	106.6	21%
PIPD
Licensing	15.4	11.4	36%	9.7	7.2	33%
Royalties¹	15.0	14.3	5%	9.4	9.1	4%
Total PIPD	30.4	25.7	19%	19.1	16.3	17%
System Design Division	13.9	12.7	10%	8.7	8.1	7%
Services	11.5	10.7	7%	7.2	6.8	7%
Total Revenue	262.8	217.0	21%	164.2	137.8	19%

¹ Includes catch-up PIPD royalties of $0.4m (£0.2m) in Q4 2012 and $2.2m (£1.4m) in Q4 2011.

FY 2012 – Revenue Analysis	Revenue ($m)***		Revenue (£m)
	FY 2012	FY 2011	% Change	FY 2012	FY 2011	% Change
PD
Licensing	287.1	236.5	21%	181.1	149.3	21%
Royalties	417.7	356.9	17%	264.4	222.2	19%
Total PD	704.8	593.4	19%	445.5	371.5	20%
PIPD
Licensing	52.2	49.2	6%	32.9	31.2	6%
Royalties¹	56.2	48.7	15%	35.4	30.2	17%
Total PIPD	108.4	97.9	11%	68.3	61.4	11%
System Design Division	54.9	52.4	5%	34.7	32.9	5%
Services	45.0	41.3	9%	28.4	26.0	9%
Total Revenue	913.1	785.0	16%	576.9	491.8	17%

¹ Includes catch-up PIPD royalties of $4.4m (£2.7m) in FY 2012 and $4.5m (£2.8m) in FY 2011.

* 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 ventures and Linaro™-related charges. For reconciliation of IFRS measures to normalised non-IFRS measures detailed in this document, see notes 11.13 to 11.16.
** 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, restructuring payments, other acquisition-related payments, share-based payroll taxes, payments to joint ventures and Linaro, and deducting inflows from share option exercises and investment disposal proceeds – see notes 11.8 to 11.12.
*** Dollar revenues are based on the group’s actual dollar invoicing, where applicable, and using the rate of exchange applicable on the date of the transaction for invoicing in currencies other than dollars. Over 95% of invoicing is in dollars.

For the full report see www.arm.com

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CONTACTS:

Sarah West/Aideen Lee

Brunswick

+44 (0)207 404 5959

Ian Thornton/Jonathan Lawton

ARM Holdings plc

+44 (0)1628 427800

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Strong ARM delivers revenue and earnings growth

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