ARC International PLC Operational Update

Reorganization Completes the Transformation of ARC Into a Multimedia Company Focused on High Volume Consumer Markets

SAN JOSE, Calif., and ST. ALBANS, England, September 22, 2008 – ARC International (LSE: ARK) today announced its plan to reorganise operations, enhancing and accelerating the deployment of its new multimedia product range to high-growth consumer electronics markets, while benefiting from recent strategic investments in new lower cost development capabilities.

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.

Carl Schlachte, president and CEO, said, “The strategically targeted acquisitions that ARC has successfully executed and integrated, together with continued investment in new lower cost development capabilities, have enabled the company to significantly reposition itself. ARC has an exciting range of multimedia solutions, which are attracting strong and growing interest from OEM and chip customers around the world. The proposed restructuring announced today will enable ARC to more effectively and rapidly deploy these products to high volume consumer markets, reduce our cost base, improve margins, and accelerate our transition to profitability and positive cash flow.”

About ARC International plc
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).