ARM FullReport 2013

ARM Holdings plc
110 Fulbourn Road

Cambridge CB1 9NJ
United Kingdom
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ENABLING INNOVATION
EVERYWHERE
ARM Holdings plc Annual Report 2013: Strategic Report
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ARM Holdings plc
Strategic Report 2013
Our Vision
Operational highlights 2
Financial highlights 3
Chairmans review 4
Chief Executives statement 6
Our Performance
Our marketplace 14
Our business model 16
Our global reach 18
Strategy and key performance
indicators 20
Mobile computing 32
Enterprise infrastructure 34
Embedded computing 36
Our Commitment
Governance 38
Sustainability 44
Risk Management and principal risks 47
Our Financial Review
Chief Financial Ofcers review 52
Summary accounts 58
Glossary 60
Governance
Chairmans introduction
Board of Directors
Corporate governance
Directors report
Directors remuneration report
Financial Report
Independent auditors report to the
members of ARM Holdings plc
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated balance sheet
Consolidated cash ow statement
Consolidated statement of changes
in shareholders equity
Notes to the nancial statements
Company balance sheet/UK GAAP
Notes to the nancial statements/
UK GAAP
Glossary and Group directory
Glossary
Group directory
Key shareholder information
Front cover
Most major population centres are covered
by 3G or 4G networks, and there were
more than two billion smartphones and
tablets connecting to the internet in 2013.
With some mobile computers now costing
as little as $35, many more people can
aford to buy a smart device. An entry-
level mobile computer may have up to
fourARM
-based chips.
Downloads
More information about ARM and our
end market opportunities are available
onourweb site.
Reports available online:
Strategic Report
Governance and Financial Report
Corporate Responsibility Report
ARMs Annual Report is in two parts. The Strategic Report contains
information about the Group, how we make money and how we run
the business. It includes our strategy, business model, markets and
key performance indicators, as well as our approach togovernance,
sustainability and risk management, and a summary of our
nancial management.
A copy of the Governance and Financial Report can be downloaded
from www.arm.com/reporting2013.
The Governance and Financial Report contains the details about
how we run the business and remunerate management, and how
weorganise ourselves nancially.
Online you can nd more information about our end markets,
including case studies about how our technology is used in our
customers products. A more detailed Corporate Responsibility
report is also available online.
STRATEGIC
REPORT
GOVERNANCE AND
FINANCIAL REPORT
ONLINE
REPORTING
WELCOME TO OUR
STRATEGIC REPORT
www.arm.com/reporting2013
The auditors report on the nancial statements and the auditors statement undersection
496of the Companies Act onwhether the information given in Strategic Report and
Directors report (for the nancial year ended 31 December 2013) is consistent with the
Group nancial statements were both unqualied and can befound on page 55 of the
Governance andFinancial Report.
If want to inform us of a change address
or have lost your share certicate or have
an enquiry about dividend payments
please contact:
Equiniti Shareholder Services
Aspect House
Spencer Road
Lancing
BN99 6DA, UK
Phone: 0871 384 2139
www.equiniti.com
For all other enquires please contact one of
ARMs investor relations team:
Ian Thornton
Head of Investor Relations
ARM Holdings plc
110 Fulbourn Road
Cambridge, CB1 9NJ
Phone: +44 1223 400796
E-mail: ian.thornton@arm.com
Phil Sparks
Investor Relations Manager
ARM Holdings plc
110 Fulbourn Road
Cambridge, CB1 9NJ
Phone: +44 1223 405566
E-mail: philip.sparks@arm.com
Laura Faid
Investor Relations Associate
ARM Holdings plc
Liberty House
Moorbridge Road
Maidenhead, SL6 8LT
Phone: +44 1628 427800
E-mail: laura.faid@arm.com
Designed and produced by Radley Yeldar. www.ry.com
This report has been printed on Cocoon Ofset a paper which is certied by
the Forest Stewardship Council
and contains 100% recycled waste. The paper

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ARM, ARM Powered, Artisan and Cortex are registered trademarks of ARM
Limited. ARM7, ARM9, ARM11, POP and Mali are trademarks of ARM Limited.
INVESTOR RELATIONS
CONTACT DETAILS AUDITORS STATEMENT

1
ARM technology now reaches around 75% of
people in the world, with chips based on our
technology driving billions of products every day.
To date more than 50 billion ARM-based chips
have been shipped, and our Partners are shipping
more than 2.5 billion everyquarter.
Our vision is to enable everyone to use
technology to innovate and create new products
and business models. From students to start-ups
to thought-leading companies, we are enabling
people and devices to connect in ways that have
never been possible before. ARM works in
partnership with global companies todevelop
products that will help to make theworld a
better place for everyone.
This report and my statement on pages 6-11
help bring this vision to life.
Simon Segars
Chief Executive Ofcer
1
ARM Holdings plc
2
OPERATIONAL HIGHLIGHTS
ACHIEVING MORE
10 billion ARM-based chips
ARMs customers reported that they had shipped more
than 10 billion ARM-based chips into everything from
phones and tablets tosmart sensors and servers. This
takes the cumulative total of ARM-based chips shipped
to over 50 billion
400 million ARM-based chips with
Mali
TM
graphics
ARMs Mali graphics processor brings games and
userinterfaces to life with stunning 3D graphics
121 licences
50 companies signed 121 licences. Bythe end of 2013
ARM has signed more than 1,000 licences with 348
companies.
1st ARMv8-based chip shipped
The ARMv8-A architecture adds 64-bit computing,
amongst other advances, andissuitable for a wide
range of devices from mobile phones to servers.
1st ARM big.LITTLE
TM
technology-based
chipshipped
big.LITTLE technology further improves performance in
energy-efcient computing devices, and rst shipped in
the Samsung Exynos family of chips
ARM hired net 441 full-time employees in 2013
More than 70% of these new employees joined
ourR&D teams
10Bn
400M
121
1
st
1st
64
Bit
441
20nm
10Bn
400M
121
1
st
1st
64
Bit
441
20nm
10Bn
400M
121
1
st
1st
64
Bit
441
20nm
10Bn
400M
121
1
st
1st
64
Bit
441
20nm
10Bn
400M
121
1
st
1st
64
Bit
441
20nm
10Bn
400M
121
1
st
1st
64
Bit
441
20nm
Our Vision Our Performance Our Commitment Our Financial Report
3
FINANCIAL HIGHLIGHTS
A PLATFORM FOR GROWTH
Revenues
$1,118m
+22%
Normalised Operating Margin
49%
Normalised EPS
20.6p
+40%
Cash Generation
345m
+29%
Full Year Dividend
5.7p
+27%
IFRS Operating Margin
21%
Includes exceptional items of 101 million.
IFRS EPS
7.4p
-35%
Revenues
715m
+24%
ARM Holdings plc
4
Overview of the year
2013 was another successful year for ARM.
During 2013, Group revenue grew 22% to
$1,117.7 million (714.6 million). This growth
enabled us to invest in both R&D and the
business infrastructure that underpins future
growth, at the same time as improving
protability and increasing returns to
shareholders. By balancing increased long-term
investment plans with improving protability in
the near term, we were able to increase the
dividend by 27% to 5.7 pence per share.
The 121 licences that we signed in 2013
demonstrate that we have a portfolio of
processors and supporting technologies
thatenable companies to build their products
for future electronic devices. From our
customers royalty reports, we know that
they shipped more than 10 billion ARM-
based chips in 2013 (a 20% increase over
2012), as they see increasing demand for
low-power smart products from consumers
and enterprises.
2014 will bring exciting opportunities and
challenges as ARM competes in new markets
where we are well positioned to succeed with
our leading technology, innovative business
model and thriving ecosystem of Partners.
CHAIRMANS REVIEW
INNOVATING FOR
THE DIGITAL WORLD
SIR JOHN BUCHANAN
Chairman
Smart and connected digital devices are increasingly being used
by billions of people all over the world, and ARMs technology
isat the heart of many of the chips used in todays electronic
products. Our strategy is to develop and license technology that
leading semiconductor companies can then incorporate into
their silicon chips. These chips go into a wide range of mobile,
consumer and embedded electronics from sensors to servers.
We are committed to hiring and developing some of the most
innovative and imaginative engineers who, together with
supporting teams, can develop and deploy next generation
processors and enabling technologies to our Partners.
5
ARMs clear business strategy continues to
serve the Group well, as demonstrated by
the innovation and quality of our products,
and also in the leadership, talent development
and strong culture of the organisation.
Whilst innovation thrives throughout the wide
range of mutually benecial partnerships that
make up the ARM Connected Community,
we must not underestimate the challenges of
the wider economic environment, nor of the
strength and quality of the competition in the
markets we serve.
Success in a challenging environment
ARM is developing technology for the mobile
and embedded computing applications and our
latest products are opening up markets such
as servers and enterprise networking. ARM is
facing well-funded competition in both these
new areas and also in the mobile computing
market where ARM hasa large share.
ARMs Partners are also amongst the
companies developing technologies for the
nascent Internet of Things, where there
will be new competitive threats, from new
technology and business models. ARM will
remain vigilant, seeking to ensure that we
are positioned competitively with suitable
technology, an innovative business model
andadiverse range of Partners.
The ARM team
The knowledge and creativity of our people
and the ability to deliver customer satisfaction
in an increasingly demanding and competitive
environment are the key determinants of our
success. We continue to attract outstanding
people and in 2013 we hired a net 441
additional employees, the majority of them
engineers working in processor design and
software development. These new hires were
a mix of new graduates and experienced
talent from all over the world.
CEO succession
In March 2013 ARM announced that
Warren East, ARMs CEO since 2001, had
decided to retire efective from 1 July 2013.
Simon Segars, previously ARMs President
became the Groups CEO from that date.
Warren helped to transform ARM during
his time as CEO. In 2001, ARM had one
processor product line, mainly used in
mobile phones. He led the Group to create
a broad portfolio of technologies in the
industry, deployed in a wide range of markets.
On behalf of the Board, and the wider ARM
team, deep thanks are due to Warren for his
passion, service and leadership.
Simon Segars has been with ARM since 1991
and has held several executive roles including
EVP Engineering, when he worked
on many of the early ARM processors,
as well as EVP Worldwide Sales and EVP
Business Development. He joined the Board
in January 2005, and as President of ARM had
operational responsibility for the companys
IP divisions. Simons proven technology
expertise and management skills across a
range of senior executive roles made him
an excellent choice for CEO and he is highly
qualied to take the Group forward.
Chairman succession
In January 2014, ARM announced my decision
to step down from the ARM Board due to
amedical condition. My successor is Stuart
Chambers, who brings board andexecutive
experience both in the UK and globally gained
through his executive and non-executive roles
with global companies. It has been a great
privilege to serve as Chairman of ARM and I
have greatly enjoyed my time on the Board of
this ne company.
In conclusion, I would like to thank all of
ARMs employees for their efort and
contribution in 2013, including the Board,
Warren and Simon, and the leadership team.
I look forward to seeing ARMs technologies
unlocking the potential of new opportunities
for innovators across the mobile world and
beyond and being ubiquitous in the products
that we use today and in the future.
The knowledge and creativity of
ourpeople and the ability to deliver
customer satisfaction in an increasingly
demanding and competitive environment
are the keydeterminants of our success.
6
This has been a successful year for ARM and
an exciting year for me. On 1 July 2013, I
succeeded Warren East to become ARMs
Chief Executive Ofcer and lead the Group
through its next stage of development. In his
12 years in charge, Warren oversaw:
ARMs strategy to transform mobile
phones into smartphones and evolving
intotablet computers.
ARM technology being chosen for
use beyond mobile devices, with our
customers deploying ARM-based chips
ineverything from sensors to servers.
More than 45 billion ARM-based chips
shipped by 150 companies during
his tenure.
ARM broadening its technology ofering to
include a range of processors for diferent
end markets, including graphics processors,
and supporting physical IP technology and
software tools.
2013 was my 23rd year at ARM, as I was
one of ARMs original handful of engineers
embarking upon a new business designing
processors. That small business has now
grown into a global technology leader
with2,833 employees. ARMs success over
the years is in no small part down to our
collaborative approach in how we manage
ourselves internally and in how we work with
our industry partners.
As the new CEO of ARM, I know that
retaining our leadership position is going to
be,at times, both challenging and exciting.
I am very grateful for the guidance and
support I have received from our Chairmen
(both retiring and incoming) and my
colleagues on the Board since I took on the
CEO role. The hard work and support of our
executive team and all of ARMs employees
has also been signicant to our continuing
success, as is the trust of our Partners that
ARM will continue to provide them with the
best technology for their products. The future
holds even more opportunity for ARM and
for our Partners as they invest in innovation,
and create technologies for decades to come.
CHIEF EXECUTIVES STATEMENT
VISION FOR THE FUTURE
ARM Holdings plc
7
From mobile phones to the Internet
ofThings
ARM technology can be found in billions of
mobile and connected devices. In 2013 alone
more than one billion smartphones shipped,
growing the installed base to approximately
two billion, and the smartphone market
is forecast to grow at a 10% Compound
Annual Growth Rate (CAGR) over the
nextve years.
The impact of mobility and connectivity
brings new levels of freedom to consumers
to access their data, and much more besides.
New products and services have been
created, such as downloadable apps and
content, and devices that can be wirelessly
attached to or controlled by a smartphone.
Expanded mobile networks are being
deployed and new data centres are being
developed as we download more content
and generate more data. And now other
products and devices are being connected
to networks such as healthcare equipment,
shipping containers, white goodsin the
home, industrial equipment andeven light
bulbs. Together, these factors are leading to
the creation of a massive Internet of Things.
Internet of Things
To better understand the business drivers for
the Internet of Things, we commissioned a
report from the Economist Intelligence Unit.
Go to www.arm.com/IOT to download
the report.
Go to www.arm.com/IOT
to download the report.
ARM is well positioned to take advantage
ofthe growth in the mobile devices market,
to benet as new networks and data centres
are built, and to be the primary technology
within embedded computing and the
Internet of Things.
Meeting Global Challenges
Digital technology based on smarter
electronics has played a huge role in making
todays society a better place for all of us.
Technology has an even greater role in the
challenges that lie ahead. Over the next few
pages we look at some of those challenges
and how technology is already helping to
overcome them.
One of the best thingsabout being
CEO ofARM is seeing our
technology used in many of the most
innovative products available today.
Simon Segars
ARM Holdings plc
8
For more information on technology in health and wellness:
Daniel Kraft, MD, presenting the Future of Technology in
Health & Medicine at ARMs TechCon 2013
For more information on how ARM and HP are working together
in this area: Martin Fink, CTO HP Labs, presenting on The New
Style of IT & HPs Moonshot at ARMs TechCon 2013
For more information on how the internet of things can make
the world a better and more efcient place: Nandini Ramani,
VP Java Platform at Oracle presenting Enabling Compelling
Services for IoT at ARMs TechCon 2013
HP Moonshot: Based on chips using the
ARMv7 and ARMv8 Architecture
With nearly 10 billion devices connected to
the internet and predictions for exponential
growth, weve reached a point where the
space, power, and cost demands of traditional
technology are no longer sustainable.
HP Moonshot marks the beginning of a new
style of IT that will change the infrastructure
economics and lay the foundation for the next
20 billion devices.
Health and wellness
Many of us are trying to improve our
health and tness by being more active.
Some devices now monitor our activity
and location, and measure how much we
have exercised and how many calories we
have burned. These devices can be a useful
motivator to encourage us to go for a walk
and get some exercise, especially if we have
been sat in the ofce all day. Other devices
can be used to provide security for those that
are potentially vulnerable such as older people
at risk of illness or falls, or young children.
Energy efciency in networks
With smartphones and tablets growing
rapidly and the introduction of new devices to
connect to the internet, we are entering an age
of hyper-connectivity. It is forecast that there
will be a ve-fold increase in data transferred
globally between 2012 and 2017. This is
reshaping the requirements for networking
infrastructure and our data centres that must
carry and store all this data. To avoid an
unsustainable increase in energy consumption
and carbon footprint, it is no longer enough to
just build more performance, operators and
equipment must provide more performance
per watt.
Environment
Managing and monitoring the use of natural
resources becomes increasingly important
as the worlds population grows, and the
standard of living increases. Therefore it is
important that we maximise the benet from
cultivated land and the use of water and
energy, whilst minimising the harmful impact
from pollution and waste. Smart electronics
can be used to monitor and control the use
of critical resources, and ensure that the right
amount of water and nutrients is applied to
crops. Using cloud-based computing, these
sensors can be linked together across very
large areas to maximise the productivity of
farms and regions.
CHIEF EXECUTIVES STATEMENT CONTINUED
ARM-based Pebble Smartwatch
It was the Pebble that has made the world
interested in Smartwatches, with its incredible
innovation and great style. Wearers want
a watch that connects seamlessly to their
devices and can run for days so they can enjoy
all the benets of their smart watch without
worrying about performance or battery life.
Intelligent Agriculture with OnFarm
OnFarm provides intelligence to farmers
to improve their yields and reduce the use
of consumables such as water, fertiliser and
pesticide. This is achieved by gathering data
from multiple sources, including sensors
placed in and around crop elds and orchards.
With the innovation taking place around
ARM-based sensors and the emergence of
low-cost and long-range wireless technologies,
we see lower-cost devices being deployed in
vast numbers to provide granular data to the
agricultural industry.
9
For more information on how Streetline is making parking
smarter near you download the Streetlines Parker app
For more information on how the Scope tablet is being used
in Thai schools: ARM technology is addressing many of the
worlds challenges, including education
For more information on how ARM technology is encouraging
innovation around the world: Simon Segars, ARM CEO,
presenting his vision for transformative technology at ARMs
TechCon 2013
Smart Parking with Streetline Networks
Smart parking reduces trafc and pollution,
making happier citizens and more cost-
efcient cities. Dust Networks wireless
mesh network solution, featuring the ARM
Cortex
-M3 processor, enables Streetline

Networks to reliably gather the real-time
status of municipal metered parking spots,
and use that data to reduce trafc congestion.
Improving education in Thailand with tablets
The One Tablet Per Child (OTPC) policy
was launched by Prime Minister Yinglucks
government in 2012 in an attempt to improve
Thai education. In 2013, OTPC tablets were
provided to the Ministry of Education by rms
including Shenzhen Scope, featuring Rockchip
RK3066 with dual-core ARM Cortex-A9
processor and quad-core ARM Mali-400 MP4
Graphics Processing Unit (GPU), with an
average cost of around $80 per tablet.
Transport
In 2008, for the rst time in history, over
half of the worlds population lived in urban
areas and by 2050 this will have risen to
70%. Congestion is already a huge problem
in many cities, especially in peak commute
times. By building intelligence into transit
systems and cars, we can make our public
transport and private car travel much more
efcient. With smarter infrastructure that
knows the location of vehicles, and can
communicate with them, we can increase the
capacity of existing roads and railways, and
predict and plan the best routes for travellers,
directing vehicles away from accidents or
overloaded intersections.
Productivity through education
Many parts of the education system havent
changed for many years, and no longer match
the needs and expectations of a modern
child, leading to a lack of engagement. At the
same time, a large number of children have
very little access to information, leading to
fewer opportunities for a good education.
Some educations systems are looking
to both reach a wider audience and to
efectively engage with them through the
useof technology.
Productivity through lowering
the barrier to entrepreneurship
New products and services are created
when entrepreneurs see an opportunity to
enter a new market with the resources to do
something about it. Over the last few years
computing has become more accessible, so
creating a new ARM-based product has never
been easier for more people. This is helping
to drive a new era of innovation.
Making (almost) anything with a 3D printer
Robox
is CELs 3D printer. You can print

with many materials to create solid, usable
3D objects and prototypes. It contains an
Atmel ATSAM3U2EA microcontroller,
powered by an ARM Cortex-M3 processor.
ARM Holdings plc
10
Enabling innovation at ARM
ARM employs some of the most creative and
innovative people in the industry, who have
the vision and drive to develop and deploy the
best technology. Together with our partners
we are developing some of the technology
that can make the world a better place for
everyone. The ARM team is bound together
by a set of principles and behaviours by which
we operate. These principles and behaviours
have evolved as the Group has developed,
and still hold true today.
We consider the following as essential
elements of the behaviour of an ARM
employee in whatever discipline they work:
teamwork and selessness; constructive
proactivity; partner and customer focus and
responsiveness. In addition, we encourage all
employees to take pride in innovation and in
their own self-development.
The focus of our business model is to create
technologies that are well suited for many
Partners to use in a diverse range of markets.
The creativity of our employees therefore
rests in our ability to listen to
and understand the needs of our
semiconductor and OEM Partners. We then
combine their inputs with our own research
to create the next generation of our
technology designs. This close collaboration
with our Partners requires the ARM team
to be open to new ideas and suggestions.
Internally we encourage managers to take
a consensual approach to leading teams,
and as those individuals become successful,
so we are developing the leaders who will
manage the Group within ARMs broad and
diverse ecosystem.
More than two-thirds of ARMs employees
are engineers, specifying and inventing
new technology to be licensed. ARMs
non-engineering employees focus on the
deployment of this technology; marketing and
sales maintain the essential relationships with
our Partners, legal and licensing teams support
negotiations, infrastructure teams provide the
delivery mechanisms, nance teams manage
nancial matters, and HR teams support the
ongoing development of a high performance,
high engagement organisation in which our
people can innovate, collaborate and grow.
Many of our customers are global
semiconductor companies, which clearly
requires an international focus. Today we
have 31 ofces in 15 countries, with R&D
development sites in UK, US, China, France,
Germany, Taiwan and India. We have
a strong culture of encouraging internal
communication and interworking between
sites. We believe strongly in spending time
with our customers and have established
ofces in the major regions where our
customers develop ARM-based products.
These shared principles and behaviours have
evolved over the last 23 years, during which
the ARM team has increased to provide
technology to the growing ecosystem of
Partners. These shared principles still guide
ustoday and I am condent that they will help
the ARM team to continue to develop, create
and license technology for years to come.
Delivery of results
Teamwork and selessness
Constructive proactivity
Partner and customer focus
Responsiveness
Innovation
Personal development
WE ARE
SUPPORTED BY
Families
Communities
Local government
Suppliers
Investors
WE SUPPORT
100s Customers
1,000s
ecosystem partners
1,000,000 Developers
Listen and understand
customer and Partner needs
Responsiveness
Being a good neighbour to
local communities
Increasing shareholder value
EXTERNAL
ARMS SHARED PRINCIPLES AND BEHAVIOURS
2,833
EMPLOYEES
INTERNAL
Multi-discipline teams work
together to determine strategy
Manage across diverse companies
and ecosystem
CHIEF EXECUTIVES STATEMENT CONTINUED
11
Enabling innovation everywhere
The use of digital technology and smarter
electronics will continue to grow as we meet
the increasing demands of society, and as
previously unconnected devices become
smarter and connected into the digital world.
This is creating a huge opportunity for the
semiconductor industry, and ARM is well
positioned to benet both from increasing
sales of computer chips, and also increasing
our market share with our smart, power
efcient technologies.
Mobile communications and mobile
computers were just the rst markets to
need smart electronics, and almost all mobile
devices sold today contain at least one
ARM-based chip. The smartphone market
grew by about half in 2013, with many
consumers upgrading from voice-only phones.
Over the next few years, the smartphone
and mobile computer markets are expected
to continue to grow strongly, especially in
emerging markets where mobile computers
can become an essential tool for education,
business and supporting community projects.
As other devices become smarter and
the need for power efciency increases in
other markets, so our opportunities grow.
During 2013, we saw high numbers of chips
containing our technology being sold into
enterprise networking, and the rst ARM-
based server chips sold. We expect these
markets to become increasingly signicant to
us over the next few years.
ARM is also seeing strong growth in chips for
embedded computing that go into a wide
range of end applications, from washing
machines to robotics. These chips are often
very low cost, and sell into a very broad range
of markets that add up to huge volumes.
In 2013 more than three billion ARM-
based chips were sold into these products,
an increase of 35% on the previous year.
Many companies are investing in innovation
into these categories of chips to meet the
needs of the Internet of Things. In 2013,
ARM licensed Cortex-M class processors to
47 companies. This market could grow to
30 billion chips by 2018.
Organising for an increasing opportunity
As ARM technology is increasingly deployed
by more companies into more applications,
we need to ensure that ARM is organised to
meet the challenges of higher expectations
from more customers and more end markets.
At the beginning of 2014 I restructured
the Group to create an organisation that
is more scalable and more accountable;
one that will ofer our customers a more
joined-up product portfolio, ensuring better
integration of our technologies in our
customers products. We therefore no longer
have separate divisions, but instead a single
product development team consisting of
seven product groups, all reporting into Pete
Hutton, EVP and President Product Groups.
Pete will be responsible for the integrated
product development and delivery of ARMs
business lines. In addition, he will manage two
cross-functional teams that will help ensure
alignment between the product groups
roadmaps and execution.
These product groups will be further
supported by Antonio Viana, EVP and
President of Commercial and Global
Development, who manages our commercial
team, and Ian Drew, EVP and Chief Marketing
Ofcer. Together Antonio and Ian will
develop the ecosystem of companies that is
so important to ARMs long-term success.
Well positioned for the future
ARMs expertise, technology, business
model and ecosystem mean that we are well
positioned to take advantage of the growing
opportunity as technology meets some of
the key challenges that face society. We are
also continuing to investigate new markets
and opportunities, as well as developing the
skills and capability of ARMs employees so
that they can develop the next generation of
technology that will enable our customers
tocreate innovative products.
ARM gains share as our customers use more
of our technology in their chips. We work
very closely with leaders across the industry
to ensure we are developing the right
technology for their designs. This collaborative
approach comes from ARMs own internal
culture and is something we carefully
manage as we grow in size, both in terms of
increased headcount and market inuence
and responsibility.
As the new CEO of ARM, I am excited by
this opportunity. I am condent that ARMs
expertise, together with our Partners
creativity and diversity, means that we will
be at the forefront of the new products and
services that will help to make the world a
better place for everyone.
Simon Segars

