ARC Announces Unaudited Interim Results for the Six Months Ended June 30, 2008

SAN JOSE, CALIF. and ST. ALBANS, ENGLAND, August 6, 2008 - ARC International (LSE: ARK), a leading provider of consumer intellectual property (IP) to manufacturers of electronics devices (OEMs) and semiconductor companies, today announced its unaudited interim results for the six months ended June 30, 2008. 

The entire news release can be downloaded here (pdf, 17 pages).

Financial Highlights (on a constant dollar basis):

• Total Revenue up 32% to $18.3 million (£9.3 million)
• Licensing Revenue up 33% to $8.4 million (£4.3 million)
• Royalty Revenue up 53% to $8.3 million (£4.2 million)
  

Company Highlights:

• Solid growth in licensing and royalty revenues despite increasingly challenging market conditions
• 16 customer contracts completed, including two agreements delayed from the fourth quarter of 2007
• Net loss without Sonic Focus acquisition remained flat at £1.5 million.  Net loss with acquisition at £2.0 million
• Closing cash and short term investment position at £16.6 million (December 31, 2007: £21.2 million) following the acquisition of Sonic Focus in February
• Bookings and backlog remain healthy despite a year-on-year decrease that reflects a large agreement completed in the first half of 2007
• Revenue from ARC's multimedia subsystems continues to grow; in 1H 2008 ASPs were approximately twice that of ARC's processor products
• Completed strategic acquisition of Sonic Focus
• Sonic Focus adds a new, complementary class of customer and revenue channel through licensing its audio enhancement software directly to OEMs
• Strong industry interest in integrated ARC® and Sonic Focus multimedia solutions
• Hewlett Packard is first customer to ship Sonic Focus-ready products
• post acquisition
• While the company performed well in the first half and we currently expect results for the full year to be in line with management's expectations, we expect economic conditions to continue providing a level of uncertainty in the market

Commenting on the company's performance, Carl Schlachte, president and chief executive officer, said, "ARC delivered solid results in the first half of 2008.  Against a weakening economic environment and fundamental shifts in the semiconductor market, ARC's performance highlights its ability to meet evolving requirements of electronic companies creating devices that enhance consumers' multimedia experiences.  ARC acquired Sonic Focus in February to bolster ARC's multimedia subsystems with a new and complementary base of customers and technologies.  Moving forward management will look for ways to enhance its strategic focus on the multimedia market while accelerating profitability."

Commenting on the financial results, Victor Young, chief financial officer, said, "Despite difficult global economic conditions, 16 licensing contracts were finalized and ARC's worldwide customer base now stands at 148 companies.  With the completion of the Sonic Focus acquisition, HP is our first customer to ship higher value royalty-bearing products with Sonic Focus post-processing technologies.  We expect new Sonic Focus customer agreements to be completed in the next six months.  In the second half, we anticipate additional cost-effective ways of capitalizing on the synergies presented by our acquisitions and changes in the marketplace." 

About ARC International
ARC International is a world leading provider of consumer IP to OEM and semiconductor companies globally.  ARC's award-winning, vertically integrated audio and video solutions enable high quality multimedia content to be captured, shared, and played on a wide range of electronics devices.  ARC's 140+ customers collectively ship hundreds of millions of ARC-Based chips annually in products such as Mobile TVs, Portable Media Players, WiFi-/WiMAX-enabled computers, flash storage, digital cameras, network appliances, and medical and government systems.
ARC International maintains a worldwide presence with corporate and research and development offices in San Jose and Lake Tahoe, Calif., St. Albans, England, and St. Petersburg, Russia.  For more information visit www.ARC.com.  ARC International is listed on the London Stock Exchange as ARC International plc (LSE: ARK).