ARM reports a rise in profits

Q2 2012 – Financial Summary	Normalised*		IFRS
Q2 2012	Q2 2011	% Change		Q2 2012	Q2 2011
Revenue ($m)	213.0	190.2	12%		213.0	190.2
Revenue (£m)	135.5	117.8	15%		135.5	117.8
Operating margin	46.4%	44.5%			37.8%	27.1%
Profit before tax (£m)	66.5	54.2	23%		54.8	33.8
Earnings per share (pence)	3.58	2.98	20%		2.83	1.93
Net cash generation**	46.9	45.6
Effective revenue fx rate ($/£)	1.57	1.61
H1 2012 – Financial Summary	Normalised*		IFRS
H1 2012	H1 2011	% Change		H1 2012	H1 2011
Revenue ($m)	422.4	375.7	12%		422.4	375.7
Revenue (£m)	268.0	233.9	15%		268.0	233.9
Operating margin	45.5%	43.5%			37.2%	26.1%
Profit before tax (£m)	128.5	104.9	22%		106.2	64.2
Earnings per share (pence)	6.93	5.70	22%		5.53	3.51
Net cash generation**	105.2	108.6
Effective revenue fx rate ($/£)	1.58	1.61

Progress on key growth drivers in Q2

Growth in adoption of ARM^®processor technology
- 23 processor licenses signed across key target markets from microcontrollers to mobile computing
- ARM’s momentum in networking continues with an ARMv8 architecture license for intelligent networking applications, and Freescale announcing their first ARM-processor based chips for network infrastructure
Growth in shipments of chips based on ARM processor technology
- 2.0 billion chips shipped into a wide range of applications, up 9% year-on-year compared with industry shipments being down 4%
- Processor royalties grew 14% year-on-year compared with a decline in industry revenues of 7%
Growth in outsourcing of new technology
- 3 Mali™ graphics processor licenses signed in Q2, of which two were with new customers for Mali technology
- 5 physical IP Processor Optimisation Packs licensed, enhancing ARM’s royalty opportunity per chip

Warren East, Chief Executive Officer, said: “ARM’s royalty revenues continued to outperform the overall semiconductor industry as our customers gained market share within existing markets and launched products which are taking ARM technology into new markets. This quarter we have seen multiple market leaders announce exciting new products including computers and servers from Dell and Microsoft, and embedded applications from Freescale and Toshiba. In addition, ARM and TSMC announced a partnership to optimise next generation ARM processors and physical IP and TSMC's FinFET process technology.

A"ll of these new products are the result of technology engagements over many years, and ARM's long-term commitment to invest in the development of innovative technology.”

Outlook

ARM enters the second half of 2012 with a record order backlog and a robust opportunity pipeline. Relevant data for the second quarter, being the shipment period for ARM’s Q3 royalties, points to a small sequential increase in industry revenues. Q4 royalties are harder to predict as macroeconomic uncertainty may impact consumer confidence, and some analysts have become less confident in the semiconductor industry outlook in the second half. However, building on our strong performance in the first half, we expect overall Group dollar revenues for full year 2012 to be in line with market expectations.

Q2 2012 – Revenue Analysis	Revenue ($m)***		Revenue (£m)
	Q2 2012	Q2 2011	% Change	Q2 2012	Q2 2011	% Change
PD
Licensing	67.0	58.1	15%	42.6	36.3	17%
Royalties	96.3	84.4	14%	61.5	51.8	19%
Total PD	163.3	142.5	15%	104.1	88.1	18%
PIPD
Licensing	11.6	12.3	-6%	7.3	7.8	-6%
Royalties¹	13.7	11.0	25%	8.6	6.7	28%
Total PIPD	25.3	23.3	9%	15.9	14.5	10%
Development Systems	13.3	13.9	-4%	8.5	8.6	-2%
Services	11.1	10.5	6%	7.0	6.6	6%
Total Revenue	213.0	190.2	12%	135.5	117.8	15%

¹ Includes catch-up PIPD royalties of $1.5m (£1.0m) in Q2 2012 and $nil in Q2 2011.

H1 2012 – Revenue Analysis	Revenue ($m)***		Revenue (£m)
	H1 2012	H1 2011	% Change	H1 2012	H1 2011	% Change
PD
Licensing	132.2	109.4	21%	83.7	68.6	22%
Royalties	189.2	172.3	10%	120.4	106.4	13%
Total PD	321.4	281.7	14%	204.1	175.0	17%
PIPD
Licensing	23.2	24.9	-7%	14.7	15.7	-7%
Royalties¹	26.8	21.7	24%	16.9	13.4	27%
Total PIPD	50.0	46.6	7%	31.6	29.1	9%
Development Systems	28.8	27.2	6%	18.3	17.0	8%
Services	22.2	20.2	10%	14.0	12.8	10%
Total Revenue	422.4	375.7	12%	268.0	233.9	15%

¹ Includes catch-up PIPD royalties of $3.6m (£2.3m) in H1 2012 and $0.6m (£0.4m) in H1 2011.

*	Normalised figures are based on IFRS, adjusted for acquisition-related charges, share-based payment costs, restructuring charges, profit or loss on disposal and impairment of available-for-sale investments and Linaro™-related charges. For reconciliation of IFRS measures to normalised non-IFRS measures detailed in this document, see notes 12.1 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, restructuring payments, other acquisition-related payments, share-based payroll taxes and Linaro-related payments, and deducting inflows from share option exercises and investment disposal proceeds – see notes 12.8 to 12.12.
***	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.

CONTACTS:

Sarah West/Anne Bark
Brunswick
+44 (0)207 404 5959

Tim Score/Ian Thornton
ARM Holdings plc
+44 (0)1628 427800

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