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COMMERCIAL OPERATIONS
TECHNICAL OPERATIONS
ARM Holdings plc
12
Wearable technology is helping to keep us t and healthy. Many people
use ARM-based digital pedometers to keep track of steps travelled and
calories burned. These devices may be synchronised with a smartphone app
that can record the calories consumed, and so give information to keep us
healthy and motivated. Keep on running.
More information about embedded ARM-based devices can be found
onpages 3237 and also online.
HELPING
PEOPLE PERFORM
13
ARM Holdings plc
OUR MARKETPLACE
WHERE THE MARKET IS NOW
14
The semiconductor industry develops chips that efciently
manage all of the worlds electronic devices. PCs, mobile phones
and even modern washing machines have some form of chip
providing their intelligence. Each generation of chip is typically
smarter than its predecessor, enabling more capable and more
efcient consumer and embedded products.
Overview of a semiconductor
Semiconductors, or silicon chips, are the
electronic controllers that manage many of
the digital devices that we use every day.
Computers, mobile phones, televisions,
washing machines and cars can all contain
many silicon chips. Also, many enterprise and
industrial applications are made smarter and
more efcient by silicon chips, from sensors
to servers.
In 2013, approximately 700 billion silicon
chips were manufactured. Of these
roughly 30 billion contained a processor.
The processor is the brain of the chip, and
controls not just the operation of the chip,
but also the operation of the product that
chip goes into. ARM processor designs were
in over 10 billion chips, a 35% market share.
The remaining market share mainly consists
of our customers own processor designs.
ARM gains share when our customers
outsource their processor design to us.
Disaggregated industry
The semiconductor industry has disaggregated
into specialist companies that focus on each
stage in the creation, design and manufacture
of a silicon chip (see the diagram below).
This allows each company to invest and
innovate in an area where they can add the
most expertise in the value chain.
Some companies specialise in designing
the chip; other companies specialise in
designing critical IP components within the
design; others in building the tools needed
to manufacture the chips; others in the chip
fabrication; and others in developing software,
such as operating systems and apps. All of
these companies work closely together as
a single ecosystem of partners.
In 2013, there were over 1,000 companies
in ARMs Connected Community.
ARM shares knowledge, experience and
innovations with these companies, enabling
greater collaboration.
Where ARM ts within the industry
ARM is the global leader in the design of
semiconductor IP components that form
some of the critical elements within System-
on-Chip designs. ARM is best known for its
family of processor designs that are used in
a range of applications from mobile phones
to car braking systems. There are a handful
of other IP component designers that
mainly specialise in complementary areas.
Their IP can often be found alongside an ARM
processor in the same chip design.
ARM works closely with the semiconductor
ecosystem to ensure that its technology
works well with other companies products,
that a silicon chip designer can quickly build a
low-power and high-performance chip, and
that an OEM can create complex programs
using a combination of third-party and in-
house operating systems and applications.
As silicon chip designs become more complex
it is expected that the semiconductor industry
will continue to license semiconductor IP.
As the global leader, ARM is well-positioned
to benet from this trend.
100s of chip
design companies
<10 IP
specialists
<10 Tools
providers
<10
Fabricators
<10
Operating
Systems
1,000s of
application developers
1,000s
of service
providers
1,000s
of OEMs
1,000,000,000s
of consumers
Our disaggregated industry
15
WHERE THE MARKET IS HEADING
Mobile computing connecting us to
each other, and our data.
Mobile phones have been getting smarter and
more capable. Smartphones have become
the primary computer for increasing numbers
of people; for sending emails, browsing the
internet, and allowing us to engage with our
friends on social networking sites. Meanwhile,
PCs have been getting smaller and lighter, with
a longer battery life and better connectivity.
The mobile phone and PC markets are
converging, enabling us to connect more
easily to each other and to our personal and
workplace data. This convergence is bringing
new opportunities and threats to the industry.
The fastest growing markets are entry-level
smartphones and tablets. These are forecast
to grow at about a 20% CAGR over the
next ve years, as consumers in emerging
economies buy their rst smartphones.
Although these are entry-level handsets, these
devices can still contain multiple ARM-based
chips, and the main applications processor
will often have several ARM processors.
An entry-level smartphone will typically
generate four times the royalty revenue of a
simple voice-only phone. The mid-range and
premium markets will also grow, and in 2018
it is estimated that the total mobile computing
market will be more than 3 billion devices
including smartphones, tablets and laptops.
read more on page 32
* Footnote: Cisco Visual Networking Index May 2013
Internet of Things connecting billions
of smart sensors.
Advances in manufacturing technology are
enabling the creation of new afordable smart
sensors. These devices usually combine three
main elements:
One or more environmental sensors
(temperature, pressure, motion).
A smart chip (microcontroller) to process
the data gathered by the sensor.
A wireless radio to connect the smart
sensor to the internet.
Data gathered from these sensors can then
be collated anywhere in the world enabling
remote monitoring of the sensors for such
applications as:
Industrial automation: factory equipment
in a region can be monitored from a
head ofce.
Home automation: appliances in the home
can be monitored and controlled by the
home owner wherever they are.
Collectively these technologies are referred to
as the Internet of Things. These smart sensors
need to be very low-cost (the chips within
them often cost less than $1) and they are
expected to be deployed in very high volume.
Efcient networking moving more
data, without using more energy.
With mobile computing connecting us to each
other, and increased machine-to-machine
communications between smart sensors,
it is forecast that mobile internet trafc will
increase 12-fold between 2012 and 2017*.
As IT and communications equipment is
using anincreasing proportion of the worlds
energy, such an increase is not sustainable.
Network operators and data centre
managers are now looking for lower power
technology to better transport, distribute,
analyse and store data across the internet.
This is leading to increased levels of
experimentation and innovation as companies
manage the increased demand for data
throughput, without having to increase the
energy required.
ARM technology-based System-on-Chip
designs are well placed to provide lower
power options for enterprise applications,
such as servers and networking equipment.
Trends within the semiconductor industry and its marketplace
are bringing new opportunities and new competitive threats.
ARM Holdings plc
16
OUR BUSINESS MODEL
HOW AND WHERE
WE MAKE MONEY
ARM is the worlds leading semiconductor intellectual property
(IP) supplier. The technology we design is at the heart of many
ofthe digital electronic products sold in the world. ARM has an
innovative business model. We license our technology to a
network of Partners, mainly leading semiconductor companies.
Our Partners incorporate ourdesigns alongside their own
technology tocreate smart, energy-efcient chips.
ARM licenses technology
to SemiCo Partner
ARM designs technology
for energy-efcient chips
1. ARM designs technology to go into
energy-efcient chips for a broad range of
end markets. ARM licenses each design
to multiple semiconductor companies.
Every company pays an upfront licence fee
to gain access to the design.
2. The semiconductor company will
incorporate the ARM technology design into
their chip. It can take 23 years to build a
chip and a further year for an OEM to build
their product, such as a digital TV or mobile
phone, containing the chip. When the chip
starts to ship, ARM receives a royalty on
every chip that uses the design. Typically our
royalty is based on the price of the chip.
Licence fee
17
Why semiconductor companies
use ARM technology
ARM designs technology that would be
difcult and expensive for our Partners R&D
teams to develop for themselves. It is more
cost efective for our Partners to license
the technology from ARM than to develop
it internally. The design of a processor
or a library of physical IP requires a large
amount of R&D investment and expertise.
We estimate that a major semiconductor
company would need to spend over
$100 million every year to develop their
own architecture. This represents more than
$20 billion of annual costs for the industry.
By designing once and licensing many times,
ARM spreads the R&D costs over the whole
industry, making digital electronics afordable
and therefore available to more and more
people across the world.
Technologies that are suitable
for the ARM business model
ARMs licensing business started in the early
1990s with the development of our rst
processor. The processor is like the brain of
the chip; it is where the software runs and
it controls the functionality of the product.
ARM designs each processor to be applicable
to a broad range of end markets to maximise
the number of Partners that can license each
processor and to maximise the number of
markets in which the Partner can deploy
that technology.
In most years ARM introduces 23 new
processor designs. Over the past ten years,
ARM has developed other technologies
suitable for our licensing and royalty business
model, such as graphics processors and
physical IP components. Both of these
technologies are now licensed widely and
aregenerating royalty revenues.
How ARM creates value
ARM endeavours to recover its costs from
the licence revenues of each technology,
leaving the majority of royalties to be
reinvested back into the business or to
be returned to shareholders. Over the
medium term, we expect ARM to become
more protable as our partners design our
technology into a broader range of end
markets. As our customers include the
worlds largest semiconductor companies,
their regular royalty payments have become
areliable cash ow.
ARM technology in the
hands of millions
OEM customer builds
consumer products
Partner develops chips
using ARMs designs
3. Each ARM design is suitable for a wide range
of end applications and so can be re-used
in diferent chip families addressing multiple
markets. Each new chip family generates a
new stream of royalties. An ARM design
may be used in many diferent chips and
mayship for over 20 years.
4. ARMs exible business model has proven
to be suitable for diferent technologies,
end products, licensing strategies and a
broad range of ecosystem Partners.
Business development
Per chip royalty
ARM Holdings plc
18
Our global markets
The majority of ARMs revenues are earned from semiconductor
companies that are based all over the world. These companies sell
their ARM-based chips to OEMs building consumer electronics, which
are also based in all major economies. The OEMs sell their products to
consumers and enterprises in every country. ARMs royalty revenues
are derived from the chips in these OEM products, and ARM therefore
benets from the growth in all economies and countries around the
world. Demand for consumer products has been growing rapidly,
especially in emerging markets such as Brazil and China.
ARM has 31 ofces in 15 countries. These ofces both support local
customers and also benet from the skills and knowledge that have
developed in certain regions. For example, our engineers in Scandinavia
are specialists in multimedia technologies such as video and graphics
processing. During 2013, ARM opened ofces inNoida, India and
Oulu, Finland.
OUR GLOBAL REACH
WHERE WE WORK
TOGETHER
NORTH AMERICA
LOCATIONS
8
EMPLOYEES
669
UK
LOCATIONS
4
EMPLOYEES
1,185
31
OFFICES AROUND
THEWORLD
348
PARTNERS IN
18 COUNTRIES
19
REST OF EUROPE
LOCATIONS
10
EMPLOYEES
355
ASIA PACIFIC
LOCATIONS
9
EMPLOYEES
624
10bn
ARM-BASED CHIPS
SOLD IN 2013
>
1,000
COMPANIES FORM
THE ARM ECOSYSTEM
BUILDING PRODUCTS
AROUND A COMMON
PLATFORM
2,833
EMPLOYEES
WORKING ACROSS
14 COUNTRIES
>
75%
OF THE WORLDS
POPULATION USED AN
ARM-BASED PRODUCT
IN 2013
ARM Holdings plc
20
STRATEGY AND KEY PERFORMANCE INDICATORS
OUR STRATEGY FOR
LONG-TERM GROWTH
ARMs strategy is for our technology to continue to gain
market share inlong-term growth markets, to increase the
value ARM receives from each device, and to develop new
technologies that can generate additional royalty revenue.
Our three growth drivers:
Increase market
penetration
ARM has achieved a more than 95% penetration of mobile
handsets. As other end markets require smarter processors,
weexpect ARM technology to increase market share in
otherapplication areas.
Building the base of licences that will drive future royalties.
Growing the number of ARM-based chips.
Increasing market penetration in target end markets.
Increase value per smart
electronic device
As consumer products become smarter they often contain
multiple ARM-based chips, increasing our royalty opportunity.
Smarter phones and TVs can generate 520 times more royalty
than a basic model.
Increasing the value that ARM receives for every
smart device sold.
Generate additional royalties
from complementary technology
ARM has introduced complementary technologies which we
believe are suitable for R&D outsourcing and can command an
upfront licence fee and an ongoing royalty.
Developing and licensing new technology to generate additional
royalty streams.
Re-investment and
shareholderreturn
ARMs nancial discipline balances the need for continued
investment to generate long-term future growth, whilst increasing
todays protability and shareholder returns.
Investing in ARMs product development and
deployment capability.
Growing normalised operating margins, EPS,
cash generation and dividends.
1
2
3
=
+
+
Read more on page 27
21
KPIs
Increase market
penetration
ARM has achieved a more than 95% penetration of mobile
handsets. As other end markets require smarter processors,
weexpect ARM technology to increase market share in
otherapplication areas.
Building the base of licences that will drive future royalties.
Growing the number of ARM-based chips.
Increasing market penetration in target end markets.
Increase value per smart
electronic device
As consumer products become smarter they often contain
multiple ARM-based chips, increasing our royalty opportunity.
Smarter phones and TVs can generate 520 times more royalty
than a basic model.
Increasing the value that ARM receives for every
smart device sold.
Generate additional royalties
from complementary technology
ARM has introduced complementary technologies which we
believe are suitable for R&D outsourcing and can command an
upfront licence fee and an ongoing royalty.
Developing and licensing new technology to generate additional
royalty streams.
Re-investment and
shareholderreturn
ARMs nancial discipline balances the need for continued
investment to generate long-term future growth, whilst increasing
todays protability and shareholder returns.
Investing in ARMs product development and
deployment capability.
Growing normalised operating margins, EPS,
cash generation and dividends.
Progress against strategy
ARM Holdings plc
22
KPI
BUILDING THE BASE OF LICENCES
THAT WILL DRIVE FUTURE
ROYALTIES
Every licence represents the opportunity for
a future royalty stream. In recent years, ARM
has added about 100 processor licences per
year to its existing base of licences. In 2013,
we signed 121 processor licences taking the
licensing base to more than 1,000 licences.
This growth in the number of licences signed
is largely due to existing customers upgrading
their ARM processor to the next generation;
existing customers choosing to deploy ARM
technology into another part of their product
portfolio; and new customers taking their rst
ever ARM processor licence.
About a quarter of the deals signed in 2013
were signed with companies taking their rst
ARM processor licence. The majority of these
new Partners are established semiconductor
companies choosing ARM technology for
the rst time. As the trend towards smarter
products gains pace, so semiconductor
companies are nding ARM technology
instrumental in helping them gain share in an
increasingly competitive marketplace.
Our Partners are planning to develop chips
for a broad range of end markets from the
simplest of microcontrollers to the most
advanced servers. These include:
internet connected consumer devices,
such as digital TVs, mobile phones and
mobile computers;
deeply embedded products, such as
microcontrollers, sensors and smartcards;
enterprise applications, such as networking
equipment, carrier infrastructure
and servers.
The future opportunity
ARM expects that its customers will continue
to re-equip their R&D teams with the
latest processors for existing product lines.
In addition, ARMs technology is becoming
increasingly relevant to growing markets such
as sensors, computers and servers, leading
to more new customers acquiring their rst
ARM licence.
ARM licences
+87
+91
+121
+110
+121
09
10
11
12
13
ARM signed 121 processor licences in 2013, taking the total number of processor licences signed to 1,062.
Number of licences signed by end market in 2013
Embedded 37%
Mobile 33%
Enterprise 12%
Home 9%
Multiple* 9%
*9% of licences were signed with companies intending
to use ARM technology in multiple end markets.
Number of licences signed by processor type in 2013
ARM7/9/11 5%
Cortex-A family 29%
Cortex-R family 7%
Cortex-M family 39%
Mali 16%
Other** 4%
**Other includes architecture and subscription licences.
The Samsung Chromebook delivers
outstanding and hassle-free performance
at an afordable price. As of May 2013,
theSamsung ARM Chromebook has led
Amazons list of best-selling laptops. It is
based on the Samsung Exynos 5 Dual
system-on-chip, which is powered by a
dual-core ARM Cortex-A15 processor
and a quad-core ARM Mali-T604 GPU.
1
Increase market
penetration
23
In 2013, ARMs customers reported more
than 10 billion chips shipped, a 20% increase
over 2012. By comparison, the industry
grew 6% in the equivalent period.* This
demonstrates ARMs increasing relevance
to equipment manufacturers as they choose
ARM-based chips over chips containing
proprietary processor designs.
ARMs total market share rose to 35%, up
from 32% in the prior year. The mobile
phone was the rst consumer electronic
device where ARM-based chips started to
be widely deployed. In 2013, ARM-based
chips could be found in more than 95% of the
worlds mobile phones. ARMs Partners sold
4.8 billion chips into mobile devices, driven
by the growth in the number of smartphones
and mobile computers.
ARM has been seeing rapid adoption of its
processor technology into markets such as
digital TVs and microcontrollers. In 2013, for
the rst time, ARMs Partners sold more chips
into non-mobile markets than into mobile
devices. Overall they sold 5.6 billion chips into
non-mobile applications.
ARM expects unit shipments and
royalty revenues to grow faster than the
semiconductor industry as ARM continues
to gain market share. Shipments of
ARM-based chips are growing most rapidly
in microcontrollers as several major
semiconductor vendors ramp into full
production, and also in mobile computing
products such as smartphones and tablets.
* Source WSTS, January 2014. Excludes memory
and analog chips.
KPI
GROWING THE NUMBER
OFARM-BASED CHIPS
Shipments of ARM processor-based chips (bn)
+3.9
+6.1
+7.9
+8.7
+10.4
ARM Partners reported the highest ever number of ARM-based chips shipped in 2013.
09
10
11
12
13
Chip shipments by end market in 2013
Mobile 49%
Embedded 28%
Enterprise 18%
Home 5%
Chip shipments by processor type in 2013*
ARM7 27%
ARM9/11 22%
Cortex-A Family 17%
Cortex-R Family 4%
Cortex-M Family 30%
*Nearly all Mali graphics processors were in chips
containing a Cortex-A family processor.
ARM Holdings plc
24
ARM HAS SEEN
INCREASED DESIGN
ACTIVITY IN ENTERPRISE
NETWORKING, AND
THE FIRST ARM-BASED
LOW-POWER BASE
STATIONS WERE
ANNOUNCED IN
FEBRUARY 2013.
KPI
INCREASING MARKET
PENETRATION IN TARGET
END MARKETS
ARM has increased market penetration into
each of its key end markets in mobile phones,
set-top boxes and digital TVs, disk drive
controllers and microcontrollers. ARM has
announced new technology developments
that will position our customers to enter
markets such as computers, servers and
medical devices.
Mobile phones >95%
For many years, mobile phones have
used ARM processor-based chips in
most of the applications processors and
baseband modems.
Enterprise networking 5%
ARM has seen increased design activity
in enterprise networking, and the rst
ARM-based low-power base-stations were
announced by Huawei and NSN in February
2013. Sales of ARM-based enterprise
networking chips are expected to gradually
ramp up over the next few years.
Digital TVs 50%
As digital TVs become smarter they are more
likely to need an ARM processor-based
chip. In a smart TV, these chips can run the
operating system and applications.
Microcontrollers 22%
The microcontroller and connected sensor
market is highly fragmented and OEMs
are increasingly requesting that their
semiconductor suppliers use a common
processor architecture. ARM is often the
choice as it is a suitable architecture that is
available to all semiconductor suppliers.
All of these target end markets have
promising long-term growth prospects
and ARMs market share gains look set to
continue as many of ARMs Partners have
announced new products in these areas.
Market penetration
Year
Mobile phones
(%)
Enterprise
networking
(%)
Digital TVs
(%)
Microcontrollers
(%)
09 >95 0 30 5
10 >95 0 35 8
11 >95 0 40 15
12 >95 1 45 18
13 >95 5 50 22
ARM has gained share in all its target end markets. Market share is calculated as the percentage
of ARM-based chips as a proportion of chips estimated to contain some form of processor technology.
Market data from Gartner, January 2014.
25
ARM value per mobile phone (indexed to 2009)
+1.00
+1.16
+1.32
+1.48
+1.69
09
10
11
12
13
ARM royalty per mobile phone has continued to increase.
KPI
INCREASING THE VALUE
THAT ARM RECEIVES FOR EVERY
SMART DEVICE SOLD
2
Increase value
per smart
electronic device
Sales of chips into smart devices such as
smartphones and high-end digital TVs
generate higher royalty revenue than basic
phones and TVs.
Typically, ARMs royalty revenue per device
can increase the smarter the device gets.
Smarter devices may generate more royalty
revenue because they may contain:
more chips than basic models;
more expensive chips than basic models;
more advanced ARM technology that
commands a higher per-chip royalty.
During 2013, the total number of
smartphones sold increased by about 50%.*
We also saw sales of ARM-based mobile
computers, such as tablets, grow to
200 million. In this period, shipments of
ARMs advanced Cortex-A family of
processor doubled to 1.8 billion.
Cortex-A processors typically command
a higher percentage per-chip royalty than
previous ARM families, which helped ARMs
dollar processor royalty revenue to grow by
19% despite the overall industry only growing
by 1%.**
ARM expects that as consumer electronic
devices become smarter they will incorporate
more chips that could be ARM technology-
based. Some of these chips may be based
on the Cortex-A family of processors,
thus generating higher royalty revenue per
device. In 2014 ARM expects that multiple
semiconductor companies will ship chips
incorporating processors designed with
its latest ARMv8 architecture. These chips
typically generate a further increase in the
royalty revenue per device.
* ARM estimates.
** WSTS, January 2014.
The Yulong Coolpad 7231 entry-level
smartphone is promoting 3G uptake
anddual sim cards in China by bringing
consumers cost-efective mobiles that
arecomparable to the worlds top
smartphones. The SoC is based on
MediaTek MT6572, which brings one of
the rst dual-core SoC with integrated
platform for the lower end of the
midmarket smartphones featuring power-
efcient dual-core ARM Cortex-A7 CPU
and ARM Mali-400 GPU.
ARM Holdings plc
26
Physical IP revenues ($m)
35.9 36.2
41.3 43.8
49.2
52.2
48.7
56.2
63.7 65.3
09
10
11
12
13
Physical IP licensing Physical IP royalty
Mali graphics number of licences signed
20
+11
+19
+17
+19
09
10
11
12
13
KPI
DEVELOPING AND LICENSING
NEW TECHNOLOGY TO GENERATE
ADDITIONAL ROYALTY STREAMS
During 2013, ARM continued to develop new
technologies that are suitable for licensing
to leading semiconductor companies, and
for generating additional royalty streams in
the future.
Multimedia IP for 3D gaming and
HDvideo
Many consumer electronic devices utilise
3Dgraphics and High-Denition (HD) video
to improve the visual experience and make
games more engaging. Mobile phones, digital
TVs and computers are familiar, and other
applications such as cars, media players and
navigation devices are emerging.
During 2013, ARM signed 19 Mali graphics IP
licences, and leading technology companies
such as MediaTek and Samsung launched
computing, mobile and consumer electronics
devices incorporating chips based on ARMs
multimedia IP. During the year our Partners
reported shipping 400 million chips containing
a Mali graphics processor, more than double
the number shipped during the previous year.
Physical IP for advanced
manufacturing processes
ARM develops physical IP for use by leading
semiconductor companies that manufacture
chips using advanced manufacturing
processes. ARM is the leading physical IP
provider and is well placed as semiconductor
companies increasingly outsource
manufacturing to ARMs foundry Partners.
During 2013, ARM saw strong licensing,
especially for advanced processes, signing
three foundry platform licences for ARMs
physical IP that will drive future royalty
revenues. In addition, ARM signed 16
licences for POP IP (pre-congured physical
IP components) which assist Partners in
implementing ARM processors. We also
received our rst royalty revenue from
physical IP used in 20nm manufacturing
process, and we created test chips at 16nm
and 14nm, which may yield royalty revenue
in2014 and beyond.
With a growing base of customers just starting
to sell their chips in high quantities, we expect
that the number of chips enabled by ARMs
physical IP and Mali graphics technology will
continue to grow in the future.
3
Generate additional
royalties from
complementary
technology
The new Samsung Galaxy Note 3 has
been developed as the ideal device to help
you stay on top of your busy life. It is based
on the Samsung Exynos 5 Octa (5420)
system-on-chip, which is designed using
the ARM big.LITTLE technology, featuring
quad-core ARM Cortex-A15 processor
running at 1.9GHz and quad-core
Cortex-A7 processor at 1.3GHz,
as well as ARM Mali-T628 MP6 GPU.
27
Number of employees at year-end
1,024 1,710
1,191 1,889
1,382
1,652
2,115
2,392
2,833 1,961
09
10
11
12
13
Number of engineers Total employees
=
Reinvestment
and shareholder
return
ARM specialises in designing innovative
technology and developing a sophisticated
community of Partners to bring that
technology to market. Our people are our
strength for designing the next generation of
technology, delivering it to our customers,
and for growing and maintaining the ARM
Partnership. ARM invests in our employees
through hiring a mix of graduates and
seasoned industry experts, developing
them and providing a supportive culture
tomaximise their capability and potential.
In 2013, ARM hired a net additional
441people. The majority of our new
hires were engineers, to increase our R&D
capability. Most of this investment was in our
processor and multimedia engineering teams
to take advantage of the opportunities for
new ARM technology in servers, computing
and3D graphics.
As a result of this investment, normalised
expenditure on research and development
rose to 148 million in 2013, representing
21% of revenues and 11% growth year-
on-year. Expenditure on research and
development under IFRS accounting was
203 million, representing 28% of revenues
and 22% growth year-on-year.
ARM also invests in the infrastructure our
engineers need to develop and test complex
technology. In 2013 we started work on
a new data centre in Austin, which will
host some of our development tools and
test software.
ARM expects to continue to invest in its
employees as we develop our engineering
capability and operational execution.
As ARMtechnology is designed into more
end markets, we expect the business to
become more protable.
KPI
INVESTING IN ARMS PRODUCT
DEVELOPMENT AND DEPLOYMENT
CAPABILITY
IN 2013, ARM HIRED
ANET ADDITIONAL
441 PEOPLE. THE
MAJORITY OF OUR
NEW HIRES WERE
ENGINEERS, TO
INCREASE OUR R&D
CAPABILITY.
ARM Holdings plc
28
ARMs business model and its exposure to
structural growth markets means that ARM
is well positioned to grow its protability,
to generate cash and to support a growing
dividend. ARM intends to cover most of its
operational costs from the licence revenues of
each new technology. This leaves the majority
of royalty revenue as prots.
ARMs nancial discipline focuses investment
in areas of maximum opportunity such
as the recruitment of more engineers to
develop the next generation of technology.
As our customers include the worlds largest
semiconductor companies, their regular
royalty payments have become a reliable cash
ow. Given our broad base of Partners and
end markets, ARM is not overly reliant on any
one company or consumer product for its
future prots and cash.
During 2013, ARM generated 344.5 million
of cash, up 29% over the prior year.
The increase in cash generation is primarily
due to the increase in revenue. Since 2004,
ARM has returned 565 million of cash
to shareholders through a combination
of share buybacks and dividends. In 2013
ARMincreased the dividend by 27% to
5.7 pence.
As royalty revenues become a greater
proportion of ARMs overall revenues, ARMs
protability and cash generation isexpected
to increase.
15.0 31.2
26.3 40.4
30.3
36.1
45.1
45.6
49.1 21.5*
09
10
11
12
13
Operating margin under IFRS Normalised** operating margin
Operating margin (%)
Normalised net cash generation
***
(m)
86.1
179.9
203.8
267.3
344.5
09
10
11
12
13
* Including exceptional items of 101.3 million.
** Normalised gures are based on IFRS, adjusted for acquisition-related charges and charges relating to amortisation of
intangible assets (other than goodwill) that have arisen on acquisitions, share-based payment costs, prot or loss on disposal
and impairment of available-for-sale investments, restructuring charges, share of results in joint venture, Linaro-related
charges and exceptional charges.
*** Normalised net cash generation is dened as movement on cash, cash equivalents, short-term and long-term deposits,
adding back dividend payments, investment and acquisition consideration, other acquisition-related payments, share-based
payroll taxes, payments to joint venture and Linaro, advance payment to the MIPS patent consortium and payments for IP
indemnity and similar charges, and deducting inows from share option exercises.
KPI
GROWING NORMALISED OPERATING
MARGINS, EPS, CASH GENERATION
AND DIVIDENDS
ARMS FINANCIAL
DISCIPLINE FOCUSES
INVESTMENT IN
AREAS OF MAXIMUM
OPPORTUNITY SUCH
AS THE RECRUITMENT
OF MORE ENGINEERS
TO DEVELOP THE
NEXT GENERATION
OF TECHNOLOGY.
29
Full Year Dividend
5.7p
+27%
IFRS Operating Margin
21%
Earnings per share (pence)
3.1 5.5
6.4 9.3
8.2
11.5
12.5
14.7
20.6 7.4*
09
10
11
12
13
Diluted EPS under IFRS Normalised** diluted EPS
Dividend per share (pence)
2.42
2.90
3.48
4.50
5.70
09
10
11
12
13
Normalised net cash generation
345m
+29%
IFRS EPS
7.4p
-35%
ARM Holdings plc
30
MAXIMI SING
POTENTIAL
31
Keeping cows healthy makes them happier and more productive. Medical device companies are
working on sensors that can monitor vital signs and create alerts if outside normal parameters.
Some of these devices are implanted or ingested so they can monitor internal levels of
chemicals and hormones. ARM-based chips can be small and energy-efcient and therefore can
reduce the overall costs, power consumption and intrusiveness of such devices. These smart
sensors are not just useful for valuable livestock, but can help people too.
More information about embedded ARM-based devices can be found
onpage 36 and also online.
ARM Holdings plc
32
Smartphones and new mobile
computing devices are creating
opportunities for innovators and
entrepreneurs
In many developed countries the penetration
rate of smartphones and mobile computers
is already very high, and replacement rates
are typically 24 years. In many fast-growing
and emerging economies the smartphone
penetration rate is much lower and
growing rapidly. 2013 was the rst year that
smartphones outsold feature phones, and
there are now over 2 billion people using
smart mobile devices.
Many of the next billion people to connect
tothe internet will live in Asia. Already
entry-level smartphones, which includes all
smartphones costing less than $150 without
subsidy, have reached price points as low
as $35, and tablets can be purchased for
less than $50. Over the next ve years, it is
estimated that entry-level smartphones will
grow at about a 20% CAGR with over
one billion forecast to be sold in 2018.
Lower cost handsets require lower cost
components, so ARM has developed very
small processors that balance the need for
capability with cost.
Mid-range smartphones are also forecast to
grow rapidly with a cumulative total of
two billion devices sold over the next ve
years. A mid-range smartphone needs to have
the same functionality as the most advanced
devices launched 1-2 years previously.
Premium mobile devices are still forecast
to grow at about a 5% CAGR, and will still
make up about 20% of the market in 2018.
Here competition will be based on the most
advanced technology, giving consumers
amazing experiences with new features
and capabilities.
To meet the needs of such a diverse market,
ARM has developed a family of processors
and graphics technology that provides
diferent levels of capability and performance,
whilst minimising size which reduces chip cost
and improves battery life.
ARMs Cortex-A family of processors is
used in almost every smartphone and tablet
computer. This includes the tiny Cortex-A5,
which is used in some Android phones and
provides sufcient computing for entry-
level smartphones costing as little as $35.
In premium mobile computers you may nd
a high-performance Cortex-A15 processor,
which provides a complete computing
experience in products such as the Samsung
Galaxy Note 3 and the HP Chromebook.
MOBILE COMPUTING
BETTER MOBILE
EXPERIENCES
JAMES BRUCE
Director of Mobile Solutions
James has led ARMs Mobile Segment Marketing
team since 2013. He and his team maintain
relationships throughout the mobile value chain,
including inuential handset OEMs, network
operators and major software developers for
mobiledevices.
Smart mobile devices are making the world a more connected
place. Smartphones and tablets are becoming more afordable,
and wireless high-speed networks are covering the majority of
the global population, connecting us all to each other, to our
lives at work, school and play, and to our digital lives. This is
enabling innovation as entrepreneurs create new products
andservices, new ways of working and new business models.
The mobile revolution is connecting a changing world.
33
In 2013 we saw the rst mobile computing
devices based on ARMs next generation
ARMv8 architecture. This introduces even
higher performance and greater power-
efciency, as well as adding faster multimedia
and improved security. We also saw the rst
consumer products based on ARMs new big.
LITTLE technology. In a big.LITTLE system
we have combined a big high-performance
processor with our most power-efcient
LITTLE processor. By ensuring that each
task or application is run on the correct
processor, devices can deliver both improved
performance and even lower power. In time
we think that many smartphones and mobile
computers will adopt both big.LITTLE
technology and ARMv8-based processors.
ARMs Mali graphics and physical IP is also
being used in many mobile computing
devices. Semiconductor companies in China
already use Mali graphics processors in
about 75% oftheir chips for mobile devices.
Beyond China, both Mediatek and Samsung
announced that they were using Mali graphics
in their chips for high-end mobile applications.
As with ARMs processor, Mali ofers a
range of scalable solutions that are being
used in $35 smartphones all the way to
$500+ smartphones and tablets. Many of
the companies that license a Cortex-A class
processor also use our physical IP
technology to help create the most efcient
implementation, and so get the most out of
their processor investment.
The increasing penetration of smartphones
and tablets is creating new opportunities for
innovators and entrepreneurs. Other devices
can now be connected and controlled via
a smartphone. A tness application such as
the Fitbit or Pebble smart watch can connect
to the internet via a smartphone. We can
use our tablets to control the thermostat in
rooms throughout the house, and check the
performance of solar panels on the roof,
even when travelling home. New businesses
and business models are being created to
ofer us information whenever we need it.
Streetline directs car drivers to the locations
of available parking spaces across a city.
Farmers and shermen can get local market
information to get the best price for their
produce, which is especially useful in rural or
developing regions. Smartphones and tablets
are helping us efortlessly to connect and
control the digital world around us.
The opportunities are huge, especially when
mobile technology is combined with smart
sensors embedded into the fabric of the
world around us, creating an Internet of
Things. These new businesses and business
models will generate jobs and wealth, helping
to make the world a more creative and
productive place.
Mobile computing via smartphone and
tablet is helping to connect everybody and
everything together, which is generating
new opportunities for businesses all over
the world. ARMs broad range of high-
performance and low-power technologies
will provide a common platform for much
ofthis innovation.
Yulong Coolpad 7231
entry-level smartphone
Entry-level smartphones, costing less
than $150, are expected to grow to over
half the market by 2018.
IN 2013 WE SAW
THE FIRST MOBILE
COMPUTING
DEVICES BASED
ON ARMS NEXT
GENERATION ARMv8
ARCHITECTURE.
THIS INTRODUCES
EVEN BETTER HIGH-
PERFORMANCE AND
POWER EFFICIENCY.
Mix of smartphones in 2018
Entry-level 1,050
Mid-range 500
Premium 350
Source: Gartner, January 2014, and ARM forecasts
ARM Holdings plc
34
ENTERPRISE INFRASTRUCTURE
INCREASING EFFICIENCY IN
NETWORK INFRASTRUCTURE
AND DATA CENTRES
Increasing capability within the
enterprise, without increasing
energyuse
When combined with the emergence
of other intelligent devices (wearables
computers and machine-to-machine
communications) becoming connected to the
network, we expect that the total amount
of data transferred and stored will continue
to grow.
An increase in data requires more networking
capacity and more capable networking
functionality across carriers, operators and
enterprises. More data also requires more
servers in data centres, especially cloud-
based providers for storage and social
networking sites.
If the technology used in current infrastructure
were to remain the same, then an increase
in capacity would require a similar increase
in energy consumption. The electricity bill
for carriers is already amongst their biggest
costs. These companies are therefore not
just looking for more performance but also
improved energy efciency.
ARMs Cortex-A9 was our rst processor
to ofer the performance and sustained
throughput to be suitable in networking
equipment or servers. Platforms based on
Cortex-A9 started shipping in 2012 and the
momentum has continued with Cortex-A15
based devices that started shipping in
2013, demonstrating the performance,
functionality and system reliability required
for these markets. The arrival of chips based
on the ARMv8 architecture broadens the
use of ARM technology into even more
enterprise applications.
Over the last few years, most of the major
chip providers for enterprise networking
andcarrier equipment have announced
ARM-based chips for this market, including
Altera, Broadcom, Cavium, Freescale, IBM,
HiSilicon, LSI, Texas Instruments and Xilinx.
In February 2013 several leading carrier
equipment providers announced ARM-based
solutions for base stations including Huawei
and Nokia Solutions Networks. In 2013
ARMs market share in carrier and enterprise
networking was 5%, with two companies
shipping in high volume. However, based on
design wins and the plans of OEMs to ramp
production of low-power equipment over
the next few years, we estimate that ARMs
share in 2018 will be in the range of 25-35%,
as outlined opposite.
CHARLENE MARINI
Vice President of Embedded Segments
Charlene joined ARM in 2004 and has held multiple
marketing roles in the Group. Today, Charlene
leadsa team that is focused on enabling the ARM
partnership and ecosystem across multiple
embedded verticals including networking,
automotive, home, general embedded and the
Internet of Things.
The growth of smart devices and the desire for users to access
information anywhere at any time is increasing the amount and
richness of content that is transmitted, processed and stored.
Over the next ve years we estimate a 12-fold increase in
mobile data trafc.
35
2018
opportunity
Chip TAM
(m)
Chip value
($bn)
Target
penetration
Mobile
Infrastructure 80 $4.5 60%
Wireline
Infrastructure 60 $2.5 30%
Corporate
Networks 940 $6.0 30%
Cable/
Broadband/
WLAN 260 $2.0 30%
Other 60 $3.0 20%
Total 1,400 $18 25-35%
ARM-based chips for the server market are
also in development. ARM and its Partners
are initially focusing on companies with
hyperscale deployments where the server
is a critical business asset. For companies
providing cloud infrastructure as a service
and web services, the server can be both a
revenue driver and a major source of costs.
For many social networking sites, the server is
just a cost; they make their revenues through
advertising or other means. For both types
of companies reducing the cost of owning a
server is key to improving their protability.
As some of the servers within these
companies have become dedicated to smaller
set of workloads, it has enabled opportunities
for semiconductor companies to develop
workload-specic chips.
By identifying a specic server workload, it is
possible to integrate many of the companion
chips into a single chip, creating a System-on-
Chip (SoC) design. Replacing data transfers
between diferent chips to transfers within
an integrated chip and adding designed-for-
purpose hardware functions dramatically
reduces power consumption and equipment
footprint. In some applications more than
90% of the energy can be saved. For the
companies ARM is targeting, this approach
delivers savings in terms of acquisition and
running costs.
During 2013, Applied Micro Circuits
Corporation announced that it had
manufactured the rst ARMv8 architecture-
based chip for servers, and Advanced Micro
Devices and Cavium, Inc. announced that
they would have ARMv8-based chips in
2014. Baidu, Inc., a leading Chinese web
services company, announced that they were
deploying the rst ARM-based storage server
in their data centre, and that the low-energy
chips would enable higher storage density and
reduce their total running costs by 25%.
For ARM technology to gain share in the
server market some critical software needs to
be ported to support the ARM architecture.
In several segments many of the applications
run on Linux, or Java which ARM and its
partners have already optimised. As ARM-
based chips become available, other software
applications will be ported and optimised.
Several leading OEMs who develop servers
have already announced that they are working
on ARM-based servers, including Dell and HP.
This development will enable ARM Partners
to start to gain share in 2014, and by 2018 we
expect to have more than a 10% share of the
server market.
Several leading OEMs who develop servers,
have already announced that they are working
on ARM-based servers including Dell and HP.
15
LICENCES SIGNED BY
ARM FOR ENTERPRISE
NETWORKING
ANDSERVERS IN 2013.
ARM Holdings plc
36
EMBEDDED COMPUTING
EMBEDDING INTELLIGENCE
EVERYWHERE
Embedded intelligence creating an
Internet of Things
In 2013, approximately 19 billion smart
microcontrollers were sold globally. As these
chips are used in awide range of end
markets they are general-purpose controllers
developed to be usable in all sorts of devices.
They can be very low cost, and in 2013, the
average selling price of amicrocontroller
wasabout $1.
In 2013, there were about 3 billion ARM-
based microcontrollers and smart embedded
chips sold. Over the last ve years much of
the growth in the embedded market can be
attributed toARM-based chips.
Many ARM-based microcontrollers used an
ARM Cortex-M class processor, and ARM
has now signed over 200 licences for this
technology, mainly for use in microcontrollers
and the new generation of Internet of Things
devices. ARM signed 47 licences for Cortex-M
class processors in 2013.
Connecting intelligence to create
anInternet of Things
Smartphones and mobile devices are
becoming the controller and the display for
the digital world around us, which is creating
opportunities for smart devices to connect
and give us more information and more
control than we have ever had before. ARM-
based smart sensors and controllers are being
integrated into a wide range of applications
from consumer electronics, to manufacturing,
transportation and agriculture.
The market for embedded computing is very
large. In 2013 there were about 16 billion
microcontrollers and smartcards sold.
Estimates for 2020 vary considerably, with
some between 30 to 50 billion network
connected devices, most of them based on
smart sensors.
Many of the products and services we use every day
are enabled by a small smart microcontroller or smart
card.Forexample, the control panel and electric motor
in a washing machine or lift controller, the remote control
for a TV, and the chip in a passport or credit card.
GARY ATKINSON
Director of Emerging Technologies, ARM
Gary is based in Cambridge, UK and spends his
timetravelling the world looking for new technology
that already has or may have a use for ARM-based
processors in disruptive, globally scalable and
impactful applications.
37
Most Internet of Things devices will have
an integrated SoC or package that contains
a microcontroller, sensor(s), and wired or
wireless connectivity. Integrating everything
together into a single chip reduces costs and
complexity. ARM is very well placed for the
Internet of Things due to a high market share
in both microcontrollers and connectivity
chips, and also because ARMs designs help
reduce the overall development cost.
Many of these smart embedded devices
will be connected to a network wirelessly.
For example, most digital pedometers and
smart watches use Bluetooth to connect to
a smartphone. ARM-based chips operate
the protocol stack in more than 75% of
wireless devices including established
wireless standards such as Bluetooth, WiFi
and emerging standards such as WiGIG
and Zigbee.
The applications for Internet of Things are
highly diverse. If every application had multiple
chip suppliers it would lead to a fragmented
market for software developers and system
designers. However, all chips that use an ARM
processor benet from a common underlying
architecture making software and software
tools reusable regardless of application,
which makes iteasier and cheaper to develop
Internet of Things devices for diferent
end markets.
In 2013, ARM acquired Sensinode Oy
based in Finland. The team from Sensinode
is developing low-power protocol stacks
necessary for wireless communications and
control between remote tiny sensors and
a hub that can collate data and manage the
sensors. ARM believes that this technology
will enable many new applications, and help
accelerate the Internet of Things.
Consumer electronics Smart watches that display more than the time (weather, alerts, text messages,
Facebook updates).
Digital pedometers that count calories burned, which can link to an app that
also records the calories eaten.
Transportation Tracking of luggage in an airport or shipping container around the world
(or even locating car keys in the home).
Inter-vehicle communications, improving automotive safety and helping enable
autonomously driven vehicles.
Infrastructure Identifying free parking spaces across a city.
More accurately tracking trains and trams to increase efectiveness of existing networks.
Smart meters, grids and appliances to use energy more efciently.
Manufacturing Tracking of critical equipment across a large site.
More efciently controlling throughput across a manufacturingprocess.
Medical Implanted or ingested sensors to monitor vital signs and create alerts if outside
normal parameters.
Implanted or ingested devices to monitor internal levels of chemicals and hormones.
Direct and accurate application of drugs when the patient needsthem.
Agriculture Remote monitoring of water and nutrient levels in the soil to control water
andfertiliser use.
Implanted medical devices for valuable livestock.
For embedded computing to achieve its
potential to create an Internet of Things
that numbers in the tens to hundreds of
billions, the technology needs to get out of
the lab and into the hands of designers to
create smart wearables, industrial and civil
engineering equipment suppliers to develop
smarter infrastructure systems, medical
specialists to invent smart devices to monitor
our vital signs, and so on. Internet of Things
systems need to become easy to innovate and
deploy and manage. ARM and our Partners
are working on making the Internet of Things
building blocks that anyone can put together,
and that can be taught at schools and colleges
to help enable the next generation of
digital entrepreneurs.
In 2013
THE AVERAGE PRICE OF
AMICROCONTROLLER
WASABOUT $1. THIS
COULDDECLINE AS
VOLUMESINCREASE.
ARM Holdings plc
38
GOVERNANCE
GOVERNANCE AT ARM
This years annual report is formed by two
documents, this Strategic Report and a
Governance and Financial Report which
contains biographies of the Board and details
on the Remuneration and other committees.
We believe that creating two documents
delivers a concise and understandable
summary, whilst also providing more
detailed information for those that want it.
Both documents can be downloaded from
www.arm.com/reporting2013 where you
can also download a copy of our detailed
Corporate Responsibility report.
The Board nurtures a working environment,
throughout the organisation, where
the highest standards of behaviour are
established, demonstrated and maintained.
This helps us to run the Group efectively
and exercise judgement to manage the risks
that we face to levels that are commensurate
with the nature of our business. There are
well-dened diferences between the roles
of the executive and non-executive directors;
and their combined contributions as an
experienced, but healthily diverse, Board add
value to the debate, decision-making and
development of strategy that are so crucial
tothe Groups success.
The Board actively considers long-term
strategy; monitors, challenges and supports
the work of the Executive Committee;
and is responsible for Board and executive
management succession. The Board has
ultimate responsibility for the Groups
performance and for overseeing the
management of risk. We seek to do this
through a strong and efective governance
system and by setting and following the
standards that we expect from all our
employees. These standards are enshrined
in ARMs values and in our approach to
corporate governance which can be found in
the Governance and Financial Report, starting
on page 6.
Risk and Risk Management
Under the guidance of Kathleen ODonovan,
who chairs the Audit Committee, during
2013 management reviewed and improved
our risk assessment and reporting framework,
with assistance from external advisers.
We need to ensure that our processes are t
for purpose and the information that comes
to the Board focuses on the principal risks
and appropriately informs our ongoing risk
appetite discussions.
Our approach to risk management and
principal risks are covered on pages 47 to
49of this document.
ARM is committed to good corporate governance, corporate
responsibility and the highest ethical standards. We believe that
efective governance is an essential contributor to our sustained
improvement in business performance. Operating with integrity
in all we do is vital to maintain the trust of investors, customers,
employees and other stakeholders. This requires leadership,
ethical behaviour and collaboration throughout the organisation.
39
Directors and succession planning
As part of our planned and continuing
evolution of the Board, there were a number
of changes in 2013 and there are some
further changes planned in 2014.
Simon Segars succeeded Warren East as
Chief Executive Ofcer on 1 July 2013.
Sir John Buchanan has requested that he
step down as Chairman of ARM, due to
a medical condition. Stuart Chambers
joined the Board as Chairman designate
on 27 January 2014 and will become
Chairman on 1 March 2014. John will
continue as an independent non-executive
director until the AGM on 1 May 2014 and
then retire from the Board.
Mike Inglis retired from the Board on
31 March 2013.
Eric Meurice joined the Board on
1 July 2013.
Philip Rowley retires from the Board in
May 2014, following his nine years service.
Board biographies and changes are covered in
detail in the Governance and Financial Report,
starting on page 4.
Employee engagement
ARM is a semiconductor IP company and the
success of our R&D and our relationships
with our customers are dependent upon
the continuing eforts of our employees.
We need our employees to be engaged
across the organisation. It is therefore vital
that all levels of staf are consulted and
involved in decision making processes.
To this end, internal conferences and
communications meetings are held regularly
which involve employees from all parts of the
Group in discussions on future strategy and
developments. Furthermore, employee share
ownership is encouraged and all employees
are able to participate in one of the Groups
schemes to encourage share ownership.
Diversity
After the changes referred to above, the
Board will comprise three executive directors,
the Chairman and ve non-executive
directors. Within this there are eight men
(80%) and two women (20%) which is
broadly in line with the gender diversity of
ARMs workforce as a whole.
Ethics and values
All directors and employees are required
to act fairly, honestly and with integrity and
to demonstrate that they have read and
understand ARMs Code of Business Conduct
and Ethics, a copy of which is published on
the corporate website at www.arm.com.
Our updated Human Rights Policy is now
incorporated into our Code of Business
Conduct and Ethics.
Corporate responsibility
Full details of our CR strategy and achievements
can be found in the main CR report
www.arm.com/reporting2013 and a summary
of highlights from the year are included in the
CR section of this Strategic Report.
Investor relations
The Board makes considerable eforts to
establish and maintain good relationships
with shareholders and the wider investment
community. There is regular dialogue
with institutional investors during the year
other than during close periods. The main
channel of communication is through the
Chief Executive Ofcer, the Chief Financial
Ofcer and the VP of Investor Relations.
Contact details for the investor relations team
can be found on the inside back cover of
this report.
References:
See Risk management and principal risks in this Strategic Report.
For more on ARM values see the CEO Vision in this Strategic Report.
Diversity of the Board
Men 80%
Women 20%
Diversity of the Company
Men 83%
Women 17%
Diversity of Senior Managers*
Men 90%
Women 10%
* Staf with job grades 712
consisting of 136 of 2,833 employees.
ARM Holdings plc
40
Total directors pay
In line with ARMs long-standing commitment to ethical values and culture, our aim is to ensure that remuneration policies and practices drive
behaviours that are in the long-term interests of the Group and its shareholders. Pay for performance and no reward for failure continue to
be key principles. At the same time, pay and benets must be at a level that will attract, retain and motivate high-calibre people with the skills
necessary to achieve our goal of sustained growth in corporate performance.
We operate in a global market, with the majority of our revenues being earned from companies located outside the UK and with more than
half our employees being based outside the UK. The Groups continuing strong performance is due principally to the proven abilities of our
executive team.
Director
Total amount
of salary and fees
All taxable
benets
*
Bonus payments
**
2013 2012 2013 2012 2013 2012
Executive
Simon Segars**** 400,000 280,000 73,186 93,284 543,454 370,605
Tim Score 415,000 400,000 26,031 25,178 599,374 529,436
Mike Muller 285,000 275,000 14,940 15,087 403,718 349,428
Warren East (retired 30 June 2013) 250,000 490,000 17,041 15,087 622,617
Mike Inglis (retired 31 March 2013) 71,250 280,000 11,293 14,692 355,781
Tudor Brown (retired 3 May 2012) 77,586 9,741
Total 1,421,250 1,802,586 142,491 173,069 1,546,546 2,227,867
Non-executive
Sir John Buchanan (appointed 3 May 2012) 390,000 258,879
Andy Green 55,000 52,000
Larry Hirst 55,000 52,000
Eric Meurice (appointed 1 July 2013) 27,500
Kathleen ODonovan 70,000 65,000
Janice Roberts 61,399 58,314
Philip Rowley 70,000 65,000
Doug Dunn (retired 3 May 2012) 62,069
Young Sohn (retired 31 December 2012) 59,906
Total 728,899 673,168
Total 2,150,149 2,475,754 142,491 173,069 1,546,546 2,227,867
* All the executive directors receive family healthcare and annual travel insurance as part of their benets in kind. In addition, Tim Score has the use of a company car with fuel benet and
Warren East, Tudor Brown, Mike Inglis and Mike Muller received a car and petrol allowance. Simon Segars receives living 61,283, transportation and other allowances as part of his
placement in the US. Warren East, Mike Inglis and Tudor Brown received an additional cash allowance in place of Group pension contributions that can no longer be contributed in a
tax-efcient way.
** The bonus payments above represent the full bonus earned during 2013. According to the terms of the DAB Plan, 50% of this bonus is not paid in cash, but is deferred and becomes payable
in shares after three years. Details of the awards made in February 2012 in respect of these deferrals are detailed above.
*** These include gains made by Tudor Brown, Mike Inglis and Warren East on LTIP and DAB plans on their retirements.
**** For the rst half of 2013, Simon Segars salary was 300,000. Following his appointment to CEO on 1 July 2013, his salary increased to 500,000, resulting in an average for the year
of 400,000.
GOVERNANCE
REMUNERATION SUMMARY
41
Money and other assets receivable for
periods of more than one nancial year
***
All pension-
related benets
Total
2013 2012 2013 2012 2013 2012

1,207,360 3,319,547 44,000 30,800 2,268,000 4,094,236
1,727,783 4,783,187 44,156 42,560 2,812,344 5,780,361
1,193,633 3,276,928 32,148 31,020 1,929,439 3,947,463
3,123,688 5,532,865 25,000 49,000 3,415,729 6,709,569
1,680,367 3,341,919 7,125 28,418 1,770,035 4,020,810
1,380,904 10,167 1,478,398
8,932,831 21,635,350 152,429 191,965 12,195,547 26,030,837
390,000 258,879
55,000 52,000
55,000 52,000
27,500
70,000 65,000
61,399 58,314
70,000 65,000
62,069
59,906
728,899 673,168
8,932,831 21,635,350 152,429 191,965 12,924,446 26,704,005
42
ARM Holdings plc
ARM is working with Literacy Bridge to reach 40,000 mothers in
Ghanatohelp improve maternal health (pre and post natal).
SHARING
KNOWLEDGE
43
ARM Holdings plc
44
SUSTAINABILITY
DELIVERING A SOCIAL IMPACT:
THROUGH OUR TECHNOLOGY,
OUR COMPANY AND OUR PEOPLE
Our ambition is to address global challenges,
achieve lasting impact and connect our
charitable partnerships to our long-term
business goals. Our approach is to:
work on long-term, strategic partnerships
with charities;
use external expertise to dene the areas
of greatest potential;
co-ordinate and drive collaboration
between the projects we support;
Sustainability and Corporate Responsibility
(CR) are an important part of ARMs
business. Our products are focused on
energy-efciency and our business model
is founded on partnership. Weare one of
a handful of companies whose technology
reaches, from the billionaire to the subsistence
farmer. Together, these factors add up to
a great opportunity for ARM to achieve a
positive global impact.
* World Bank report of 2012 on mobile phone use, Information and Communications for Development 2012: Maximizing Mobile.
There are four principal areas to ARMs CR programme:
Our people across the world make the
Company successful. Our Sustainability
and CR activities help engage and support
them around the broader benets of ARM
technology whilst providing volunteering
opportunities that can really challenge
their skills.
Responsible corporate behaviour starts
with engagement and support from the
most senior team. The Board sets the tone
and receives an update on objectives and
progress twice a year. The CR programme
is then supported by processes, practices
and individuals throughout the business.
We support innovative charitable projects
that can help transform our future.
These range from improving health
or agriculture practices in developing
economies to helping young children in the
UK learn how to write computer code.
We want to help our local communities.
We are committed to encouraging our
staf to put their skills to the service of
the community, and for ARM to provide
support to help strengthen the fabric of
the societies in which it operates.
ARM technology now reaches around 75% of people in the
world*, making our products amongst the most used, and
useful, in the world. Now we are looking at how we can reach
further, supporting projects where ARM technology and the
ARM ecosystem can be transformative.
45
Our people
ARMs success relies upon a motivated,
innovative and highly skilled workforce
working in an efcient, friendly working
environment. Maintaining this is our aim.
Treating everyone equally is an important
partof our approach, so we provide the
samebenets to everyone globally.
We encourage a culture of open and
honest communication at all levels of the
organisation. There are regular opportunities
for employees to provide feedback such
as the Global Employee Survey and our
open door policy for discussions with the
executive team.
Emphasis is placed on continuous learning and
development. We use a blend of education,
reection, feedback and direct experience as
well as formal and on-the-job training.
Our charity fundraising and volunteering
programme, Team ARM, encourages
teamwork and engagement with ARMs CR
areas of interest and strategic charity partners.
We are investing more in Team ARM in 2014
to deliver a wider range of opportunities
for employee engagement in everything
from charity hackathons to mentoring
young engineers.
ARM nished 2013 with 2,833 established
employees, an increase of 18%, in 31 ofces
across 15 countries. Staf turnover dropped
from 8.0% to 6.8%.
In 2013 we ran 38 internal conferences,
bringing together a high percentage of our
employees. We run a Global Graduate
Conference and last year 88% of the years
graduate intake took part in the week,
supported by 70 senior staf from across
the business. Maintaining a global culture
and unity of purpose is critical and we
invest accordingly.
Our responsible behaviour
ARMs business model means that the impact
of our operations on the environment,
human rights issues and local communities
is low. The scale and potential of our
business ecosystem and technology to make
a productive contribution to sustainability
is high. We are committed to reducing
any environmental impacts we have whilst
maximising the benecial aspects of our
business model and products.
To help us understand where our risks,
responsibilities and opportunities lie, ARM
is a member of United Nations Global
Compact (UNGC) LEAD. LEAD is a group
of 53 multinationals working with the
UN towards a more sustainable world by
implementing their Blueprint for Corporate
Sustainability Leadership. LEAD companies
were chosen out of the 7,000 UNGC
members because of their history of
engagement with the UN and commitment
to CR. ARM is represented on both the
global LEAD and UK networks advisory
boards, keeping us in touch with our peers
and informing how we can contribute to
sustainability in our immediate operations, our
ecosystem and more broadly.
In 2013 we sponsored the creation of a UN
Climate and Energy Action Hub to enable
new business partnerships on environmental
projects. The hub now has 43 organisations
involved, working together to scale up climate
and energy eforts. As part of the project,
ARM is supporting research into the potential
for smarter appliances to consume less energy
and reduce peaks in power consumption.
Carbon reduction is an issue that afects
everyone. Despite independent assessment
of ARM as an environmentally low-impact
business, ARM has taken part in the Carbon
Disclosure Project (CDP) for the past
three years. We have been using the CDP
framework to help us improve the reporting
and management of our carbon impacts.
We achieved a 42% improvement on our
2012 score this year, placing us in Grade C.
We have made steady progress towards
our corporate environmental goal for
energy use and remain committed to our
carbon emission reduction targets for a
30% reduction in intensity by headcount by
2020. At the end of 2013 we had achieved
areduction of 18%.
Our energy intensity based on kWh per
employee has decreased by 19% globally
based on our 2009 baseline. This has been
achieved through our commitment to better
energy performance from our buildings
alongside improved utility of our estate.
Please refer to the Governance and Financial
Report page 24 for methodology and
further data.
Human rights
There is growing interest worldwide in the
issue of the impact of business on human
rights. Reecting this, ARM has worked
this year with Shift, a specialist non-prot
organisation working on business and human
rights, to understand more about this agenda
and its key guidelines, the UN Guiding
Principles on Business and Human Rights.
We are condent that our risk in this area
is low, but no company can aford to be
complacent. We have therefore adopted
a general Human Rights Policy, in addition
to related existing policies including those
on conict minerals, business ethics and
discrimination. The new Policy underlines
our commitment to avoiding adverse impact
on human rights in the way we conduct
our operations.
ARM Holdings plc
46
Our support for innovation
ARM believes that business has an important
role to play in charitable work and addressing
global sustainability issues. It is expected that,
following the 2015 Millennium Development
Goals, the post 2015 United Nations
Sustainable Development Goals will
include the role of business as a key enabler.
We believe that the technology sector has a
great deal to ofer.
When working with charities, companies
are unencumbered by many of the
constraints faced by charitable foundations
and governments. We have an opportunity
to bring charities and businesses together,
looking at the bigger picture across multiple
issue areas to develop new ideas that can
deliver real benets. Companies are able to
take more risk and try out ideas that may not
work; but this is a necessary part of research,
development and entrepreneurship, subjects
that are very close to ARM.
In the past year, ARM has helped launch
some exciting new initiatives. In early 2013,
ARM became the rst major sponsor of
Code Club, a non-prot organisation helping
primary school children learn computer
coding. ARMs early support, taking a leap
of faith in the founders vision, led to the
expansion of the team from two part-time
founders to four full-time and two part-time
members of staf. We saw the potential
for the idea to scale and supported the
entrepreneurial spirit of the two co-founders.
ARM employees run 15 clubs and there are
now a total of over 1,500 clubs across the UK
supporting 22,000 children. At the time of
writing, 100 new clubs are started each month
and next year ARM will be helping Code Club
deliver more regional support with a goal of
reaching 25% of all primary schools by the
end of 2015. We will also be working with the
founders to help take the Code Club model
worldwide, using ARM locations around the
world to help start new Code Clubs.
Literacy Bridge uses Talking Book
technology designed to provide those living
in extreme poverty with education on health
and agriculture that can reduce maternal
and child mortality, hunger and chronic
malnutrition. ARM has been working with
Literacy Bridge to develop a long-term
strategy aiming to empower the worlds
poorest families. In 2013, we partnered with
UNICEF in Ghana on a major 18-month
project that will allow Literacy Bridge to prove
their model at a scale of 40,000+ people.
This is a critical milestone as the majority of
projects fail after the pilot stage.
UNICEF and ARM have delivered the funding
for the maternal health component of the
project. ARM suggested the inclusion of
Literacy Bridges prior work on agriculture,
which was outside the remit of the UNICEFs
project, and provided the additional support
needed. This is an example of a companys
freedom to look at the big picture, and
across diferent issue areas, something that
is challenging for sector-focused charities
and donors.
Initial data suggests that educational
information from Literacy Bridge can help
people achieve a 48% increase in their crop
yield. For a subsistence farmer this increase
is life-changing. In a small health trial in Jirapa
District, people adopted 90% of applicable
health messages from the Talking Book.
In 2014, ARM will continue its support for
Literacy Bridge, focusing on its R&D eforts
to use ARMs Cortex M0 within a new chip
that will deliver a signicant reduction in
manufacturing costs and power consumption
of the technology.

