SOURCE: ARM Holdings PLC

April 26, 2007 02:09 ET

ARM Holdings Plc Reports Results for the First Quarter Ended 31 March 2007

Cambridge, UK -- (MARKET WIRE) -- April 26, 2007 --ARM HOLDINGS PLC REPORTS RESULTS FOR THE FIRST QUARTER ENDED 31 MARCH 2007

Conference calls discussing these results will be audiocast today at 08:30 BST and 13:00 BST at www.arm.com/ir

CAMBRIDGE, UK, 26 April 2007-ARM Holdings plc ((LSE: ARM); (Nasdaq: ARMHY)) announces its unaudited financial results for the quarter ended 31 March 2007

Highlights (US GAAP unless otherwise stated)

-  Q1 dollar revenues up 14% year-on-year
   -  Processor Division (PD) licensing revenue up 25%
   -  Physical IP Division (PIPD) licensing revenue up 23%
   -  PD underlying royalty revenue up 16% to $45m on 724m shipments


-  Normalised operating margin increases to 30.3% (Q4 2006: 29.0%) 
   despite strong currency headwind


-  Capital structure update announced - plan to move to net cash 
   balance of approximately GBP50m by year end (from GBP127m at end 
   of Q1)
   -  Propose to step-up dividend in 2007 to 2p per share (from 1p 
      per share in 2006)
   -  Share buyback program to be accelerated - more than GBP100m to 
      be spent on buybacks in FY 2007

Commenting on the results, Warren East, Chief Executive Officer, said:

"We are pleased that our Q1 results represent another quarter of robust operational execution and strong cash flow generation against a backdrop of some softness in the semiconductor industry. In addition, today's announcement of our intention to double the dividend in 2007 and to accelerate the share buyback program reflects our confidence in the long-term growth, earnings and cash generation potential of the business."

Q1 2007 - Revenue Analysis
______________________________________________________________________

                         Revenue ($M)***         Revenue (GBPM)
               _______________________________________________________

               Q1 2007   Q1 2006  % Change Q1 2007  Q1 2006  % Change
______________________________________________________________________
PD
      Licensing   37.4      30.0       +25%   19.4     17.3       +12%
      Royalties   45.0     40.91       +10%   23.0    23.21        -1%
Total PD          82.4      70.9       +16%   42.4     40.5        +5%
PIPD
      Licensing   16.9      13.7       +23%    8.7      7.9       +10%
      Royalties   8.42      8.42         0%   4.32     4.92       -12%
Total PIPD        25.3      22.1       +14%   13.0     12.8        +2%
Development
 Systems          13.5      13.9        -3%    6.9      7.9       -13%
Services           8.0       6.0       +33%    4.2      3.4       +24%
Total Revenue    129.2     112.9       +14%   66.5     64.6        +3%
______________________________________________________________________

1 Includes catch-up royalties in Q1 2006 of $2.0m (GBP1.1m)

2 Includes catch-up royalties in Q1 2007 of $1.5m (GBP0.8m) and in Q1 
  2006 of $0.6m (GBP0.4m).



Q1 2007 - Financial Summary

______________________________________________________________________

                                Normalised*                US GAAP
                ____________________________________  ________________

GBPM                     Q1 2007  Q1 2006  % Change   Q1 2007 Q1 2006
____________________________________________________  ________________

Revenue                     66.5(1)  64.6       +3%      66.5    64.6
Income before income tax    21.6     24.7      -13%      12.7    16.1
Operating margin            30.3%    35.6%               16.9%   22.3%
Earnings per share (pence)  1.14     1.27      -10%      0.70    0.84
                                                      ________________
Net cash generation**       15.6     17.3
Effective fx rate ($/GBP)   1.94     1.75
____________________________________________________

(1) Equivalent to GBP74.0m at Q1 2006 effective $/GBP rate

Current trading and prospects

We are encouraged to have started 2007 by reporting a 14% increase in our Q1 dollar revenues compared to last year.

We enter the second quarter with a strong order backlog and a healthy licensing sales opportunity pipeline across the business. With our reported royalty revenues in Q2 being based on foundry utilisation and product shipments made in the first calendar quarter, when some softness in the wider semiconductor industry persisted, we expect total group dollar revenues in Q2 to be at similar levels to Q1.

Based on our broad product portfolio for licensing and the increasing usage of ARM® technology across a wide range of end markets, we are well-placed to benefit from the generally-anticipated improvement in industry conditions later in the year and therefore we remain confident of achieving dollar revenues in the second half broadly in line with expectations.

CONTACTS:

Tom Buchanan/Fiona Laffan                     Tim Score/Bruce Beckloff
Brunswick                                     ARM Holdings plc
+44 (0)207 404 5959                           +44 (0)1628 427800

* Normalised figures are based on US GAAP, adjusted for acquisition- related charges and share-based remuneration charges. For reconciliation of GAAP measures to normalised non-GAAP measures detailed in this document, see notes 6.1 to 6.21.

** Before dividends and share buybacks, net cash flows from share option exercises and acquisition consideration - see notes 6.12 to 6.15.

*** 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. Approximately 95% of invoicing is in dollars.

**** Each American Depositary Share (ADS) represents three shares.

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