ARC International plc Announces Unaudited Preliminary Results For the Year Ended December 31, 2008

• Revenues and Royalties Increased Over 2007
• Restructuring Completed Delivering Significant Cost Savings
• New Integrated Solutions Generating Strong Customer Interest

SAN JOSE, Calif., and ST. ALBANS, England, February 25, 2009 - ARC International (LSE: ARK), a leading provider of consumer IP to OEM and semiconductor companies worldwide, today announced its unaudited preliminary results for the full year ended December 31, 2008. 

• For the year ended December 31, 2008 revenues and royalties increased over 2007

• Total revenue £17.0 million, up 18% (2007: £14.4 million) or $31.2 million, up 8% (2007: $28.9 million)
• Royalty revenue £7.9 million, up 61% (2007: £4.9 million) or $14.3 million, up 47% (2007: $9.7 million)
• Licensing revenue £7.3 million, flat year on year (2007: £7.4 million) or $13.4 million, down 11% (2007: $15.0 million) 

•   Net loss was £7.3 million including the results of non-recurring expenses, charges and delayed revenues

• Restructuring charges of £2.3 million
• Additional expenses of £1.6 million associated with Sonic Focus™ acquisition
• Two contracts delayed to 1H 2009 as previously announced

•   Significant actions to drive enhanced revenue opportunities

• New executive appointments to the management team and strengthened worldwide Sales and Marketing organizations
• New higher royalty "Sound-to-Silicon" multimedia solutions generating significant sales opportunities with OEM and chip customers throughout Asia, North America, and Europe
• Launch of new multimedia solutions at the CES and Mobile World Congress events generated strong customer interest
• ARC® Sonic Focus products now shipping in new PCs and laptops from "Tier 1" customers

•   Restructuring completed generating annual savings in excess of 25% of costs

• Early and decisive action in response to fundamental industry shifts and worsening economic climate to ensure that restructuring benefits are fully realized in 2009
• Development programs maintained while operating on significantly lower cost base
• New organization enhances ability to deploy more integrated multimedia solutions

Commenting on the company's performance, Carl Schlachte, president and chief executive officer, said: "In 2008 ARC traded against the backdrop of an increasingly challenging economic environment that worsened in the second half of the year.  Including all non-recurring events our net loss was larger than expected.  Going forward into 2009, we remain cautious as visibility is limited and uncertainty in the semiconductor industry with lengthening sales cycles may affect the timing of new license revenues and royalty volumes."

Schlachte continued, "However a rapid transition to profitability and positive cash flow continues to be our overriding strategic goal, and in response to the challenging semiconductor market and global economic conditions we have taken swift and decisive action to further enhance our ability to achieve this goal within planned time scales.  To accelerate growth in our revenues and customer base, we have strengthened our product portfolio through the acquisition of Sonic Focus, transformed our ability to deploy integrated multimedia solutions, broadened our target market to include the higher royalty OEM and consumer electronics sectors, strengthened our worldwide sales and marketing organizations and made significant new appointments to the senior management team.  In addition, the company-wide restructuring announced in September 2008 has been substantially completed, and is already delivering improved operational efficiencies, a rationalized and streamlined management structure and product portfolio, and a significantly lower cost base.  We will continue to assess industry conditions throughout 2009 to ensure that the company's cost structure is aligned with revenue opportunities.
 
"Over the medium to long term we expect consumer demand for devices delivering increasingly higher quality multimedia content to continue to grow, driving OEM and semiconductor companies to create innovative next-generation products with better performance and lower development costs.  Feedback from ARC's worldwide customers and partners confirms our confidence that our integrated solutions and more efficient organization can continue to provide compelling value.  We remain confident in our strategy and our ability to execute."
 
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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 150+ customers collectively ship hundreds of millions of ARC-Based™ chips annually in products such as PCs and laptops, digital and mobile TVs, portable media players, 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, St. Petersburg, Russia, and Hyderabad, India.  For more information visit www.ARC.com.  ARC International is listed on the London Stock Exchange as ARC International plc (LSE: ARK).