Helping our local communities
ARMs approach to local community support
is two-fold; to support activities that impact
on our employees directly, and to help in
areas of need that are often neglected.
We work closely with local charities to advise
us on where our support is most needed and
can have the greatest impact.
ARM has been an active supporter of the
community local to its Cambridge head ofce
ever since its foundation. Now, as a global
company, it is important that we are able
to support our local communities in all of
our locations.
We recognise that the needs of every
community are diferent and so we build
relationships at a local level and encourage
each ofce to allocate support to local
charities or community outreach projects.
Our aim is to help strengthen the fabric of
society in the communities around our ofces.
ARM is now working with community
leaders to understand the most pressing local
needs, whether this is one-of emergency
support or long-term help for the areas of
greatest deprivation.
This is a programme that we will be focusing
on in 2014. We are condent ARM can
make as big a contribution to our local
communities as we have in our strategic
charitable partnerships.
There are more examples of our charitable
partnerships, as well as data on all our material
issues, in the full CR report. We haveself-
assessed the CR report at GRIlevel B
and it can be found at www.arm.com/
reporting2013.
SUSTAINABILITY CONTINUED
THERE WERE SO MANY
THINGS WE DIDNT KNOW
ABOUT RAISING HEALTHY
CHILDREN BUT DUE TO THE
TALKING BOOK, WE LISTEN
AND LEARN HEALTHY WAYS
TO RAISE OUR CHILDREN.
Nadowli Kuubataanono, traditional birth attendant in the
Jirapa District, Ghana.
47
RISK MANAGEMENT AND PRINCIPAL RISKS
IDENTIFYING AND
MANAGING RISKS
At a strategic level, our risk management
objectives are to:
identify ARMs most signicant strategic
and operational risks;
develop plans to manage the risks
identied, with a clear owner assigned to
each risk;
ensure that business growth plans are
properly supported by an efective
risk infrastructure;
help executives improve the control and
co-ordination of risk taking across the
business; and
ensure ARMs assurance activities are
focused on the organisations key risks.
Strategic risks are managed through a number
of regular forums where key risks are
discussed and existing management activities
challenged. These include regular sessions
with both the Holdings Board and the
senior management.
Operational risks are managed in accordance
with the ARM Management System (AMS),
which denes key policies and processes
across the organisation. ARM has a number
of sources in place to provide assurance over
compliance with the AMS.
Risk review process
Strategic and operational risks are identied,
prioritised and reported on within the
Corporate Risk Register (CRR). The CRR
includes a description of the overall risk, the
risk factors, the risk owner, the operational
response and management activities including
sources of assurance and the residual
likelihood and impact.
Risks are identied through senior
management discussion (top-down) and
regular reporting from every part of the
business (bottom-up). Relevant risks are
entered onto the CRR and given an owner
at senior management level. ARMs ongoing
operations and internal controls may mitigate
the likelihood and/or the impact of the risk.
The residual likelihood and impact of the risk
is assessed to identify any further mitigating
activities that may be required.
The CRR is monitored by the Risk Review
Committee, chaired by Mike Muller, Chief
Technology Ofcer. The Risk Review
Committee meets on a quarterly basis to
review the CRR. Each risk owner is required
to review and demonstrate that risks are
being appropriately managed. A more detailed
explanation of the Risk Review Committees
activities is included in the Governance and
Financial Report on pages 19 to 20. The Audit
Committee is responsible for overseeing the
risk management framework and ensuring
that the risk management process is operating
efectively. The Executive Committee and the
Board review the CRR on a regular basis.
Internal audit assurance
ARMs internal audit function develops an
annual internal audit plan designed to provide
assurance that the management activities
for the key risks identied are designed and
operating efectively.
ARM has a robust risk management process in place to
identifykey risks; assign ownership for each risk at a senior
management level, identify both existing and planned
management activities against each risk; assess the residual
likelihood and impact of each risk; and to ensure ongoing
monitoring and reporting of each key risk.
ARM Holdings plc
48
2. A competitors product or
technology may lead to loss of
marketshare
ARM faces competition both from large
semiconductor companies and from smaller
IP companies. Intel is developing x86-based
processors for use in PCs and servers, and is
looking to deploy these chips in markets such
as tablets, mobile phones and embedded
markets, including the Internet of Things.
There are many small semiconductor IP
companies competing with ARM, especially
in emerging markets where there are
lower barriers to entry. Any success by our
competition would result in a reduction in
royalty revenue to ARM.
Mitigation
ARM works closely with leading
semiconductor companies who together have
a long history of developing cost-efcient,
low-power chips. Together we have created
a highly competitive market and OEMs have
enjoyed a wide choice of chips at diferent
capabilities and pricing.
ARMs established ecosystem includes many
software and chip design engineers who
understand how to build ARM-based chips
and write software optimised for ARM
processors. ARM has enabled thousands
of companies to ofer products that are
compatible with and support other ARM-
based technologies, reducing the complexity
and cost of developing an SOC or product
around an ARM processor. ARM invests in
this ecosystem to help further reduce the total
cost of developing and maintaining a portfolio
of ARM-based chips.
3. ARM may face challenges managing
its business in new geographic markets
Chinese semiconductor companies have
become responsible for an increasingly
signicant proportion of ARMs revenues,
and we expect that proportion to continue to
grow. India has had a strong semiconductor
presence for many years, although revenues
from that region are smaller. ARM has little
knowledge and experience of the markets in
Russia, South America and Africa, which have
diferent political cultures to the markets we
are established in. In all these regions local
governments are supporting and funding local
technology companies, which could give rise
to new competitors and new markets.
Mitigation
ARM has had ofces in both China and India
for many years, and 19% of our workforce is
split between these two countries. We have
regional development ofces to support the
other regions, and combined with regular
visits by management, we track opportunities
and meet local decision makers.
See page 18 for a global overview of
ARMs business.
4. We could sufer signicant damage
to our brand and reputation
ARMs technology is used in billions of
consumer and enterprise products, many of
which are depended on by individuals and
businesses, and are used to store, manage
or transmit huge amounts of personal,
condential or proprietary information.
Afault or bug associated with one of ARMs
products could damage ARMs corporate
reputation and lead to a loss of brand value.
Mitigation
ARM has rigorous quality assurance, and
verication and validation processes to reduce
the risk of faults or bugs. ARM regularly
gathers feedback from its customers
and Partners to determine whether the
perception of ARM is changing, and that
corrective action can be taken early if
customers are becoming less satised with
our products or behaviour.
ARMs principal risks and uncertainties are
outlined below
1. A change in the industry business
dynamic may lead to loss of market
share and/or reduction in value of IP
We work in the highly competitive and fast
moving semiconductor industry. Many of the
other companies within this industry are well
resourced and may consider processor and
physical IP as attractive markets for them to
enter with competitive products. Start-up
and open source technology initiatives could
develop competing or alternative ways for
companies to design their chips. The cost
of developing software in many end market
applications is increasing, which may also
result in new technologies that might not
suit ARMs current product portfolio or skill
set. We may not be able to adapt to these
changes, resulting in a loss of market share.
Mitigation
At the end of 2013 ARM had approximately
350 Partners, and over 1,000 companies
in the ARM Connected Community.
These companies depend on ARM
technology for part of their business, and
we meet with thought leaders within our
industry and related sectors to discuss their
business context and strategy. ARM is well
positioned to detect any change within the
semiconductor industry, and react accordingly.
ARMs management team reviews our
strategy and our long-term product
development plans to test that we are
developing the technology to meet the future
needs of the industry.
See pages 1417 for an overview of
the industry and ARMs market position.
RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
VISION FOR THE FUTURE
49
7. ARM may have to defend itself
against third-parties who claim that we
have infringed their proprietary rights
Whilst we take great care to establish and
maintain the integrity of our products, we
may have to protect our intellectual property
or defend our technology against claims that
we have infringed others proprietary rights.
From time to time, third-parties, including
our competitors, may assert patent,
copyright and other intellectual property
rights to technologies that are important
to our business. Any infringement claim
brought against us or our Partners, could
result in substantial costs and divert
managements attention.
Any assertion of intellectual property rights
by a third-party against our technology could
result in our licensees becoming the target of
litigation and we may be bound to indemnify
such licensees under the terms of our
licence agreements.
Mitigation
We focus on designing and implementing
our products without the use of intellectual
property belonging to third-parties, except
under strictly maintained procedures and with
the benet of appropriate licence rights. In the
event that a third-party successfully proves
that it has intellectual property rights covering
a product that we have licensed to customers,
we will take steps to either purchase a licence
to use the relevant technology or work
around the technology by developing our
own solution so as to avoid infringement of
that third-partys intellectual property rights.
From time to time ARM enters into
cross-licensing agreements and non-assert
agreements with leading technology
companies. In 2013, ARM was part of a
consortium of companies that acquired rights
to the patent portfolio of MIPS Technologies
Inc., which removes the potential risk
of future litigation from those patents.
In early 2014, ARM acquired the patent
portfolio outright.
See page 55 on the nancial impact
of ARM acquiring the patent portfolio
of MIPS.
8. Signicant concentration in our
customer base may increase the risk
to ARMs growth ambitions
Changes in technology trends and/or economic
conditions may cause companies within the
semiconductor industry to consolidate further,
thereby reducing the number of customers
that ARM may sell its technology to and
potentially making ARM more dependent on
a smaller number of customers. Any change
to the product plans of a major customer may
have an impact on the technology that ARM
was developing, and so result in both additional
costs, and a delay in revenues.
Mitigation
We have licensed our processor technology
to approximately 350 Partners, about half
of which are now paying royalty revenues.
Much of our royalty and licence revenues
are generated by the top 20 semiconductor
companies. ARM typically develops 23 new
processors each year, reducing the impact of a
customer asking us to change the specication
of a product.
9. Assumptions that fundamentally
underpin ARMs valuation may be
undermined, leading to a sudden
depreciation of share price
ARMs valuation is based on the nancial
markets view of our growth opportunity
and the value of ARMs assets. Revisions to
assessments of our future markets could
impact estimated cash ows. Changes to
assumptions about the value of ARMs assets,
including goodwill, could lead to the
impairment of certain of ARMs assets.
Mitigation
At least once every year, we present to the
nancial markets the latest forecasts on the
growth of the semiconductor industry and
ARMs view of our opportunity to win share
within that market.
5. ARMs technology may not meet
customer requirements in the future
The technology industry is characterised
by rapid change, as new innovation
continually improves the way that chipsets
are designed and manufactured, and how
they are deployed by OEMs and used by
consumers. A change in the end market
that does not favour ARM or our business
model could occur, requiring ARM to either
change its investment approach or risk losing
share. Either way, ARM could become less
protable in the future as a result of such a
market change.
Mitigation
ARM has well-established product
specication and development processes,
and we work with thought leaders within
various industries to ensure our technology
issuitable for next generation digital products.
We spend some of our R&D budget on
longer term programmes to investigate
how new scientic developments might
impact the industry, and how technologies
in adjacent markets might impact ARM and
our ecosystem.
6. ARMs current people, processes
and/or infrastructure may not be
adequately scalable to meet our
growth ambitions
We have grown our headcount rapidly over
the last few years, as we have hired more
engineers to develop the next generation of
processors and the supporting technology our
customers need. If this growth rate continues
we may nd our existing organisational
structure, culture and infrastructure cannot be
adapted to meet the greater number of staf.
Mitigation
Our multi-year planning process includes
product development reviews alongside
long-term investment plans for recruitment,
training, facilities and IT. We also hold regular
surveys of employees to measure job
satisfaction and engagement levels across the
organisation, and in sufcient detail to identify
early problems with specic teams, locations
or departments.
See pages 32 to 37 for an overview
of ARMs main markets.
ARM Holdings plc
50
51
MADE
TO MEASURE
3D printers, and other advanced manufacturing techniques, are enabling the creation of
bespoke, solid and usable 3D objects. This reinvention of manufacturing is enabling new types
of products and prototypes to be efciently created. 3D printers need smart electronics to
control them, and ARM-based chips are an ideal choice.
Our Vision Our Performance Our Commitment Our Financial Review
52
ARM Holdings plc
ARMs goals are to build a business that will
grow revenues over an extended period
and balance increasing investment in product
development with growth in earnings and
cash generation. In 2013, we achieved these
objectives once again, further strengthening
the platform for future growth.
Figures referred to as normalised in
this narrative, exclude charges relating to
amortisation of intangible assets (other than
goodwill) that have arisen on acquisitions;
share-based payment charges relating to the
issuance of ARM share-based remuneration
to employees of the Group; acquisition-
related charges; Linaro-related charges; ARMs
share of the results in joint venture; changes
in the value of and prot on disposal of
available-for-sale investments; and exceptional
items. Reconciliations of normalised costs
and expenses to IFRS costs and expenses are
shown in tables accompanying this narrative.
We believe that normalised gures allow for
clearer comparisons of performance from
year to year, and enable users of the accounts
to better assess the underlying nancial
performance of the Group.
Selected nancial data/IFRS
2013
m
2012
m
2011
m
2010
m
2009
m
Revenues 714.6 576.9 491.8 406.6 305.0
Cost of revenues (39.3) (31.9) (27.7) (26.1) (25.5)
Gross prot 675.3 545.0 464.1 380.5 279.5
Total operating expenses before exceptional items (420.5) (336.9) (315.2) (273.5) (233.9)
Exceptional items (101.3)
Total operating expenses after exceptional items (521.8) (336.9) (315.2) (273.5) (233.9)
Prot from operations 153.5 208.1 148.9 107.0 45.6
Operating margin 21.5% 36.1% 30.3% 26.3% 15.0%
Investment income, net 13.1 13.6 8.0 3.1 1.6
Share of results in joint venture (4.0) (0.7)
Prot before tax 162.6 221.0 156.9 110.1 47.2
Tax (57.8) (60.3) (44.3) (24.1) (6.8)
Prot for the year 104.8 160.7 112.6 86.0 40.4
Dividends paid 68.9 51.8 42.2 34.3 29.0
Capital expenditure 17.0 33.2 13.0 7.4 6.9
Research and development expenditure 202.9 166.3 165.4 139.7 112.2
Cash, short- and long-term deposits 713.5 527.6 429.0 291.8 141.8
Shareholders funds 1,311.4 1,206.1 1,061.2 894.9 738.7
Employees at end of year (number) 2,833 2,392 2,116 1,889 1,710
CHIEF FINANCIAL OFFICERS REVIEW FOR THE FUTURE
OUR FINANCIAL STRATEGY
This review discusses the Groups results against our key
nancialperformance indicators and provides an overview of our
nancial strategy, including how we intend to grow shareholder
returns over the medium term and our approach to treasury
andtax planning.
53
Normalised costs and expenses reconciled toIFRS costs and expenses
Normalised
m
Share-based
payments
m
Intangible
amortisation
and acquisition-
related charges
m
Impairment
of investments
net of prot
on disposals
m
Exceptional
items
m
Linaro-related
charges
m
IFRS
m
2013
Cost of revenues 37.2 2.1 39.3
Research and development expenses 148.3 45.1 9.5 202.9
Sales and marketing expenses 76.7 12.1 0.6 89.4
General and administrative expenses 101.5 14.7 1.5 3.5 7.0 128.2
Total operating expenses before exceptional items 326.5 71.9 11.6 3.5 7.0 420.5
Exceptional items 101.3 101.3
Total operating expenses after exceptional items 326.5 71.9 11.6 3.5 101.3 7.0 521.8
2012
Cost of revenues 29.8 2.1 31.9
Research and development expenses 134.0 25.8 6.5 166.3
Sales and marketing expenses 64.3 7.7 0.9 72.9
General and administrative expenses 85.9 9.8 1.4 0.6 97.7
Total net operating expenses 284.2 43.3 8.8 0.6 336.9
Growing revenues
During 2013, ARM achieved record dollar
revenues of $1,117.7 million, an increase of
22% over the previous year. 2013 sterling
revenues of 714.6 million were up 24%
year-on-year.
Licensing revenues reached new highs as more
semiconductor companies chose to deploy
ARM technology in their chips. During the year
we signed 121 licences with 72 semiconductor
companies, with 30 companies acquiring their
rst-ever ARM processor licence. Total dollar
licensing revenues in 2013 were $447.9 million,
up 32% year-on-year.
Since 2009, dollar licensing revenues have
grown at a compound annual growth rate
(CAGR) of 29%. This growth rate has been
driven by ARM technology becoming suitable
for a wider range of end markets, which has
enabled existing customers to take ARM
technology into new areas and encouraged
new customers to select an ARM processor
for their chip. We expect that ARMs licensing
revenue will continue to grow, albeit at a
more moderate rate, over the medium term.
We also saw record royalty revenues in 2013,
generated from the sale of more than 10 billion
ARM-based chips. Since 2009, dollar royalty
revenues have grown at a CAGR of 23%,
outperforming the semiconductor industry by
10-20% per annum. We expect our growth
will continue to outpace the semiconductor
industry, driven by market share gains and
the trend for modern devices to use higher-
value ARM technology. In particular, we see
opportunities coming from the continued
adoption of smartphones around the world;
growth in mobile computing; the deployment
of ARM processors in servers and enterprise
networking equipment; and the emergence of
the Internet of Things.
A comparison of revenues by revenue stream
between 2013 and 2012 is shown in note 2 to
the nancial statements.
Delivering efciency
To underpin growth in our revenues, we
will continue to expand our employee base
through increased investment in research and
development, sales and marketing, and our
business infrastructure. Over the years, ARMs
revenues have grown more quickly than
costs, giving rise to an increase in normalised
operating margin from 31.2% in 2009 to
49.1% in 2013. Over the same period, IFRS
operating margin rose from 15.0% to 21.5%.
Developing new technology
As semiconductor technology becomes more
complex, the cost of designing chips and
microprocessors increases. This trend benets
ARM in that it encourages our customers to
outsource some of their technology needs;
it also means that each generation of ARM
technology requires more development efort
than the last. At 31 December 2013, ARM
employed 1,961 engineers, a 19% increase
in the year (2012: 1,652). This represented
69% of ARMs total employees (2012: 69%).
Normalised research and development
expenditure in 2013 was 148.3 million (IFRS:
202.9 million), compared with 134.0 million
in 2012 (IFRS: 166.3 million), with the
increase reecting our ongoing investment in
new technology development.
In the year to 31 December 2013, ARM led
210 patent applications worldwide, bringing
the total number of patents owned by ARM
to approximately 3,500.
ARM Holdings plc
54
CHIEF FINANCIAL OFFICERS REVIEW CONTINUED FOR THE FUTURE
The following table shows non-GAAP measures used in this report; including reconciliations from the IFRS measures. They exclude
acquisition-related charges; share-based payment costs and related payroll taxes; restructuringcharges; prot on disposal and impairment
of available-for-sale investments; share of results in joint venture; Linaro-related costs; and exceptional items.
2013
m
2012
m
2011
m
2010
m
2009
m
Prot from operations
(per income statement) 153.5 208.1 148.9 107.0 45.6
Intangible amortisation and acquisition-related charges 11.6 8.8 6.4 11.4 16.2
Share-based payment costs and related payroll taxes 74.0 45.4 57.7 41.9 24.7
Restructuring charges (0.4) 8.4
Prot/loss on sale/impairment of investments 3.5 0.6 1.8 0.2
Linaro-related charges 7.0 6.9 4.4
Exceptional items 101.3
Normalised prot from operations 350.9 262.9 221.7 164.3 95.1
Normalised operating margin 49.1% 45.6% 45.1% 40.4% 31.2%
Investment income, net 13.1 13.6 8.0 3.1 1.6
Normalised prot before tax 364.0 276.5 229.7 167.4 96.7
Tax (per IFRS income statement) (57.8) (60.3) (44.3) (24.1) (6.8)
Tax impact of above charges (15.6) (11.0) (14.2) (17.0) (19.1)
Normalised prot after tax 290.6 205.2 171.2 126.3 70.8
Normalised diluted EPS (pence) 20.59 14.70 12.45 9.34 5.45
IFRS diluted EPS (pence) 7.43 11.51 8.19 6.36 3.11
Supporting our growth
ARM continues to invest in our nance, IT,
HR and legal teams to ensure that we have
a robust infrastructure to support growth.
In the year to 31 December 2013, ARMs
normalised general and administrative costs
were 101.5 million (IFRS: 128.2 million),
compared with 85.9 million in 2012 (IFRS:
97.7 million). As well as increasing our
research and development capacity, we
invested in our teams that support the
deployment of ARMs technology and in the
development of the organisation.
Paying our taxes
ARMs tax strategy is to enhance shareholder
value by minimising its tax liabilities through
the use of legitimate tax exemptions and
tax reliefs. Many governments encourage
innovation by ofering tax incentives to
companies that develop new technologies.
ARM is committed to paying the correct
taxes in each relevant jurisdiction and follows
a policy of full disclosure in its dealings with
the tax authorities worldwide. The Board has
oversight of ARMs tax strategy and regularly
reviews key developments that may inuence
the Groups global tax position.
This includes approximately 500 patents
acquired from MIPS Technologies, Inc in
January 2014.
Nurturing the ecosystem
To ensure that ARMs products ofer an
attractive value proposition to our Partners, we
are in continuous dialogue with semiconductor
companies and OEMs. As part of this dialogue,
we provide technical support to our licensees
and promote awareness of our long-term
product development roadmap. In October
2013, ARM held its annual technology
conference, where 5,000 engineers and
developers, from across the ARM Partnership,
came together to learn about ARMs roadmap
and to share their knowledge and experience
of using ARM technology, whilst discussing
their plans for developing future ARM-based
products. This included companies such as
semiconductor designers and manufacturers,
OEMs and equipment developers, software
and hardware tools vendors, and software and
training providers. In the year to 31 December
2013, ARMs normalised sales and marketing
spend was 76.7 million (IFRS: 89.4 million),
compared with 64.3 million in 2012 (IFRS:
72.9 million). The year-on-year increase
reects the increased investment in customer
support and marketing activities.
55
Managing our nancial assets
ARMs business model is highly cash
generative. Between 2009 and 2013, ARM
paid out 226.2 million in dividends and
our normalised net cash balance grew
from 141.8 million at the end of 2009 to
706.3 million at the end of 2013.
Dividends
The directors are recommending payment
of a nal dividend in respect of 2013 of 3.6
pence per share which, taken together with
the interim dividend of 2.1 pence per share
paid in October 2013, gives a total dividend
in respect of 2013 of 5.7 pence per share, an
increase of 27% over 4.5 pence per share in
2012. The total cash outow from dividends
paid in 2013 amounted to 68.9 million
(2012: 51.8 million).
Since 2009, our dividend has grown at a
CAGR of 24%. In 2013, the recommended
dividend per share was equal to 28% of our
normalised diluted earnings per share (77%
ofIFRS diluted earnings per share).
Subject to shareholder approval, the nal
dividend for 2013 will be paid on 16 May
2014 to shareholders on the register on
22 April 2014.
Share buybacks
Between 2005 and 2008, the Company
bought back 213 million shares (being 16%
of issued share capital) at a total cost of
261 million. No share buybacks have been
undertaken since 2008. The rolling authority
to buy back shares given by the shareholders
at the 2013 AGM remains in place and a
resolution to authorise the directors to make
purchases in appropriate circumstances will be
proposed at the 2014 AGM.
At 1.4 billion shares, the total share count
is similar to the level outstanding at the
commencement of the 2005 to 2008 rolling
share buyback programme. It is our intention
to continue to maintain a at share count over
time by ofsetting dilution from share-based
remuneration with further share buybacks.
A large proportion of ARMs products
are developed in the UK, where the
government ofers credits to companies
with R&D commitments. In April 2013, the
UK government provided further incentive
for companies to invest in the UK with the
introduction of the Patent Box tax legislation,
which allows companies to apply for a lower
rate of Corporation Tax on prots earned
from patented technologies. The lower rate
of tax is being phased-in between April 2013
and April 2017.
ARM also develops technology in the US and
France, where the respective governments
also ofer R&D tax credits. In 2013, ARMs
normalised efective tax rate was 20.2% (IFRS:
35.5%), which reects the benet of the
Patent Box legislation and other R&D credits.
ARMs normalised prot before tax in 2013
was 364.0 million (IFRS: 162.6 million).
ARMs total tax contribution worldwide
in 2013 amounted to 162.5 million
(2012: 152.4 million), of which 133.8 million
(2012: 121.7 million) related to tax collected
on behalf of the tax authorities for employee
payroll taxes; 23.3 million (2012: 26.1 million)
related to corporation taxes; 1.7 million
(2012: 1.3 million) to property taxes; and
3.7 million (2012: 3.3 million) related to
other taxes.
Acquisition strategy
The rapid pace of technological change
in the semiconductor industry presents
opportunities for ARM to apply its business
model to new products or into new
markets. On occasion, ARM has identied a
strategic opportunity to buy-in IP rather than
developing it internally. Such opportunities can
take the form of an acquisition, an investment
in a start-up company, or the acquisition or
licensing of third-party patents.
In 2013, ARM spent a total of 21.1 million
on two acquisitions (2012: nil): Sensinode,
a Finnish company with expertise in low-
power radio communications software; and
Geomerics, a 3D-graphics software business.
More details on these acquisitions can be
found in note 19 to the nancial statements.
Acquisition of patent portfolios and
indemnication costs
In late 2012, ARM became a participant in a
consortium of major technology companies
that formed Bridge Crossing LLC, to acquire
rights to MIPS Technologies, Incs portfolio of
approximately 500 patents. In February 2013,
the consortium acquired the patent rights
for $350 million, of which ARM contributed
$167.5 million. ARMs contribution was
classied within current assets as available-
for-sale ($100.5 million) and other intangibles
($67.0 million) in the nancial statements.
The available-for-sale nancial asset
represented ARMs right to receive cash
from the Groups nancial interest in the
consortium, as it was anticipated that a
programme of licensing the patents to third-
parties would be undertaken. The other
intangible asset consists of intellectual
property rights that are being amortised
over a period of eight and a half years,
being the average remaining life of the
underlying patents.
ARM Holdings plc
56
CHIEF FINANCIAL OFFICERS REVIEW CONTINUED FOR THE FUTURE
Treasury policy
The Group has established treasury policies
aimed both at mitigating the impact of foreign
exchange uctuations on reported prots
and cash ows, and at ensuring appropriate
returns are earned on the Groups cash
resources. The consolidated cash, cash
equivalents, and deposits was 706.3 million
net of accrued interest of 7.2 million as at
31 December 2013 (2012: 520.2 million
net of accrued interest of 7.4 million).
Net investment
income was 13.1 million for 2013 compared
to 13.6 million in 2012. The decrease is due
primarily to the lower interest rates available
on cash deposits in 2013.
Further information on nancial risk
management, (including currency, interest
rate, securities price, credit and liquidity risks)
is provided in notes 1 (c), 11 and 17 to the
nancial statements on pages 77, 90 and 97.
Analysis of cash and normalised cash ow
2013
m
2012
m
2011
m
2010
m
2009
m
Cash and cash equivalents 43.8 46.3 26.8 29.4 34.5
Short-term deposits 544.1 340.0 319.1 247.4 105.5
Short-term marketable securities 1.8
Long-term deposits 125.6 141.3 83.1 15.0
Less: interest accrued (7.2) (7.4) (5.0) (1.7)
Normalised net cash, at end of year 706.3 520.2 424.0 290.1 141.8
Less:
Normalised net cash, at start of year (520.2) (424.0) (290.1) (141.8) (78.8)
Cash inow from exercise of share options (6.0) (5.6) (8.5) (24.0) (19.1)
Cash inow from sale of available-for-sale securities (0.1) (0.7)
Add back:
Cash outow from payment of dividends 68.9 51.8 42.2 34.3 29.0
Cash outow from advance payment to the MIPS
patent consortium 104.5
Cash outow/(inow) from investments and
acquisitions (net of cash acquired) 25.6 (8.8) 17.3 11.0 9.7
Cash outow from investment in joint venture 3.7 7.5
Cash outow from restructuring payments 4.5 3.5
Cash outow from other acquisition-related
payments 4.6 3.8 3.1
Cash outow from share-based payroll taxes 16.3 14.4 12.4 3.2 0.7
Cash outow from payments related to Linaro 3.5 3.5 3.4 2.7
Cash outow from IP indemnity and similar charges 41.8
Normalised net cash generation 344.5 267.3 203.8 179.9 86.1
In the fourth quarter of 2013, the trust made
a strategic decision not to pursue a licensing
programme and ARM, believing there to be
a signicant long-term strategic advantage in
owning this intellectual property, purchased
the patents outright for $4m in the rst
quarter of 2014. As a result of this, there is
no future cash to be received from Bridge
Crossing and subsequently the available-for-
sale investment has been impaired, giving
rise to a non-cash exceptional charge of
59.5 million.
In the second and third quarters of 2013,
ARM acquired a patent portfolio and
indemnied a licensees legal costs related
to that patent portfolio for a total cost of
41.8 million. The cost of acquiring the patent
portfolio and associated indemnication costs
have been classied as exceptional items in
the nancial statements. More details on the
exceptional items can be found in note 6 to
the nancial statements.
Equity investments
ARM occasionally invests in innovative
companies that operate in ARMs key
markets. Any such investments are made
on commercial terms, usually alongside
venture capital rms and other nancial
investors. At the end of December 2013,
ARMs investment portfolio was valued at
13.9 million (2012: 13.8 million).
57
Principal risks and uncertainties
In line with the guidance for the preparation
of an operating and nancial review, the
principal risk factors faced by the Group
are identied in the Risk Management and
Principal Risks section on pages 47 to 49.
Details of other risks and uncertainties faced
by the Group are noted within the Annual
Report on Form 20-F for the year ended
31 December 2013, which is available on
ARMs website at www.arm.com.
Further details of the Groups internal
controls and risk management procedures
are included in the Governance and
Financial Report.
Segmental reporting
Internally, up to 31 December 2013, ARM
was organised on a worldwide basis into three
main business segments, being the Processor
Division (PD), the Physical IP Division (PIPD)
and the System Design Division (SDD).
Whilst revenues are also reported into four
main revenue streams (namely licensing,
royalties, software and tools and services), the
costs, operating results and balance sheet are
only analysed into these three divisions.
ARMs strategy is to deploy this internal
organisation to develop and license
technology to semiconductor companies
so that ARM-based products gain market
share in long-term growth markets such as
mobile phones, tablets, consumer electronics,
enterprise applications and embedded digital
devices. In communicating our progress
against this strategy externally on an ongoing
basis, we have developed key performance
indicators which enable investors and analysts
to track how ARM is performing in market
share terms in these markets. Therefore,
the commentary on strategy and KPIs in the
Strategic Report focuses on our progress in
penetrating these end markets as we believe
this is the clearest way for investors and
analysts to understand ARMs progress against
its long-term strategic objectives.
PD revenues (including revenues from
services) in 2013 were 596.2 million
($931.5 million), compared with
473.9 million ($749.8 million) in 2012.
PD licensing revenues are driven by
customers ongoing R&D programmes.
Royalty revenues increased in 2013 as ARM
technology continued to gain market share.
PIPD revenues in 2013 were 82.0 million
($129.1 million), compared with 68.3 million
($108.4 million) in 2012. PIPD revenues
increased as a result of more companies
choosing to outsource their physical IP
development to ARM. SDD revenues in 2013
were 36.4 million ($57.1 million), compared
with 34.7 million ($54.9 million) in 2012.
Prot before tax in the year for PD was
169.6 million, compared to 230.6 million
in2012. Normalised prot before tax in 2013
for PD was 345.5 million, compared to
266.7 million in 2012. The decrease in prot
before tax reects the exceptional items that
were charged to the income statement in
2013. Under the normalised measure, prot
before tax in PD increased, mainly as a result
of increased revenues.
Loss before tax in the year for PIPD
was 8.7million, compared to a loss of
14.5million in 2012. Normalised prot
before tax in 2013 for PIPD was 5.4million,
compared to a normalised loss before tax
of3.4 million in 2012. Loss before tax
in theperiod for SDD was 6.2million,
compared to 5.4 million in 2012. Normalised
prot before tax in 2013 for SDDwas
1.2million, compared to 1.4million
in 2012. The improved results in both of
these business segments are primarily due
toincreased revenues.
As part of the ongoing evolution of the
business, the Groups divisional structure was
re-organised on 1 January 2014. As a result
of this change, the Groups business segments
may change for future reporting periods in
order to reect this new organisation.
A more detailed segmental analysis is
provided in note 2 to the nancial statements.
This Strategic Report is approved by the
board of directors.
By Order of the Board
TIM SCORE
Chief Financial Ofcer
ARM Holdings plc
58
For the year ended 31 December
2013
m
2012
m
Revenues 714.6 576.9
Cost of revenues (39.3) (31.9)
Gross prot 675.3 545.0
Operating expenses
Research and development (202.9) (166.3)
Sales and marketing (89.4) (72.9)
General and administrative (128.2) (97.7)
Total operating expenses before exceptional items (420.5) (336.9)
Exceptional items (101.3)
Total operating expenses after exceptional items (521.8) (336.9)
Prot from operations 153.5 208.1
Investment income 13.3 13.9
Interest payable and similar charges (0.2) (0.3)
Prot before tax 162.6 221.0
Tax (including 8.6 million in respect of exceptional items) (57.8) (60.3)
Prot for the year 104.8 160.7
Earnings per share
Basic and diluted earnings 104.8 160.7
Number of shares (millions)
Basic weighted average number of shares 1,396.4 1,375.1
Efect of dilutive securities: Employee incentive schemes 15.4 20.7
Diluted weighted average number of shares 1,411.8 1,395.8
Basic EPS 7.5p 11.7p
Diluted EPS 7.4p 11.5p
All the prot for the year is attributable to the owners of the Company and all activities relate to continuing operations.
SUMMARY ACCOUNTS
CONSOLIDATED
INCOME STATEMENT
59
2013
m
2012
m
Assets
Current assets:
Cash and cash equivalents 43.8 46.3
Short-term deposits 544.1 340.0
Fair value of currency exchange contracts 5.1 1.4
Accounts receivable 136.2 124.5
Available-for-sale nancial assets 1.2
Prepaid expenses and other assets 39.8 135.6
Current tax assets 6.9 13.9
Inventories 3.0 2.3
Total current assets 780.1 664.0
Non-current assets:
Long-term deposits 125.6 141.3
Loans and receivables 3.0 2.1
Available-for-sale nancial assets 13.9 13.8
Investment in joint venture 6.5 6.8
Prepaid expenses and other assets 1.6 2.0
Property, plant and equipment 33.6 36.1
Goodwill 525.9 519.4
Other intangible assets 82.9 11.2
Deferred tax assets 65.3 70.1
Total non-current assets 858.3 802.8
Total assets 1,638.4 1,466.8
Liabilities
Current liabilities:
Accounts payable 7.0 5.9
Embedded derivatives 7.0 2.5
Accrued and other liabilities 88.1 79.3
Finance lease liabilities 2.7 2.9
Current tax liabilities 18.8 16.6
Deferred revenue 156.7 126.4
Total current liabilities 280.3 233.6
Non-current liabilities:
Accrued and other liabilities 2.6
Deferred tax liabilities 0.1
Total non-current liabilities 46.7 27.1
Total liabilities 327.0 260.7
Net assets 1,311.4 1,206.1
Capital and reserves attributable to owners of the Company
Share capital 0.7 0.7
Share premium account 18.1 12.2
Capital reserve 354.3 354.3
Share option reserve 61.4 61.4
Retained earnings 820.6 703.3
Cumulative translation adjustment 56.3 74.2
Total equity 1,311.4 1,206.1
SUMMARY ACCOUNTS
CONSOLIDATED
BALANCE SHEET
60
ARM Holdings plc
Apps Application software that runs within the chip.
ARM7/9/11 ARM7 processor was one of ARMs rst commercial products.
ARM9 and ARM11 processors followed later.
ARMv8 Latest family of ARM processor designs.
big.LITTLE Combination of two diferent ARM processors on a single chip; one (big) that delivers high-performance when
needed with the other (LITTLE) running most of the time enabling long battery-life.
CAGR Compound Annual Growth Rate.
Cortex ARMs latest family of processors.
DTV Digital TV.
Ecosystem Community of companies that work with ARM, including semiconductor companies, foundries, OEMs and
software providers.
Fabless semiconductor company A fabless semiconductor company designs computer chips.These chips are typically manufactured by a foundry.
Forexample Mediatek, NVIDIA and Qualcomm.
Foundry foundry is a specialist company that manufacturers computer chips on behalf of fabless semiconductor companies.
For example TSMC and UMC.
Intellectual Property (IP) ARM designs technology for use in computer chips.The general term for the products that are designs only, or are
creations of the mind, is intellectual property.
Internet of Things (IoT) An increasing variety of digital devices are being connected to the internet either directly or indirectly via a
smartphone. From pedometers to thermostats to streetlights.
Licence A licence is a legal agreement that confers certain rights to our Partners.They pay an upfront free, which is reported
as licence revenue.
LTE Long Term Evolution (or 4G) is the next generation wireless standard for mobile phones. It is optimised for data
streaming allowing internet connections at speeds similar to broadband in the home.
Mali ARMs family of 3D graphics processors.
Microcontroller (MCU) A microcontroller is a general-purpose computer chip which has/can be used in many applications. Most ARM
processors are used in either an SoC or MCU.
Original Equipment Manufacturer (OEM) (OEM) An OEM manufactures consumer products such as TVs or mobile phones. For example Apple, HTC or LG
Partner A Partner is a licensee of ARMs processor technology.
Physical IP Design of the building blocks used in the implementation a SoC design.
Processor Design of the brain of the computer chip.
POP IP Physical IP components that have been selected and optimised to implement a processor on a specic foundrys
manufacturing process.
Royalty ARM receives a royalty on every chip that contains ARM technology.The royalty is usually a percentage of the selling
price of the chip and is reported as royalty revenue.
STB Set-top box.
System-on-Chip (SoC) A SoC is a computer chip where multiple functions have been integrated into a single chip. Most ARM processors
are used in either an SoC or MCU.
GLOSSARY
KEY TERMS EXPLAINED
ARM Holdings plc
Our Vision
Operational highlights 2
Financial highlights 3
Chairmans review 4
Chief Executives statement 6
Our Performance
Our marketplace 14
Our business model 16
Our global reach 18
Strategy and key performance
indicators 20
Mobile computing 32
Enterprise infrastructure 34
Embedded computing 36
Our Commitment
Governance 38
Sustainability 44
Risk Management and principal risks 47
Chief Financial Ofcers review 52
Summary accounts 58
Glossary 60
Governance
Chairmans introduction
Board of Directors
Corporate governance
Directors report
Directors remuneration report
Financial Report
Consolidated statement of
comprehensive income
Consolidated cash ow statement
in shareholders equity
Notes to the nancial statements
UK GAAP
Glossary
Group directory
Front cover
Most major population centres are covered
by 3G or 4G networks, and there were
more than two billion smartphones and
tablets connecting to the internet in 2013.
With some mobile computers now costing
as little as $35, many more people can
aford to buy a smart device. An entry-
level mobile computer may have up to
fourARM
-based chips.
Downloads
onourweb site.
Strategic Report
ARMs Annual Report is in two parts. The Strategic Report contains
nancial management.
A copy of the Governance and Financial Report can be downloaded
from www.arm.com/reporting2013.
report is also available online.
STRATEGIC
REPORT
GOVERNANCE AND
FINANCIAL REPORT
ONLINE
REPORTING
WELCOME TO OUR
STRATEGIC REPORT
The auditors report on the nancial statements and the auditors statement undersection
496of the Companies Act onwhether the information given in Strategic Report and
Directors report (for the nancial year ended 31 December 2013) is consistent with the
Group nancial statements were both unqualied and can befound on page 55 of the
Governance andFinancial Report.
please contact:
Aspect House
Spencer Road
Lancing
BN99 6DA, UK
Phone: 0871 384 2139
www.equiniti.com
Ian Thornton
ARM Holdings plc
110 Fulbourn Road
Cambridge, CB1 9NJ
Phone: +44 1223 400796
Phil Sparks
ARM Holdings plc
110 Fulbourn Road
Cambridge, CB1 9NJ
Phone: +44 1223 405566
Laura Faid
ARM Holdings plc
Liberty House
Moorbridge Road
Maidenhead, SL6 8LT
Phone: +44 1628 427800


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ARM Holdings plc
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ARM Holdings plc
110 Fulbourn Road
Cambridge CB1 9NJ
United Kingdom
Telephone +44 (0)1223 400400
Facsimile +44 (0)1223 400410
www.arm.com
pinterest: ARMLtd
youtube.com/armix
ARM Holdings plc Annual Report 2013: Governance & Financial Report
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Governance
Chairmans introduction 1
Board of directors 4
Corporate governance 6
Directors report 23
Directors remuneration report 29
Financial Report
Independent Auditors Report to the
Members of ARM Holdings plc 55
Consolidated income statement 60
Consolidated statement
of comprehensive income 60
Consolidated balance sheet 61
Consolidated cash ow statement 62
in shareholders equity 63
Notes to the nancial statements 64
Company balance sheet/UK GAAP 109
UK GAAP 110
Glossary 117
Group directory 118
Key shareholder information 120
Our Vision
Operational highlights
Financial highlights
Chairmans review
Chief Executives statement
Our Performance
Our marketplace
Our business model
Our global reach
Strategy and key
performance indicators
Mobile computing
Enterprise infrastructure
Embedded computing
Our Commitment
Governance
Sustainability
Risk management and principal risks
Chief Financial Ofcers review
Summary accounts
Glossary
Front cover
Most major population centres are now
covered by 3G or 4G networks, and there
were more than two billion smartphones
and tablets connecting to the internet in
2013. With some mobile computers now
costing as little as $35, many more people
can now aford to buy a smart device.
An entry-level mobile computer may have
up to fourARM
-based chips.
Downloads
onourwebsite.
Strategic Report
ARMs annual report is in two parts. The Strategic Report contains
nancial management.
reportis also available online.
GOVERNANCE AND
FINANCIAL REPORT

