ARC plans to reorganise operations

The reorganization comprises a number of key elements, which streamline the company’s execution of its market strategy with improved operational efficiencies and a significantly reduced cost base. The plan builds on a new company structure reporting directly to CEO Carl Schlachte and includes: A new integrated worldwide sales and field organisation. The formation of a multimedia software business unit. A new system on chip (SOC) business unit. The streamlining of the Office of the CTO into a single function. An increased focus on vertically integrated multimedia solutions. The transfer of certain product development to ARC’s engineering centers in Russia and India Execution of the reorganization plan will commence today and is expected to be substantially completed in 2008, with the full benefits being generated from the beginning of 2009. The reorganization plan is expected to necessitate a one-time charge of £3.0 million in the second half of 2008, comprising a cash cost of £1.5 million and provisions for future costs, principally relating to surplus property lease obligations of a further £1.5 million. Full year savings are expected to be in excess of £2.0 million. While a small impact on revenue is expected over the remainder of 2008, fundamental trading conditions remain unchanged. These actions are expected to accelerate profitability and positive cash flow.