ARM Holdings plc - Results For The Fourth Quarter And Year Ended 31 December 2005.

(From Hugin)

CAMBRIDGE, UK, 31 January 2006-ARM Holdings plc [(LSE: ARM); (Nasdaq: ARMHY)] announces its unaudited financial results for the fourth quarter and for the year ended 31 December 2005 showing full Q4 dollar revenues up 8% sequentially and strong profitability with a normalised operating margin of 35% Financial Highlights - FY 2005 * FY total dollar revenues* up 14% to $418.7m comprising Processor Division ("PD" - formerly expressed as "Original ARM") licensing $124.0m (up 19% year-on-year), PD royalties $131.1m (up 22%), Development Systems $46.5m (up 29%), Service revenues $26.5m (up 6%), Physical IP division ("PIPD") $90.6m (licensing $63.0m, royalties $27.6m) (up 9% on actual PIPD 2004 revenues of $83.1m; down 4% on pro forma PIPD 2004 revenues of $94.6m(see note 7.23)) * FY 2005 PIPD revenues 15% up on actual PIPD 2004 revenues excluding "catch-up" royalties from both years ($88.2m in 2005 compared to $76.5m in 2004) * FY normalised operating margin increased to 32.7% * FY normalised earnings per share up 24% year-on-year and full year dividend of 0.84p per share, up 20% on 2004 * GBP26.6m returned to shareholders in 2005 through dividends (GBP10.4m) and the rolling share buyback program initiated in July 2005 (GBP16.2m) Financial Highlights - Q4 2005 * Q4 total dollar revenues* up 8% sequentially to $109.0m comprising Processor Division ("PD") licensing $30.3m (GBP17.7m), PD royalties $36.2m (GBP20.7m), Development Systems $13.5m (GBP7.8m), Service revenues $7.2m (GBP4.1m), PIPD $21.8m (licensing $13.8m, royalties $8.0m including "catch-up" royalties of $1.6m) (GBP12.6m) * Total Group order backlog flat at end Q4 with PIPD component of backlog up more than 20% sequentially * Q4 normalised operating margin increased to 35.0% Operating Highlights * Strong processor licensing momentum continues in 2005, up 19% year-on-year * 71 processor licenses signed in 2005 bringing cumulative total to 398 * Record 499 million ARM Powered products shipped * Rapid growth in non-mobile unit shipments, up 46% year-on-year * Seven synergistic deals signed in 2005 demonstrating early benefits from Artisan acquisition * 19 new physical IP licenses signed in 2005 bringing cumulative total to 176 Commenting on the fourth quarter and full year, Warren East, Chief Executive Officer, said: "2005 has been another successful year for ARM and we enter 2006 well placed to build on our market-leading position. Q4 was an excellent quarter for our processor division with our new flagship Cortex-A8 product winning four high-profile industry awards and initial deliveries of the next two Cortex products being made to lead partners. These innovative products underpin license revenues in 2006. We have also made substantial progress in positioning the combination of physical IP and processor IP in order to realise the anticipated financial and technological benefits in 2006 and beyond." Tim Score, Chief Financial Officer, added: "We have grown revenues at twice the rate of the semiconductor industry, achieved operating margins healthily in excess of 30% and seen volumes of ARM Powered products grow by more than 30% year-on-year to 1.66 billion units. Notwithstanding the 20% increase in R&D expenditure to drive expected strong revenue growth, a 24% increase in earnings per share has enabled us to return more cash to shareholders via our progressive dividend policy and the ongoing share buyback program that we introduced during the year." Full year 2005 - financial summary +-------------------------------------------------------------------------+ | | Normalised*** | US GAAP | | |GBPM |--------------------------+-----------------+-| | |FY05 |FY04 |% change|FY05 |FY04 | | | | |(ARM | | |(ARM | | | | |standalone)| | |standalone)| | |--------------------------+-----+-----------+--------+-----+-----------+-| |Revenue |232.4|152.9 |+52% |232.4|152.9 | | |--------------------------+-----+-----------+--------+-----+-----------+-| |Income before income tax |81.3 |48.1 |+69% |53.2 |38.5 | | |--------------------------+-----+-----------+--------+-----+-----------+-| |Operating margin |32.7%|26.9% | |20.6%|20.6% | | |--------------------------+-----+-----------+--------+-----+-----------+-| |Earnings per share |4.28p|3.44p |+24% |2.93p|2.67p | | |--------------------------+-----+-----------+--------+-----+-----------+-| |Net cash generation**** |65.0 | | | | | | +-------------------------------------------------------------------------+ Q4 2005 - financial summary +----------------------------------------------------------------------------+ | | Normalised*** | US GAAP | |GBPM |-----------------------------+-----------------------------| | |Q405 |Q305 |Q404 |Q405 |Q305 |Q404 | | | | |(ARM | | |(ARM | | | | |standalone) | | |standalone) | |----------------+-------+-------+-------------+-------+-------+-------------| |Revenue |62.9 |56.7 |41.5 |62.9 |56.7 |41.5 | |----------------+-------+-------+-------------+-------+-------+-------------| |Income before|23.7 |19.1 |14.1 |15.8 |12.0 |5.3 | |income tax | | | | | | | |----------------+-------+-------+-------------+-------+-------+-------------| |Operating margin|35.0% |31.3% |29.4% |22.4% |18.8% |8.2% | …