STRATEGIC REPORT

ONLINE REPORTING
WELCOME TO OUR GOVERNANCE
AND FINANCIAL REPORT
Aspect House
Spencer Road
Lancing
BN99 6DA, UK
Phone: 0871 384 2139
www.equiniti.com
Ian Thornton
ARM Holdings plc
110 Fulbourn Road
Cambridge, CB1 9NJ
Phone: +44 1223 400796
Phil Sparks
ARM Holdings plc
110 Fulbourn Road
Cambridge, CB1 9NJ
Phone: +44 1223 405566
Laura Faid
ARM Holdings plc
Liberty House
Moorbridge Road
Maidenhead, SL6 8LT
Phone: +44 1628 427800


printer certied to
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please contact:
Governance Financial Report
1
CHAIRMANS INTRODUCTION
A STRONG AND EFFECTIVE
GOVERNANCE SYSTEM
The Boards aim is to nurture a working
environment in which the highest standards
of behaviour are established, demonstrated
and maintained in all our activities. This helps
us to run the Group efectively and exercise
judgement to manage the risks that we face
to levels that are commensurate with the
nature of our business. There are
well-dened diferences in roles between the
executive and non-executive directors and
their combined contributions as an
experienced, but healthily diverse, team add
value to the debate, decision making and
development of strategy that are so crucial
to the Groups success.
The Board actively considers long-term
strategy, monitors, challenges and supports
the work of the Executive Committee, and
isresponsible for Board and executive
management succession. My role as
Chairman is to provide the leadership to
ensure high quality decision making in all
areas of strategy, performance, responsibility
and accountability.
As a Board, we have ultimate responsibility
for the Groups performance and for
overseeing the management of risk. We seek
to do this through a strong and efective
governance system and by setting and
following the standards that we expect from
all our employees. These standards are
enshrined in ARMs seven shared values,
which are listed below.
This part of the report explains how we
comply with good corporate governance
principles, describes how the Board
and its Committees work to provide
appropriate oversight, and our approach
to risk management and internal control.
Risk management and principal risks are also
covered on pages 47 to 49 of the Strategic
Report. During 2013, management reviewed
and improved our risk assessment and
reporting framework under the guidance
of Kathleen ODonovan, who chairs the
AuditCommittee, and with assistance from
external advisers. We need to ensure that
Dear shareholder
Welcome to ARMs 2013 Governance and
Financial Report. This is the rst year we have
created the annual report as two documents:
a Strategic Report containing an update on
ARMs progress during the year, a summary of
our approach to governance, and our nancial
results; and a separate document giving more
detail on governance at ARM and our full
accounts. We believe that these two
documents together full the best practice
guidelines given by the UK Governments
Department for Business Innovation and
Skills. As ever wewelcome your feedback,
and you can contact us via the investor
relations website atwww.arm.com/ir.
SIR JOHN BUCHANAN
Chairman
This report explains the Boards commitment to good
corporate governance, corporate responsibility and the
highestethical standards. We believe that efective governance
is an essential contributor to our sustained improvement in
business performance.
Operating with integrity in all we do is vital to maintain the trust
of investors, customers, our employees and other stakeholders.
This requires leadership, ethical behaviour and collaboration.
ARM Holdings plc
Governance and Financial Report 2013
2
our processes are t for purpose, and that the
information that comes to the Board focuses
on the principal risks and appropriately informs
our ongoing risk appetite discussions.
Directors and succession planning
As part of our planned and continuing
evolution of the Board there were a number
of changes in 2013, and further changes are
planned in 2014.
Simon Segars succeeded Warren East as
Chief Executive Ofcer on 1 July 2013 and
the strong nancial performance achieved for
the full year demonstrates that the transition
has been seamless and well executed.
The Board was delighted to have a candidate
of Simons experience and calibre within ARM
to appoint to this role. Following an extensive
externally conducted review of candidates
worldwide, Simons proven technology
expertise and management skills across a
range of senior executive roles resulted in
him being selected. His initiatives in the period
since his appointment, including changes to
the organisation structure to better address
the needs of our customers, conrm that he
is highly qualied to take the Group forward.
Warren retired after nearly 12 years as CEO
and 19 outstanding years with the Group.
He built a strong platform for growth and
consistently created value for shareholders,
even in a challenging external environment.
On behalf of the Board and the wider ARM
team, deep thanks are due to Warren for his
passion, service and leadership. The Board
was delighted to see Warrens achievements
acknowledged through the award of a CBE in
the 2014 New Years Honours List. Mike Inglis
also retired from the Board on 31 March
2013 and left with our sincere thanks and
good wishes.
In January 2014 we announced that, with
much regret, I have requested that I step
down as Chairman of ARM, due to a medical
condition. The Board conducted a thorough
search, led by the Senior Independent
Director, and was pleased to welcome
Stuart Chambers to the Board as Chairman
designate on 27 January 2014. He took over
as Chairman on 1 March 2014. Stuart is
Chairman of Rexam plc and a non-executive
director of Tesco PLC. Up to 2009, he was
the Group Chief Executive of Nippon Sheet
Glass Group which acquired Pilkington plc in
2006, where he was Chief Executive. Prior to
the glass industry, Stuart held a number
of senior positions at Mars, Inc., having
previously spent ten years in several European
roles at Royal Dutch Shell plc.
It has been a great privilege to serve as
Chairman of ARM and I have greatly enjoyed
my time on the Board of this ne company.
Due to the medical uncertainties, it is right
that I should step aside at this time and I wish
the Group well under its new leadership. I will
continue as an independent non-executive
director until the AGM on 1 May 2014 and
will then retire from the Board.
Philip Rowley will also be retiring from the
Board at the AGM, on the ninth anniversary
of his election by shareholders. On behalf
of the Board I want to express our deep
appreciation to Philip for his excellent, wide
ranging contributions during his tenure.
He chaired the Remuneration Committee
until 31 December 2013, before that was
Chairman of the Audit Committee, and he
has also been a long-standing member of the
Nomination Committee. We ofer our deep
thanks and wish him well for the future.
The Board reects a balance between
technology sector, commercial, nancial
and general business skills, with a highly
experienced international team leading the
business in both executive and non-executive
roles. We were pleased to welcome Eric
Meurice to the Board in July 2013. He brings
a wealth of experience of the semiconductor
industry having been President and CEO of
ASML Holding NV (a leading provider of
manufacturing equipment and technology
to the semiconductor industry) from 2004
until 2013.
The Nomination Committee is seeking further
candidates as independent non-executive
directors with appropriate skills, experience
and diversity to complement our existing
Board members and maintain, collectively,
anefective Board.
Reports from the various Board Committees
and details of their current composition are
covered in more detail in the Corporate
Governance and Remuneration reports below.
During 2013, the Board played an important
role in successfully guiding ARM through
the Chief Executive Ofcer transition and
ensuring that the Groups performance
targets were achieved in the challenging
and competitive economic environment.
The Board also provided clear strategic
direction and ensured that the Groups
standards of conduct met its expectations.
The roles and specic expertise of the current
members of the Board are set out in the
Biographies section on pages 4 to 5.
Diversity
After the changes referred to above, the
Board will comprise three executive directors,
the Chairman, and ve non-executive
directors. At the year end there were eight
men (80%) and two women (20%) which
broadly reects the gender diversity of ARMs
workforce as a whole.
Diversity of the Board
Men 80%
Women 20%
The Board noted the publication of Lord
Davies Review into Women on Boards in
February 2011 and the proposals published
by the European Commission in November
2012 (the latter of which includes an objective
that 40% of non-executive directors should
be women by 2020). We believe that diversity
should be considered broadly, as well as
focusing on gender. It is important to achieve
the correct balance of skills, knowledge and
experience on the Board. We will continue
to make appointments on merit and also to
value diversity in its broadest context.
CHAIRMANS INTRODUCTION CONTINUED
3
Development of strategy
The Boards work on dening our short- and
long-term strategic priorities at this important
stage in the Groups development is receiving
increased focus. We undertook a detailed
strategy review in September and the next in-
depth strategy meeting is scheduled for April
2014. This meeting will focus on progress to
date and future plans to take advantage of
the signicant opportunities that have been
identied. These opportunities are in areas
that include the evolving Internet of Things,
efcient networking, ARM-powered servers
and security applications. More details are
included in the Strategic Report that forms the
other part of ARMs Annual Report 2013.
Corporate governance framework
androle of the Board
The Groups corporate governance
framework is built around three pillars:
Organisation, structure and processes.
The internal control framework.
Independent assurance.
ARM has its primary listing on the London
Stock Exchange and is also listed on
the NASDAQ Stock Market in the US.
Throughout 2013, the Group complied
fully with the UK Corporate Governance
Code (September 2012) and also with the
Sarbanes-Oxley Act 2002 (US). The Board
values good corporate governance and this
is reected in our governance principles,
policies and practices, and our everyday
working processes. This approach is backed
by continuous improvement based on
measurement against internal and external
audits by both Lloyds Register Quality
Assurance and the external auditors,
benchmarking and a rigorous approach to
risk management.
Remuneration
ARMs remuneration policy seeks to
align the interests of executive directors,
senior management and shareholders,
and is structured to enable the Group
to attract, motivate and retain the talent
required to deliver the business strategy.
The Remuneration Committee, under Philip
Rowleys chairmanship, undertook a review
of executive remuneration policy during 2012,
which resulted in the approval of our new
Long-Term Incentive Plan by shareholders
at the 2013 AGM. The changes, which take
efect in 2014, reect the latest guidelines and
the desire of shareholders for:
the simplication of incentive plans
for executives;
longer holding periods for shares;
increased share ownership requirements.
Details of how these principles have been
applied are included in the policy section of
the Remuneration report. As was the case
last year, we also include total remuneration
gures for executive directors in the report.
The Board is cognisant of the general
sensitivity relating to executive director
remuneration. We are committed to the
principle that there should be no reward for
failure and believe that the increased emphasis
on long-term performance-related pay, longer
holding periods and increased shareholding
requirements are appropriate and ensure
that ARMs remuneration policy does not
encourage inappropriate risk taking.
Ethics and values
All directors and employees are required
to act fairly, honestly and with integrity, and
to demonstrate that they have read and
understand the Groups Code of Business
Conduct and Ethics, a copy of which is
published on the corporate website at
www.arm.com. Our Human Rights Policy is
now incorporated in our Code of Business
Conduct and Ethics.
As part of our commitment to the highest
standards of business conduct and ethics, we
have implemented enhanced communication
and training programmes to ensure that
all employees worldwide understand the
requirements of all relevant legislation,
including the UK Bribery Act 2010 (and
its global reach) and the principles of and
importance of compliance with competition
law and anti-trust law. The Compliance
Committee reviews a range of activities
across the Group, sets appropriate policies
and procedures, and takes the lead in
ensuring compliance with them. It reports
on its activities to the Board through
the Committee.
Employee performance is measured each year
against a set of seven shared values:
Delivery of results that benet ARM
Teamwork and selessness
Constructive pro-activity
Responsiveness
Innovation
Personal development
Corporate responsibility
Full details of our CR strategy and
achievements can be found in the main CR
report www.arm.com/reporting2013 and
a summary of highlights from the year are
included in the Sustainability section of the
Strategic Report on page 44.
I hope the following reports demonstrate that
setting the corporate governance framework
continues to be a key focus for the Board.
We must always be conscious of the fact
that the Boards primary responsibility is to
promote the long-term success of the Group
for the benet of customers, employees and
shareholders and I am condent that we are
well positioned to continue to provide value
to all our stakeholders.
Sir John Buchanan
Chairman (until 1 March 2014)
5 March 2014
ARM Holdings plc
4
BOARD OF DIRECTORS
THE EXPERIENCE
OF THE TEAM
ARMs Board has the breadth
and depth of experience
necessary to guide the Group
as it seeks to take full
advantage of new
opportunities and contend
with new challenges.
Biographical details of the
directors as at the date of
thisreport are as follows:
Chief Financial Ofcer
Chairman
(until 1 March 2014)
Independent
Non-Executive Director
SIMON SEGARS 46
TIM SCORE 53
SIR JOHN BUCHANAN 70
ANDY GREEN 58
Committees
Nomination Committee (Chairman) (from 1 March 2014)
Current directorships
Rexam plc (Chairman)
Tesco plc (independent non-executive director)
Time on Board
1 month
Expertise
Stuart Chambers joined the Board as Chairman designate on
27 January 2014 and became Chairman on 1 March 2014.
He brings a strong track record and a wealth of Board and
executive experience both in the UK and globally. Up to
2009, he was the Group Chief Executive of Nippon Sheet
Glass Group, which acquired Pilkington plc in 2006, where he
was Chief Executive. Prior to the glass industry, Stuart held
a number of senior positions at Mars, Inc., having previously
spent ten years in several European roles at Royal Dutch
Shell plc.
Committees
None
SOI Industry Consortium (director)
EDA Consortium (director)
Time on Board
9 years 2 months
Expertise
Simon Segars joined the Board in January 2005 and
was appointed Chief Executive Ofcer on 1 July 2013.
His previous roles include President, leading the IP divisions
and representing them on the Board, EVP and General
Manager of the Processor and Physical IP Divisions and prior
to that, EVP, Engineering, EVP, Worldwide Sales and EVP,
Business Development. He joined ARM in early 1991 and
worked on many of the early ARM CPU products. He led the
development of the ARM7
TM
and ARM9
TM
Thumb
families.
He holds a number of patents in the eld of embedded
CPU architectures.
Committees
Risk Review Committee
Compliance Committee
National Express Group plc (Senior Independent Director and
Chairman of the Audit Committee) until 25 February 2014
Time on Board
12 years
Expertise
Tim Score joined ARM as Chief Financial Ofcer and director
in March 2002. Before joining ARM, he was Finance Director
of Rebus Group Limited. He was previously Group Finance
Director of William Baird plc, Group Controller at LucasVarity
plc and Group Financial Controller at BTR plc.
Committees
Nomination Committee (Chairman)
Smith & Nephew plc (Chairman)
BHP Billiton plc (Senior Independent Director)
International Chamber of Commerce (UK) (Chairman)
Chairman of the UK Trustees for the Christchurch
Earthquake appeal
Time on Board
I year 10 months
Expertise
John Buchanan joined the Board as Chairman on 3 May
2012. His intention to retire from the Board, due to a
medical condition, was announced on 27 January 2014.
He handed over the role of Chairman on 1 March 2014
and will retire from the Board at the AGM on 1 May 2014.
He has broad international experience gained in large and
complex businesses. He has experience and knowledge of
the international investor community and has held various
leadership roles in strategic, nancial, operational and
marketing positions, including executive experience in diferent
countries. He is a former Chief Financial Ofcer of BP plc and
a former Deputy Chairman and Senior Independent Director
of Vodafone Group plc.
Committees
Remuneration Committee
Nomination Committee
Dock On AG (Chairman)
Networking People (UK) Limited (Chairman)
UK Government Connected Digital Economy Catapult
(CDEC) (Chairman)
ABESU (Trustee and director)
Time on Board
3 years 1 month
Expertise
Andy Green joined the Board in February 2011. He was
CEO of Logica plc from 2008 to 2012. He is a former CEO
of BT Global Services and a former CEO of Group Strategy
and Operations at BT plc and was CEO of BT Openworld.
He is Chair of e-Skills UK (the UK Sector Skills Council for
Business and Information Technology), is on the Board and the
Presidents Committee of the CBI and is a Companion of the
Chartered Management Institute.
Chairman
(from 1 March 2014)
STUART CHAMBERS 57
5
Independent
Senior Independent
Independent
Independent
Chief Technology Ofcer
Independent
LARRY HIRST 62
KATHLEEN ODONOVAN 56
ERIC MEURICE 57
JANICE ROBERTS 58
MIKE MULLER 55
PHILIP ROWLEY 61
Committees
Remuneration Committee (Chairman from 1 January 2014)
Audit Committee (until 31 December 2013)
MITIE Group plc (non-executive director)
Time on Board
3 years 2 months
Expertise
Larry Hirst joined the Board in January 2011. He is the former
Chairman of IBM Europe, Middle East and Africa. He retired
from IBM in 2010 having previously held a wide range of senior
positions since joining the company in 1977. He currently
chairs the Imperial College Digital Cities Exchange. He is
also an Ambassador to Monitise plc and on the International
Advisory Board for British Airways. Former roles include
being a UK Business Ambassador, a Commissioner for the
Commission for Employment and Skills, and Chair of e-skills
UK (the UK Sector Skills Council for Business and Information
Technology). He was awarded a CBE in 2006.
Committees
Audit Committee (Chairman)
Invensys Pension Trustee Ltd (Chairman)
Trinity Mirror plc (Non-Executive Director and Chairman of
the Audit Committee)
D S Smith Plc (Non-Executive Director)
Time on Board
7 years 3 months
Expertise
Kathleen ODonovan joined the Board in December 2006.
Previously she was a non-executive director and Chairman of
the Audit Committees of the Court of the Bank of England,
Great Portland Estates plc, EMI Group plc and Prudential plc
and a non-executive director of O2 plc. Prior to that, she was
Chief Financial Ofcer of BTR plc and Invensys plc, and before
that she was a Partner at Ernst & Young.
Committees
Audit Committee (from 1 January 2014)
Current activities
ASML Holding NV (Chairman)
Time on Board
7 months
Expertise
Eric Meurice joined the Board in July 2013. He was President
and Chief Executive Ofcer of ASML Holding NV from
October 2004 until 30 June 2013 and will continue as
their Chairman until 31 March 2014. Former roles include
Executive Vice President of Thomson Television Worldwide
and head of Dell Computers Western, Eastern Europe
and EMEA emerging market businesses. He also gained
extensive technology experience in the semiconductor
industry between 1984 and 1994 at Intel and then at ITT
Semiconductors Group.
Committees
Audit Committee
Mayeld Fund (Venture Adviser)
RealNetworks, Inc. (Non-Executive Director)
Zebra Technologies Corporation (Non-Executive Director)
Time on Board
3 years 2 months
Expertise
Janice Roberts joined the Board in January 2011. She is a
Venture Adviser at Mayeld Fund having been a Managing
Director from 2000-2013. Mayeld is a Silicon Valley-based
venture capital rm with approximately $3 billion under
management, where her focus is on the mobile, wireless,
communications and consumer technology industries.
Prior to that, she held various executive positions at 3Com
Corporation, including President Palm Computing, President
3Com Ventures and Senior Vice President, Business
Development and Global Marketing. She is a director of
several private technology companies in the US.
Committees
Risk Review Committee (Chairman)
Intelligent Energy Limited
Trustonic Limited
Time on Board
12 years 5 months
Expertise
Mike Muller was one of the founders of ARM. Before joining
the Group, he was responsible for hardware strategy and
the development of portable products at Acorn Computers.
He was previously at Orbis Computers. At ARM he was VP,
Marketing from 1992 to 1996 and EVP, Business Development
until October 2000 when he was appointed Chief Technology
Ofcer. In October 2001, he was appointed to the Board.
Committees
Remuneration Committee (Chairman until
31 December 2013)
Audit Committee
Promethean World plc (Non-Executive Director and
Chairman of the Audit Committee)
Livestation Limited (Chairman)
Pouncer Media Limited (Chairman)
Time on Board
9 years 2 months
Expertise
Philip Rowley joined the Board in January 2005 and will be
retiring at the 2014 AGM. He was Chairman and CEO of
AOL Europe, the internet services and web brands provider
until February 2007 and Chairman of HMV Group plc until
early 2013. He is a qualied chartered accountant and was
Group Finance Director of Kingsher plc from 1998 to 2000
and Deputy CEO and CFO of the General Merchandise
Division until 2001. Prior to that, his roles included EVP, Chief
Financial Ofcer of EMI Music Worldwide.
ARM Holdings plc
6
CORPORATE GOVERNANCE
A BALANCED
BOARD STRUCTURE
This section and the Remuneration report detail how the Group
has applied the principles of good governance contained in the
UK Corporate Governance Code (September 2012).
Compliance statement
The Group has complied with the provisions
of the UK Corporate Governance Code
throughout 2013 and to the date of this
document. The Group also achieved full
compliance with the requirements of section
404 of the Sarbanes-Oxley Act 2002 (US) for
the eighth successive year. The Companys
American Depositary Shares are listed on
NASDAQ and we are therefore subject to
and comply fully with NASDAQ rules, US
Securities laws and Securities and Exchange
Commission rules to the extent that they
apply to foreign private issuers. We explain
in the reports below how we applied the
provisions and principles of the FCA Listing
Rules, the Disclosure and Transparency Rules,
and the UK Corporate Governance Code
throughout the year.
Board
The Board is collectively responsible for the
overall conduct of the Groups business.
The Boards core activities include:
providing leadership for the Group;
active engagement in developing the
Groups long-term strategy;
monitoring executive actions, standards
of conduct, performance against business
plans and budgets and ensuring that the
necessary nancial resources and people
are in place for the Group to meet
its objectives;
obtaining assurance that material risks to
the Group are identied, that appropriate
systems of risk management and control
exist to mitigate such risks and dening the
Groups appetite for risk;
Board and executive
management succession;
responsibility for the long-term success
ofthe Group having regard to the interests
of all stakeholders;
responsibility for ensuring the efectiveness
of and reporting on our system of
corporate governance.
The Board has a formal schedule of
matters specically reserved for its decision,
which include:
Group strategy and major
business decisions;
annual budgets and long-term plans;
major capital expenditure, acquisitions,
disposals and investments;
nancial reporting, controls and
nancial structure;
shareholder communications;
key policies;
key advisers.
The schedule was reviewed in January 2014.
Composition and operation of
theBoard
At the end of 2013, the Board comprised
three executive directors (the Chief Executive
Ofcer, the Chief Financial Ofcer and the
Chief Technology Ofcer), the Chairman,
and six independent non-executive directors.
Stuart Chambers was appointed to the Board
as Chairman designate on 27 January 2014.
Their biographies appear on pages 4 to 5.
John Buchanan and Philip Rowley will be
retiring from the Board at the 2014 AGM.
7
CHAIRMAN
Stuart Chambers
KEY OBJECTIVES:
leadership, operation and
governance of the Board.
BOARD
11 directors three executive directors, the Chairman
and seven independent non-executive directors.
KEY OBJECTIVES:
the overall conduct of the Groups business and setting the Groups strategy.
NOMINATION
COMMITTEE
Three independent
non-executive directors,
Chairman Stuart Chambers.
KEY OBJECTIVES:
to make recommendations to the
Board for future appointments to
ensure that the Board comprises
individuals with appropriate skills,
knowledge and experience
to be efective in discharging
its responsibilities.
RISK REVIEW COMMITTEE
Two executive directors, two other
Executive Committee members and two
senior executives, Chairman Mike Muller.
KEY OBJECTIVES:
to identify and evaluate risks which may impact
the Groups strategic and business objectives
and to monitor the progress of actions
designed to mitigate such risks.
EXECUTIVE COMMITTEE
14 members including the executive
directors, key division and function
heads, Chairman Simon Segars.
KEY OBJECTIVES:
to focus on strategy, the day-to-day running
of the business, nancial and competitive
performance, organisational development,
succession planning and implementation of policies.
DISCLOSURE COMMITTEE
Six members chaired by the Chief
Executive Ofcer and including three
other Executive Committee members.
KEY OBJECTIVES:
to ensure that disclosures made to
shareholders and the investment community
are accurate and complete.
AUDIT
COMMITTEE
Four independent
Chairman Kathleen
ODonovan.
KEY OBJECTIVES:
to monitor the integrity of the
Groups nancial statements, to
review the efectiveness of the
Groups internal controls over
nancial reporting, and to provide
oversight for the Groups risk
management systems.
REMUNERATION
COMMITTEE
Four independent
Chairman Larry Hirst.
KEY OBJECTIVES:
to review and make
recommendations to the Board
on executive remuneration.
CHIEF EXECUTIVE
OFFICER
Simon Segars

KEY OBJECTIVES:
to manage the Groups business
and, with the Executive Committee,
to implement Group strategy
and policies.
BOARD AND COMMITTEE STRUCTURE
ARM Holdings plc
8
Conicts
The Board is fully aware of the other
commitments of the former and current
Chairman, and the executive and non-
executive directors. All directors have
completed conicts of interest questionnaires
and any planned changes in their directorships
outside the Group are subject to prior
approval by the Board. No conicts of
interest arose in 2013 or to date in 2014,
and no other situations have been identied
that might lead to a conict of interest.
In circumstances where a potential conict
arises, the Board (excluding the director
concerned) would consider the situation
and either authorise the arrangement in
accordance with the Companies Act 2006
and the articles of association or take other
appropriate action.
Independence
The Board reviewed the independence of
the non-executive directors on appointment
and continues to do so on an ongoing
basis. The independence of the longer
serving non-executive directors, Kathleen
ODonovan and Philip Rowley, has been
considered. Kathleen ODonovan, who has
now served for seven years, remains highly
committed and continues to be regarded
as independent. In her capacity as Senior
Independent Director and Chairman of
the Audit Committee her independence
is demonstrated on many occasions each
year through her robust approach to
questioning management. Philip Rowley,
who will be retiring from the Board in May
2014, has demonstrated his independence
on many occasions during his tenure in
both his interactions with management and
shareholders on remuneration matters.
The other non-executive directors have
shorter service and are regarded as
independent in character, judgement and
behaviour, based on both participation and
performance at Board and Committee
meetings. There are no relationships or
circumstances that are likely to afect the
judgement of any of them. It is the policy
of the Board to review the continued
appointment of non-executive directors
after six years service. Both Sir John
Buchanan and Stuart Chambers were
regarded as independent at the time of their
respective appointments as Chairman and
Chairman designate.
Non-executive directors expertise
Kathleen ODonovan has been the Senior
Independent Director since January 2011.
In this capacity she acts as a sounding
board for the Chairman and provides
a communication channel between the
Chairman and the non-executive directors.
She is also available to discuss matters with
shareholders, if required. During 2013
and early 2014, she led the Nomination
Committee through the process to identify
and recommend the recruitment of the
new Chairman.
Janice Roberts (who is based in Silicon Valley),
Larry Hirst, Andy Green and Eric Meurice all
have a broad understanding of the Groups
technology and the practices of major US-
based technology companies. Philip Rowley
and Kathleen ODonovan are both nancial
experts with strong nancial backgrounds.
The benecial interests of the directors in the
share capital of the Company are set out in
the Remuneration report.
Board meetings
Board and Committee papers are circulated
electronically before each meeting.
The business considered at each Board
meeting includes the Chief Executive
Ofcers report on the status of the business,
(incorporating industry and strategic
development) and the Chief Financial
Ofcers report (incorporating nancial,
market and investor-related information).
On a cyclical basis, Board agendas also include
detailed assessments of risk, governance,
corporate responsibility, public afairs,
performance by division and geographical
area, competitive landscape, R&D and
organisation/succession planning.
Approximate allocation of Board agenda time in 2013
Strategy and risk 51%
Business updates/
nancial reporting 30%
Division and
function updates 12%
Governance 7%
In the event that a director is unable to attend
a meeting or participate by conference call,
they receive and read the documents for
consideration at that meeting, and have the
opportunity to relay their comments and, if
necessary, to follow up with the Chairman or
the Chief Executive Ofcer after the meeting.
The non-executive directors are encouraged
to suggest matters for Board discussions, and
in 2013 they were active in contributing to the
agenda for the strategy review and ensuring
the amount of time spent on strategic
and operational issues was appropriately
balanced. The independently conducted
Board evaluation in 2013 conrmed that
the September 2013 strategy meeting was
considered to be thorough and informative.
An additional strategy meeting has again
been scheduled during 2014 and strategy will
continue to be covered regularly at Board
meetings during the year.
CORPORATE GOVERNANCE CONTINUED
9
During 2013, the non-executive directors
encouraged the executive team to allocate
resources to accelerate the development of
technology in the Internet of Things arena.
A new group was set up in 2013 to focus on
the Internet of Things and has been enhanced
by the acquisition in July 2013 of Sensinode,
which has developed software for connecting
wireless low-power, low-cost devices to
the internet.
Key senior executives attend Board meetings
throughout the year, which gives the non-
executive directors visibility of executive
talent below executive director level, direct
information about business developments,
and informs them on potential management,
succession. In particular, each year the general
managers of the divisions present a review of
past performance against key objectives and
KPIs, and their proposals for the coming year.
During 2013, the Chairman held at least two
meetings with the non-executive directors
without the executives present, and the
non-executive directors met on at least one
occasion without the Chairman being present.
The table above shows directors attendance
at scheduled Board meetings, conference calls
and ad hoc meetings which they were eligible
to attend during the 2013 nancial year.
Scheduled
Board meetings
Conference calls/
ad hoc meetings
Number 6 6
Sir John Buchanan 6/6 5/6
Simon Segars 6/6 6/6
Andy Green 6/6 6/6
Larry Hirst 5/6 6/6
Eric Meurice 2/3 3/3
Mike Muller 6/6 5/6
Kathleen ODonovan 6/6 5/6
Janice Roberts 6/6 5/6
Philip Rowley 6/6 6/6
Tim Score 6/6 5/6
Warren East (retired 30 June 2013) 3/3 3/3
Mike Inglis (retired 31 March 2013) 2/2 1/1
Chairman
As previously announced and also explained
on page 2, Sir John Buchanan retired
as Chairman on 1 March 2014 and will
leave the Board at the close of the AGM
on 1 May 2014. He is also Chairman of
Smith & Nephew plc and the International
Chamber of Commerce (UK), and is Senior
Independent Director of BHP Billiton plc.
He has attended all meetings and conference
calls since the date of his appointment and
also several induction sessions, meeting
members of the executive team and a range
of senior managers to increase his knowledge
and understanding of the various parts of the
business and its operations.
Stuart Chambers joined the Board on
27 January 2014 and took over from Sir
John Buchanan as Chairman on 1 March
2014. He is Chairman of Rexam plc and
an independent non-executive director
ofTesco plc.
The Chairman has primary responsibility for
running the Board and the Chief Executive
Ofcer has executive responsibility for the
operations and results of the Group, and
also for making proposals to the Board in
relation to the strategic development of the
Group. The Board recognises that the roles
of the Chairman and Chief Executive Ofcer
are distinct (as described below) and also
the importance of establishing an excellent
working relationship between them.
During 2013, there were regular meetings
and calls between the Chairman and the
Chief Executive Ofcer outside Board
meetings. These discussions provided and
continue to provide opportunities for the
exchange of information, mentoring and
regular updates on the list of priorities that
the Board set for the Chief Executive Ofcer
on his appointment. These priorities include:
development of the organisation and the next
generation of executives, working efectively
with the Board, ensuring appropriate strategic
decisions are made on investments, employee
motivation, and customer focus.
ARM Holdings plc
10
Main responsibilities of the Chairman include:
leadership of the Board and creating the
conditions for overall Board and individual
director efectiveness, and a constructive
relationship with good communication
between the executive and non-
executive directors;
ensuring that the Board as a whole
plays a full and constructive part in the
development of strategy and overall
commercial objectives;
chairing the Nomination Committee,
which initiates succession planning
to retain and build an efective and
complementary Board;
ensuring that there is efective
communication with shareholders and
that members of the Board develop an
understanding of the views of the major
investors in the Group;
promoting the highest standards
of integrity, probity and corporate
governance throughout the Group,
particularly at Board level;
ensuring that the performance of the
Board as a whole, its Committees
and individual directors is formally and
rigorously evaluated at least once a year.
Main responsibilities of the Chief Executive
Ofcer include:
proposing and developing the Groups
strategy and overall commercial
objectives in conjunction with the
Executive Committee;
day-to-day management of the
Groups business;
chairing the Executive Committee;
maintaining a close working relationship
with the Chairman;
meeting regularly with ARMs leading
customers for executive discussions on
broad strategic and industry trends;
hosting discussions with inuential
media outlets;
fostering good relationships with
ARMs larger shareholders and major
nancial institutions;
representing the organisation in various
industry organisation and professional
associations, and activities within the local
community and at international level.
Company Secretary
Patricia Alsop acts as Secretary to the Board
and Board Committees, and all Board
members have individual access to her
advice. She ensures that the Board receives
all relevant information in a timely manner,
organises induction and training programmes,
and facilitates the Board evaluation in years
when this is conducted internally. She is also
responsible for ensuring that the correct
Board and Committee procedures are
followed and advises the Board on corporate
governance matters. The established
procedure under which directors can, where
appropriate, obtain independent legal or
other professional advice at the Groups
expense is also administered through her.
Annual Report, information and
communication with shareholders
andother stakeholders
The ultimate responsibility for reviewing and
approving the Annual Report and the quarterly
earnings releases, and for ensuring that they
present a balanced assessment of the Groups
position, lies with the Board.
The Board delegates day-to-day responsibility
for managing the Group to the Executive
Committee and has a number of other
Committees, details of which are set out on
the following pages.
Investor relations
The Board makes considerable eforts to
establish and maintain good relationships
with shareholders and the wider investment
community. There is regular dialogue with
institutional investors during the year, except
during close periods. The main channel of
communication continues to be through the
Ofcer and the VP of Investor Relations.
The Chairman, the Senior Independent
Director and the other directors are
available to engage in dialogue with major
shareholders as appropriate. Beginning in
2012, the Chairman of the Remuneration
Committee and the Chairman consulted with
shareholders on the terms of the new Long
Term Incentive Plan, which was approved at
the 2013 AGM. Philip Rowley also consulted
with major shareholders over incentive
programmes in 2013 and early in 2014.
The Board encourages communication
with private investors and part of the
Groups website is dedicated to providing
information for all investors, including
responses to frequently asked questions,
the investment case, product information,
press releases, RNS and Securities and
Exchange Commission (SEC) announcements,
and an interactive online version of the
Annual Report.
11
At present, over 30 sell-side analysts write
research reports on the Group and their
details appear on the Groups website.
Shareholders can also obtain telephone
numbers from the website, enabling them
to listen to earnings presentations and audio
conference calls with analysts. In addition,
webcasts or audiocasts of key presentations
are made available through the website.
Members of the Board develop an
understanding of the views of major
shareholders through any direct contact
that may be initiated by shareholders, or
through analysts and brokers briengs.
The Board also receives feedback from the
Groups brokers and nancial PR advisers,
who in turn obtain feedback from analysts
and brokers following investor roadshows.
All shareholders can register to receive the
Groups press releases via the internet.
AGM
The Board actively encourages participation at
the AGM, scheduled for 1 May 2014, which is
the principal forum for dialogue with private
shareholders. The Circular and Notice of AGM
are being sent to shareholders concurrently
with the distribution of this report, which is well
in advance of the required 20 working days
before the meeting. A presentation is made
outlining recent developments in the business
and an open question-and-answer session
follows to enable shareholders to ask questions
about the business in general. The Chairman,
who chairs the Nomination Committee,
will be present at the AGM. He will arrange
for the respective chairs of the Audit and
Remuneration Committees to be available to
answer questions and for all directors to attend.
All resolutions proposed at the 2014 AGM
will be decided on a poll and the voting results
will be published via RNS and the SEC, and
will also be available on the Groups website.
Board evaluation
The Board undertakes an annual review of its
efectiveness. In order to provide the longest
possible period in which to evaluate the
performance of the Board following the change
of Chief Executive Ofcer in July 2013, the
Board evaluation was deferred until late 2013.
This exercise was conducted by an external
provider, Independent Audit, who had detailed
individual discussions with all members of the
Board, four senior executives and the external
audit partner. The ndings were reported
to the Board in January 2014 and were the
subject of detailed discussion by the Board in
February 2014. Neither the Group nor any
individual director has any connection with
Independent Audit.
The 2013 evaluation covered:
Board composition and dynamics;
the Boards role;
the operation of the Board, which was
observed rst hand;
the operation of each of the
Audit, Remuneration and
Nomination Committees.
The overall conclusion was that individual
Board members are satised that the Board
works well and operates efectively in an
environment where there is constructive
challenge from the non-executive directors.
They are also satised with the contribution
made by their colleagues and that Board
Committees operate properly and efciently.
There are a number of areas for further
consideration and action in 2014 including:
the size, composition and mix of the Board;
succession planning both within
the executive team and the non-
executive directors;
providing improved visibility of the
strategicplanning and review process
tothe non-executive directors;
the number and scheduling of
Board meetings;
increased focus on strategy which has been
addressed by the Chief Executive Ofcer
including a strategy update within each of
his reports and scheduling an additional
full-day meeting in April 2014;
a continuing programme of development
sessions/teach-ins for the non-executive
directors in order to provide them with
a more detailed appreciation of possible
strategic and technological developments.
The rst of these, on the Internet of
Things technology, was held in February
2014 andfurther sessions are planned;
continuing development and
documentation of risk assessment
andrisk appetite.
ARM Holdings plc
12
The non-executive directors will also meet
with the Chairman outside Board meetings
on a more frequent basis to discuss any issues
and concerns, which will provide opportunities
for greater sharing of views and understanding
without impacting on the business of Board
meetings themselves. An internally facilitated
Board evaluation will take place during 2014
and the Board intends to continue with a cycle
of external evaluations every three years with
internal evaluations in between.
Induction
A personalised induction programme is
arranged for new directors, tailored to their
specic requirements, the aim of which is to
introduce them to key executives across the
business and to enhance their knowledge and
understanding of the Group and its activities.
In 2013, this included continuation of the
programme for Sir John Buchanan and a new
programme, which will continue during 2014,
for Eric Meurice who joined the Board in July
2013. An induction programme is underway
for Stuart Chambers, who was appointed
to the Board on 27 January 2014 and took
over the Chairman role on 1 March 2014.
During the rst three months this will include
several days with the Chief Executive Ofcer
in Silicon Valley to see the Groups operations
and meet senior executives based there, in
addition to a series of individual meetings
with Board members, senior executives and
external advisers based in the UK.
All members of the Board are encouraged
to spend time outside Board meetings with
members of the Executive Committee
and senior management and a number of
individual meetings took place during 2013,
which will continue during 2014. All Board
members are invited to attend the annual
ARM Partner Meeting in the UK, which
is the Groups key customer event of the
year and/or the ARM TechCon in the US.
Board members are also invited to attend the
annual Analyst and Investor Day. These events
ofer the opportunity to understand more
about the business, products, technology
development roadmap, customer base and
investor perspective.
Training
Board members receive guidance on the
regulatory regimes and corporate governance
framework that the Group operates under.
In particular, during 2013 the Board received
an update from the Company Secretary on
current governance topics including executive
remuneration and Board diversity. The Group
has a commitment to training and all directors,
executive or non-executive, are encouraged
to attend suitable training courses at the
Groups expense.
Terms of reference
The terms of reference of the Audit,
Remuneration and Nomination Committees
are published on the Groups website at
www.arm.com.
Executive Committee
The Executive Committee is responsible for
developing and implementing the strategy
approved by the Board. In particular, the
Committee is responsible for ensuring
that the Groups budget and forecasts are
properly prepared, that targets are met, and
for generally managing and developing the
business within the overall budget. In addition,
the Committee ensures that risks identied
through the Operational Planning process,
particularly corporate-level risks, are managed
and mitigated to the greatest extent possible.
Variations from the budget and changes in
strategy require approval from the main Board
of the Group. The Executive Committee,
which meets monthly, now comprises the
Chief Executive Ofcer, Chief Financial
Ofcer, the Chief Technology Ofcer,
the Chief Operating Ofcer, the Chief
Information Ofcer, the EVP and President
Product Groups, the EVP and President of
Commercial and Global Development, the
EVP Strategy, the EVP and General Manager
Physical Design Group, the General Manager
of the Internet of Things business unit, the
Chief Marketing Ofcer, the EVP People, the
General Counsel and the Company Secretary.
Executive Committee meetings are attended
by other senior operational personnel, as
appropriate. In recognition of the increasing
importance of Asia as both a market and
an engineering base, the President of ARM
Greater China, who is based in China, was
appointed as an Executive Committee
observer on 1 January 2014 and now attends
all meetings.
Biographies of the members of the Executive
Committee appear on the Groups website at
www.arm.com.
Management structure
The Group has a traditional UK Board
structure with a unitary Board comprising
the Chairman, executive and non-executive
directors. The Audit and Remuneration
Committees are made up of independent
non-executive directors and they, together
with the Nomination Committee, report to
the Board. The divisions and functions report
to the Executive Committee. The Risk Review
Committee reports periodically to the
Executive Committee, Audit Committee and
the Board. The VP Business Assurance/Head
of Internal Audit also has a separate reporting
line to the Chairman of the Audit Committee.
13
Governance Review Teams Operational Review Meetings
Committees
Board
Remuneration
Committee
Business
Review Meeting
KPI Financial
SignOf Meeting
Sales
Commission Meeting
Nomination
Committee
Travel
Policy Committee
Energy Use and
Climate Change
Committee
Corporate
Responsibility
Committee
Operations
Committee
Risk
Review Committee
IT Committee
Compliance
Committee
Operations
Review Team
Management
System Team
Customer
Satisfaction Team
Corporate Product
Approval Team
Security
Review Team
Business
Continuity Team
Health, Safety and
Environment Team
Executive Committee
Disclosure Committee
Holdings Board Audit Committee
Business
Assurance /
Internal Audit
MANAGEMENT STRUCTURE
ARM Holdings plc
14
AUDIT COMMITTEE

Committee composition and meeting
attendance during 2013
Name of director Position Meetings attended
Kathleen ODonovan Senior Independent Director, Committee Chairman 6/6
Larry Hirst Independent non-executive director 5/6
Janice Roberts Independent non-executive director 6/6
Philip Rowley Independent non-executive director 6/6
Kathleen ODonovan has chaired the
Committee since January 2011. She is
qualied as the Committee nancial expert
as dened in the Sarbanes-Oxley Act 2002
(US). Philip Rowley is also qualied to full this
role. Both have recent and relevant nancial
expertise in compliance with the Code
provision C3.1. The external auditors, Chief
Executive Ofcer, Chief Financial Ofcer, the
VP Finance, ARM Group, the VP Business
Assurance/Head of Internal Audit, the Head
of Tax, and the Company Secretary attend
all meetings in order to ensure that all the
information required by the Committee for it
to operate efectively is available. The Group
Chairman and other Board members also
attend Committee meetings from time to time.
KATHLEEN ODONOVAN
Committee Chairman
The Committees key objectives are to provide efective
nancial governance and to assist the Board in ensuring the
integrity of the Groups nancial reporting. The Committee
oversees theexternal and internal audit processes, and reviews
the risk management framework, the efectiveness of the risk
management processes, and thesystem of internal control.
TheCommittee will continue to evolve its activities in the light
ofguidance from regulators and prevailing economic conditions.
The Chairman of the Audit Committee
reports to the Board on how the Committee
has discharged its responsibilities.
On 1 January 2014, Eric Meurice joined the
Committee and Larry Hirst stepped down as
a member, on his appointment as Chairman
of the Remuneration Committee.
Representatives of the Groups external
auditors have a private session with the
Committee at the start of each meeting,
without other management being present.
The Chairman of the Committee also has
separate meetings with the VP Business
Assurance/Head of Internal Audit, the
Chairman of the Risk Review Committee,
theexternal auditors, the Chief Financial
Ofcer and the VP Finance, ARM Group
during the year to discuss their ongoing work
and any areas of concern, and also to invite
certain members of management to report
on key areas of risk and control.
During 2013, the Chairman of the
Committeeand the external audit partner
again organised a meeting for the UK-based
PricewaterhouseCoopers LLP audit and
tax teams and the ARM nance and tax
teams to discuss the audit approach, and to
understand the planning for the year end, and
to gain insights into the corporate governance
environment and the Groups expectations
from the internal and external audit processes.
15
In line with the requirement in the UK
Corporate Governance Code applicable
to nancial years commencing on or after
1 October 2012, based on both internal and
external audit reviews and conrmations from
management, the Committee and the Board
believe that the Annual Report taken asa
whole is fair, balanced and understandable
and provides the information necessary
for shareholders to assess the Companys
performance, business model and strategy.
Principal activities of the Committee
during 2013:
in conjunction with management and the
Risk Review Committee, the Committee
undertook an in-depth review of the
Groups risk assessment and reporting
framework, with assistance and guidance
from external advisers. This work has
resulted in the development of a new
format for the Corporate Risk Register,
Risk Assurance Matrix and Risk Heatmap.
These documents are expected to continue
to evolve during 2014, with feedback from
the Board being provided through the
ongoing risk appetite discussions.
reviewing a detailed response from
management to the questions raised by
the Conduct Committee of the Financial
Reporting Council on the Annual Report
for the year ended 31 December 2012.
The Groups response was accepted with
no further questions being raised. We have
included certain additional disclosures
relating to goodwill impairment testing in
this Annual Report.
reviewing the work and results of Business
Assurance and Internal Audit in relation
to the 2013 Audit Plan and approving the
Audit Plan for the 2014 year.
reviewing the 2013 external audit
plans and reports, including those of
overseas subsidiaries.
considering and approving the assumptions
in the annual goodwill impairment review,
prior to approval by the full Board.
reviewing the status of Sarbanes-Oxley
compliance and testing.
considering any whistleblowing reports (of
which there were none in 2013).
implementing our policy on the
engagement of the external auditors to
supply non-audit services and assessing
their nature, extent and cost efectiveness.
assessing the external auditors
independence and objectivity, the
efectiveness of the audit process and fees.
undertaking an assessment of the
efectiveness of the Committee (which
took place early in 2014 and concluded
that its performance was efective).
monitoring the integrity of the nancial
statements of the Group and any formal
announcements relating to the Groups
nancial performance and reviewing any
signicant nancial reporting judgements
and the clarity of disclosures.
reviewing the efectiveness of the Groups
internal controls over nancial reporting.
providing oversight of the Groups risk
management framework and process.
making recommendations to the Board in
relation to the appointment, remuneration
and resignation or dismissal of the Groups
external auditors.
considering compliance with legal
requirements, accounting standards, the
Listing Rules of the Financial Conduct
Authority and the requirements of the SEC.
monitoring the assessment of going
concern, in advance of its consideration
bythe Board.
Financial reporting judgements:
Each quarter, the Committee reviewed
accounting papers prepared by management
on areas of nancial reporting judgement
and matters giving rise to exceptional items.
These included:
Consideration of the accounting treatment
of substantial transactions, including any
judgemental matters in relation to revenue
recognition for major licence contracts
with customers.
Consideration of the judgements
surrounding the goodwill impairment
review performed in the fourth quarter
of2013. In light of the strong performance
of the Physical IP Division business in
the year and a robust order backlog,
the Committee was comfortable with
managements assessment that no
reasonable variation in key assumptions
would afect the conclusion that no
impairment in carrying value was required.
In reaching this conclusion, the Committee
considered the detailed work and sensitivity
analyses presented by the external auditors.
In connection with the Groups participation
in a consortium of technology companies
that acquired rights to MIPS Technologies
Incs portfolio of patents in February
2013, consideration of the impairment
of the value of $100.5 million, which was
classied as an available-for-sale (AFS)
nancial asset. In Q4 2013, the trust made
a strategic decision not to pursue a licensing
programme, which resulted in a decision
that the asset had been impaired, giving
rise to a non-cash exceptional charge of
59.5 million. The Committee reviewed
the situation in detail and concurred with
managements view that this impairment
was necessary. More details are contained
innote 6 on page 85.
Consideration of managements
judgement of the level of provision
required to be carried in relation to
ongoing litigation involving either the
Group or its licensees, and in particular
where the Group may be required to
indemnify its licensees, including receiving
regular updates from the Groups
General Counsel.
ARM Holdings plc
16
Consideration of the key judgements
made in estimating the Groups tax charge
and review of any tax provisions in respect
of open areas, together with assessment
from independent experts.
Consideration of the Groups tax strategy
and key developments that may inuence
the Groups global tax position.
Internal Audit
The Committee noted further improvements
in the development and efectiveness of the
Business Assurance/Internal Audit function
in 2013. In particular, the Audit Assurance
System (AAS) deployed during 2012 to
provide improved document control, risk
assessment and reporting, was reviewed
in 2013. Further improvements to the
AAS are underway and are expected to
be completed in 2014. We reviewed the
resources of the team and the plans for
their deployment during the year. We also
noted the key relationships between the
Assurance team and the Compliance and
Risk Review functions, as well as the working
relationship with the external auditors
PricewaterhouseCoopers LLP (PwC) and
Lloyds Register Quality Assurance.
As well as the Committees formal meeting
with the VP Business Assurance/Internal
Audit, the Chairman of the Committee meets
him informally throughout the year in order to
provide the opportunity for open and timely
dialogue. Typically we discuss the content and
quality of papers intended for the Committee,
emerging business risks, the quality of
engagement with IA and any concerns therein.
Audit plan and Approach
During the year we reviewed PwCs audit
strategy, and the audit approach, key areas
of focus and audit plan produced as a result.
PwC explained their risk-based approach,
including the interaction with their work on
internal control for the purposes of expressing
an opinion under section 404 of the Sarbanes-
Oxley Act. The results of those procedures
were reported in January and February
2014. No material misstatements remained
unadjusted in the nancial statements.
In addition to the private meetings held with
the external auditors and the Committee,
the Chairman of the Committee meets with
thePwC team on a regular basis to provide
the opportunity for an open communication
regarding any concerns, aswell as to
understand their assessment ofkey
judgements as they arise.
Auditor efectiveness and
partnerrotation
PricewaterhouseCoopers LLP have been the
Groups auditors since it listed on the London
Stock Exchange in April 1998. The external
auditors are required to rotate the audit
partner responsible for the Group and
subsidiary audits every fth year-end. The last
audit partner rotation took place early in 2012.
The Committee considers that the relationship
with the auditors is working well and remains
satised with their objectivity and efectiveness.
This view is supported by a review of the
efectiveness of the external audit process,
which was undertaken early in 2014 with
Board members and senior managers who
interact with the auditors. It looked at the
robustness of the audit, and the quality of
delivery, people and service, and concluded
that the auditors are efective. Accordingly,
the Committee has not considered it
necessary to date to require the rm to
tender for the audit work. This situation will
be kept under regular review. The Committee
is actively monitoring the developments
and ongoing discussions in this area at the
Financial Reporting Council, the EU and the
Competition Commission.
Auditor independence
The auditors are required to and do
communicate with the Committee at least
annually as to whether there are any threats
to their independence and objectivity and,
if there are, what safeguards have been
applied. The Committee has also reviewed
the auditors Transparency report, paying
particular attention to the sections covering
internal controls, independence policies and
the results of external regulator reviews.
Having reviewed the safeguards in place, and
the contents of the Transparency report, as
well as noting the regular and recent rotation
of the audit partner, the Committee is satised
that the auditors procedures are sufcient to
maintain their independence and objectivity.
The Committee has also considered the level
of non-audit fees and believes that these are
at a level which does not compromise their
objectivity or independence in any way.
There are no contractual obligations
restricting the Groups choice of external
auditor. The Committee also keeps under
review the value for money of the audit.
Policy on auditors providing
non-audit services
To avoid the possibility of the auditors
objectivity and independence being
compromised, there is an agreed policy in
place on the provision of non-audit services
by the auditors, which sets out arrangements
for approving:
services that require general pre-approval
by the Committee;
services that require specic pre-
approval by the Committee before
work commences;
services that cannot be provided by
the auditors.
This non-audit services policy is reviewed
annually. The Groups tax advisory work
is carried out by the auditors only in cases
where they are deemed to be best suited
to perform the work in a cost-efective
manner, given their familiarity with the
Groups business. In other cases, the Group
has engaged another independent rm of
accountants to perform tax advisory work.
The Group does not normally award general
consulting work to the auditors. From time
to time, however, the Group will engage
the auditors to perform work on matters
relating to benchmarking of the internal audit
function, human resources, and royalty audits.
A breakdown of fees paid to the auditors can
be found in note 5 to the nancial statements.
Kathleen ODonovan
Committee Chairman
5 March 2014
AUDIT COMMITTEE CONTINUED
17
NOMINATION COMMITTEE
As announced on 27 January 2014 it is with
much regret that Istepped down as Chairman
on 1 March 2014, and will be retiring from the
Board at the AGM on 1 May 2014 due to a
medical condition. The Committee, led for this
purpose by the Senior Independent Director,
was active in 2013 and early 2014 in nalising
arrangements for the appointment of a new
Chairman and we were delighted to welcome
Stuart Chambers who joined the Group on
27 January 2014 as Chairman Designate and
took over as Chairman on 1 March 2014.
The Committee, now chaired by Stuart
Chambers, continues to focus on dening
the skills and attributes required for future
non-executive director appointments to ensure
that the Board comprises individuals with the
requisite skills, knowledge and experience to
ensure that it is efective in discharging its duties.
SIR JOHN BUCHANAN
Nomination Committee Chairman
The Committees key task in 2013 was the selection of a
newChief Executive Ofcer, which resulted in the promotion
of Simon Segars to the role on 1 July 2013. This followed
anextensive externally conducted review of candidates
worldwide, and Simons proven technology expertise and
management skills across a range of senior executive roles
resulted in him being selected. The Committee also identied
and appointed Eric Meurice, who has signicant experience
inthe semiconductor industry, to the Board on 1 July 2013
asan additional independent non-executive director. Again,
thisappointment followed an extensive externally conducted
review of candidates.
ARM Holdings plc
18
Nomination Committee composition and
meeting attendance during 2013
Name of director Position Meetings attended
Sir John Buchanan Chairman 3/3
Kathleen ODonovan Senior Independent Director 4/4
Philip Rowley Independent non-executive director 4/4
Andy Green Independent non-executive director
(appointed 21 February 2013) 3/3
During the year, the activities of the
Committee included engaging external search
rms to seek and introduce candidates and
interviewing a number of candidates in each
case for the following roles:
Chief Executive Ofcer (CEO), which
resulted in the Committee recommending
the appointment of Simon Segars.
Chairman, which resulted in the
Committee recommending the
appointment of Stuart Chambers.
Independent non-executive director, which
resulted in the Committee recommending
the appointment of Eric Meurice.
The Chairman led the process for the
appointment of the new CEO and the
new independent non-executive director.
Kathleen ODonovan, in her capacity as
the Senior Independent Director, led the
process for the appointment of the new
Chairman, chairing relevant meetings of
the Nomination Committee and a number
of conference calls between Committee
members. The recruitment process involved
a review by the Board of all aspects of
the role of Chairman, its requirements,
Board dynamics and how best the new
Chairman should interact with the Board,
the Executive Committee, shareholders and
other stakeholders.
The external search rms were Zygos in the
case of the Chairman recruitment and Egon
Zehnder in relation to the CEO and non-
executive director recruitments. There is no
connection between the Group, any individual
director, nor either of the search rms.
Andy Green joined the Committee in February
2013. His business and skills background
contributed valuable experience to our work.
In addition to leading the process for Board
appointments and making recommendations to
the Board in relation to new appointments, the
Committees general responsibilities include:
reviewing succession planning, Board
composition and balance;
considering the roles and capabilities
required for each new appointment, based
on an evaluation of the skill, experience,
independence and knowledge of the
existing directors.
The Nomination Committee is seeking
further candidates as independent non-
executive directors with appropriate skills,
experience and diversity to complement
our existing Board members and maintain,
collectively, an efective Board. We will also
be looking for nancial expertise, in light of
the forthcoming retirement of Philip Rowley
in May 2014, following his nineyears service
on the Board.
Sir John Buchanan
Chairman (until 1 March 2014)
5 March 2014
NOMINATION COMMITTEE CONTINUED
19
CORPORATE GOVERNANCE REPORT

