ARM says it continues to generate cash with cash balances likely to increase to approximately £121.7 million at the period end, compared with £115.4 million at 30 June 2002. Its accounts receivable figure is projected to fall to approximately £28.1 million at 30 September 2002 from £40.2 million at 30 June 2002.
The slowdown in licensing activity in the third quarter has given rise to a reduction in the backlog at the end of September. Deferred revenue, being that portion of the backlog that has been invoiced to partners but not yet recognised in the profit and loss account, is projected to decrease, as expected, from £17.4 million at 30 June 2002 to approximately £13.8 million at the end of September.
Although the fourth quarter is usually stronger than the third quarter, ARM does not anticipate any significant upturn in business activity before next year.
Warren East, Chief Executive Officer, commented:
The semiconductor industry is experiencing its worst ever downturn. Whilst ARM has continued to achieve robust results to date, the persisting challenging market conditions have eventually caused some of our partners to delay decisions about licensing our technology. Our strategy and confidence in medium and long-term opportunities for this business remain unchanged despite the current market difficulties. We continue to focus on our profitability and long term growth drivers and will manage our cost base accordingly.
Sir Robin Saxby, Chairman, commented:
We are confident that the progress ARM has made in becoming the significant global standard architecture is enabling the company to strengthen its competitive position further as these difficult market conditions persist.
Tim Score, Chief Financial Officer, added:
ARM’s continued cash generation and strong balance sheet enable us to continue to invest in the future growth of the business during these challenging times. Rigorous working capital management and the maintenance of a cost base which balances long term growth opportunities and short term trading pressures remain priorities for the business.
Third quarter results to September 20, 2002 will be released on October 15, 2002.