Internal control/risk management
The Group fully complies with the UK
Corporate Governance Code (September
2012)s provisions on internal control, having
established procedures to implement in full
the Turnbull Guidance Internal Control:
Revised Guidance for Directors on the
Combined Code. The Groups risks are
managed within a systematic process of risk
identication and assessment. The detailed
risk management process is explained in the
Risk management and principal risks section
on pages 47 to 49 of the Strategic Report.
The Audit Committee is responsible for
ensuring that the risk management framework
and process is operating efectively. The Risk
Review Committee reviews the Corporate
Risk Register (CRR), Risk Assurance Matrix
(RAM), and risk heatmap on a quarterly basis,
and minutes of its meetings are reviewed
by the Audit Committee. The Executive
Committee and the Board also review
these documents at least twice each year.
The Board conrms that the necessary actions
have been or are being taken to remedy any
signicant failings or weaknesses identied
from this process inatimely manner.
The Board has overall responsibility for
ensuring that the Group maintains an
adequate system of internal control and
risk management, and for reviewing its
efectiveness, while implementation of
internal control systems is the responsibility
ofmanagement. The Group has implemented
an internal control system designed to
help ensure:
the efective and efcient operation of
the Group and its divisions by enabling
management to respond appropriately to
signicant risks to achieving the Groups
business objectives;
the safeguarding of assets from
inappropriate use or from loss and fraud,
and ensuring that liabilities are identied
and managed;
the quality of internal and
external reporting;
compliance with applicable laws and
regulations and with internal policies on the
conduct of the Groups business; and
the ability to recover in a timely manner
from the efects of disasters or major
accidents that originate outside the
Groups direct control.
Compliance with section 404 of the
Sarbanes-Oxley Act 2002 (US) has been
successfully achieved for each nancial year
since it became efective for foreign private
issuers in 2006. This is reported on in more
detail in the annual report on Form 20-F
that is led with the SEC. The processes and
procedures for identifying, evaluating and
managing the signicant business, operational,
nancial, compliance and other risks facing
the Group have been successfully integrated
into day-to-day business operations through
our internal control system. This is known as
the ARM Management System (AMS) and is
proven to provide a sustainable solution for
ongoing compliance.
The AMS, which covers nancial, compliance
and operational controls, is fully documented
and compliance is monitored through
periodic controls testing during each year.
The efectiveness ofindividual controls is
also reviewed with their owners within the
divisions and functions to ensure efcacy and
relevance. The Business Assurance function
reports on the status of the AMS to the
Audit Committee at least twice each year.
The Compliance and Audit Committees
also monitor the satisfactory remediation
of any identied control issues with Group-
level signicance.
The Board has reviewed and approved the
system of internal control, including internal
controls over the consolidation process
and nancial reporting, which have been in
place for the year under review and up to
the date of approval of the Annual Report
and nancial statements. These controls
consist of extensive reviews by qualied and
experienced individuals, underpinned by a
system of checklists which ensures that all
elements of the nancial statements and
appropriate disclosures are considered and
accurately stated.
Control systems are designed to manage
rather than eliminate the risks inherent in a
fast-moving, high-technology business and
can, therefore, provide only reasonable
and not absolute assurance against material
misstatement or loss.
A description of the composition,
responsibilities and operation of the
Remuneration Committee is set out in the
Remuneration report.
The Group has a number of other
Committees and bodies that contribute to the
overall control environment. These include:
Risk Review Committee
The Risk Review Committee comprises the
Chief Technology Ofcer, the Chief Financial
Ofcer, the Chief Operating Ofcer, the
VP Finance, ARM Group, the VP Business
Assurance/Head of Internal Audit and the
Company Secretary. The Groups process
for the identication, ownership, mitigation
and reporting of risk was enhanced further
during 2013. The Committee established
a CRR some years ago, which summarises
the key risks faced by the Group and sets
out risk management activities, the sources
of assurance and action plans to mitigate
any signicant residual risk. Residual risks are
assessed in terms of likelihood and impact
and mapped onto the RAM. Each risk on
the CRR is owned by a member of the
senior management team. Risk management
action plans are managed within the relevant
operational plans of the divisions and
corporate functions.
ARM Holdings plc
20
During 2013, the Committee, in conjunction
with management, undertook an in-depth
review of our risk assessment and reporting
framework, with assistance and guidance from
external advisers. The work has resulted in
the development of a new format for the
CRR, RAM and risk heatmap with a better
focus on strategic risks. These documents are
expected to continue to evolve during 2014
with feedback from the Board being provided
through our ongoing risk appetite discussions.
The CRR and risk heatmap are normally
considered in detail by the Board in January
each year and, at the January 2014 review, the
Board conrmed that the level of residual risk
is regarded as acceptable and within normal
parameters for a company operating in ARMs
sphere of business. Risk appetite and a draft
set of guiding principles were also discussed
by the Board in January 2014. It was agreed
that the draft guiding principles are a good
starting point to inform and serve as a context
for the development and implementation of
the Groups strategy. The guiding principles
will continue to be rened during 2014.
The Risk Review Committee reports to
the Audit Committee throughout the
year. The Board and the Audit Committee
receive copies of the minutes of Risk Review
Committee meetings, the CRR and the risk
heatmap. These provide greater visibility of
the range of risks, the ways in which such risks
are mitigated, and an assessment of the level
and acceptability of residual risk. It is intended
that the Board will review changes to the CRR
and risk heatmap quarterly during 2014.
The Risk Review Committee typically meets
on a quarterly basis to review the CRR
and identify other risks that need to be
incorporated. Each risk owner is required
to review and demonstrate that residual
risks are being appropriately mitigated via
the operational plans. The divisions and
corporate functions operational plans are
updated quarterly. Changes that could impact
the CRR are reviewed by the Committee.
The Committee reports formally on the
CRR to the Executive Committee twice
a year, where its ndings are considered
and challenged.
More information on industry trends and
associated risks and opportunities are
included in the Risk management and principal
risks section of the Strategic Report on pages
47 to 49 and in the annual report on Form
20-F for the year ended 31 December 2013
which is available on the Groups website at
www.arm.com.
Compliance Committee
The Compliance Committee consists of
the General Counsel, the Chief Operating
Ofcer, the Chief Financial Ofcer, the EVP,
People, the VP Business Assurance/Head
of Internal Audit, the Chief Information
Ofcer, the VP Operations and the Company
Secretary. It oversees compliance throughout
the business with all relevant international
regulations, export controls, trading
requirements and standards; including direct
oversight of nancial, employment, health and
safety, environmental, business continuity and
security processes and policies.
Disclosure Committee
The Disclosure Committee comprises the
Ofcer, the VP Finance, ARM Group, the
General Counsel, the VP Investor Relations
and the Company Secretary. It is responsible
for ensuring that disclosures made by the
Group to its shareholders and the investment
community are accurate, complete and fairly
present the Groups nancial condition in all
material respects.
Management structure
In addition, there are various Committees,
Governance Review Teams and Operational
Review meetings that span the Group, as
shown in the management structure chart on
page 13. These include the regular Executive
Committee meetings chaired by the Chief
Executive Ofcer and the weekly
Business Review Meeting chaired by the Chief
Operating Ofcer, the purpose of which
is to monitor and control all main business
activities, revenue forecasts and other matters
requiring approval. Through this structure
management reviews (with representatives
from the divisions and functions) revenues,
orders booked, costs, product and project
delivery dates, and levels of defects found in
products in development. Relevant issues are
escalated to the Executive Committee which,
in turn, raises relevant issues to the Board of
the Group.
The seven Governance Review Teams and
three Operational Review meetings all report
to the Operations Committee, which in turn
reports to the Executive Committee.
Internal audit function
The Group has an internal audit function that
meets the criteria set out in the key practice
standards prescribed by the Institute of
Internal Auditors. The internal audit function
undertook a range of nancial and operational
audits in line with the plan agreed with the
Audit Committee. Additional resource
was provided by co-sourcing arrangements
in2013 and this will continue in 2014.
The Group successfully achieved certicate
renewal for ISO 9001 in December 2013.
The Group also has certication for
ISO27001, the international standard for
Information Security Management and for
ISO22301, the international standard for
Business Continuity Management, both of
which were maintained throughout the year.
The Groups Management System documents
processes and responsibilities across all
business functions and operations. As an
autonomous part of this system, the internal
audit function carries out a programme of
audits to assess its efectiveness and efciency,
resulting in continuous maintenance and
improvement of the system, adapting to
changes in business operations as necessary.
CORPORATE GOVERNANCE REPORT CONTINUED
21
To demonstrate compliance with the
Sarbanes-Oxley Act, the internal audit
function also maintains the documented
controls over nancial reporting and conrms
the operation of them either by direct testing
or through a monitored self assessment
programme. The management system
is audited externally by Lloyds Register
Quality Assurance for compliance with
the requirements of ISO 9001:2008, ISO
27001:2005, ISO 22301:2012 and as part of
its Business Assurance scheme supports the
Sarbanes-Oxley compliance activity.
Any signicant control failings identied
through the internal audit function or the
external auditors are brought to the attention
of the Compliance Committee and undergo
a detailed process of evaluation of both
the failing and the steps taken to remedy it.
There is then a process for communication
of any signicant control failures to the Audit
Committee. There were no signicant control
failures during 2013 or up to 3 March 2014,
being the latest practicable date before the
printing of this report.
Whistleblowing procedures
The Group operates a whistleblowing policy
for employees to report concerns about
any unethical business practices to senior
management in strict condence and without
fear of recrimination. If they prefer, they can
do so anonymously through an independent
third-party telephone line. The third-party
telephone line is tested regularly to ensure
that employees can use it if they have
occasion to. The Audit Committee receives
details of any such condential reports from
the Compliance Committee. There were no
whistleblowing reports in 2013. In 2014, there
has been one whistleblowing report, which is
currently under investigation.
Anti-bribery and anti-corruption
measures
The Groups Code of Business Conduct
and Ethics, which is available on the Groups
website, and the Company Rules incorporate
appropriate provisions to meet our
obligations under the UK Bribery Act 2010.
A training and communication programme is
in place to ensure that employees understand
the requirements of the Act and the reporting
procedures. This is targeted at employees
in roles or working in countries that are
regarded as higher risk.
Arrangements with contractors and suppliers
have been and will continue to be reviewed
and updated to reect the requirements
of the Act. The Compliance Committee
oversees the reporting procedures and
monitors and escalates reports in appropriate
circumstances. There were no reports of
concern during 2013 or up to 3 March 2014,
being the latest practicable date before the
printing of this report.
Human rights and equal opportunities
The Group has signed the Universal
Declaration of Human Rights and has
integrated relevant human rights principles
into its policies for employees and contractors.
There is growing interest worldwide in the
issue of the impact of business on human
rights. Reecting this, during 2013 the Group
worked with Shift, a specialist NGO working
on business and human rights, to understand
more about this agenda and its key guidelines,
the UN Guiding Framework on Business and
Human Rights.
As a result of our work with Shift, we are
condent that our risk in this area is low.
We have adopted a specic Human Rights
Policy within our Code of Business Conduct
and Ethics, in addition to our existing
policies on conict minerals, business ethics,
discrimination and export controls. This new
policy underlines our commitment to trying
to avoid any adverse impact on human rights
in the way we conduct our operations, and
designates contact points within the senior
executive team for any employee to seek
advice on any issue that might have human
rights implications.
The Group strives for equal opportunities for
all its employees and does not tolerate any
harassment of, or discrimination against, its
staf. The Group endeavours to be honest
and fair in its relationships with its customers
and suppliers and to be a good corporate
citizen, respecting the laws of the countries in
which it operates.
University Programme
The ARM University Programme (AUP)
is an important initiative for the future
of the Group and our relationships with
business Partners. The programme engages
with professors, researchers and students
worldwide using various channels, including
higher education institutions, government
agencies and ARMs business Partners.
The aim of the AUP is to develop the
next generation of engineers for the ARM
ecosystem, and 2013 saw the building of rm
foundations to achieve this aim. A strategy
and plan have been put in place to increase
the reach of the Group and its Partners
into academia worldwide and to scale up
AUP operations using strategic partnerships,
streamlined processes and procedures.
These include the AUP agship Lab-in-a-
Box (LiB) product which is now shipping.
This allows educators to use state-of-the-art
ARM and ARM Partners technologies in their
courses and laboratories. LiB, which is free of
charge, includes both hardware and software
and comprehensive teaching materials.
2013 saw the AUP sign up seven Partners:
Freescale, ST, NXP, Nuvoton, Cypress,
EnergyMicro/SiLabs and Xilinx for joint
university engagements and LiB hardware
platforms. In this time the AUP also doubled
its reach to universities as a result of the
above activities, with particularly high growth
in AsiaPAC and India. Further partnerships in
education and research are being explored in
2014 to enable the AUP to increase its reach
and scalability.
The Group and our Partners are seeing the
benets of the AUP, as students graduate
with experience in designing with ARM
products and as university engineering
departments base their own research around
ARM technology.
ARM Holdings plc
22
Environmental, social, corporate
governance and ethical policies
While the Group is accountable to its
shareholders, it also endeavours to take into
account the interests of all its stakeholders,
including employees, customers and suppliers
and the local communities and environments
in which it operates. The Chief Executive
Ofcer and the Chief Financial Ofcer take
responsibility for these matters, which are
considered at Board level.
Full details of our CR strategy and
achievements can be found in the main
CR report on our website (www.arm/
reporting2013) and a summary of highlights
from the year are included in the Sustainability
section of the Strategic Report on page 44.
The Group regularly monitors employees
awareness of Group policies and procedures,
including its conduct and ethical policies.
Employees and temporary contractors
reconrm their understanding of key policies
each year to help reinforce awareness.
The Group operates from a global
portfolio of ofces located in 15 countries.
The portfolio is made up entirely of ofces
since the Group has no manufacturing
activities. As such there are no hazardous
substances nor complex waste streams to be
managed as part of our business operations.
The Groups principal activity involves the
use of IT-based engineering tools to create
intellectual property. With the exception of
development systems products, the majority
of products sold by the Group comprise
microprocessor core and physical IP designs
that are delivered electronically to customers.
The Groups ongoing environmental impact
analysis informs management about key
environmental factors and how it can reduce
the impacts associated with them. In 2013
the Groups advanced compute resource
requirement continued to build upon the
success of its CEEDA Gold (Certied Energy
Efcient Data Centre Award) winning data
centre in Cambridge by commissioning the
design and build of a second major data
centre hub in Austin, Texas. This installation
has the potential to harness geothermal
energy as part of its design and therefore
could have a Power Usage Efectiveness (PUE)
rating some 25% lower than typical data
centres in this region. We have piloted new
build techniques for this project as part of a
programme to ensure minimal environmental
impact in our data centre strategy.
In 2013 ARM opened a new 120,000
sq ft ofce in Bangalore, which attained
Leadership in Energy and Environmental
Design (LEED) Gold Accreditation.
This accreditation recognises buildings for
high environmental performance in their
construction and operation. ARM aims to
meet the same LEED accreditation or the
equivalent Building Research Establishment
Environmental Assessment Methodology
(BREEAM) performance in all new ofce
construction as demonstrated in the design
briefs of other ofce expansions developed
during 2013. These building standards ensure
high environmental performance of the
Groups built environment throughout its
entire lifecycle.
The Group has continued to partner with
companies working in the low-impact building
technology eld. We have test installations
in place with Intellisense, Enlight and Alert
Me in our Cambridge ofces to improve
environmental performance using energy-
efcient ARM technology. Areas such as
lighting control and environmental monitoring
of plant for improved building efciency are
being developed with these partners and
will be extended to other key sites and new
build projects. The Group continued to
enhance its environmental data collection and
reporting ability during 2013 to support the
work of our Energy Use and Climate Change
Committee (EUCCC). This is an Executive-
sponsored steering group that directs activity
relating to environmental stewardship and the
management of our environmental aspects.
The Groups environmental policy is published
on our website within the CR report. In line
with the Companies Act 2006, the articles
of association enable the Group to send
information to shareholders electronically
and make documents available through the
website rather than in hard copy, which
provides both environmental and cost
benets. Shareholders can opt to continue
receiving a printed copy of the annual report,
subject to availability.
Health and safety
The Group operates in an industry and in
environments which are considered low
risk from a health and safety perspective.
However, the safety and welfare of
employees, contractors and visitors is a
priority in all Group workplaces worldwide.
The Group continues to improve its
management systems in this area with an audit
programme that includes external auditing of
processes and ofces.
More detail about the Groups approach to
environmental matters and health and safety
isincluded in the CR report.
Business model
A detailed description of ARMs business
model is set out on pages 16 to 17 of the
Strategic Report.
By order of the Board
Patricia Alsop
Company Secretary
CORPORATE GOVERNANCE REPORT CONTINUED
23
DIRECTORS REPORT
ADDITIONAL STATUTORY
INFORMATION
Description of operations, principal
activities and review of business
The principal operations and activities of the
Group and its subsidiaries are the licensing,
marketing, research and development of
RISC-based microprocessors, fabric system IP,
graphics processors, physical IP and associated
systems IP, software and tools. The nature
of the global semiconductor industry is such
that most of the Groups business originates
overseas and, to serve its customers better,
the Group has sales ofces around the world.
These include eight ofces in the US and
ofces in Shanghai, Shenzhen and Beijing, PR
China; Shin-Yokohama, Japan; Seoul, South
Korea; Taipei, Taiwan; Kfar Saba, Israel; Paris,
France; Grasbrunn, Germany and Bangalore,
India. Design ofces are based in Cambridge,
Shefeld and Blackburn, UK; Sophia Antipolis
and Grenoble, France; Grasbrunn, Germany;
Trondheim, Norway; Sentjernej, Slovenia;
Lund, Sweden; Oulu, Finland; Austin, Texas;
Olympia, Washington and San Jose, California
in the US; Shanghai, PR China; Hsinchu,
Taiwan and Bangalore, India.
More information about the business, its
operations and key performance indicators
is set out in Overview Marketplace sections
on pages 14 to 15, the Financial review
incorporating a section on Risk management
on pages 47 to 57, and the Sustainability
summary on pages 44 to 46. The Groups
statement on corporate governance can be
found in the Corporate governance report
on pages 6 to 22 of this Governance and
Financial Report. The Risk management
section of the Financial review and the
Corporate governance report form part of
this section and are incorporated into it by
cross reference.
Future developments
The Groups stated objective is to establish
a global standard for its RISC architecture,
physical IP and other products in the
embedded microprocessor and semiconductor
markets. The directors believe that, in order to
achieve this goal, it is important to expand the
number and range of potential customers for
its technology.
The Group intends to enter into licence
agreements with new customers and to
increase the range of new technology
supplied to existing customers.
Relationships will continue to be established
with third-party tools and software vendors
to ensure that their products will operate
with the Groups products. As a result of its
position in the semiconductor industry, the
Group is presented with many opportunities
to acquire complementary technology or
resources and it intends to continue to make
appropriate investments and acquisitions from
time to time.
Going concern
After dividend payments of 68.9 million the
highly cash generative nature of the business
enabled the Group to increase its cash, cash
equivalents and deposits to 706.3 million
(net of accrued interest of 7.2 million)
at the end of 2013. This was an increase
from 520.2 million (net of accrued interest
of 7.4 million) at the start of the year.
After reviewing the 2014 budget and longer-
term plans and considering any reasonably
likely scenarios that may occur, the directors
are satised that, at the time of approving
the nancial statements, it is appropriate to
adopt the going concern basis in preparing
the nancial statements of both the Group
and the parent Company. This view was
supported by a sensitivity analysis and stress
tests undertaken at the year end which
showed that some extreme assumptions
would have to be made before there is a
negative impact.
Dividends
The directors recommend payment of
a nal dividend in respect of the year to
31 December 2013 of 3.6 pence per share
which, subject to approval at the AGM on
1 May 2014, will be paid on 16 May 2014
to shareholders on the register on 22 April
2014. This nal dividend, combined with the
interim dividend of 2.1 pence per share paid in
October 2013, makes a total of 5.7 pence per
share for the year, an increase of 27% on the
total dividend of 4.5 pence per share for 2012.
The total cost of dividends paid or to be paid
in respect of the year to 31 December 2013
isapproximately 80 million.
Share buyback programme
No share buybacks were undertaken in 2013
and no shares have been re-purchased to
date in 2014. The rolling authority to buy back
shares given by the shareholders at the AGM
in May 2013 remains in place and a resolution
to authorise the directors to make purchases
in appropriate circumstances will be proposed
at the 2014 AGM. In addition to our policy of
increasing the dividend through the economic
cycles, the Group intends to commence a
limited share buyback programme in 2014
in order to maintain the issued share capital
at a constant level in future. The issued
share capital at 31 December 2013 was
1,400,263,804 shares, broadly the same level
as in July 2005 when the Board initiated the
ongoing share buyback programme under
which purchases were made until the end
of 2008.
The directors present their report and the audited nancial
statements of the Group for the year ended 31 December 2013.
The following additional disclosures are made in compliance with
the Companies Act 2006, the Disclosure and Transparency Rules
and the UK Corporate Governance Code (September 2012).
ARM Holdings plc
24
Research and development (R&D)
Development of IP is at the heart of the
Groups activities and 69% of the Groups
workforce is employed in engineering
activities. Within this, R&D is of major
importance and, as part of its research
activities, the Group collaborates closely
with universities worldwide and plans to
continue its successful engagement with
Michigan University.
Key areas of product development for 2014
include the development of further energy-
efcient, high-performance processors, such
as ARM cores based on symmetric multicore
and superscalar technology.
The Group is investing in future physical IP
development including system IP and software
and low-power, low-leakage technologies for
a range of chip manufacturing processes, to
ensure leadership in this market. In addition,
the Group will continue to develop and
deliver tools, graphics processors and system
IP to enable its customers to design and
programme SoCs.
The Group incurred R&D expenses of
202.9 million in 2013, representing 28% of
revenues, compared with 166.3 million in
2012, representing 29% of revenues. R&D
expenses have been charged in full to the
income statement since the requirements for
capitalisation were not met. The requirements
for capitalisation are considered in more detail
in note 1 to the nancial statements.
Donations
During the year the Group made donations
for charitable purposes as follows:
2013
000
2012
000
Promotion of education 362.3 142.0
Relief of poverty 55.2 55.3
Other 50.3 37.3
Medical research 62.4 26.5
Local charities 67.8 14.0
Environmental 89.9 1.7
Total 687.9 276.8
ARMs investment of 2.5 million in an
interest-free charitable bond in Future
Business, made in 2010, remains in place.
Future Business is a Cambridge-based social
enterprise, which provides business advice,
coaching and afordable workspace to
entrepreneurs, start-up businesses, charities
and voluntary organisations.
ARM employees are encouraged to ofer
their time and expertise to help charities and
other groups in need. The Group operates
a Matching Gift Donation programme
for individual employees fundraising
eforts. The Group does not make any
political donations.
More details of the Groups charitable work
and fundraising activities can be found in the
Corporate Responsibility report available
on the Groups website at www.arm.com/
reporting2013.
Global Green House Gas Emissions
Methodology
Our report covers emissions within
operations that fall under the Groups nancial
control. As such data used represents our
global operations with regional conversion
factors applied as required.
Our emission factors are from Defra/DECC
GHG Conversion Factors for Company
reporting. Our environmental impact
assessment of ARMs operations includes
energy use and air travel as our material
CO
2
e contributors. We have excluded non
material emissions related to refrigerant losses
in air conditioning systems, motor cars and
waste streams.
Further detail on our emissions and the
Groups management of those emissions
can be found in our Carbon Disclosure
Project Submissions.
Reported Emissions 2013 2012
Scope 1 and 2 Emissions
Combustion of Fuel, Operation
of Facilities and Electricity
and Cooling Purchased
(tonnes CO2e) 11,067 10,547
CO2e Intensity (Tonnes CO2e
per Employee) 3.37 3.82
Scope 3 Emissions
Business Travel (Tonnes CO2e) 10,186 10,112
DIRECTORS REPORT CONTINUED
25
Directors in the year
The following served as directors of
the Company during the year ended
31 December 2013:
Sir John Buchanan (Chairman)
Simon Segars (Chief Executive Ofcer)
Tim Score (Chief Financial Ofcer)
Mike Muller (Chief Technology Ofcer)
Andy Green (independent non-
executive director)
Larry Hirst CBE (independent non-
executive director)
Eric Meurice (independent non-executive
director appointed 1 July 2013)
Kathleen ODonovan (Senior Independent
Director and nancial expert)
Janice Roberts (independent non-
executive director)
Philip Rowley (independent non-executive
director and nancial expert)
Warren East (former Chief Executive Ofcer
retired 30 June 2013)
Mike Inglis (former Chief Commercial Ofcer
retired 31 March 2013)
Re-election of directors
As previously announced, Sir John Buchanan
stepped down as Chairman on 1 March
2014 and will retire from the Board at the
conclusion of the AGM on 1 May 2014.
Stuart Chambers joined the Board on
27 January 2014 as Chairman designate
and became Chairman on 1 March 2014.
He will be standing for election at the 2014
AGM. With the exception of Philip Rowley,
who is retiring having served for nine years,
and Sir John Buchanan, all of the other
directors will be standing for re-election at
the 2014 AGM. In line with the provisions
of the UK Corporate Governance Code
2010, all directors will present themselves
for re-election annually (if eligible) unless
thedirectors have agreed otherwise.
See pages 4 to 5 for the biographies ofthe
directors at the date of this report.
The interests of the directors in the
Companys ordinary shares of 0.05 pence,
allof which were benecially held, are
disclosed in the Remuneration report.
The directors have the benet of directors
and ofcers liability insurance.
Appointment of directors
ARM shareholders may by ordinary resolution
appoint any person to be a director. ARM
must have not less than two and no more
than 16 directors holding ofce at all times.
ARM may by ordinary resolution from time
totime vary the minimum and/or maximum
number of directors.
The directors may appoint a director to ll a
casual vacancy or as an additional director to
hold ofce until the next AGM, who shall then
be eligible for election.
Share capital
At 31 December 2013, ARMs share
capital comprised a single class of ordinary
shares of 0.05 pence each and there were
1,400,263,804 ordinary shares in issue, none
of which were held in treasury (2012: no
shares held in treasury). The rights attached
to treasury shares are restricted in accordance
with the Companies Act.
The rights attached to ordinary shares are
as follows:
1. On a show of hands at a general meeting,
every shareholder present in person (or,
inthe case of a corporation, present at the
meeting by way of a representative) and
entitled to vote shall have one vote and
every proxy present who has been duly
appointed by a shareholder entitled to
voteon the resolution shall have one vote.
2. On a poll, every shareholder present in
person (or in the case of a corporation,
present at the meeting by way of a
representative) or by proxy and entitled
tovote shall have one vote for every
ordinary share held.
3. Shareholders are entitled to a dividend
where declared or paid out of prots
available for such purposes.
4. Shareholders are entitled to participate in
areturn of capital on a winding-up.
ARM Holdings plc
26
The notice of the AGM species deadlines for
exercising voting rights and appointing a proxy
or proxies to vote in relation to resolutions
to be passed at the AGM. All proxy votes
are counted and the numbers for, against or
withheld in relation to each resolution are
announced at the AGM and published on
ARMs website after the meeting.
There are no restrictions on the transfer of
ordinary shares in ARM other than:
restrictions that may from time to time
be imposed by laws and regulations (for
example, those relating to market abuse
and insider dealing);
restrictions that may be imposed pursuant
to the Listing Rules of the Financial Services
Authority under which certain employees
of ARM require the approval of the
Company to deal in shares;
restrictions on the transfer of shares that
may be imposed under article 61.2 of
ARMs articles of association or under
Part 22 of the Companies Act 2006, in
either case following a failure to supply
information required to be disclosed
following service of a request under
section 793 of the Companies Act 2006;
restrictions on transfer of shares held
under certain of the Companys employee
share plans while they remain subject to
the plan.
Substantial shareholdings
The directors are aware of the following
substantial interests in the issued share capital
of the Company as at 3 March 2014:
Percentage of issued
ordinary share capital
Baillie Giford & Co 5.05
Thornburg Investment
Management 5.01
Fidelity Management and Research
Corporation 4.92
The Capital Group Companies, Inc 4.16
Janus Capital Management LLC 3.05
Save for the above, the Company has not
been notied, as at 3 March 2014, of any
material interest of 3% or more or any non-
material interest exceeding 10% of the issued
share capital of the Company.
Articles of association
ARMs articles of association may be amended
only by a special resolution at a general meeting
of shareholders. It is proposed that the articles
of association be amended at the AGM on
1 May 2014 to increase the aggregate limit
on ordinary remuneration payable to the
non-executive directors from 0.5m to 1m.
This aggregate limit has not been increased
since 2007. Further details are contained in the
Circular and Notice of 2014 AGM.
Directors authority
The directors are responsible for the
management of the business of ARM and
may exercise all powers of ARM subject to
applicable legislation and regulation and the
articles of association.
At the 2013 AGM, the directors were given
authority to buy back a maximum number of
139,650,000 ordinary shares at a minimum
price of 0.05 pence each. The maximum price
was an amount equal to 105% of the average
of the closing mid-market prices of ARMs
ordinary shares as derived from the London
Stock Exchange Daily Ofcial List for the ve
business days immediately preceding the day
on which such ordinary shares are contracted
to be purchased. This authority will expire
at the earlier of the conclusion of the 2014
AGM or 30 June 2014.
Accordingly, a resolution will be proposed as
a special resolution at the 2014 AGM to give
ARM authority to acquire up to 140,891,000
ordinary shares following expiry of the
current authority. The directors will use this
authority only after careful consideration,
taking into account market conditions
prevailing at the time, other investment
opportunities, appropriate gearing levels and
the overall position of ARM. In particular,
this authority will be exercised only if the
directors believe that it is in the best interests
of shareholders generally and will increase
earnings per share.
27
Resolutions will also be proposed at the 2014
AGM to:
authorise the directors generally to allot
up to 232,470 in nominal amount of
ordinary shares;
authorise the directors to allot up to a
further 232,470 in nominal amount of
ordinary shares in connection with a rights
issue (as dened in the Notice of AGM);
authorise the directors to allot ordinary
shares (or sell treasury shares) for cash (i)
otherwise than in connection with a pre-
emptive ofer (as dened in the Notice of
AGM) up to an aggregate nominal amount
of 35,222 or (ii) in connection with a pre-
emptive ofer up to an aggregate nominal
amount of 35,222, or (iii) in connection
with a rights issue up to a further nominal
amount of 35,222, in each case as if
section 561(1) of the Companies Act 2006
did not apply to such allotment (or sale).
The period of authorisation will in each
case expire at the earlier of the conclusion
of the 2014 AGM or on 30 June 2014.
Qualifying indemnity provision
Article 139 of the Companys articles of
association provides for the indemnication
of directors of the Company against liability
incurred by them in certain situations, and is
a qualifying indemnity provision within the
meaning of section 236 of the Companies
Act 2006.
The qualifying indemnity was in force during
the nancial year and up to the date of signing
the annual report.
Change of control
All of ARMs equity-based plans contain
provisions relating to a change of control.
Outstanding awards and options would
normally vest and become exercisable on a
change of control, subject to the satisfaction
of any performance conditions at that time.
There are no signicant agreements to which
ARM is a party that take efect, alter or
terminate upon a change of control.
Diversity
The Group is committed to employment
policies, which follow best practice, based
on equal opportunities for all employees,
irrespective of sex, race, colour, disability
or marital status. The Group has a strong
demand for highly qualied staf and
disability is not seen to be an inhibitor
to employment or career development.
Appropriate arrangements are made for the
continued employment and training, career
development and promotion of disabled
persons employed by the Group. In the
event of any staf becoming disabled while
with the Group, their needs and abilities
would be assessed and the Group would,
where possible, seek to ofer alternative
employment to them if they were no longer
able to continue in their current role.
Employee involvement
To help reach the best decision, and one
that the whole company can support, it
is important that we include the views of
those outside of the management team in
the decision-making process. To this end,
internal conferences and communications
meetings involving employees from all
parts of the Group in discussions on future
strategy and developments are held regularly.
Furthermore, employee share ownership
is encouraged and all employees are able
to participate in one of the Groups share
ownership schemes. The Group has an
informal and delegated organisation structure.
It does not presently operate any collective
agreements with any trade unions.
Information about the Groups
employees and policies are contained
in the Remuneration report, the Our
commitment section and the Corporate
Governance report. Information about
environmental matters, social and community
policies and their efectiveness is contained in
the Our commitment section and in the full
Corporate Responsibility report available on
our website.
Financial instruments
The Groups nancial risk management and
policies and exposure to risks in relation to
nancial instruments are detailed in note 1c.
ARM Holdings plc
28
Essential contracts
There are no parties with whom the Group
has contractual or other arrangements that
are essential to the business of the Group.
There is one company that accounted for
12% of Group revenues in 2013 (2012: 15%),
which is referred to in note 2 on page 80.
Annual General Meeting (AGM)
The AGM will be held at 110 Fulbourn Road,
Cambridge CB1 9NJ, UK, on 1 May 2014
at 2.00pm. A presentation will be made at
this meeting outlining recent developments
in the business. All voting at the meeting
will be conducted on a poll where every
shareholder present in person or by proxy
will have one vote for each share of which
they are the owner. The Group will convey
the results of the poll on the website after
the AGM. Shareholders are invited to submit
written questions in advance of the meeting.
Questions should be sent to The Company
Secretary, ARM Holdings plc, 110 Fulbourn
Road, Cambridge CB1 9NJ, UK.
A resolution to reappoint
PricewaterhouseCoopers LLP as auditors
to the Group will be proposed at the AGM.
Details of other resolutions to be proposed
at the meeting are set out in the Circular and
Notice of AGM 2014, which will be made
available to all shareholders together with a
proxy card.
Statement of directors responsibilities
The directors are responsible for preparing
the Annual Report, the Remuneration report,
and the nancial statements in accordance
with applicable law and regulations.
Company law requires the directors to
prepare nancial statements for each nancial
year. Under that law the directors have
prepared the Group nancial statements
in accordance with International Financial
Reporting Standards (IFRSs) as adopted
by the European Union, and the parent
Company nancial statements in accordance
with United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards and applicable law).
Under company law the directors must
not approve the nancial statements unless
they are satised that they give a true and
fair view of the state of afairs of the Group
and the Company, and of the prot or loss
of the Group for that period. In preparing
these nancial statements, the directors are
required to:
select suitable accounting policies and then
apply them consistently;
make judgements and accounting estimates
that are reasonable and prudent;
state whether IFRSs as adopted by
the European Union and applicable
UK Accounting Standards have been
followed, subject to any material
departures disclosed and explained in
the Group and parent Company nancial
statements respectively;
prepare the nancial statements on the
going concern basis unless it is inappropriate
to presume that the Company will continue
in business.
The directors are responsible for keeping
adequate accounting records that are
sufcient to show and explain the Companys
transactions and disclose with reasonable
accuracy at any time the nancial position
of the Company and the Group and enable
them to ensure that the nancial statements
and the Remuneration report comply with
theCompanies Act 2006 and, with regards
to the Group nancial statements, Article
4 of the IAS Regulation. They are also
responsible for safeguarding the assets of
the Company and the Group and hence for
taking reasonable steps for the prevention
anddetection of fraud and other irregularities.
The directors are responsible for the
maintenance and integrity of the annual
report included on the Groups website in
accordance with the UK legislation governing
the preparation and dissemination of nancial
statements. Legislation in the UK governing
the preparation and dissemination of nancial
statements may difer from legislation in
other jurisdictions.
Each of the directors, whose names and
functions are listed in the biographies on
pages 4 to 5, conrm that to the best
oftheir knowledge:
the Group nancial statements, which have
been prepared in accordance with IFRSs
as adopted by the EU, give a true and
fair view of the assets, liabilities, nancial
position and prot of the Group;
this Directors report on pages 23 to
28 and the Financial review and the Risk
management sections on pages 47 to 49
ofthe Strategic Report include a fair review
of the development and performance
of the business and the position of the
Group, together with a description of
the principal risks and uncertainties that
it faces.
Disclosure of information to auditors
In the case of each director in ofce at the
date the Directors report is approved, that:
(a) so far as the director is aware, there is
no relevant audit information of which the
Companys auditors are unaware; and
(b) the director has taken all the steps that
he or she ought to have taken as a director
in order to make themselves aware of any
relevant audit information and to establish
that the Companys auditors are aware of
that information.
By order of the Board
Patricia Alsop
Company Secretary
ARM Holdings plc
Company Number: 2548782
29
Dear Shareholder
2013 was a busy year for the Committee with theintroduction
and implementation of the new Long-Term Incentive Plan
(LTIP), which also involved making changes to the annual bonus
plan for the purposes of simplication of the overall package.
This followed consultation with major shareholders and
representative bodies which started in 2012. The Committee
also approved new salary and benets arrangements for
SimonSegars on his promotion to Chief Executive Ofcer.
In line with ARMs long-standing commitment to ethical values
and culture, our aim is to ensure that remuneration policies and
practices drive behaviours that are in the long-term interests of
the Group and its shareholders. Pay for performance and no
reward for failure continue to be key principles. At the same
time, pay and benets must be at a level that will attract, retain
and motivate high-calibre people with the skills necessary to
achieve our goal of sustained growth in corporate performance.
We operate in a global market, with the majority of our
revenues being earned from companies located outside the UK
and with more than half our employees being based outside the
UK. The Groups continuing strong performance is due
principally to the proven abilities of our executive team.
PHILIP ROWLEY
Remuneration Committee Chairman
(until 31 December 2013)
DIRECTORS REMUNERATION REPORT

ARM Holdings plc
30
In line with the revised remuneration
disclosure regulations that came into force in
October 2013, this report is now split into
two sections:
The Directors Remuneration Policy is
intended to apply for three years from the
2014 AGM. The policy will be subject to a
binding shareholder vote at the 2014 AGM
and at least every third year after that.
The Implementation report, which sets
out payments and awards made to the
directors and explains the linkage between
Group performance and remuneration in
respect of 2013. This report will be subject
to an advisory shareholder vote at the
2014 AGM.
Key decisions on remuneration and actions
taken in relation to 2013 and 2014 include:
approval of a pay and benets package
(including an LTIP top-up) for Simon Segars
on his appointment as Chief Executive
Ofcer. Pay was increased to the same
level as applied for the retiring Chief
Executive Ofcer (see details on page 46);
approval of a base pay increase for the
executive directors of 3.48% for 2013 and
3.00% for 2014 compared to the average
increases for the workforce as a whole of
4.7% for 2013 and 4.35% for 2014;
setting of performance targets for the
bonus plan and new LTIP;
approval of pro-rated vesting under
the LTIP and Deferred Annual Bonus
(DAB) plans for former Chief Executive
Ofcer Warren East and former Chief
Commercial Ofcer Mike Inglis on their
retirements from the Group;
clear documentation of our remuneration
policies as set out in this report.
Notwithstanding the tough market conditions
that continued during 2013, the minimum
targets, established three years ago under
both the former LTIP and the former DAB
Plan, were exceeded and our executives
have been rewarded for their performance
as detailed in the Implementation report. It is
encouraging that shareholders have been
supportive of our remuneration policies
for many years and that the Remuneration
report, incorporating our proposed
remuneration policy for 2014, received a
97.6% vote in favour (2.3% vote against;
4,850,706 votes withheld) at the 2013 AGM.
We take an active interest in investors views
on remuneration policy, which we were able
to discuss directly with many shareholders
through the consultation undertaken in 2013
in connection with the new LTIP. In line with
my earlier commitment, I also consulted with
shareholders in December 2013 over the EPS
targets applicable to the new LTIP and we
have taken shareholders views into account in
setting the new LTIP EPS targets.
Finally, I have very much enjoyed my role
as Committee Chairman and was pleased
to be able to hand over a coherent and
carefully considered remuneration structure
to Larry Hirst, who became Chairman of the
Committee on 1 January 2014, having been
a member of the Committee since he joined
the Board in 2011. At the Annual General
Meeting on 1 May 2014, it will be nine years
since my election by shareholders and I will
therefore be retiring from the Board. I would
like to thank my colleagues on the Committee
for their hard work and support during
my tenure as Chairman and, in particular,
during 2013.
Philip Rowley
In this section we describe the composition
and activities of the Committee during 2013.
Committee composition and meeting
attendance during 2013:
Name of director Position
Total number
ofmeetings/
Meetings
attended
Philip Rowley Independent non-
executive director
(Committee
Chairman until 31
December 2013)
5/5
Andy Green Independent non-
executive director
5/5
Larry Hirst Independent non-
executive director
(Committee
Chairman from 1
January 2014)
5/5
Janice Roberts Independent
non-executive
director (joined
28 February 2013)
5/5
Given their diverse business experience,
the independent non-executive directors
who made up the Committee in 2013
ofer a balanced view and international
expertise in relation to remuneration matters
for the Group. Janice Roberts joined the
Committee on 28 February 2013 and has
added valuable knowledge, particularly on
UScompensation matters.
DIRECTORS REMUNERATION REPORT CONTINUED
31
Operation of the Committee
The Chief Executive Ofcer and the EVP
People attend each meeting for at least part
of the time to ensure that the Committee
is able to obtain their views on the level of
compensation for executive directors and
other senior executives, although they are
not present when their own remuneration
is discussed. The Company Secretary
advises the Committee on corporate
governance matters and acts as Secretary
tothe Committee.
The Committees terms of reference are
published on the corporate website at
www.arm.com.
The principal items of business dealt with by
the Committee during 2013 are described in
my initial letter.
Remuneration policy
Introduction
This Remuneration policy section of the
report has been prepared in accordance
with Schedule 8 to the Large and Medium-
sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013
and will be submitted to shareholders for
their approval at the Annual General Meeting
of the Company to be held on 1 May 2014.
The Committee has also taken into account
the principles set out in Schedule A to the UK
Corporate Governance Code (September
2012) published by the Financial Reporting
Council, the Listing Rules of the Financial
Conduct Authority and the ABIs Principles of
Remuneration published in November 2013.
Remuneration Policy for executive
directors
We believe that sustained growth can be
successfully achieved only with a high level
of employee engagement and motivation.
We believe that it is in shareholders best
interests that the Group is able to attract
the best talent in the world within our
specialised market. All elements of pay
and benets set out in the policy table are
regarded as necessary to recruit, retain and
motivate appropriately skilled executives.
The structure of competitive base salaries
and higher potential incentives supports both
short- and long-term strategy and has proved
motivational and successful in achieving strong
business performance over the past few years.
The Committee believes that a directors total
remuneration should be monitored against
their worth in the external market, with total
reward linked to corporate and individual
performance. To this end, the Committee
obtains information from independently
published remuneration surveys, benchmarks
the total remuneration package, and applies
the following principles:
Base salaries are set at an appropriately
competitive level.
A signicant amount (i.e. more than
70%) of total potential remuneration is
performance-related.
There should be reward for performance
but not for failure with an opportunity for
upside for exceptional performance.
Benchmarking provides a useful reference
point but not a target range for salaries or
other benets.
A signicant element of performance-
related remuneration is provided in the
form of shares.
Elements of performance-related variable
remuneration are subject to deferral.
Consideration is given to pay and
conditions elsewhere in the Group.
The Committee is able to consider corporate
performance on environmental, social and
corporate governance issues when setting
the remuneration of executive directors,
and also takes account of pay and conditions
elsewhere in the Group. In particular, the
Committee is mindful of the fact that all
employees receive share awards (or cash
equivalents) under the Groups equity plans.
The Committee does not specically consult
with employees when setting and reviewing
remuneration policy for the executive
directors; however, it does review the
salary increases for all Executive Committee
members against the general employee
pay award each year to ensure that there
is fairness. Employees have an opportunity
to raise any concerns over pay and benets
through the annual employee engagement
survey or direct with their line manager.
The Committee believes that the new LTIP and
bonus arrangements provide a much simpler
package (similar to the approach adopted in
a largely US dominated sector) and one that
rewards sustained longer term performance.
The new LTIP also rebalances the package
towards long-term performance and materially
reduces the total quantum released after
three years. In addition, the introduction of
the new holding periods and increased share
ownership guidelines will result in longer term
performance alignment. Therefore, if share
price performance is sustained during the
holding period, then participants are rewarded.
If share price performance is not sustained
during the holding period then participants are
worse of than under the old arrangements.
Relative importance of spend on pay m and percentage change
350
50
100
150
200
250
300
Staf Pay Distributions to
shareholders
Research and
development costs
Tax
2012 2011 2013 2012 2011 2013 2012 2011 2013 2012 2011 2013
235.7
225.0
292.5 4.8%
24.1%
62.5
47.6
80.4
31.3%
28.6%
166.3
158.6
202.9
4.9%
22.0%
60.3
44.3
57.8
36.1%
4.1%
The above graph illustrates the relative importance of spend on pay compared with other disbursements from prot
(i.e.distributions to shareholders, the development of new products and tax). These were the most signicant outgoings
fortheGroup in the last nancial year.
ARM Holdings plc
32
Remuneration Policy
The Directors Remuneration Policy below
will be put to shareholders for approval at the
next Annual General Meeting on 1 May 2014
and is intended to apply for three years from
that date.
The Policy applies to the executive directors
at the date of this report and is intended
to apply to any new executive directors
who may be appointed during this three-
year period.
Component of remuneration package
and how it supports business strategy
Operation and clawback Maximum potential value Performance conditions,
targets assessment and areas of discretion
Base salary
To provide an appropriately
competitive level of base salary
in order to enable the Group
to recruit, retain and motivate
executive directors of the calibre
required to achieve the Groups
business strategy and goal of
sustained growth in corporate
performance.
Base salaries are reviewed annually by the
Committee and are paid monthly in cash
Increases generally apply from January in each
year. In its annual review or on promotion,
theCommittee considers the following:
Pay levels at companies of similar size
(byreference to market capitalisation and
revenue) on a geographic and global basis.
External market conditions.
Pay and benets elsewhere in theGroup.
Individual performance, skills, experience
andpotential.
Corporate performance on environmental,
social and corporate governance issues.
Clawback does not apply to base salary
(inaccordance with contractual agreements).
Base salaries are set at an
appropriate level for each role,
taking account of the factors
described in this table.
Generally salaries are no higher
than market median, although
higher salaries may be paid, if
necessary, to recruit externally
orto retain key executives.
In normal circumstances
base salary increases will be
determined by reference
to average increases for
employees across the Group.
Greater increases may be
approved if there is a substantial
change in a directors role
or responsibilities or if the
salary is signicantly below the
current market rate. In such
circumstances, increases may
be phased over a number
ofyears and be conditional
onperformance.
None, although the overall performance
ofeach executive director is considered by
theCommittee when reviewing base salaries.
Maximum notice period is 12 months and pay
in lieu of notice may be made at the discretion
of the Group. This would include base salary
and contractual benets (pro-rated where
applicable) and any untaken holiday.
Fees for outplacement and legal advice may also
be paid by the Group.
DIRECTORS REMUNERATION REPORT (POLICY)
33
Performance-related bonus
(in respect of 2014 nancial
year onwards)
To incentivise executive directors
to achieve performance
objectives that are directly linked
to the Groups short-term
nancial andstrategic goals.
Bonus, if earned, is paid wholly in cash for
2014onwards.
Paid annually after the Preliminary
Announcement for the prior year end.
Bonus payments are not pensionable.
Individual performance measures are focused
on objectives that are specic to each
executive director.
Clawback: provisions exist that require
bonus to be forfeited (i.e. ofset of bonus
accruing in that year) or an equivalent value
repaid in exceptional circumstances. These
include material misstatement of published
results and misconduct causing a material
loss and would apply for two years from the
payment of such bonus. The proportion of
the bonus that would be repayable (and could
be 100%) would depend on the extent to
which the original bonus exceeds that which
would have been paid if the results had been
correctly stated, and also taking into account
any negative impact of the re-statement.
Maximum bonus: 125% of
basesalary.
Bonus payable at target: 85%
ofbase salary.
Target means the achievement
of appropriate maximum
targets in respect of both
Normalised Operating Prot
(NOP) and total revenue
and prior to any personal
performance adjustment.
Bonus payable at threshold: 0%
of base salary.
Threshold means the minimum
level of performance before
bonus starts to accrue.
Amount is subject to achievement of two
performance targets and then adjusted for
individual performance:
NOP (50% of target bonus).
Total revenue (50% of target bonus).
Individual performance measures specic
to each executive director, which ex the
amount of bonus by a factor of 0.75 to 1.25.
Revenue and prot growth are regarded as
the most appropriate short-term metrics for
continuing the Groups performance.
The Committee retains discretion to adjust
bonus targets for any nancial year to reect
intervening events including acquisitions
or disposals.
The numerical values of targets for any particular
nancial year will not be disclosed in advance or
during that year as the Committee considers
this information to be commercially sensitive.
Theactual targets will be disclosed in the
following nancial year.
Performance-related bonus
(in respect of years up to and
including 2013)
to the Groups short-term
nancial andstrategic goals.
Revenue and prot growth
are regarded as the most
appropriate short-term
metrics for continuing the
Groups performance.
Bonus earned in respect of 2013 was subject
to the provisions of the DAB Plan. This was
the nal operation of the DAB Plan.
Bonus was split 50% cash and 50% deferred
shares based on NOP, total revenue and
individual performance.
There is compulsory deferral into shares for
three years.
Bonus matching applies to deferred shares in
the range of 0.3 for 1 to 2 for 1 match subject
to three-year EPS growth of CPI + 4% to CPI
+12% p.a., respectively.
Deferred and any matching shares in relation
to2013 performance will be received in
February 2017.
Dividend shares are added at vesting.*
Provisions exist that could result in immediate
forfeiture of shares in the event of dismissal
for gross misconduct, as determined by the
Committee and at its discretion.
Maximum and target bonus
opportunity of 150% and 100%
of salary respectively.
The targets for 2013 bonus were:
50% of target bonus was dependent on
achieving a NOP target of 313.5m** with
0% payout at 257.7m rising in a linear way
to 25% at 294.6m.
The NOP portion of bonus can continue to
accrue linearly above the target of 313.5m
on a straight-line basis, subject to the overall
maximum of 150% of base salary.
50% of bonus was dependent on achieving
a US$ revenue target of US$1,096m**
with 0% payout at US$913.2m rising to
25%at$1,030.1m.
The revenue portion of bonus can continue
to accrue above the target of US$1,096m so
that for every 1% increase in revenue, bonus
is increased by 2.5% of the target, subject to
the overall maximum of 150% ofbase salary.
Bonus amount is then subject to an individual
performance multiplier which exes the
payment by 0.75 to 1.25 again subject to the
overall maximum of 150% of base salary.
ARM Holdings plc
34
Long-Term Incentive
Plan2013
(rst operation in 2014)
to the Groups long-term nancial
and strategic goals.
To align executive directors
interests with those of the
shareholders through the
performance conditions and
share retention obligations.
Annual conditional share awards are made
at 187.5% of base salary with the ability for
vesting of between 0% to 200% after three
years dependent on achievement of the
performance conditions, with a maximum
of375% of basesalary.
50% of the vested shares will be subject to
additional holding periods with 25% released
after four years and the remaining 25%
released after ve years. During these new
holding periods, shares may not be sold even
ifthe participant has left the Group.
Dividend shares are added at vesting.
Malus: The Committee has discretion to
reduce a share award (including to nil) prior
to vesting where there are exceptional
circumstances, which include a material
misstatement in the Groups published results,
misconduct by the executive director that is
deemed to have caused or contributed to a
material loss as a result of reckless, negligent
or wilful actions, or inappropriate values
orbehaviour.
Clawback: The Committee has discretion
to clawback shares and executive directors
have an obligation under the Rules to transfer
shares or pay over the proceeds of sale in
exceptional circumstances (as described
above). If sold at less than market value, the
obligation is to pay market value at the date
of disposal. Clawback would be less any tax
and social security paid or due to be paid. The
Committee has discretion to set the length of
the clawback period, which would normally be
two years from acquisition of the shares.
Maximum limit of 600% in
exceptional circumstances as
determined by the Committee.
By way of example, exceptional
circumstances could include the
hiring of an exceptional senior
executive director in a highly
competitive market where we
need to make an exceptional
ofer in order to recruit.
For the 2014 award vesting is based on:
three-year Total Shareholder Return
(TSR)growth relative to the FTSE All World
Technology Index (25%).
three-year TSR growth relative to the
FTSE 350 (25%).
three-year normalised EPS growth (50%)
withthreshold at 15% annual growth (including
CPI) and the upper performance target at 22%
annualgrowth (including CPI).
25% of the respective TSR elements vest for
median performance with 100% vesting for
upper quintile performance.
Similarly 25% of the normalised EPS element
vests at threshold performance with 100%
vesting at the upper performance target
with straight line interpolation between these
two points.
The Committee will review the performance
conditions for new awards annually.
The Committee has discretion to waive or
change a performance condition if anything
happens that causes the Committee reasonably
to consider it appropriate, provided that
any changed performance condition will be
no moredifcult to satisfy than the original
condition was intended to be at the time the
award was granted.
Shareholding requirement
interests with those of
shareholders over a longer time
period, they are required to
build a shareholding of 200%
ofbase salary.
Until 200% of salary is achieved, no more than
50% of shares received through the DAB Plan
and LTIP (after the automatic sale of shares to
satisfy tax liabilities) can be disposed of.
Unvested DAB Plan shares do not count
towards the shareholding requirements.
DIRECTORS REMUNERATION REPORT (POLICY) CONTINUED
35
Long-Term
Incentive Plan
(in respect of years up to and
including 2013)
objectives that are directly
linked to the Groups long-term
nancial and strategic goals.
interests with those of the
shareholders through the
performance conditions and
share retention obligations.
Annual conditional awards normally at 100%
of salary with the potential for the award to
vest at between 0% and 200% of salary for
upper decile performance at the end of the
three-year performance period.
Dividend shares are added at vesting.
Maximum award limit of 400%
in exceptional circumstances was
never used.
Vesting is based on:
FTSEAllWorld Technology Index (50%).
FTSE350(50%).
Threshold vesting commencing at median
ranking of TSR group (25% of respective TSR
elements rising to 100% vesting for an upper
decile ranking on a straight-line basis).
The Committee has discretion to waive or
change a performance condition in the event of
circumstances which cause the Committee to
reasonably consider that:
(a) the amended Performance Condition would
be a fairer measure of performance and
would be no easier to satisfy; or
(b) the Performance Condition should
be waived.
Pension
To provide pension contributions
in line with market practice, which
will enable directors to plan
for retirement.
10% of base salary for executive directors and
11% for the Chief Executive Ofcer is paid
either into the Group Personal Pension Plan
or overseas equivalent, or as a cash allowance
(subject to payroll deductions) for those in
excess of the lifetime allowance applicable in
the UK.
11% of base salary. Not applicable.
Other benets
To provide competitive
benets in line with market
practice to enable the Group to
recruit and retain high-calibre
executive directors.
To reward innovation
and invention.
Other benets are provided appropriate
to the location of the executive director
and include provision of a car or car and
fuel allowance, long-term sickness and
disability insurance, death in service benet,
and healthcare and travel insurance for the
executive director and family.
Executive directors may also receive patent
bonuses in line with the scheme operated
by the Group from time to time for patent
applications and on grants of patents.
Reasonable market cost
ofproviding benets.
The Committee reserves
thediscretion to provide such
situation-specic benets as
may be required in the interests
of the Groups business,
such as relocation. Full details
of the exercise of any such
discretion would be provided
to shareholders in the next
Remuneration report.
Not applicable.
ARM Holdings plc
36
Overseas benets/
Relocation allowances
To provide competitive
benets in line with market
practice to enable the Group to
recruit and retain high-calibre
executive directors and move
them to alternative locations
when required by the needs of
the business.
Executives based in countries outside
their home country receive other benets
appropriate to the country in which they
areworking.
In the event that an executive director agrees
to move from their home country temporarily
the relocation arrangements may include:
Housing allowance or settlement of actual costs.
Disturbance allowance to enable essential
household purchases to be made.
Cost of living and transportation allowance
forthe duration of the assignment.
Flights home for executive and family.
School fees for executive directors children.
Cost of personal tax advice.
Cost of visas for executive and family.
Cost of transporting executive and familys
personal efects.
Legal and estate agents fees associated with
properties in home and overseas locations.
Reasonable market cost of
providing benets for the
duration of the term abroad.
Not applicable.
One-of recruitment cash/
equity awards
To provide an appropriately
attractive package to persuade an
external hire to accept an ofer
of employment and/or to buy
out equity that would be lost on
leaving previous employment.
An award of restricted stock units (RSUs)
or a grant of options may be made under
the Employee Equity Plan to a new recruit
to compensate for equity awards foregone
with previous employer and/or provide equity
that vests in the three years prior to potential
vesting of the rst LTIP award.
Alternatively a cash payment or an additional
LTIP award may be made to compensate.
Payment may be on taking up appointment
or to coincide with vesting dates under the
previous employers plan.
Malus and clawback provisions would apply.
The maximum would be
a sum equal to the value
of equity foregone, taking
account of performance
conditions attached to the
award, likelihood of vesting,
andaccelerated payment.
The Committee has discretion to determine
appropriate performance conditions for any
award of RSUs, any LTIP award, or any grant
ofoptions taking account of the circumstances
of each individual case. Performance conditions
would normally be applied on an equivalent
basisto those applicable to awards made to
other executive directors in the same calendar
year. Performance conditions may, but would
notnecessarily be applied to any cash payment.
Other Contributory
Equity Plans
Executive directors are eligible
to participate in the share plan
applicable to the country where
they work.
These plans provide an
opportunity for executive
directors to voluntarily invest
inthe Group.
ARM currently operates a Save as You
Earn Option Scheme in the UK (and some
other countries) and an Employee Stock
Purchase Plan in the US (and some other
countries), which enables employees to buy
shares at a discount of up to 20% of market
value through regular monthly or fortnightly
payroll deductions.
The maximum participation
limits will not exceed those set
by the relevant tax authorities
from time to time.
Not applicable.
Fees for non-executive
roles held outside the
Group
To provide executive directors
with opportunities to widen their
knowledge and experience of
the operation of other company
boards and Committees, they are
permitted to hold non-executive
positions at other companies.
Executive directors are permitted to retain any
fees paid and/or shares ofered in connection
with external non-executive roles that
they undertake.
The amounts received are
disclosed annually.
Details are provided on
page 54.
Not applicable.
37
Non-executive directors
(NED) and Chairmans fees
To attract and retain an
appropriately experienced
Chairman and independent
non-executive directors
of suitable calibre to full
a range of diferent roles
including nancial expert/Audit
Committee Chairman, Senior
Independent Director and
Committee Chairmen.
To pay fees that reect
responsibilities and workload
undertaken, and which
are competitive with
peercompanies.
NED fees are proposed by the executive
directors and approved by the Board as a
whole. The Chairmans fee is proposed by the
Committee and approved by the Board as
a whole with the Chairman taking no part in
the decision.
NED appointments are terminable on three
months notice.
Fees are reviewed on an annual basis and
take account of fees paid for similar roles by
peer companies.
The NEDs and the Chairman are not eligible
to receive bonuses, pension contributions and
nor can they participate in the LTIP or other
equity plans.
The overall fees paid to non-executive
directors will remain within the limit stated in
our Articles of Association, currently 0.5m
which we are seeking approval to increase to
1.0m at the 2014 AGM.
Fees are set at an appropriate
level taking into account the
factors outlined in this table.
Additional fees are paid to the
SID and Committee Chairmen.
An additional fee is paid to
NEDs based outside the UK
who undertake long-haul travel
to attend Board meetings in
the UK, to reect the additional
time commitment.
Not applicable.
Legacy arrangements
(pre 27 June 2012)
None.
* Dividend shares are additional shares added at vesting equal to the amount of dividends that would have been paid during the deferral period for the DAB Plan and LTIP.
** Calculated at the Group budget exchange rate of 1:US$1.60.
Selection of Performance Measures
and how targets are set
LTIP
Performance measures for the new LTIP were
selected after careful consideration by the
Committee and following consultation with
larger shareholders. The Committee believes
that the use of both TSR and EPS performance
measures provide the best alignment to Group
strategy and encourages, reinforces and
rewards the delivery of sustainable shareholder
value. The TSR element (which accounts for
50% of total LTIP vesting) was approved by
shareholders as part of the approval of the
new LTIP at the 2013 AGM.
The normalised EPS growth performance
condition (which accounts for 50% of total
LTIP vesting) has been set as follows:
12.5% vesting for annual growth of 15%
(including CPI) rising on a straight-line basis
to 50% vesting for annual growth of 22%
(including CPI).
The Committee has set this range for the LTIP
award made for 2014 and intends to review
it annually. Changes will be made only if the
targets become inappropriate in changing
market conditions. Analysts targets are
acknowledged as important reference points
for the markets, but there are a number of
factors beyond the control of the Group
and the executive directors that may impact
medium- to long-term EPS performance
(such as macro or semiconductor industry
cycles and currency uctuations). These may
have impacts that would not necessarily be
seen as underperformance by the Group.
The Committee is also keen not to encourage
short-term views or behaviour where, in
theory, investment in the long-term future
(either organically or by acquisition) may be
discouraged if the EPS range is set at too
higha level.
Annual Bonus Plan
Performance measures for the Annual
Bonus Plan are set annually. Each year the
Committee considers the most appropriate
metrics to apply for the following nancial
year. These metrics are currently NOP and
Group Revenue. Apersonal performance
multiplier is then applied related to
achievement of specic personal goals for
each individual. The Committee is of the
opinion that the numerical values of targets
for the Annual Bonus Plan are commercially
sensitive because they include budgeted
numbers within the range of outcomes and
it would be detrimental to the Group to
disclose them in advance of or during the
relevant performance period. The actual
targets will be disclosed in the following
nancial year.
ARM Holdings plc
38
Changes to executive directors
remuneration for 2014
The former LTIP approved in 2003 expired
in 2013 and at that time the Committee took
the opportunity to review its entire approach
to executive pay. The objective of the review
was to ensure that the Groups approach
remains t for purpose over the next stage
of its development. The replacement of
the DAB Plan and former LTIP with the
new Bonus Plan and LTIP will not result in
any increases to the maximum quantum of
reward delivered. The Committee believes
that the new structure provides a much
simpler package (similar to the approach
adopted in a largely US-dominated sector)
and one that rewards only sustained longer-
term performance. The chart below highlights
the change:
Structure of executive directors remuneration % of salary
Base salary
Potential DAB match
Cash bonus Potential DAB
LTIP
600
500
400
300
200
100
Former New
Illustration of Remuneration policy
for2014
The tables below illustrate the level of
remuneration that could be received by each
executive director through the operation of
our remuneration policy for 2014. They show
the proportion of total remuneration made
up of each component (salary, bonus, LTIP,
DAB pension and other benets) and the
total potential value. It should be noted that
these do not reect the new LTIP scheme,
as entitlements under the new LTIP will not
start to vest for three years and we are in a
transitional period between the old and new
LTIP and bonus plans. For the total amount
received by each director in respect of 2013
please see the table on pages 46 to 47.
Three scenarios have been illustrated for each
of the three executive directors:
Fixed element only performance no bonus,
no LTIP/DAB vesting.
On-target performance 85% of base salary
in cash bonus, 100% LTIP vesting, 100% DAB
matching shares.
Maximum performance 125% of base salary
in cash bonus, 200% LTIP vesting, 200% DAB
matching shares.
The total remuneration for each of the
executive directors that could result from
theproposed remuneration policy in 2014
under three diferent performance levels is
shown below.
Simon Segars
Percentages/amounts 000s
Fixed elements Annual variable
Multiple period variable
100%
31%
Fixed
On-target
Maximum
615
1,534
2,221
29% 40%
43% 29% 28%
Tim Score
100%
44%
Fixed
On-target
Maximum
500
1,550
2,409
24% 32%
57% 22% 21%
Mike Muller
100%
44%
Fixed
On-target
Maximum
342
1,066
1,657
24% 32%
57% 22% 21%
Notes:
1. The Fixed element is base salary for 2014 plus thevalue
ofpension, allowances and benets.
2. The annual variable element is the amount of the cash
bonus potential.
3. The Multiple period variable is made up of the LTIP and
DAB Plan awards that were granted in February 2012 and
have a performance period ending in 2014.
4. The values included assume a constant share price from
date of grant. The actual value received will be higher or
lower depending on the share price at vest.
5. The annual variable elements would have been three
percentage points higher under the previous years
remuneration arrangements, as the on-target bonus was
100% and the maximum bonus was 150%.
% Increase in pay and benets from 2012 to 2013 for CEO compared
to employees
CEO* Employees
Base Salary 2.0% 4.7%
Benets and pension** 65.6% -5.0%
Bonus*** 12.7% 9.6%
* The percentages for the CEO reect the pay and benets for Warren East for the rst half of the year and for Simon Segars
for the second half of the year.
** The large increase in the benets and pension of the CEO in 2013 was due to allowances paid to Simon Segars as a result of
his placement in the US. Warren East received no such allowance in 2012.
*** The CEOs bonus percentage reects the decrease in the bonus received by Simon Segars for the year to 31 December
2013 compared to the bonus received by Warren East for the year to 31 December 2012. On his appointment as CEO on 1
July 2013, Simon Segars base salary was increased from 300,000 to 500,000. Since his bonus is calculated on pro-rata
basis, his bonus for 2013 was lower than that received by Warren East for 2012, despite the higher overall percentage paid.
39
Service contracts
Our policy is for notice periods for executive
directors to be of one years duration and
each of the executive directors service
contracts reects this. These agreements
provide for each of the directors to provide
services to the Group on a full-time basis
and contain restrictive covenants for
periods of three to six months following
termination of employment relating to non-
competition, non-solicitation of the Groups
customers, non-dealing with customers, and
non-solicitation of the Groups suppliers
and employees. In addition, each service
contract contains an express obligation of
condentiality in respect of the Groups trade
secrets and condential information and
provides for the Group to own any intellectual
property rights created by the directors in the
course of their employment.
The dates of the service contracts of each
person who served as an executive director
during the nancial year are as follows:
Director Date
Simon Segars 18 March 2013
Tim Score 1 March 2002
Mike Muller 31 January 1996
Mike Inglis
(retired 31 March 2013) 17 July 2002
Warren East
(retired 30 June 2013) 29 January 2001
Service contracts for the executive directors
and appointment letters for the Chairman and
non-executive directors are available to view
in the Corporate Governance section of our
website at www.arm.com/reporting2013.
The term of appointment for non-executive
directors is three years, which can be rolled
forward for two further periods each of three
years, which would be subject to annual review.
Appointments are subject to termination
on three months notice. Fees paid to non-
executive directors are reviewed annually
withefect from 1 January.
Termination of employment
In the event of termination of an executive
directors contract of employment,
compensation would be based on salary and
contractual benets during the notice period
and whether the departing director is deemed
to be a good leaver under the rules of the
bonus plan, the 2013 LTIP, the former LTIP,
and the former DAB Plan.
Contractual provisions/Plan Rules Exit Payment Policy
Service contracts Payment of contractual entitlements, including payment in lieu of
notice in appropriate circumstances, where certainty and protection
ofrestrictive covenants are in the best interests of the Group.
Termination payments would take into account the particular
circumstances relevant to each individual situation.
Maximum notice period is 12 months and pay in lieu of notice may
bemade at the discretion of the Group.
This would include base salary and contractual benets (pro-rated
where applicable) and any untaken holiday.
Fees for outplacement and legal advice may also be paid by the Group.
LTIP For good leavers conditional awards under the LTIP would normally
vest pro-rata to time served and the extent to which the performance
conditions are satised at the date of termination of employment.
For bad leavers, unvested share awards would lapse on termination
ofemployment.
In relation to both the LTIP and Bonus Plan: in assessing whether
an executive director is a good leaver in retirement circumstances,
the executive director is required to conrm future intentions to
the Committee (including that he or she will not accept a full-time
executive role in a commercial organisation). If the Committee
determines that the executive director is a good leaver and
subject tosatisfaction of performance targets, pro-rated vesting of
entitlementsunder the old and new LTIPs and bonus plans would
normally be approved.
The holding periods described in the Remuneration Policy table would
apply to any shares that vest under the LTIP.
Bonus Plans There is no automatic entitlement to annual bonus. In the event of
deathor leaving as a result of disability or ill health, pro-rata bonus
maybe paid for the year of cessation.
Bad leavers would not receive performance-related bonus awards in
relation to the year of cessation.
Clawback provisions exist that require bonus to be forfeited (i.e. ofset
of bonus accruing in that year) or an equivalent value repaid should
it be necessary for the Group to re-state to a material extent the
nancial results on which the bonus was awarded within two years of
the payment of such bonus. The proportion of the bonus that would
be repayable (which could be 100%) would depend on the extent to
which the original bonus exceeds that which would have been paid if the
results hadbeencorrectly stated, also taking into account any negative
impactofthere-statement.
Former DAB Plan Deferred shares under the former DAB Plan would vest on
termination. Deferred shares can be forfeited in certain circumstances.
Matching shares vest, to the extent the performance conditions are
satised, for good leavers only.
ARM Holdings plc
40
DIRECTORS REMUNERATION REPORT (IMPLEMENTATION)
BALANCING SHORT AND
LONG-TERM REMUNERATION
Base salary increase for 2013 and 2014
For 2013, the average increase in base salaries
for the executive directors was 3.48% and
the average increase for the workforce as
a whole was 4.7%. On his appointment as
Chief Executive Ofcer on 1 July 2013, the
Committee approved a salary increase for
Simon Segars to 500,000, which was at the
same level as the retiring Chief Executive
Ofcer. For 2014 the average increases are
3.0% for the executive directors and 4.35%
for the workforce as a whole. Within the
overall increase for 2014, the range was 3.4%
for the US rising to 8.0% in Asia, reecting
local market conditions and salary ination.
Shareholding requirements
In order to align executives interests with
those of shareholders over a longer time
period, all Executive Committee members
arenow required to build a shareholding
of 200% of base salary (an increase from
the previous level of 100% of base salary).
For other participants in the new LTIP, the
shareholding requirement has increased from
50% to 100% of base salary.
Unvested DAB Plan shares do not count
towards the shareholding requirements.
Until these levels are achieved, no more than
50% of shares received through the DAB
Plan and LTIP (after the automatic sale of
shares to satisfy tax liabilities) can be disposed
of by participants. For 2014 a transitional
arrangement is in place for participants below
Executive Committee level under which
20% of net shares vesting must be retained.
This will increase to 50% for 2015 onwards.
At the present share price, all of the executive
directors meet the 200% of base salary
shareholding requirement.
Collectively the Executive Committee,
including the executive directors, held
3.7 million shares with a value of 36.8 million
at 3 March 2014. This currently equates to a
multiple of 10times base salaries.
Current incentive arrangements and
their operation in respect of 2013
nancial year
For 2013 there were four key incentive
schemes in operation across the workforce
asa whole. These are as follows:
For executive directors and senior managers:
The nal annual bonus award under the
DAB Plan.
An annual conditional award under
the LTIP.
For all other employees:
Awards under the Annual Bonus Plan.
Employee Equity Plan.
Option grants to executive directors ceased
in 2006 (although the facility to grant options
exists in exceptional circumstances). The move
away from options to restricted shares for all
employees has reduced potential dilution and
has simplied remuneration arrangements.
We signicantly out-performed our
international peer group over the last three
years, which resulted in 183.7% vesting of the
LTIP awards made in 2011 when the share
price was 611 pence per share and full vesting
of the DAB Plan matching share awards made
in respect of 2010. To put the awards that
are currently outstanding under the LTIP and
DAB Plan into context, the share price was
568 pence per share for the February 2012
awards and 924.5 pence per share for the
February 2013 awards. The share price was
896 pence per share on 7 February 2014
being the day before the 2014 LTIP and nal
DAB Plan awards were made.
Shares earned are satised through the issue
of new shares (any treasury shares available
would be used rst).
Each of the executive directors achieved a
personal performance multiplier of at least
1.15 for 2013, which means bonus received
was in the range 136% to 144% of salary,
half of which was compulsorily deferred into
shares for three years. Actual bonuses are
detailed in the table on page 48.
The revenue target is set in US dollars to
reect the main currency in which revenues
are earned.
The NOP target range was from zero payout
at 257.7 million up to 25% at 294.6 million
and 50% at 313.5 million, all at the Group
budget exchange rate of 1:US$1.60.
Shares representing the deferred element of
bonus earned in 2010 and awarded in 2011
vested in February 2014, with the maximum
2:1 ratio of matching shares being triggered.
This ratio was achieved because EPS growth
was 120.4%, which is greater than CPI plus
12% per annum on average for the three
years making up the performance period.
At normalised EPS growth equal to the
increase in the Consumer Prices Index (CPI)
plus 4% per annum, the deferred shares will
be matched on a 0.3:1 basis, rising to 2:1
when EPS growth is in excess of CPI plus 12%
per annum. These targets are directly related
to the Groups nancial results and encourage
achievement of the Groups short-term
nancial goals, while the deferral and matching
elements encourage a longer term view
of the success of the Group. The deferred
shares can be forfeited in the event of gross
misconduct and the matching shares are
subject to forfeiture for bad leavers.
41
New Bonus Plan for 2014
As part of the new structure for executive
remuneration and in particular the new LTIP
(which was consulted on with shareholders
in 2012/13 and approved by shareholders at
the 2013 Annual General Meeting), bonuses,
if earned, will be paid wholly in cash for 2014
onwards. The maximum bonus opportunity
has reduced from 150% to 125% of base
salary, bonus payable at target has reduced
from 100% to 85% of base salary and no
bonus is paid at threshold.
Target constitutes the achievement of
appropriate maximum targets in respect
ofboth NOP and total revenue and prior
toany personal performance adjustment.
The amount is subject to the achievement
oftwo performance targets and then adjusted
for individual performance:
NOP 50% of target bonus.
Total revenue 50% of target bonus.
Individual performance multiplier specic
to each executive director, which exes the
bonus amount by a factor of 0.75 to 1.25.
Revenue and prot growth are regarded
asthe best drivers to increase market share
andcontinue the Groups outperformance
ofsemiconductor market growth.
The Committee retains discretion to adjust
bonus targets for any nancial year to reect
intervening events including acquisitions or
disposals. It should be noted that the individual
performance multiplier when applied to the
executive directors normally falls within a
relatively narrow range at the upper end.
This results from the fact that maintenance
of a very high level of performance is a
pre-requisite to continuation in the role of
executive director. Performance is reviewed
on an in-depth basis on at least an annual
basis by the CEO (for the other executive
directors) and by the Chairman for the CEO.
The individual performance multipliers for
the executive directors are then approved by
the Committee.
The numerical values of targets for any
particular nancial year will not be disclosed in
advance or during that year as the Committee
considers this information to be commercially
sensitive. The commercial sensitivity relates to
the use of current year budget revenue within
the range of outcomes. The actual targets will
be disclosed in the following nancial year.
The bonus targets set by the Committee
for each year are intended to be stretching
but motivational and average bonus paid to
the executive directors over the past ve
years was 125% of salary (with a range from
84% payout for 2009 to 150% for 2011)
asshown below:
Notes:
1. 2010 maximum bonus was limited to 125% of base salary.
2. For 2011, 2012 and 2013 maximum bonus was 150% of basesalary.
3. For 2014 onwards maximum bonus is 125% of base salary.
Average percentage bonus paid over the past ve years to executive directors
576.9
200%
150%
100%
50%
0% 2009 2010 2011 2012 2013
%

o
f

b
a
s
e

s
a
l
a
r
y
ARM Holdings plc
42
Linkage of bonus targets to
businessstrategy
The personal performance multiplier depends
on the achievement of pre-determined
objectives, which are reviewed and approved
by the Committee each year. These include
key strategic objectives related to each
directors role and responsibilities (such as
compliance with the Management Charter,
which is designed to foster employee
development), understanding of the
overall vision and strategy of the Group,
and good governance. The Committee is
able to consider corporate performance
on environmental, social and corporate
governance issues when setting the
remuneration of executive directors.
Long-Term Incentive Plan
Former LTIP
Under the former LTIP, annual conditional
awards to executive directors were normally
made at a level equivalent to base salary.
Conditional awards vest to the extent
that the performance criteria are satised
over a three-year performance period
from 1 January of the year of award,
with no subsequent re-testing permitted.
The performance conditions are based on
the Companys TSR when measured against
that of two comparator groups (each testing
half of the shares comprised in the award).
The rst index comprises UK companies
across all sectors (FTSE 350) and the second
comprises predominantly US companies
within the hi-tech sector (FTSE All World
Technology Index).
For each comparator group, the number
of shares that may vest may be up to a
maximum of 200% of the relevant half of
the shares comprised in the conditional
award if the Companys TSR ranks in the
upper decile, 50% of the relevant half of
the shares will vest in the event of median
performance and between median and upper
decile performance vesting will increase on
a straight-line basis. Additional shares may
vest to cover dividends paid by the Company
during the performance period. No shares will
be received for below-median performance.
In addition, no shares will vest unless the
Committee is satised that there has been
a sustained improvement in the underlying
nancial performance of the Group.
The vesting of the 2011 LTIP awards in
February 2014 was at 183.7% as a result of
our signicant outperformance compared to
our international peer group over the past
three years. Subject to achievement of the
performance conditions, the nal outstanding
awards under the former LTIP will vest
in 2016.
New LTIP
The new LTIP was approved by shareholders
at the 2013 Annual General Meeting
and is described in more detail in the
Remuneration Policy summary earlier in
this report. Annual awards are made up
to a normal maximum of 375% of base
salary. Dividend shares are added at vesting.
Vesting is based on:
Three-year relative TSR growth relative to
theFTSE All World Technology Index (25%).
Three-year relative TSR growth relative to
theFTSE 350 (25%).
Three-year EPS growth (50%).
25% of the respective TSR elements vest for
median performance, with 100% vesting for
upper quintile performance.
Similarly 25% of the EPS element vests at
threshold performance (annual growth in
EPS of 15% including CPI) and 100% vests at
maximum performance (annual growth in EPS
of 22% including CPI) and rising on a straight-
line basis between these two points.
50% of the vested shares will be subject to
additional holding periods with 25% released
after four years and the remaining 25%
released after ve years. During these new
holding periods, shares may not be sold even
if the participant has left the Group.
DIRECTORS REMUNERATION REPORT (IMPLEMENTATION) CONTINUED
43
The Committee gave particularly careful
thought to this range, taking into account a
number of factors including internal forecasts
and updated market consensus, balanced
with the need to create a real incentive over
the long-term. Another key factor was the
need for the Group to have the exibility to
make appropriate investments with a view
to generating long-term shareholder value
(recognising the typical timelines in which
investments in technology give rise to licence
and royalty revenue). The range is considered
to be challenging and signicantly exceeds the
EPS growth range for awards granted under
the former DAB Plan (being CPI + 4% to
CPI+ 12%).
Our intent is to review these targets on
an annual basis, taking account of market
conditions and any other relevant factors
to ensure that they remain appropriate in
the context of the factors set out above.
The Committee will review their applicability
on an annual basis, so that in the event that
exceptional circumstances arise, such as
material corporate activity or substantial
changes in market conditions, their impact
can be considered against subsequent annual
awards. If changes are to be proposed for
any prospective LTIP award, it would be the
Committees intention to conrm any such
change to shareholders in advance.
Former share option schemes
The remaining shares of the nal option grant
to executive directors made in 2006 vested
in accordance with the rules of the scheme in
February 2013.
Pensions
The Group does not operate its own pension
scheme but makes payments into a group
personal pension plan, which is a money
purchase scheme. For executive directors,
the normal rate of Group contribution is
10% of the executives basic salary, or 11%
in the case of the Chief Executive Ofcer
(plus additional amounts in accordance
with the Groups salary sacrice scheme).
Full details of Group contributions are set
out in the directors emoluments table later
in this report. Since 2011, to the extent that
contributions cannot be made in a tax efcient
way at the 10/11% of basic salary level,
the diference is paid as an additional cash
allowance (and subject to appropriate tax and
other deductions).
Compensation for loss of ofce
No payments were made during 2013
to former executive directors by way of
compensation for loss of ofce, or pay in
lieuof notice.
ARM Holdings plc
44
Performance graphs
A performance graph showing the
Companys TSR together with the TSRs for
the FTSE All-World Technology Index and
the FTSE 350 from 31 December 2008 is
shown below. The TSR has been calculated in
accordance with the Directors Remuneration
Report Regulations 2002.
The TSR for the Companys shares was
1,231% over this period compared with 148%
for the FTSE All-World Technology Index for
the same period.
The Committee considers the FTSE
All-World Technology Index to be an
appropriate choice as the Index contains
companies from the US, Asia and Europe
and therefore reects the global environment
in which the Group operates. In addition,
the Index includes many companies that are
currently the Groups customers, as well as
companies that use ARM technology in their
end products.
1400
1200
1000
800
600
400
200
Dec 09 Dec 08 Dec 10 Dec 11 Dec 12 Dec 13
ARM FTSE All-World Technology FTSE 350
ARM total shareholder return performance from 31 December 2008 to 31 December 2013
CEOs Pay for the last ve nancial years
Year 2009 2010 2011 2012 2013
CEOs total single gure *
Warren East (retired 30 June 2013) 2,010,584 7,570,679 7,744,982 6,709,569 3,415,729
Simon Segars (appointed CEO 1 July 2013) 2,064,907
CEOs total single gure 2,010,584 7,570,679 7,744,982 6,709,569 5,480,636
Bonus % of maximum award % 67% 100% 100% 85% 91%
LTIP % of maximum vesting % 91% 100% 100% 100% 92%
DAB % of maximum vesting % 0% 100% 100% 100% 100%
* Warren East retired on 30 June 2013 and was succeeded by Simon Segars. The CEOs total single gure for 2013 represents the pay, benets and pension received by Warren East for the rst
half of the year as well as the market value at vesting of the shares received by him on his retirement under the rules of the LTIP and DAB Plans. This gure also includes the pay, benets, bonus
and pension received by Simon Segars for the second half of the year as well as the market value of the shares received byhim under the LTIP and DAB Plans in respect of the nancial year to
31 December 2013.
45
Non-executive directors
During 2013, the Chairmen of the Audit and
Remuneration Committees each received
a total fee of 70,000 per annum and the
other non-executive directors each received
a total fee of 55,000 per annum. In line
with fee arrangements in place in other
companies of similar size and complexity, the
executive directors have implemented new
arrangements from 1 January 2014 as follows:
A standard fee of 60,000 per annum.
Additional fees for Committee Chairmen
and the Senior Independent Director of
16,000 per annum.
This is believed to more fairly reect the
workload undertaken by Committee
Chairmen and the Senior Independent
Director. The additional fee of $2,500 per
meeting which is paid to non-executive
directors who are based in the US and travel
to the UK for Board meetings will continue
at this level. This is to reect their additional
time commitment.
The Chairmans fee for 2013 was at the
rate of 390,000 per annum and increased
by 2.6% for 2014 to the rate of 400,000
per annum.
Non-executive directors do not have service
contracts and are not eligible to participate
in bonus or share incentive arrangements.
Their service does not qualify for pension
purposes or other benets, and no element
oftheir fees is performance-related.
In addition to the interests disclosed above,
the executive directors have interests in
dividend shares that could be awarded
under the former and current LTIPs and
the former DAB Plan, the amount of which
will depend on the extent to which the
performance criteria are satised and on the
dividends declared during the performance
period. Changes in directors interests in the
Companys shares that have taken place in the
period from 31 December 2013 to the date
of approval of the Remuneration report are
shown above.
External advisers
The Committee has access to independent
professional advice on remuneration
matters. Following a competitive tender
process, Towers Watson were appointed
by the Committee in 2010, and Committee
members continue to be satised that their
advice is objective and independent and their
fees are in line with market practice. Access to
their global database and expertise is an
important factor in considering remuneration
matters across the senior executive team.
Work undertaken by Towers Watson in
2013 included advice on the structure and
targets for the new LTIP, new CEO and senior
executive packages, and the Remuneration
Policy summary in this report, for which total
fees of 52,000 were paid during the year.
The Committee also received advice from
Kepler Associates who provided independent
verication of Total Shareholder Return (TSR)
calculations for the LTIP.
The former EVP Human Resources and the
current EVP People also provided advice to
the Committee in 2013.
Share dilution
It is proposed that the Group will continue
to manage dilution within the context of
maintaining award levels within a 10% limit
over ve years (excluding rolled over Artisan
options), the limit that has applied since 2003.
We are aware that this is higher than the limit
of 5% over ten years in respect of discretionary
awards and 10% over ten years in respect of
all schemes adopted by many UK companies
and preferred by many institutional investors.
The reasons for this higher limit, which was
approved by shareholders when the former
LTIP was introduced, are at least as strong
today. These are the broad-based nature of
our equity plans (which cover all employees)
and the need to be able to compete with US
companies worldwide for the high-calibre
engineers and executives required to secure
the Groups future success. The Committee
is keenly aware of this issue, and will continue
to keep well below the 10% upper limit.
Dilution over the past ve years has been
6.85%.
ARM Holdings plc
46
Audited information
The following information has been audited by the Companys auditors, PricewaterhouseCoopers LLP, as required bythe Companies Act 2006.
Director
Total amount of salary and fees
All taxable benets

*
Bonus payments
**
2013 2012 2013 2012 2013 2012
Executive
Simon Segars**** 400,000 280,000 73,186 93,284 543,454 370,605
Tim Score 415,000 400,000 26,031 25,178 599,374 529,436
Mike Muller 285,000 275,000 14,940 15,087 403,718 349,428
Warren East (retired 30 June 2013) 250,000 490,000 17,041 15,087 622,617
Mike Inglis (retired 31 March 2013) 71,250 280,000 11,293 14,692 355,781
Tudor Brown (retired 3 May 2012) 77,586 9,741
Total 1,421,250 1,802,586 142,491 173,069 1,546,546 2,227,867
Non-executive
Sir John Buchanan (appointed 3 May 2012) 390,000 258,879
Andy Green 55,000 52,000
Larry Hirst 55,000 52,000
Eric Meurice (appointed 1 July 2013) 27,500
Kathleen ODonovan 70,000 65,000
Janice Roberts 61,399 58,314
Philip Rowley 70,000 65,000
Doug Dunn (retired 3 May 2012) 62,069
Young Sohn (retired 31 December 2012) 59,906
Total 728,899 673,168
Total 2,150,149 2,475,754 142,491 173,069 1,546,546 2,227,867
* All the executive directors receive family healthcare and annual travel insurance as part of their benets in kind. In addition, Tim Score has the use of a company car with fuel benet
andWarren East, Tudor Brown, Mike Inglis and Mike Muller received a car and petrol allowance. Simon Segars receives 61,283 living, transportation and other allowances as part of his
placement in the US. Warren East, Mike Inglis and Tudor Brown received an additional cash allowance in place of Group pension contributions that can no longer be contributed in a
tax-efcient way.
** The bonus payments above represent the full bonus earned during 2013. According to the terms of the DAB Plan, 50% of this bonus is not paid in cash, but is deferred and becomes payable
inshares after three years. Details of the awards made in February 2012 in respect of these deferrals are detailed above.
*** These include the value of shares received by Tudor Brown, Mike Inglis and Warren East on LTIP and DAB plans on their retirements.
**** For the rst half of 2013, Simon Segars salary was 300,000. Following his appointment to CEO on 1 July 2013, his salary increased to 500,000, resulting in an average for the year of 400,000.
Executive directors annual salaries were increased from 1 January 2014, each by 3% to the following amounts: Simon Segars 515,000; Tim Score 427,450; and Mike Muller 293,550.
The Group has adopted the single total gure performance measure in the year. Under the new guidance, share price appreciation of scheme interests that vest in the year, for which the performance
conditions were met in a prior year, are excluded from the single gure table. The comparative amounts have been amended to reect the new guidance.
47
Money and other assets receivable
for periods of more than one nancial year
***
All pension-related benets
Total
2013 2012 2013 2012 2013 2012

1,207,360 3,319,547 44,000 30,800 2,268,000 4,094,236
1,727,783 4,783,187 44,156 42,560 2,812,344 5,780,361
1,193,633 3,276,928 32,148 31,020 1,929,439 3,947,463
3,123,688 5,532,865 25,000 49,000 3,415,729 6,709,569
1,680,367 3,341,919 7,125 28,418 1,770,035 4,020,810
1,380,904 10,167 1,478,398
8,932,831 21,635,350 152,429 191,965 12,195,547 26,030,837
390,000 258,879
55,000 52,000
55,000 52,000
27,500
70,000 65,000
61,399 58,314
70,000 65,000
62,069
59,906
728,899 673,168
8,932,831 21,635,350 152,429 191,965 12,924,446 26,704,005
ARM Holdings plc
48
Deferred Annual Bonus Plan in respect of 2013 nancial year
This was the nal operation of the DAB Plan which will be replaced by the new Annual Bonus Plan and LTIP for 2014 onwards. Details of these
new plans are included in the Remuneration Policy summary earlier in this report. The deferred and matching share elements of the DAB Plan will
continue to vest over the next three years and all new awards will be made under the new LTIP and the Annual Bonus Plan. As demonstrated in
this summary, there is a highly variable element to executive directors remuneration. For 2013, target and maximum bonus of 100% and 150%
of base salary respectively (after application of an individual performance multiplier which exes the payment by 0.75 to 1.25) could be earned
through the DAB Plan if all targets were met.
The strong performance of the Group in 2013 resulted in achievement of both of the equally weighted bonus targets, as set out below:
2013 Bonus targets Target Actual
Bonus % achieved
of base salary
Revenue US$1,096.0m US$1,117.7m 55.0%
NOP* 313.5m 332.6m 62.9%
Total 117.9%
* NOP for bonus purposes is calculated using the Group budget exchange rate of 1:US$1.60 for 2013.
The executive directors received the following payments in respect of the performance of the company in 2013:
Director
Salary
Bonus %
achieved
Personal
multiplier
Total
bonus
%
Bonus
paid
50% deferred
in shares
Shares
awarded
Number
Simon Segars (until 30 June 2013) 300,000 117.9 1.150 135.59 201,706
Simon Segars (from 1 July 2013) 500,000 117.9 1.150 135.59 341,748
Simon Segars Total for year* 543,454 271,727 30,327
Tim Score 415,000 117.9 1.225 144.43 599,374 299,687 33,447
Mike Muller** 285,000 117.9 1.200 141.48 403,218 201,609 22,501
* Simon Segars bonus was calculated pro-rated on a daily basis.
** In addition to his DAB bonus, Mike Muller received a 500 bonus for ling a patent.
Money and other assets receivable for periods of more than one nancial year.
The executive directors received the following in February 2014, in respect of performance periods ending in 2013:
Director
Market value
of LTIP at
vesting
Market value
of DAB matching
shares at vesting
Total
received
Simon Segars 734,433 472,927 1,207,360

Tim Score 1,049,565 678,218 1,727,783
Mike Muller 726,208 467,425 1,193,633
Warren East (retired 30 June 2013) 1,822,138 1,301,550 3,123,688
Mike Inglis (retired 31 March 2013) 921,076 759,291 1,680,367
Total 5,253,420 3,679,411 8,932,831
49
The executive directors received the following in February 2013, in respect of performance periods ending in 2012:
Director
Market value
of LTIP at
vesting
Market value
of DAB matching
shares at vesting
Total
received
Simon Segars 2,376,446 943,101 3,319,547

Tim Score 3,408,086 1,375,101 4,783,187
Mike Muller 2,348,822 928,106 3,276,928
Warren East (retired 30 June 2013) 3,960,771 1,572,094 5,532,865
Mike Inglis (retired 31 March 2013) 2,394,880 947,039 3,341,919
Tudor Brown (retired 3 May 2012) 928,941 451,963 1,380,904
Total 15,417,946 6,217,404 21,635,350
LTIP vesting in 2013
The performance conditions applicable to the conditional awards granted on 8 February 2010 were satised in respect of the performance
period ended 31 December 2012 to the extent of 200% plus dividend shares which vested on 8 February 2013, as follows:
Director
Conditional award
Number
Vested award
Number
Dividend shares
Number
Total award
Number
Market value
at vesting
Simon Segars 125,853 251,706 5,346 257,052 2,376,446

Tim Score 180,487 360,974 7,667 368,641 3,408,086
Mike Muller 124,390 248,780 5,284 254,064 2,348,822
Warren East (retired 30 June 2013) 209,756 419,512 8,911 428,423 3,960,771
Mike Inglis (retired 31 March 2013) 126,829 253,658 5,388 259,046 2,394,880
Total 767,315 1,534,630 32,596 1,567,226 14,489,005
The amount vested above represents the maximum award under the LTIP. This is based on the total shareholder return as calculated below:
Comparator Group ARM TSR percentile rank Implied vesting
FTSE 350 Index 99.4% 200%
FTSE All World Technology Index 100% 200%
Overall 200%
LTIP vesting in 2014
The performance conditions applicable to the conditional awards granted on 8 February 2011 were satised in respect of the performance
period ended 31 December 2013 to the extent of 183.7% plus dividend shares which vested on 8 February 2014, as follows:
Director
Conditional award
Number
Vested award
Number
Dividend shares
Number
Total award
Number
Market value
at vesting
Simon Segars 43,863 80,576 1,392 81,968 734,433

Tim Score 62,684 115,150 1,989 117,139 1,049,565
Mike Muller 43,372 79,674 1,376 81,050 726,208
Total 149,919 275,400 4,757 280,157 2,510,206
ARM Holdings plc
50
The amount vested above is based on the total shareholder return as calculated below:
Comparator Group ARM TSR percentile rank Implied vesting
FTSE 350 Index 81.3% 167.4%
FTSE All World Technology Index 90.0% 200.0%
Overall 183.7%
In accordance with the rules of the LTIP, on his retirement on 31 March 2013, Mike Inglis received the following shares under the Plan calculated
on a pro-rata basis and reecting the extent to which the performance conditions were satised at that date:
Grant
Conditional award
Number
Vested award
Number
Dividend shares
Number
Total award
Number
Market value
at vesting
8 February 2011 44,190 52,683 52,683 551,064

8 February 2012 49,295 35,374 35,374 370,012
Total 93,485 88,057 88,057 921,076
In accordance with the rules of the LTIP, on his retirement on 30 June 2013, Warren East received the following shares under the Plan calculated
Grant
Conditional
award
Number
Vested
award
Number
Dividend
shares
Number
Total
award
Number
Market value
at vesting
8 February 2011 77,741 122,434 122,434 1,085,377

8 February 2012 86,267 83,109 83,109 736,761
Total 164,008 205,543 205,543 1,822,138
In accordance with the rules of the LTIP, on his retirement on 3 May, 2012, Tudor Brown received the following shares under the Plan calculated
Grant
Conditional award
Number
Vested award
Number
Dividend shares
Number
Total award
Number
Market value
at vesting
8 February 2010 106,341 165,679 165,679 796,088

8 February 2011 36,007 27,649 27,649 132,853
Total 142,348 193,328 193,328 928,941
The following conditional awards over ordinary shares were made under the LTIP on 8 February 2014: Simon Segars 107,770; Tim Score 89,449
and Mike Muller 61,429. The mid-market closing price of an ordinary share on 7 February 2014, being the business day prior to the date of these
conditional awards, was 896 pence.
51
Deferred Annual Bonus Plan
There is a compulsory deferral of 50% of the annual bonus earned by executive directors in the year. The emoluments detailed above include the
full bonus earned for 2013, although only half has been settled in cash and the deferred elements will be settled in shares after three years.
The total number of deferred shares held under the DAB Plan by the directors following conrmation of 2013 bonus is:
Director
Shares deferred as part of
the 2011 bonus
Number
the 2012 bonus
Number
the 2013 bonus
Number
Total awards
Number
Simon Segars 35,387 20,045 30,327 85,759
Tim Score 50,572 28,637 33,447 112,656
Mike Muller 34,991 18,900 22,501 76,392
Total 120,950 67,582 86,275 274,807
The performance conditions applicable to the matching awards relating to the deferred elements of the annual bonus for 2010 were satised to
the extent of 200% matching shares plus dividend shares which vested on 8 February 2014, as follows:
Director
the 2010 bonus
Number
Matching shares
Number
Matching shares
Value
Dividend shares
Number
Total award
Number
Simon Segars 26,391 52,782 472,927 456 79,629
Tim Score 37,847 75,694 678,218 654 114,195
Mike Muller 26,084 52,168 467,425 451 78,703
Total 90,322 180,644 1,618,570 1,561 272,527
The market value of an ARM share on the date of vesting was 896.0 pence. The matching shares vesting above represent the maximum award
under the DAB Plan. This award is based on an EPS growth rate before ination of 120% per annum compared with a target growth rate of CPI
plus 12% per annum on average for the three years making up the performance period.
In accordance with the rules of the DAB Plan, on his retirement on 31 March 2013, Mike Inglis received the following shares calculated on a pro-
rata basis and reecting the extent to which the performance conditions were satised at that date:
Grant
Shares deferred as part
of the bonus
Number
Matching shares
Number
Matching shares value
Total award
Number
2011 26,595 39,831 416,632 66,426
2012 35,651 29,629 309,919 65,280
2013 19,244 3,130 32,740 22,374
Total 81,490 72,590 759,291 154,080
ARM Holdings plc
52
In accordance with the rules of the DAB Plan, on his retirement on 1 July 2013, Warren East received the following shares calculated on a pro-
rata basis and reecting the extent to which the performance conditions were satised at that date:
Grant
Shares deferred as
part of the bonus
Number
Matching shares
Number
Matching shares value
Total award
Number
2011 43,985 73,186 648,794 117,171
2012 62,720 62,550 554,506 125,270
2013 33,677 11,083 98,251 44,760
Total 140,382 146,819 1,301,550 287,201
The performance conditions applicable to the matching awards relating to the deferred elements of the annual bonus for 2009 were satised to
the extent of 200% matching shares plus dividend shares which vested on 8 February 2013, as follows:
Director
Shares deferred
as part of
the bonus
Number
Matching
shares
Number
Matching
shares
award
Dividend shares
Number
Total awards
Number
Simon Segars 51,006 102,012 943,101 1,082 154,100
Tim Score 74,370 148,740 1,375,101 1,578 224,688
Mike Muller 50,195 100,390 928,106 1,065 151,650
Warren East 85,024 170,048 1,572,094 1,804 256,876
Mike Inglis 51,219 102,438 947,039 1,087 154,744
Total 311,814 623,628 5,765,441 6,616 942,058
The market value of an ARM share on the date of vesting was 924.5 pence. The matching shares vesting above represent the maximum award
under the DAB Plan. This award is based on an EPS growth rate before ination of 170% compared with a target growth rate of CPI plus 12%
per annum on average for the three years making up the performance period.
In accordance with the rules of the DAB Plan, on his retirement on 3 May, 2012, Tudor Brown received the following shares calculated on a
pro-rata basis and reecting the extent to which the performance conditions were satised at that date:
Grant
Shares deferred
as part of
the bonus
Number
Matching
shares
Number
Matching
shares
award
Total award
Number
2010 43,427 67,659 325,102 111,086
2011 22,299 19,875 95,499 42,174
2012 29,049 6,527 31,362 35,576
Total 94,775 94,061 451,963 188,836
53
Share awards
Details of conditional awards made in the year to 31 December 2013 under the LTIP and deferred shares granted under the DAB in the year to
31 December 2013 plan by the directors are as follows:
Director
Type of
award
Basis of
award
Date of
award Number
Share price at
award date
Vesting
date
Face value*
% vesting at
threshold**
Simon Segars LTIP 100% of salary 8 February 2013 32,449 9.245 8 February 2016 600,000 50%
Simon Segars LTIP
100% of payrise
for 2013 on
becoming CEO 13 August 2013 11,280 8.865 13 August 2016 200,000 50%
Simon Segars DAB
50% of bonus
paid in respect
of 2012 8 February 2013 20,045 9.245 8 February 2016 370,605 100%
Tim Score LTIP 100% of salary 8 February 2013 44,889 9.245 8 February 2016 830,000 50%
Tim Score DAB
50% of bonus
paid in respect
Mike Muller LTIP 100% of salary 8 February 2013 30,827 9.245 8 February 2016 570,000 50%
Mike Muller DAB
50% of bonus
paid in respect
Warren East
(retired 30 June 2013) LTIP 100% of salary 8 February 2013 54,083 9.245 8 February 2016 1,000,000 50%
Warren East
(retired 30 June 2013) DAB
50% of bonus
paid in respect
Mike Inglis
(retired 31 March 2013) DAB
50% of bonus
paid in respect
* Face Value represents the maximum amount receivable under the award.
** Threshold for LTIP is 50% vest when certain TSR-related criteria are met. All DAB shares will vest after three years. Additional matching shares may be granted depending on EPS growth
(see page 33 for details).
Details of options exercised by directors during the year are as follows:
Director
Number
of shares
Exercise
price
Market price
on date of
exercise
Gains on
exercise
Simon Segars 75,441 1.325 9.2168 595,362

Tim Score 114,959 1.325 9.2213 907,749
Mike Muller 80,830 1.325 9.2211 638,241
Warren East (retired 30 June 2013) 136,513 1.325 9.2943 1,087,911
Warren East (retired 30 June 2013) 4,620 1.948 8.745 31,402
Warren East (retired 30 June 2013) 141,133 1,119,313
Mike Inglis (retired 31 March 2013) 80,830 1.325 9.3014 644,736
Total 493,193 3,905,401
No options were exercised by directors after the year end. Except as described above, there have been no changes in directors interests under
the Groups equity schemes since the end of the 2013 nancial year up to the date of approval of the Remuneration report.
The Companys register of directors interests contains full details of directors shareholdings and options to subscribe and conditional awards
under the LTIP.
ARM Holdings plc
54
Directors shareholdings in the Company
There is no requirement in the Articles of Association for directors to hold shares in the Company. There is a requirement for executive directors
to hold shares to the value of 200% of their salary as set out in the remuneration policy on page 34.
The directors benecial interests in the Companys ordinary shares of 0.05 pence areas follows:
Director
Shareholding at
date of report
Number
Shareholding at
31 December 2013
or date of retirement
if earlier
Number
Shareholding
requirement met
Number
Shares held
under LTIP at
31 December 2013
Number
Shares held
under DAB at
31 December 2013
Number
Shares held under
SAYE scheme at
31 December 2013
Number
Sir John Buchanan N/A
Stuart Chambers (appointed 27 January 2014) 10,000 10,000 N/A
Simon Segars 557,222 479,947 Yes 136,887 81,823
Tim Score 864,824 742,218 Yes 177,995 117,056 18,208
Mike Muller 1,425,442 1,340,774 Yes 122,614 79,975
Andy Green N/A
Larry Hirst N/A
Eric Meurice (appointed 1 July 2013) N/A
Kathleen ODonovan N/A
Janice Roberts N/A
Philip Rowley 40,000 40,000 N/A
Warren East (retired 30 June 2013) N/A 1,419,322 N/A
Mike Inglis (retired 31 March 2013) N/A 99,857 N/A
The following information is unaudited.
It is the Companys policy to allow executive directors to hold non-executive positions at other companies and to receive remuneration for
their services. The Board believes that experience of the operations of other companies and their boards and Committees is valuable to the
development of the executive directors.
Details of executive directors roles within other companies and their remuneration are as follows:
Tim Score was a non-executive director of National Express Group plc until 25 February 2014 and he received remuneration totalling 60,500
up to 31 December 2013 (2012: 60,500). Mike Muller is a non-executive director of Intelligent Energy Limited in July 2012 and he received fees
totalling 40,000 up to 31 December 2013 (2012: 16,666 from appointment in July 2012).
Warren East (who retired on 30 June 2013) is a non-executive director of De La Rue plc and he received remuneration totalling 26,100 up to
the date of his retirement (2012: 49,000 for the full year). Mike Inglis (who retired on 31 March 2013) was a non-executive director of Pace plc
and he received remuneration totalling 10,500 up to the date of his retirement. (2012: 42,000 for the full year).
All of the executive directors are accruing benets under a money purchase pension scheme as a result of their services to the Group.
Contributions to the scheme or the alternative cash allowance as described in the Pensions section above were fully paid during the year.
The Directors Remuneration Report was approved by a duly authorised Committee of the Board and signed on its behalf by
Philip Rowley
5 March 2014
55
Report on the Group nancial statements
Our opinion
In our opinion the Group nancial statements, dened below:
give a true and fair view of the state of the Groups afairs as at 31 December 2013 and of its prot and cash ows for the year then ended;
have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; and
have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation.
This opinion is to be read in the context of what we say in the remainder of this report.
What we have audited
The Group nancial statements, which are prepared by ARM Holdings plc, comprise:
the consolidated statement of nancial position as at 31 December 2013;
the consolidated income statement and consolidated statement of comprehensive income for the year then ended;
the consolidated statement of changes in shareholders equity and consolidated cash ow statement for the year then ended; and
the notes to the Group nancial statements, which include a summary of signicant accounting policies and other explanatory information.
The nancial reporting framework that has been applied in the preparation of the Group nancial statements comprises applicable law and IFRSs
asadopted by the European Union.
Certain disclosures required by the nancial reporting framework have been presented elsewhere in the Annual Report and Accounts
(the Annual Report), rather than in the notes to the nancial statements. These are cross-referenced from the nancial statements and
areidentied as audited.
What an audit of nancial statements involves
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (ISAs (UK & Ireland)). An audit involves
obtaining evidence about the amounts and disclosures in the nancial statements sufcient to give reasonable assurance that the nancial
statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:
whether the accounting policies are appropriate to the Groups circumstances and have been consistently applied and adequately disclosed;
the reasonableness of signicant accounting estimates made by the directors; and
the overall presentation of the nancial statements.
In addition, we read all the nancial and non-nancial information in the Annual Report and Accounts (the Annual Report) to identify material
inconsistencies with the audited Group nancial statements and to identify any information that is apparently materially incorrect based on, or
materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.
Overview of our audit approach
Materiality
We set certain thresholds for materiality. These helped us to determine the nature, timing and extent of our audit procedures and to evaluate the
efect of misstatements, both individually and on the nancial statements as a whole.
Based on our professional judgement, we determined materiality for the Group nancial statements as a whole to be 13.2 million.
We based this assessment on the Groups prot before exceptional items and taxation, being, in our view, the most relevant measure of
performance of the Group. Materiality was calculated as 5% of this performance measure.
We agreed with the Audit Committee that we would report to them misstatements identied during our audit above 0.6 million as well as
misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Overview of the scope of our audit
The Group nancial statements are a consolidation of 27 companies, comprising the Groups operating businesses and head ofce entities.
Our Group audit focused on the two largest companies of the Group (ARM Limited and ARM Inc.) which contribute substantially all of
the Groups third party revenue and prots and more than 80% of the Groups expenses and net assets. We performed full scope audit
procedures at ARM Limited and ARM Inc. We also performed audit procedures over certain account balances and transaction classes at
otherGroup companies
Substantially all audit work in respect of the Group nancial statements was performed by the Group engagement team, with the assistance
ofauditors from other PwC network rms in respect of specic account balances or transaction classes at some Group companies.
Independent Auditors Report to the Members of ARM Holdings plc
ARM Holdings plc
56
Areas of particular audit focus
In preparing the nancial statements, the directors made a number of subjective judgements, for example in respect of signicant accounting
estimates that involved making assumptions and considering future events that are inherently uncertain. We primarily focused our work in
these areas by assessing the directors judgements against available evidence, forming our own judgements, and evaluating the disclosures in the
nancial statements.
In our audit, we tested and examined information, using sampling and other auditing techniques, to the extent we considered necessary to
provide a reasonable basis for us to draw conclusions. We obtained audit evidence through testing the efectiveness of controls, substantive
procedures or a combination of both.
We considered the following areas to be those that required particular focus in the current year. This is not a complete list of all risks or areas of
focus identied by our audit. We discussed these areas of focus with the Audit Committee. Their report on those matters that they considered
to be signicant issues in relation to the nancial statements is set out on page 15.
Revenue recognition
The timing of revenue recognition, particularly licence revenue, is inherently complex.
Recognition of license revenue involves a number of signicant judgements by the directors, including the following:
determining whether contracts contain deliverables which should be separated for revenue recognition purposes and the most appropriate
revenue recognition methodology for those contracts;
determining the allocation of consideration on a fair value basis between components of multi-element contracts and whether the
consideration is deemed probable where a contract incorporates extended payment terms; and
assessing the degree of completion of contracts accounted for on a percentage of completion basis.
(Refer also to note 1b to the Group nancial statements.)
In addition, ISAs (UK & Ireland) presume there is a risk of fraud in revenue recognition for every audit conducted under these auditing standards
because of the pressure management may feel to achieve the planned results.
How the scope of our audit addressed the area of focus
We evaluated the relevant IT systems and tested the internal controls over the completeness, accuracy and timing of revenue recognised.
We read a sample of contracts selected on a high value basis and assessed whether the revenue recognition methodology is consistent with
accounting standards. We evaluated the signicant judgements and estimates made by management in applying the Groups policy to specic
contracts and obtained evidence, including contractual agreements, delivery records, cash receipts and project plans.
For the contracts selected we re-performed managements calculations and agreed the revenue recognised to the underlying accounting records.
In response to the presumed risk of fraud, where revenue was recorded through journal entries we performed testing over a sample of journals
to establish whether revenue was appropriately recognised.
Litigation and accounting for responses to Intellectual Property (IP) risk
The Group has, directly and through indemnity provisions in its contracts with customers, exposure to patent infringement disputes.
Judgements are made in determining the extent and amount of any provisions. In addition, the Group has engaged in arrangements to obtain IP
rights, and judgements are made in determining the most appropriate accounting treatment in this regard.
We discussed litigation with the Groups in-house legal counsel and obtained conrmations from external legal advisors. We assessed the
adequacy of any provisions recognised and disclosures made in the Group nancial statements.
We examined the Groups arrangements in response to litigation and IP risk and considered their accounting treatment.
Where indemnication costs with a licensee and litigation settlements through purchase of a licence were expensed during the year, we vouched
to evidence of payment and examined relevant contracts.
In respect of ARMs contribution to a consortium to acquire rights over the patents of MIPS Technologies Inc., we evaluated the accounting
treatment adopted and considered the assumptions made in valuing the available-for-sale asset acquired and its subsequent impairment. We also
examined evidence demonstrating the future use of the patents acquired in ARMs roadmap and assessed the assumptions used that support the
carrying value in the balance sheet.
continued
57
Goodwill impairment assessment
The assessment of the value in use of the Physical Intellectual Property Division (PIPD) for the purpose of assessing whether the carrying value
of goodwill is impaired involves signicant judgement from the directors. These judgements include estimates of the projected future results of
PIPD and the allocation of revenue to PIPD from the Processor Division (PD) to reect an estimate of the arms length incremental benet
accruing to PD from PIPD activity.
(Refer also to note 13 to the Group nancial statements.)
We reviewed the methodology used in the directors cash ow projections, and the process by which they were drawn up, including reconciling
them to the latest Board-approved budgets, and testing the accuracy of the underlying calculations. We challenged:
the estimates underlying the allocation of revenues from PD to PIPD by assessing the historical and projected growth in POP IP and the
reasonableness of the proportion of this revenue allocated to PIPD;
the directors key assumptions for long term growth rates in the forecasts by comparing them to external analysts and industry expert
forecasts; and
the discount rate by comparing to our own estimate of the cost of capital for the company.
We also performed sensitivity analysis around the key drivers: including the cross-allocation of revenues to PIPD from other divisions of the ARM
group, and the growth and discount rates used within the cash ow forecasts.
Risk of management override of internal controls
ISAs (UK & Ireland) require that we consider this.
We assessed the overall control environment of the Group, including the arrangements for staf to whistle-blow inappropriate actions, and
interviewed senior management and the Groups internal audit function.
We examined the signicant accounting estimates and judgements relevant to the nancial statements for evidence of bias by management.
In particular, we challenged management over the estimates and judgements made in respect of the annual goodwill impairment review and
revenue recognition. We also performed testing over manual journal entries.
Going Concern
Under the Listing Rules we are required to review the directors statement, set out on page 23, in relation to going concern. We have nothing to
report having performed our review.
As noted in the directors statement, the directors have concluded that it is appropriate to prepare the Groups nancial statements using the
going concern basis of accounting. The going concern basis presumes that the Group has adequate resources to remain in operation, and that the
directors intend it to do so, for at least one year from the date the nancial statements were signed. As part of our audit we have concluded that
the directors use of the going concern basis is appropriate.
However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the Groups ability to continue
as a going concern.
Opinion on matters prescribed by the Companies Act 2006
In our opinion:
the information given in the Strategic Report and the Directors Report for the nancial year for which the Group nancial statements are
prepared is consistent with the Group nancial statements.
ARM Holdings plc
58
Other matters on which we are required to report by exception
Adequacy of information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion we have not received all the information and explanations we
require for our audit. We have no exceptions to report arising from this responsibility.
Directors remuneration
Under the Companies Act 2006 we are required to report if, in our opinion, certain disclosures of directors remuneration specied by law have
not been made, and under the Listing Rules we are required to review certain elements of the report to shareholders by the Board on directors
remuneration. We have no exceptions to report arising from these responsibilities.
Corporate Governance Statement
Under the Listing Rules we are required to review the part of the Corporate Governance Statement relating to the Companys compliance with
nine provisions of the UK Corporate Governance Code (the Code). We have nothing to report having performed our review.
On page 15 of the Annual Report, as required by the Code Provision C.1.1, the directors state that they consider the Annual Report taken as a
whole to be fair, balanced and understandable and provides the information necessary for members to assess the Groups performance, business
model and strategy. On page 15, as required by C3.8 of the Code, the Audit Committee has set out the signicant issues that it considered in
relation to the nancial statements, and how they were addressed. Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:
the statement given by the directors is materially inconsistent with our knowledge of the Group acquired in the course of performing our audit;
or
the section of the Annual Report describing the work of the Audit Committee does not appropriately address matters communicated by us to
the Audit Committee.
We have no exceptions to report arising from this responsibility.
Other information in the Annual Report
Under ISAs (UK & Ireland), we are required to report to you if, in our opinion, information in the Annual Report is:
materially inconsistent with the information in the audited Group nancial statements; or
apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing our
audit; or
is otherwise misleading.
continued
59
Responsibilities for the nancial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the directors Responsibilities Statement, the directors are responsible for the preparation of the Group nancial
statements and for being satised that they give a true and fair view.
Our responsibility is to audit and express an opinion on the Group nancial statements in accordance with applicable law and ISAs (UK & Ireland).
Those standards require us to comply with the Auditing Practices Boards Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Companys members as a body in accordance with Chapter 3 of
Part16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our
priorconsent in writing.
Other matter
We have reported separately on the parent company nancial statements of ARM Holdings plc for the year ended 31 December 2013 and on
the information in the Directors Remuneration Report that is described as having been audited.
Charles Bowman
Senior Statutory Auditor
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
5 March 2014
ARM Holdings plc
60

For the year ended 31 December Note
2013
m
2012
m
Revenues 2 714.6 576.9
Gross profit 675.3 545.0
Operating expenses
Exceptional items 6 (101.3)
Profit from operations 153.5 208.1
Share of results in joint venture 26 (4.0) (0.7)
Profit before tax 2, 5 162.6 221.0
Tax (including 8.6 million in respect of exceptional items) 7 (57.8) (60.3)
Profit for the year 2 104.8 160.7
Earnings per share
Effect of dilutive securities: Employee incentive schemes 15.4 20.7
All the profit for the year is attributable to the owners of the Company and all activities relate to continuing operations. The Company has opted
to present its own accounts under UK GAAP as shown on pages 109 to 114.
Details of dividends paid and proposed are in notes 8 and 25 of the financial statements respectively.

Consolidated statement of comprehensive income

2013
m
2012
m
Profit for the year 104.8 160.7
Other comprehensive income:
Unrealised holding loss on available-for-sale financial assets (net of tax of nil (2012: 0.1m)) * 11 (0.3)
Currency translation adjustment * (17.9) (26.8)
Other comprehensive loss for the year (17.9) (27.1)
Total comprehensive income for the year 86.9 133.6
*These items may be reclassified to the income statement if certain conditions are met.
The accompanying notes are an integral part of the financial statements.


At 31 December
Note
2013
m
2012
m
Assets
Current assets:
Cash and cash equivalents 17 43.8 46.3
Short-term deposits 17 544.1 340.0
Fair value of currency exchange contracts 17 5.1 1.4
Accounts receivable 9 136.2 124.5
Available-for-sale financial assets 11, 17 1.2
Prepaid expenses and other assets 10 39.8 135.6
Inventories 3.0 2.3
Non-current assets:
Long-term deposits 17 125.6 141.3
Loans and receivables 17 3.0 2.1
Available-for-sale financial assets 11, 17 13.9 13.8
Investment in joint venture 26 6.5 6.8
Property, plant and equipment 12 33.6 36.1
Goodwill 13 525.9 519.4
Other intangible assets 14 82.9 11.2
Deferred tax assets 7 65.3 70.1
Total assets 1,638.4 1,466.8
Liabilities
Accounts payable 17 7.0 5.9
Embedded derivatives 17 7.0 2.5
Accrued and other liabilities 15 88.1 79.3
Finance lease liabilities 16 2.7 2.9
Accrued and other liabilities 15 2.6
Deferred tax liabilities 7 0.1
Net assets 1,311.4 1,206.1
Share capital 18 0.7 0.7
Total equity 1,311.4 1,206.1
The accompanying notes are an integral part of the financial statements. The financial statements on pages 60 to 108 were approved by the Board
of directors on 5 March 2014 and were signed on its behalf by:
Simon Segars, Chief Executive Officer Tim Score, Chief Financial Officer
017043_ARM_GovernanceFinancials_2013_WORD.indd 60 10/03/2014 21:00
61

2013
m
2012
m
Revenues 2 714.6 576.9
Gross profit 675.3 545.0
Operating expenses
Exceptional items 6 (101.3)
Share of results in joint venture 26 (4.0) (0.7)
Profit before tax 2, 5 162.6 221.0
Tax (including 8.6 million in respect of exceptional items) 7 (57.8) (60.3)
Profit for the year 2 104.8 160.7
Earnings per share
Effect of dilutive securities: Employee incentive schemes 15.4 20.7
All the profit for the year is attributable to the owners of the Company and all activities relate to continuing operations. The Company has opted
to present its own accounts under UK GAAP as shown on pages 109 to 114.
Details of dividends paid and proposed are in notes 8 and 25 of the financial statements respectively.

Consolidated statement of comprehensive income

2013
m
2012
m
Unrealised holding loss on available-for-sale financial assets (net of tax of nil (2012: 0.1m)) * 11 (0.3)
Currency translation adjustment * (17.9) (26.8)
Other comprehensive loss for the year (17.9) (27.1)
Total comprehensive income for the year 86.9 133.6
*These items may be reclassified to the income statement if certain conditions are met.


At 31 December
Note
2013
m
2012
m
Assets
Current assets:
Cash and cash equivalents 17 43.8 46.3
Short-term deposits 17 544.1 340.0
Fair value of currency exchange contracts 17 5.1 1.4
Accounts receivable 9 136.2 124.5
Available-for-sale financial assets 11, 17 1.2
Inventories 3.0 2.3
Non-current assets:
Long-term deposits 17 125.6 141.3
Loans and receivables 17 3.0 2.1
Available-for-sale financial assets 11, 17 13.9 13.8
Investment in joint venture 26 6.5 6.8
Property, plant and equipment 12 33.6 36.1
Goodwill 13 525.9 519.4
Other intangible assets 14 82.9 11.2
Deferred tax assets 7 65.3 70.1
Total assets 1,638.4 1,466.8
Liabilities
Accounts payable 17 7.0 5.9
Embedded derivatives 17 7.0 2.5
Accrued and other liabilities 15 88.1 79.3
Accrued and other liabilities 15 2.6
Deferred tax liabilities 7 0.1
Net assets 1,311.4 1,206.1
Share capital 18 0.7 0.7
Total equity 1,311.4 1,206.1
The accompanying notes are an integral part of the financial statements. The financial statements on pages 60 to 108 were approved by the Board
of directors on 5 March 2014 and were signed on its behalf by:
Simon Segars, Chief Executive Officer Tim Score, Chief Financial Officer
ARM Holdings plc
62
Consolidated cash flow statement
Note
2013
m
2012
m
Profit before tax 162.6 221.0
Investment income (net of interest payable and similar charges) (13.1) (13.6)
Share of results in joint venture 4.0 0.7
Adjustments for:
Depreciation and amortisation of property, plant and equipment and intangible assets 28.0 17.4
Compensation charge in respect of share-based payments 59.2 37.1
Provision for impairment of available-for-sale financial assets (including non-cash exceptional item of 59.5 million) 66.3 1.4
Profit on disposal of available-for-sale financial assets (3.3) (0.8)
Loss on disposal of property, plant and equipment 0.6
Provision for doubtful debts 4.0 0.4
Non-cash foreign currency gains (3.6) (0.7)
Movement in fair value of currency exchange contracts (3.7) (2.9)
Movement in fair value of embedded derivatives 4.4 3.7
Changes in working capital
Accounts receivable (19.8) (5.7)
Inventories (0.7) 0.1
Prepaid expenses and other assets (8.8) (1.1)
Accounts payable 1.1 (2.8)
Accrued and other liabilities 8.3 (4.8)
Cash generated by operations before tax 338.6 286.7
Income taxes paid (23.3) (26.1)
Net cash from operating activities 315.3 260.6
Investing activities
Interest received (net of interest paid of 0.2m (2012: 0.3m)) 13.2 11.2
Purchases of property, plant and equipment (13.5) (20.2)
Advance payment to acquire intangible asset and available-for-sale financial asset 10 (103.7)
Purchases of other intangible assets (31.8) (5.4)
Purchases of available-for-sale financial assets 11 (8.9) (3.0)
Proceeds on disposal of available-for-sale financial assets 5.5 11.8
Purchase of short- and long-term deposits, net (188.5) (76.8)
Purchase of subsidiaries, net of cash and borrowings acquired 19 (21.1)
Investment in joint venture 26 (3.7) (7.5)
Provision of long-term loan (0.7)
Net cash used in investing activities (249.5) (193.6)
Financing activities
Proceeds from borrowings 99.8
Proceeds received on issuance of shares 18 5.9 5.6
Refund of costs related to share issue 2.7
Dividends paid to shareholders 8 (68.9) (51.8)
Repayment of borrowings (1.1) (99.8)
Repayment of finance lease liabilities (3.3) (3.3)
Net cash used in financing activities (67.4) (46.8)
Net (decrease)/increase in cash and cash equivalents (1.6) 20.2
Cash and cash equivalents at beginning of the year 46.3 26.8
Effect of foreign exchange rate changes (0.9) (0.7)
Cash and cash equivalents at end of the year 43.8 46.3
Consolidated statement of changes in shareholders equity

Attributable to the owners of the Company
Share
capital
m
Share
premium
account
m
Capital
reserve*
m
Share
option
reserve**
m
Retained
earnings
m
Revaluation
reserve***
m
Cumulative
translation
adjustment
m
Total
m
Balance at 1 January 2012 0.7 6.6 351.6 61.4 539.6 0.3 101.0 1,061.2
Unrealised holding loss on available-for-sale
financial assets (net of tax of 0.1 million) (0.3) (0.3)
Currency translation adjustment (26.8) (26.8)
Total comprehensive income for the year 160.7 (0.3) (26.8) 133.6
Shares issued on exercise of share options and
awards (note 18) 5.6 5.6
Dividends (note 8) (51.8) (51.8)
Credit in respect of employee share schemes 37.1 37.1
Movement on tax arising on share options
and awards 17.7 17.7
Refund of costs related to share issue **** 2.7 2.7
5.6 2.7 3.0 11.3
Balance at 31 December 2012 0.7 12.2 354.3 61.4 703.3 74.2 1,206.1
Total comprehensive income for the year 104.8 (17.9) 86.9
5.9 12.5 18.4
* Capital reserve. In 2004, the premium on the shares issued in part consideration for the acquisition of Artisan Components Inc. was credited to reserves on consolidation in accordance with Section
131 of the Companies Act 1985. The reserve has been classified as a capital reserve to reflect the nature of the original credit to equity arising on acquisition.
** Share option reserve. This represents the fair value of options granted on the acquisition of Artisan Components Inc. in 2004.
*** Revaluation reserve. The Group includes on its balance sheet equity investments that are not publicly traded, which are classified as available-for-sale financial assets. These are carried at fair value plus
transaction costs. Unrealised holding gains or losses on such investments are included, net of related taxes, within the revaluation reserve (except where there is evidence of permanent impairment,
in which case losses would be recognised within the income statement). Any unrealised gains within this reserve are undistributable.
**** Refund of costs related to share issue. This represents the refund of stamp duty costs incurred on the issue of shares for the acquisition of Artisan Components Inc. in 2004.

63
Consolidated cash flow statement
Note
2013
m
2012
m
Investment income (net of interest payable and similar charges) (13.1) (13.6)
Adjustments for:
Depreciation and amortisation of property, plant and equipment and intangible assets 28.0 17.4
Compensation charge in respect of share-based payments 59.2 37.1
Provision for impairment of available-for-sale financial assets (including non-cash exceptional item of 59.5 million) 66.3 1.4
Profit on disposal of available-for-sale financial assets (3.3) (0.8)
Loss on disposal of property, plant and equipment 0.6
Provision for doubtful debts 4.0 0.4
Non-cash foreign currency gains (3.6) (0.7)
Movement in fair value of currency exchange contracts (3.7) (2.9)
Movement in fair value of embedded derivatives 4.4 3.7
Changes in working capital
Accounts receivable (19.8) (5.7)
Inventories (0.7) 0.1
Prepaid expenses and other assets (8.8) (1.1)
Accounts payable 1.1 (2.8)
Accrued and other liabilities 8.3 (4.8)
Cash generated by operations before tax 338.6 286.7
Income taxes paid (23.3) (26.1)
Net cash from operating activities 315.3 260.6
Investing activities
Interest received (net of interest paid of 0.2m (2012: 0.3m)) 13.2 11.2
Purchases of property, plant and equipment (13.5) (20.2)
Advance payment to acquire intangible asset and available-for-sale financial asset 10 (103.7)
Purchases of other intangible assets (31.8) (5.4)
Purchases of available-for-sale financial assets 11 (8.9) (3.0)
Proceeds on disposal of available-for-sale financial assets 5.5 11.8
Purchase of short- and long-term deposits, net (188.5) (76.8)
Purchase of subsidiaries, net of cash and borrowings acquired 19 (21.1)
Investment in joint venture 26 (3.7) (7.5)
Provision of long-term loan (0.7)
Net cash used in investing activities (249.5) (193.6)
Financing activities
Proceeds from borrowings 99.8
Proceeds received on issuance of shares 18 5.9 5.6
Refund of costs related to share issue 2.7
Dividends paid to shareholders 8 (68.9) (51.8)
Repayment of borrowings (1.1) (99.8)
Repayment of finance lease liabilities (3.3) (3.3)
Net cash used in financing activities (67.4) (46.8)
Net (decrease)/increase in cash and cash equivalents (1.6) 20.2
Cash and cash equivalents at beginning of the year 46.3 26.8
Effect of foreign exchange rate changes (0.9) (0.7)
Cash and cash equivalents at end of the year 43.8 46.3
Consolidated statement of changes in shareholders equity

Attributable to the owners of the Company
Share
capital
m
Share
premium
account
m
Capital
reserve*
m
Share
option
reserve**
m
Retained
earnings
m
Revaluation
reserve***
m
Cumulative
translation
adjustment
m
Total
m
Balance at 1 January 2012 0.7 6.6 351.6 61.4 539.6 0.3 101.0 1,061.2
Unrealised holding loss on available-for-sale
financial assets (net of tax of 0.1 million) (0.3) (0.3)
Total comprehensive income for the year 160.7 (0.3) (26.8) 133.6
Refund of costs related to share issue **** 2.7 2.7
5.6 2.7 3.0 11.3
Total comprehensive income for the year 104.8 (17.9) 86.9
5.9 12.5 18.4
* Capital reserve. In 2004, the premium on the shares issued in part consideration for the acquisition of Artisan Components Inc. was credited to reserves on consolidation in accordance with Section
131 of the Companies Act 1985. The reserve has been classified as a capital reserve to reflect the nature of the original credit to equity arising on acquisition.
** Share option reserve. This represents the fair value of options granted on the acquisition of Artisan Components Inc. in 2004.
*** Revaluation reserve. The Group includes on its balance sheet equity investments that are not publicly traded, which are classified as available-for-sale financial assets. These are carried at fair value plus
transaction costs. Unrealised holding gains or losses on such investments are included, net of related taxes, within the revaluation reserve (except where there is evidence of permanent impairment,
in which case losses would be recognised within the income statement). Any unrealised gains within this reserve are undistributable.
**** Refund of costs related to share issue. This represents the refund of stamp duty costs incurred on the issue of shares for the acquisition of Artisan Components Inc. in 2004.

ARM Holdings plc
64
Notes to the financial statements
1 The Group and a summary of its significant accounting policies and financial risk management
1a General information about the Group
The business of the Group
ARM Holdings plc and its subsidiary companies (ARM or the Group) design microprocessors, physical IP and related technology and software,
and sell development tools, to enhance the performance, cost-effectiveness and energy-efficiency of high-volume embedded applications.
The Group licenses and sells its technology and products to leading international electronics companies, which in turn manufacture, market and sell
microcontrollers, application-specific integrated circuits (ASICs) and application-specific standard processors (ASSPs) based on ARMs technology
to systems companies for incorporation into a wide variety of end products.
By creating a network of Partners, and working with them to best utilise ARMs technology, the Group is establishing its processor architecture
and physical IP for use in many high-volume embedded microprocessor applications, including mobile phones, tablets, digital televisions and PC
peripherals, enterprise networking and servers, and smart cards and microcontrollers.
The Group also licenses and sells development tools direct to systems companies and provides support services to its licensees, systems
companies and other systems designers.
The Groups principal geographic markets are Europe, the US and Asia Pacific.
Incorporation and history
ARM is a public limited company incorporated and domiciled under the laws of England and Wales. The registered office of the Company is
110 Fulbourn Road, Cambridge, CB1 9NJ, UK.
The Company was formed on 16 October 1990, as a joint venture between Apple Computer (UK) Limited and Acorn Computers Limited, and
operated under the name Advanced RISC Machines Holdings Limited until 10 March 1998, when its name was changed to ARM Holdings plc. Its
initial public offering was on 17 April 1998.
Group undertakings include ARM Limited (incorporated in the UK), Geomerics Limited (incorporated in the UK), ARM France SAS (incorporated
in France), ARM Germany GmbH (incorporated in Germany), ARM Norway AS (incorporated in Norway), ARM Sweden AB (incorporated in
Sweden), ARM Finland Oy (incorporated in Finland), ARM Inc. (incorporated in the US), ARM Consulting (Shanghai) Co. Limited (incorporated in
PR China), ARM KK (incorporated in Japan), ARM Korea Limited (incorporated in South Korea), ARM Taiwan Limited (incorporated in Taiwan),
and ARM Embedded Technologies Pvt. Limited (incorporated in India).
1b Summary of significant accounting policies
The principal accounting policies applied in the presentation of these consolidated financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted
by the EU, IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The consolidated financial statements have been prepared on a going concern basis and in accordance with the historical cost convention as
modified by: the revaluation to fair value of available-for-sale financial assets; financial assets and liabilities at fair value through the income statement
(including embedded derivatives and derivative instruments).
The cash flow statement for 2012 includes a reclassification in respect of the advance payment to acquire rights to MIPS Technologies, Inc.s
portfolio of patents. 103.7 million has been moved from prepayments and other assets within working capital movements to advance payment
to acquire intangible asset and available-for-sale (AFS) financial asset within investing activities. The reclassification has been made to better reflect
the nature of the payment following the completion of the transaction in 2013.
Critical accounting estimates and judgements
The preparation of financial statements in accordance with IFRS requires the directors to make critical accounting estimates and judgements that
affect the amounts reported in the financial statements and accompanying notes. These estimates and judgements are continually evaluated and
are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions
that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.

1b Summary of significant accounting policies continued
Critical accounting estimates and judgements continued
Impairment of goodwill
The Group tests goodwill for impairment at least annually. This requires an estimation of the value in use of the cash generating units (CGUs) to
which goodwill is allocated. As discussed in detail in note 13, estimating the value in use requires the Group to make an estimate of the expected
future cash flows from the CGUs and also to choose a suitable discount rate in order to calculate the present values of those cash flows. The
discount rate is based on an estimate of the Groups weighted average cost of capital. The Group uses a post-tax discount rate of 10% (2012:
10%) (pre-tax discount rate of approximately 11% (2012: 11%)).
The most significant balance of goodwill is that allocated to the Physical IP Division (PIPD). The cash flows relevant to this CGU are those of both
the division itself and also a proportion of the cash flows generated by the Processor Division (PD). The directors make an estimate of the PD cash
flows that are considered to be generated as a result of the incremental value provided by the combination of PD and PIPD products. Although
these PD cash flows are not cross allocated to PIPD in the segmental reporting note, the directors consider that it is necessary to include them in
the estimation of the value in use of the PIPD CGU. This is because PD products are enhanced when combined with certain PIPD products. As a
result the directors believe that PD is able, and will be able in future, to achieve higher revenues than it would have done as a stand-alone entity.
The amount of these revenues is estimated by considering the percentage of revenue that is achieved as a result of the combination for each class
of PD product. While these percentages are not derived from external sources of information, as no such sources exist, the directors utilise their
considerable knowledge and experience of the semiconductor industry in estimating the amounts that would be re-charged if PD and PIPD were
independent entities. Among other things, they consider the number of additional licences that may be signed and the additional value that may be
achieved per licence as a result of the processors enhanced performance.
Revenue recognition
The Group makes significant estimates in applying its revenue recognition policies. In particular, as discussed in detail in the revenue recognition
policy on page 68, estimates are made in relation to the use of the percentage-of-completion accounting method, which requires that the extent
of progress toward completion of contracts can be anticipated with reasonable certainty. The use of the percentage-of-completion method is itself
based on the assumption that, at the outset of licence agreements, there is an insignificant risk that customer acceptance is not obtained. The
Group also makes assessments, based on prior experience, of the extent to which future milestone receipts represent a probable future
economic benefit to the Group. In addition, when allocating revenue to various components of arrangements involving several components, it
is assumed that the fair value of each element is reflected by its price when sold separately. The complexity of the estimation process and issues
related to the assumptions, risks and uncertainties inherent with the application of the revenue recognition policy affect the amounts reported
in the financial statements. If different assumptions were used, it is possible that different amounts would be reported in the financial statements.
Provisions for income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the world-wide provision for
income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of
business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the
final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and
deferred tax provisions in the period in which such determination is made.
Legal settlements and other contingencies
Determining the amount to be accrued for legal settlements requires the directors to estimate the committed future legal and settlement fees
the Group is expecting to incur, either where suits are filed against the Group for infringement of patents, or where the Group may be required
to indemnify a licensee. The directors assess the extent of any potential infringement based on legal advice and written opinions received from
external counsel and then estimate the level of accrual required.
Contingent consideration for an acquisition is recognised at fair value as part of the purchase consideration if the contingent conditions are
expected to be satisfied. This requires the directors to estimate the acquirees future financial performance, typically more than one year
post-acquisition.

65
1 The Group and a summary of its significant accounting policies and financial risk management
1a General information about the Group
The business of the Group
ARM Holdings plc and its subsidiary companies (ARM or the Group) design microprocessors, physical IP and related technology and software,
and sell development tools, to enhance the performance, cost-effectiveness and energy-efficiency of high-volume embedded applications.
The Group licenses and sells its technology and products to leading international electronics companies, which in turn manufacture, market and sell
microcontrollers, application-specific integrated circuits (ASICs) and application-specific standard processors (ASSPs) based on ARMs technology
to systems companies for incorporation into a wide variety of end products.
By creating a network of Partners, and working with them to best utilise ARMs technology, the Group is establishing its processor architecture
and physical IP for use in many high-volume embedded microprocessor applications, including mobile phones, tablets, digital televisions and PC
peripherals, enterprise networking and servers, and smart cards and microcontrollers.
The Group also licenses and sells development tools direct to systems companies and provides support services to its licensees, systems
companies and other systems designers.
The Groups principal geographic markets are Europe, the US and Asia Pacific.
Incorporation and history
ARM is a public limited company incorporated and domiciled under the laws of England and Wales. The registered office of the Company is
110 Fulbourn Road, Cambridge, CB1 9NJ, UK.
The Company was formed on 16 October 1990, as a joint venture between Apple Computer (UK) Limited and Acorn Computers Limited, and
operated under the name Advanced RISC Machines Holdings Limited until 10 March 1998, when its name was changed to ARM Holdings plc. Its
initial public offering was on 17 April 1998.
Group undertakings include ARM Limited (incorporated in the UK), Geomerics Limited (incorporated in the UK), ARM France SAS (incorporated
in France), ARM Germany GmbH (incorporated in Germany), ARM Norway AS (incorporated in Norway), ARM Sweden AB (incorporated in
Sweden), ARM Finland Oy (incorporated in Finland), ARM Inc. (incorporated in the US), ARM Consulting (Shanghai) Co. Limited (incorporated in
PR China), ARM KK (incorporated in Japan), ARM Korea Limited (incorporated in South Korea), ARM Taiwan Limited (incorporated in Taiwan),
and ARM Embedded Technologies Pvt. Limited (incorporated in India).
1b Summary of significant accounting policies
The principal accounting policies applied in the presentation of these consolidated financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted
by the EU, IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The consolidated financial statements have been prepared on a going concern basis and in accordance with the historical cost convention as
modified by: the revaluation to fair value of available-for-sale financial assets; financial assets and liabilities at fair value through the income statement
(including embedded derivatives and derivative instruments).
The cash flow statement for 2012 includes a reclassification in respect of the advance payment to acquire rights to MIPS Technologies, Inc.s
portfolio of patents. 103.7 million has been moved from prepayments and other assets within working capital movements to advance payment
to acquire intangible asset and available-for-sale (AFS) financial asset within investing activities. The reclassification has been made to better reflect
the nature of the payment following the completion of the transaction in 2013.
Critical accounting estimates and judgements
The preparation of financial statements in accordance with IFRS requires the directors to make critical accounting estimates and judgements that
affect the amounts reported in the financial statements and accompanying notes. These estimates and judgements are continually evaluated and
are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions
that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.

Impairment of goodwill
The Group tests goodwill for impairment at least annually. This requires an estimation of the value in use of the cash generating units (CGUs) to
which goodwill is allocated. As discussed in detail in note 13, estimating the value in use requires the Group to make an estimate of the expected
future cash flows from the CGUs and also to choose a suitable discount rate in order to calculate the present values of those cash flows. The
discount rate is based on an estimate of the Groups weighted average cost of capital. The Group uses a post-tax discount rate of 10% (2012:
10%) (pre-tax discount rate of approximately 11% (2012: 11%)).
The most significant balance of goodwill is that allocated to the Physical IP Division (PIPD). The cash flows relevant to this CGU are those of both
the division itself and also a proportion of the cash flows generated by the Processor Division (PD). The directors make an estimate of the PD cash
flows that are considered to be generated as a result of the incremental value provided by the combination of PD and PIPD products. Although
these PD cash flows are not cross allocated to PIPD in the segmental reporting note, the directors consider that it is necessary to include them in
the estimation of the value in use of the PIPD CGU. This is because PD products are enhanced when combined with certain PIPD products. As a
result the directors believe that PD is able, and will be able in future, to achieve higher revenues than it would have done as a stand-alone entity.
The amount of these revenues is estimated by considering the percentage of revenue that is achieved as a result of the combination for each class
of PD product. While these percentages are not derived from external sources of information, as no such sources exist, the directors utilise their
considerable knowledge and experience of the semiconductor industry in estimating the amounts that would be re-charged if PD and PIPD were
independent entities. Among other things, they consider the number of additional licences that may be signed and the additional value that may be
achieved per licence as a result of the processors enhanced performance.
Revenue recognition
The Group makes significant estimates in applying its revenue recognition policies. In particular, as discussed in detail in the revenue recognition
policy on page 68, estimates are made in relation to the use of the percentage-of-completion accounting method, which requires that the extent
of progress toward completion of contracts can be anticipated with reasonable certainty. The use of the percentage-of-completion method is itself
based on the assumption that, at the outset of licence agreements, there is an insignificant risk that customer acceptance is not obtained. The
Group also makes assessments, based on prior experience, of the extent to which future milestone receipts represent a probable future
economic benefit to the Group. In addition, when allocating revenue to various components of arrangements involving several components, it
is assumed that the fair value of each element is reflected by its price when sold separately. The complexity of the estimation process and issues
related to the assumptions, risks and uncertainties inherent with the application of the revenue recognition policy affect the amounts reported
in the financial statements. If different assumptions were used, it is possible that different amounts would be reported in the financial statements.
Provisions for income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the world-wide provision for
income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of
business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the
final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and
deferred tax provisions in the period in which such determination is made.
Legal settlements and other contingencies
Determining the amount to be accrued for legal settlements requires the directors to estimate the committed future legal and settlement fees
the Group is expecting to incur, either where suits are filed against the Group for infringement of patents, or where the Group may be required
to indemnify a licensee. The directors assess the extent of any potential infringement based on legal advice and written opinions received from
external counsel and then estimate the level of accrual required.
Contingent consideration for an acquisition is recognised at fair value as part of the purchase consideration if the contingent conditions are
expected to be satisfied. This requires the directors to estimate the acquirees future financial performance, typically more than one year
post-acquisition.

ARM Holdings plc
66
continued
Participation in trust to acquire patent rights
During 2013, the Group has participated in a consortium, via a trust, to acquire certain patent rights and has made various judgements regarding
these transactions.
The directors believe that the Group does not control or have significant influence over the trust since, amongst other factors it does not have
voting rights on the board or significant influence over the relevant activities of the trust. The results of the trust have therefore not been
consolidated or equity accounted in the Group financial statements. The Group has determined that the participation in the consortium conferred
on the Group two separate rights: an intangible asset, conferring the right to use the assets in the Groups own business, and an AFS financial asset
conferring the right to certain potential future revenue streams arising from the licensing activities of the trust. The amount expected to be
recovered through this licensing programme was estimated by the Group in conjunction with the management of the trust, which has
considerable experience of managing the assets of similar trusts.
The Group assesses its intangible assets for impairment at each reporting date and has reviewed the valuation of the patent rights acquired in this
transaction. Given the design freedom that these rights provide and the size of the future opportunity afforded, the directors have concluded that
no impairment of the patent rights is required.
In Q4 2013, the trust made a strategic decision not to pursue a licensing programme and the portfolio was instead put up for sale by auction.
The Group acquired the patents in January 2014 for $4.0 million (2.4 million), which will be accounted for as an additional intangible asset.
The auction process means that there are no further potential cash flows in relation to the AFS financial asset and the asset has therefore been
impaired down to the value of the Groups share of the auction proceeds, resulting in a non-cash exceptional charge of $98.5 million
(59.5 million).
Provision for impairment of trade receivables
The Group assesses trade receivables for impairment which requires the directors to estimate the likelihood of payment forfeiture by customers.

New standards, amendments and interpretations
New and amended standards adopted by the Group
IFRS 10 Consolidated financial statements IFRS 10 replaces the guidance on control and consolidation in IAS 27 Consolidated and separate
financial statements, and SIC-12 Consolidation special purpose entities and changes the definition of control so that the same criteria are
applied to all entities. The revised definition of control focuses on the need to have both power and variable returns before control is present.
Power is the current ability to direct the activities that significantly influence returns. Returns must vary and can be positive, negative or both. This
standard has not had a material impact on the results of the Group. The standard is effective for annual periods beginning on or after 1 January
2014 but has been early adopted by the Group.
IFRS 11 Joint arrangements Changes in the definitions have reduced the types of joint arrangements to two: joint operations and joint
ventures. The existing policy choice of proportionate consolidation for jointly controlled entities has been eliminated. Equity accounting is
mandatory for participants in joint ventures. Entities that participate in joint operations will follow accounting much like that for joint assets or joint
operations today, whereby a joint operator will recognise its interest based on its involvement in the joint operation (that is, based on its direct
rights and obligations) rather than on the participation interest it has in the joint arrangement. In contrast, a joint venture does not have rights to
individual assets or obligations for individual liabilities of the joint venture. Instead, joint venturers share in the net assets and, in turn, the outcome
(profit or loss) of the activity undertaken by the joint venture. This standard has not had a material impact on the results of the Group. This
standard is effective for annual periods beginning on or after 1 January 2014 but has been early adopted by the Group.
IFRS 12 Disclosure of interests in other entities IFRS 12 sets out the required disclosures for entities reporting under the two new standards,
IFRS 10 Consolidated financial statements, and IFRS 11 Joint arrangements. The new standard, IFRS 12, requires entities to disclose
information that helps financial statement readers to evaluate the nature, risks and financial effects associated with the entitys interests in
subsidiaries, associates, joint arrangements and unconsolidated structured entities. This standard has not had a material impact on the results
of the Group. The standard is effective for annual periods beginning on or after 1 January 2014 but has been early adopted by the Group.
IFRS 13 Fair value measurement The requirements do not extend the use of fair value accounting but provide guidance on how it should be
applied where its use is already required or permitted by other standards. IFRS 13 aims to improve consistency and reduce complexity by
providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The
standard is effective for annual periods beginning on or after 1 January 2013 and was endorsed by the EU in December 2012. The Group has
included the relevant disclosure requirements within note 1c Financial risk management, and note 17 Financial instruments.
IAS 28 (Revised) Investments in associates and joint ventures IAS 28 defines significant influence and the equity method and provides
guidance on their practical application. The revised standard incorporates the accounting for joint ventures as well as the consensus from SIC-13
Jointly controlled entities. The disclosure requirements have now been relocated to IFRS 12. This new guidance may impact the classification of
investments acquired in the future. This standard is effective for annual periods beginning on or after 1 January 2014 but has been early adopted by
the Group.
Amendment to IAS 1 Financial statement presentation The main change resulting from this amendment is a requirement for entities to group
items presented in other comprehensive income (OCI) on the basis of whether they are potentially reclassifiable to the income statement
subsequently (reclassification adjustments). This standard is effective for accounting periods beginning on or after 1 July 2012 and was endorsed
by the EU in June 2012. The Group has included relevant disclosures within the financial statements.
IAS 27 (revised 2011) Separate financial statements This standard includes the provisions on separate financial statements that are left after
the control provisions of IAS 27 have been included in the new IFRS 10. This standard is effective for accounting periods beginning on or after
1 January 2014 but has been early adopted by the Group. There has been no material impact on the Group.
Amendment to IAS 36 Impairment of assets This amendment relates to the recoverable amount disclosures for non-financial assets.
The amendment removes certain disclosures of the recoverable amount of CGUs that had been included in IAS 36 by the issue of IFRS 13.
The amendment is effective for accounting periods beginning on or after 1 January 2014 but has been early adopted by the Group.

67
continued
Participation in trust to acquire patent rights
During 2013, the Group has participated in a consortium, via a trust, to acquire certain patent rights and has made various judgements regarding
these transactions.
The directors believe that the Group does not control or have significant influence over the trust since, amongst other factors it does not have
voting rights on the board or significant influence over the relevant activities of the trust. The results of the trust have therefore not been
consolidated or equity accounted in the Group financial statements. The Group has determined that the participation in the consortium conferred
on the Group two separate rights: an intangible asset, conferring the right to use the assets in the Groups own business, and an AFS financial asset
conferring the right to certain potential future revenue streams arising from the licensing activities of the trust. The amount expected to be
recovered through this licensing programme was estimated by the Group in conjunction with the management of the trust, which has
considerable experience of managing the assets of similar trusts.
The Group assesses its intangible assets for impairment at each reporting date and has reviewed the valuation of the patent rights acquired in this
transaction. Given the design freedom that these rights provide and the size of the future opportunity afforded, the directors have concluded that
no impairment of the patent rights is required.
In Q4 2013, the trust made a strategic decision not to pursue a licensing programme and the portfolio was instead put up for sale by auction.
The Group acquired the patents in January 2014 for $4.0 million (2.4 million), which will be accounted for as an additional intangible asset.
The auction process means that there are no further potential cash flows in relation to the AFS financial asset and the asset has therefore been
impaired down to the value of the Groups share of the auction proceeds, resulting in a non-cash exceptional charge of $98.5 million
(59.5 million).
Provision for impairment of trade receivables
The Group assesses trade receivables for impairment which requires the directors to estimate the likelihood of payment forfeiture by customers.

New standards, amendments and interpretations
New and amended standards adopted by the Group
IFRS 10 Consolidated financial statements IFRS 10 replaces the guidance on control and consolidation in IAS 27 Consolidated and separate
financial statements, and SIC-12 Consolidation special purpose entities and changes the definition of control so that the same criteria are
applied to all entities. The revised definition of control focuses on the need to have both power and variable returns before control is present.
Power is the current ability to direct the activities that significantly influence returns. Returns must vary and can be positive, negative or both. This
standard has not had a material impact on the results of the Group. The standard is effective for annual periods beginning on or after 1 January
2014 but has been early adopted by the Group.
IFRS 11 Joint arrangements Changes in the definitions have reduced the types of joint arrangements to two: joint operations and joint
ventures. The existing policy choice of proportionate consolidation for jointly controlled entities has been eliminated. Equity accounting is
mandatory for participants in joint ventures. Entities that participate in joint operations will follow accounting much like that for joint assets or joint
operations today, whereby a joint operator will recognise its interest based on its involvement in the joint operation (that is, based on its direct
rights and obligations) rather than on the participation interest it has in the joint arrangement. In contrast, a joint venture does not have rights to
individual assets or obligations for individual liabilities of the joint venture. Instead, joint venturers share in the net assets and, in turn, the outcome
(profit or loss) of the activity undertaken by the joint venture. This standard has not had a material impact on the results of the Group. This
standard is effective for annual periods beginning on or after 1 January 2014 but has been early adopted by the Group.
IFRS 12 Disclosure of interests in other entities IFRS 12 sets out the required disclosures for entities reporting under the two new standards,
IFRS 10 Consolidated financial statements, and IFRS 11 Joint arrangements. The new standard, IFRS 12, requires entities to disclose
information that helps financial statement readers to evaluate the nature, risks and financial effects associated with the entitys interests in
subsidiaries, associates, joint arrangements and unconsolidated structured entities. This standard has not had a material impact on the results
of the Group. The standard is effective for annual periods beginning on or after 1 January 2014 but has been early adopted by the Group.
IFRS 13 Fair value measurement The requirements do not extend the use of fair value accounting but provide guidance on how it should be
applied where its use is already required or permitted by other standards. IFRS 13 aims to improve consistency and reduce complexity by
providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The
standard is effective for annual periods beginning on or after 1 January 2013 and was endorsed by the EU in December 2012. The Group has
included the relevant disclosure requirements within note 1c Financial risk management, and note 17 Financial instruments.
IAS 28 (Revised) Investments in associates and joint ventures IAS 28 defines significant influence and the equity method and provides
guidance on their practical application. The revised standard incorporates the accounting for joint ventures as well as the consensus from SIC-13
Jointly controlled entities. The disclosure requirements have now been relocated to IFRS 12. This new guidance may impact the classification of
investments acquired in the future. This standard is effective for annual periods beginning on or after 1 January 2014 but has been early adopted by
the Group.
Amendment to IAS 1 Financial statement presentation The main change resulting from this amendment is a requirement for entities to group
items presented in other comprehensive income (OCI) on the basis of whether they are potentially reclassifiable to the income statement
subsequently (reclassification adjustments). This standard is effective for accounting periods beginning on or after 1 July 2012 and was endorsed
by the EU in June 2012. The Group has included relevant disclosures within the financial statements.
IAS 27 (revised 2011) Separate financial statements This standard includes the provisions on separate financial statements that are left after
the control provisions of IAS 27 have been included in the new IFRS 10. This standard is effective for accounting periods beginning on or after
1 January 2014 but has been early adopted by the Group. There has been no material impact on the Group.
Amendment to IAS 36 Impairment of assets This amendment relates to the recoverable amount disclosures for non-financial assets.
The amendment removes certain disclosures of the recoverable amount of CGUs that had been included in IAS 36 by the issue of IFRS 13.
The amendment is effective for accounting periods beginning on or after 1 January 2014 but has been early adopted by the Group.

ARM Holdings plc
68
continued
New standards, amendments and interpretations continued
Standards, amendments and interpretations that are not yet effective and have not been early adopted
IFRS 9 Financial instruments addresses the classification and measurement of financial assets and financial liabilities. This is the first part of a new
standard to replace IAS 39. IFRS 9 has two measurement categories: amortised cost and fair value. All equity instruments are measured at fair
value. A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent
principal and interest. Otherwise it is measured at fair value through the income statement. This standard is not expected to have a material impact
on the results of the Group. Published by the IASB in November 2009, the effective date is currently open, pending the finalisation of the
impairment, and classification and measurement requirements. This standard is not yet endorsed by the EU.
Amendment to IAS 32 Financial instruments: Presentation This amendment updates the application guidance in IAS 32 to clarify some of the
requirements for offsetting financial assets and financial liabilities on the balance sheet. This standard is effective for accounting periods beginning
on or after 1 January 2014 and was endorsed by the EU in December 2012. It is not expected to have a material impact on the Group.
Revenue recognition
The Group follows the principles of IAS 18, Revenue recognition, in determining appropriate revenue recognition policies. In principle,
therefore, revenue associated with the sale of goods is recognised when all of the following conditions have been satisfied:
The Group has transferred to the buyer the significant risks and rewards of ownership of the goods.
The Group does not retain either continuing managerial involvement to the degree usually associated with ownership or effective control over
the goods sold.
The amount of revenue can be measured reliably.
It is probable that the economic benefits associated with the transaction will flow to the Group.
The costs incurred or to be incurred in respect of the sale can be measured reliably.
Revenue associated with the rendering of services is recognised when all of the following conditions have been satisfied:
The stage of completion of the transaction at the end of the reporting period can be measured reliably.
The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
Revenue is shown net of value added tax, returns, rebates and discounts, and after eliminating sales within the Group.
Revenue comprises the value of sales of licences to ARM technology, royalties arising from the resulting sale of licensees ARM technology-based
products, revenues from support, maintenance and training and the sale of development boards and software toolkits.
Licence revenues:
Revenue from standard licence products that are not modified to meet the specific requirements of each customer is recognised when all of the
conditions relevant to revenue associated with the sale of goods have been satisfied:
The significant risks and rewards of ownership are transferred when a licence arrangement has been agreed and the IP has been delivered
to the customer.
Continuing managerial involvement and effective control over licensed IP is relinquished at the point at which the IP is delivered to the customer.
The amount of revenue can be measured reliably; any consideration due under the licensing arrangement that is not deemed to be reliably
measurable is deferred until it can be measured reliably.
It is probable that the economic benefits associated with the transaction will flow to the Group; any economic benefits of the transaction that
are deemed unlikely to flow to the Group are deferred until it becomes probable that they will flow to the Group.

Revenue recognition continued
The majority of the Groups revenues come from the licensing of IP and subsequent receipt of royalty revenues and there are therefore very few
direct costs associated with the sale of goods; where there are direct costs of revenues, these are measured with reference to the purchasing
agreements in place with the Groups suppliers.
Many licence agreements are for products which are designed to meet the specific requirements of each customer. Revenue from the sale of
such licences is recognised on a percentage-of-completion basis over the period from signing of the licence to customer acceptance. Under the
percentage-of-completion method, provisions for estimated losses on uncompleted contracts are recognised in the period in which the likelihood
of such losses is determined. The percentage-of-completion is measured by monitoring progress using records of actual time incurred to date in
the project compared with the total estimated project requirement, which approximates to the extent of performance.
Where invoicing milestones in licence arrangements are such that the receipts fall due significantly outside the period over which the customisation
is expected to be performed or significantly outside its normal payment terms for standard licence arrangements, the Group evaluates whether it
is probable that economic benefits associated with these milestones will flow to the Group and therefore whether these receipts should initially be
included in the arrangement consideration.
In particular, it considers:
whether there is sufficient certainty that the invoice will be raised in the expected timeframe, particularly where the invoicing milestone is in
some way dependent on customer activity;
whether it has sufficient evidence that the customer considers that the Groups contractual obligations have been, or will be, fulfilled;
whether there is sufficient certainty that only those costs expected to be incurred will indeed be incurred before the customer will accept that
a future invoice may be raised;
the extent to which previous experience with similar product groups and similar customers supports the conclusions reached.
Where the Group considers that there is insufficient evidence that it is probable that the economic benefits associated with such future milestones
will flow to the Group, taking into account these criteria, such milestones are excluded from the arrangement consideration until there is sufficient
evidence that it is probable that the economic benefits associated with the transaction will flow to the Group. The Group does not discount future
invoicing milestones, as the effect of so doing would be immaterial.
Where agreements involve several components, the entire fee from such arrangements is allocated to each of the individual components based
on each components fair value, where fair value is the price that is regularly charged for an item when sold separately. Where a component in a
multiple-component agreement has not previously been sold separately, the assessment of fair value for that component is based on other factors
including, but not limited to, the price charged when it was sold alongside other items and the book price of the component relative to the book
prices of the other components in the agreement. If fair value of one or more components in a multiple-component agreement is not
determinable (where such component is not considered incidental to the overall arrangement), the entire arrangement fee is deferred until such
fair value is determinable, or the component has been delivered to the licensee. Where, in substance, two or more elements of a contract are
linked and fair values cannot be allocated to the individual components, the revenue recognition criteria are applied to the elements as if they were
a single element.
Agreements including rights to unspecified future products (as opposed to unspecified upgrades and enhancements) are accounted for using
subscription accounting, with revenue from the arrangement being recognised on a straight-line basis over the term of the arrangement, or an
estimate of the economic life of the products offered if no term is specified, beginning with the delivery of the first product.
Royalty revenues:
Royalty revenues are earned on sales by the Groups customers of products containing ARM technology. Royalty revenues are recognised when it
is probable that the economic benefits associated with the transaction will flow to the Group, the amount of revenue can be reliably measured,
and when the Group receives notification from the customer of product sales. Notification is typically received in the quarter following shipment of
the products by the customer.
69
continued
New standards, amendments and interpretations continued
Standards, amendments and interpretations that are not yet effective and have not been early adopted
IFRS 9 Financial instruments addresses the classification and measurement of financial assets and financial liabilities. This is the first part of a new
standard to replace IAS 39. IFRS 9 has two measurement categories: amortised cost and fair value. All equity instruments are measured at fair
value. A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent
principal and interest. Otherwise it is measured at fair value through the income statement. This standard is not expected to have a material impact
on the results of the Group. Published by the IASB in November 2009, the effective date is currently open, pending the finalisation of the
impairment, and classification and measurement requirements. This standard is not yet endorsed by the EU.
Amendment to IAS 32 Financial instruments: Presentation This amendment updates the application guidance in IAS 32 to clarify some of the
requirements for offsetting financial assets and financial liabilities on the balance sheet. This standard is effective for accounting periods beginning
on or after 1 January 2014 and was endorsed by the EU in December 2012. It is not expected to have a material impact on the Group.
Revenue recognition
The Group follows the principles of IAS 18, Revenue recognition, in determining appropriate revenue recognition policies. In principle,
therefore, revenue associated with the sale of goods is recognised when all of the following conditions have been satisfied:
The Group has transferred to the buyer the significant risks and rewards of ownership of the goods.
The Group does not retain either continuing managerial involvement to the degree usually associated with ownership or effective control over
the goods sold.
The costs incurred or to be incurred in respect of the sale can be measured reliably.
Revenue associated with the rendering of services is recognised when all of the following conditions have been satisfied:
The stage of completion of the transaction at the end of the reporting period can be measured reliably.
The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
Revenue is shown net of value added tax, returns, rebates and discounts, and after eliminating sales within the Group.
Revenue comprises the value of sales of licences to ARM technology, royalties arising from the resulting sale of licensees ARM technology-based
products, revenues from support, maintenance and training and the sale of development boards and software toolkits.
Licence revenues:
Revenue from standard licence products that are not modified to meet the specific requirements of each customer is recognised when all of the
conditions relevant to revenue associated with the sale of goods have been satisfied:
The significant risks and rewards of ownership are transferred when a licence arrangement has been agreed and the IP has been delivered
to the customer.
Continuing managerial involvement and effective control over licensed IP is relinquished at the point at which the IP is delivered to the customer.
The amount of revenue can be measured reliably; any consideration due under the licensing arrangement that is not deemed to be reliably
measurable is deferred until it can be measured reliably.
It is probable that the economic benefits associated with the transaction will flow to the Group; any economic benefits of the transaction that
are deemed unlikely to flow to the Group are deferred until it becomes probable that they will flow to the Group.

The majority of the Groups revenues come from the licensing of IP and subsequent receipt of royalty revenues and there are therefore very few
direct costs associated with the sale of goods; where there are direct costs of revenues, these are measured with reference to the purchasing
agreements in place with the Groups suppliers.
Many licence agreements are for products which are designed to meet the specific requirements of each customer. Revenue from the sale of
such licences is recognised on a percentage-of-completion basis over the period from signing of the licence to customer acceptance. Under the
percentage-of-completion method, provisions for estimated losses on uncompleted contracts are recognised in the period in which the likelihood
of such losses is determined. The percentage-of-completion is measured by monitoring progress using records of actual time incurred to date in
the project compared with the total estimated project requirement, which approximates to the extent of performance.
Where invoicing milestones in licence arrangements are such that the receipts fall due significantly outside the period over which the customisation
is expected to be performed or significantly outside its normal payment terms for standard licence arrangements, the Group evaluates whether it
is probable that economic benefits associated with these milestones will flow to the Group and therefore whether these receipts should initially be
included in the arrangement consideration.
In particular, it considers:
whether there is sufficient certainty that the invoice will be raised in the expected timeframe, particularly where the invoicing milestone is in
some way dependent on customer activity;
whether it has sufficient evidence that the customer considers that the Groups contractual obligations have been, or will be, fulfilled;
whether there is sufficient certainty that only those costs expected to be incurred will indeed be incurred before the customer will accept that
a future invoice may be raised;
the extent to which previous experience with similar product groups and similar customers supports the conclusions reached.
Where the Group considers that there is insufficient evidence that it is probable that the economic benefits associated with such future milestones
will flow to the Group, taking into account these criteria, such milestones are excluded from the arrangement consideration until there is sufficient
evidence that it is probable that the economic benefits associated with the transaction will flow to the Group. The Group does not discount future
invoicing milestones, as the effect of so doing would be immaterial.
Where agreements involve several components, the entire fee from such arrangements is allocated to each of the individual components based
on each components fair value, where fair value is the price that is regularly charged for an item when sold separately. Where a component in a
multiple-component agreement has not previously been sold separately, the assessment of fair value for that component is based on other factors
including, but not limited to, the price charged when it was sold alongside other items and the book price of the component relative to the book
prices of the other components in the agreement. If fair value of one or more components in a multiple-component agreement is not
determinable (where such component is not considered incidental to the overall arrangement), the entire arrangement fee is deferred until such
fair value is determinable, or the component has been delivered to the licensee. Where, in substance, two or more elements of a contract are
linked and fair values cannot be allocated to the individual components, the revenue recognition criteria are applied to the elements as if they were
a single element.
Agreements including rights to unspecified future products (as opposed to unspecified upgrades and enhancements) are accounted for using
subscription accounting, with revenue from the arrangement being recognised on a straight-line basis over the term of the arrangement, or an
estimate of the economic life of the products offered if no term is specified, beginning with the delivery of the first product.
Royalty revenues:
Royalty revenues are earned on sales by the Groups customers of products containing ARM technology. Royalty revenues are recognised when it
is probable that the economic benefits associated with the transaction will flow to the Group, the amount of revenue can be reliably measured,
and when the Group receives notification from the customer of product sales. Notification is typically received in the quarter following shipment of
the products by the customer.
ARM Holdings plc
70
continued
Other revenues:
In addition to licence fees, contracts generally contain an agreement to provide post-delivery service support (in the form of support, maintenance
and training) which consists of the right to receive services and/or unspecified product upgrades or enhancements that are offered on a when-
and-if-available basis. Fees for post-delivery service support are generally specified in the contract. Revenue related to post-delivery service support
is recognised based on fair value, which is determined with reference to contractual renewal rates. Where renewal rates are specified, revenue for
post-delivery service support is recognised on a straight-line basis over the period for which support and maintenance is contractually agreed by
the Group with the licensee.
Sales of software, including development systems, which are not specifically designed for a given licence (such as off-the-shelf software) are
recognised upon delivery, when the significant risks and rewards of ownership have been transferred to the customer. At that time, the Group has
no further obligations except that, where necessary, the costs associated with providing post-delivery service support have been accrued. Services
(such as training) that the Group provides which are not essential to the functionality of the IP are separately stated and priced in the contract and,
therefore, accounted for separately. Revenue is recognised as services are performed and it is probable that the economic benefits associated with
the transaction will flow to the Group.
For all types of revenue, if the amount of revenue recognised exceeds the amounts invoiced to customers, the excess amount is recorded as
amounts recoverable on contracts within accounts receivable. The excess of licence fees and post-delivery service support invoiced over revenue
recognised is recorded as deferred revenue.
Intangible assets
(a) Goodwill Goodwill represents the excess of the fair value of the consideration paid on acquisition of a business over the fair value of the
assets, including any intangible assets identified, and liabilities acquired. Goodwill is not amortised but is measured at cost less impairment losses.
In determining the fair value of consideration, the fair value of equity issued is the market value of equity at the date of completion, the fair value
of share options is calculated using the Black-Scholes valuation model, and the fair value of contingent consideration is based upon whether the
directors believe any performance conditions will be met and thus whether any further consideration will be payable.
(b) Other intangible assets Computer software, purchased patents and licences to use technology are capitalised at cost and amortised on
a straight-line basis over an estimate of the time that the Group is expected to benefit from them. Costs that are directly attributable to the
development of new business application software and that are incurred during the period prior to the date that the software is placed into
operational use, are capitalised. External costs and internal costs are capitalised to the extent they enhance the future economic benefit of the
asset.
Although an independent valuation is made of any intangible assets purchased as part of a business combination, the directors are primarily
responsible for determining the fair value of intangible assets.
In-process research and development projects purchased as part of a business combination may meet the criteria set out in IFRS 3 (revised),
Business combinations, for recognition as intangible assets other than goodwill. Management tracks the status of in-process research and
development intangible assets such that their amortisation commences when the assets are brought into use.
Order backlog is derecognised when it has been fully amortised.
Amortisation is calculated so as to write off the cost of intangible assets, less their estimated residual values, which are adjusted (if appropriate)
at each balance sheet date, on a straight-line basis over the expected useful economic lives of the assets concerned. The principal economic lives
used for this purpose are:
Computer software Three to five years
Patents and licences Three to eleven years
In-process research and development One to five years
Developed technology One to seven years
Existing agreements and customer relationships One to six years
Core technology Five years
Trademarks and tradenames One to five years
Order backlog One year

Income taxes
The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the balance sheet date in the countries
where the Groups subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
During the period legislation was enacted to allow UK companies to elect for the Research and Development Expenditure Credit (RDEC) on
qualifying expenditure incurred since 1 April 2013, instead of the existing super-deduction rules. At the balance sheet date management has
concluded that the election will be made and therefore the RDEC is recorded as income included in profit before tax, netted against research and
development expenses as the RDEC is of the nature of a government grant. In previous periods there was a reduction in the income tax expense.
Deferred income taxes are computed using the liability method. Under this method, deferred tax assets and liabilities are determined based on
temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted rates and laws that will
be in effect when the differences are expected to reverse. The deferred tax is not accounted for if it arises from initial recognition of an asset or
liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will arise against which the temporary differences will
be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary
difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets
and liabilities arising in the same tax jurisdiction are offset, where the taxation authority permits a single net payment.
In the period a decision to elect into the UK patent box regime was made. The UK patent box regime seeks to tax all profits attributable to
patented technology at a reduced rate of 10%. The rules are to be phased in over five years from 1 April 2013 a company will be entitled
to only 60% of the deduction in financial year 2013/14, rising to 100% by 2017/18. As relevant patent box profits are taxed at 10% and other
profits are taxed at UK statutory rates, deferred tax assets and liabilities are measured using the average rates expected to apply on realisation
or settlement.
In the UK and the US, the Group is entitled to a tax deduction for amounts treated as compensation on exercise of certain employee share
options or vest of share awards under each jurisdictions tax rules. As explained under Share-based payments below, a compensation expense
is recorded in the Groups income statement over the period from the grant date to the vesting date of the relevant options and awards. As there
is a temporary difference between the accounting and tax bases, a deferred tax asset is recorded. The deferred tax asset arising is calculated by
comparing the estimated amount of tax deduction to be obtained in the future (based on the Companys share price at the balance sheet date)
with the cumulative amount of the compensation expense recorded in the income statement. If the amount of estimated future tax deduction
exceeds the cumulative amount of the compensation expense at the statutory rate, the excess is recorded directly in equity, against retained
earnings.
Impairment of assets
Non-financial assets that have an indefinite useful life, for example goodwill, are not subject to amortisation but are tested annually for impairment.
Non-financial assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the non-financial assets carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an assets fair value less costs to sell and value-in-use. For purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (each a cash generating unit, CGU). Where the recoverable
amount of a CGU is measured based on a value-in-use calculation, all cash inflows and outflows associated with the CGU are taken into account
whether these are explicitly charged or not. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at each reporting date.
The annual impairment tests in 2013 and 2012 showed there was no impairment with respect to goodwill. Furthermore, no trigger events have
been identified that would suggest the impairment of any of the Groups other intangible assets.
The Group considers at each reporting date whether there is any indication that tangible fixed assets are impaired. If there is such an indication, the
Group carries out an impairment test by measuring the assets recoverable amounts, which are the higher of the assets fair values less costs to sell
and their values in use. If the recoverable amounts are less than the carrying amounts an impairment loss is recognised, and the assets are written
down to their recoverable amounts.
71
continued
Other revenues:
In addition to licence fees, contracts generally contain an agreement to provide post-delivery service support (in the form of support, maintenance
and training) which consists of the right to receive services and/or unspecified product upgrades or enhancements that are offered on a when-
and-if-available basis. Fees for post-delivery service support are generally specified in the contract. Revenue related to post-delivery service support
is recognised based on fair value, which is determined with reference to contractual renewal rates. Where renewal rates are specified, revenue for
post-delivery service support is recognised on a straight-line basis over the period for which support and maintenance is contractually agreed by
the Group with the licensee.
Sales of software, including development systems, which are not specifically designed for a given licence (such as off-the-shelf software) are
recognised upon delivery, when the significant risks and rewards of ownership have been transferred to the customer. At that time, the Group has
no further obligations except that, where necessary, the costs associated with providing post-delivery service support have been accrued. Services
(such as training) that the Group provides which are not essential to the functionality of the IP are separately stated and priced in the contract and,
therefore, accounted for separately. Revenue is recognised as services are performed and it is probable that the economic benefits associated with
the transaction will flow to the Group.
For all types of revenue, if the amount of revenue recognised exceeds the amounts invoiced to customers, the excess amount is recorded as
amounts recoverable on contracts within accounts receivable. The excess of licence fees and post-delivery service support invoiced over revenue
recognised is recorded as deferred revenue.
Intangible assets
(a) Goodwill Goodwill represents the excess of the fair value of the consideration paid on acquisition of a business over the fair value of the
assets, including any intangible assets identified, and liabilities acquired. Goodwill is not amortised but is measured at cost less impairment losses.
In determining the fair value of consideration, the fair value of equity issued is the market value of equity at the date of completion, the fair value
of share options is calculated using the Black-Scholes valuation model, and the fair value of contingent consideration is based upon whether the
directors believe any performance conditions will be met and thus whether any further consideration will be payable.
(b) Other intangible assets Computer software, purchased patents and licences to use technology are capitalised at cost and amortised on
a straight-line basis over an estimate of the time that the Group is expected to benefit from them. Costs that are directly attributable to the
development of new business application software and that are incurred during the period prior to the date that the software is placed into
operational use, are capitalised. External costs and internal costs are capitalised to the extent they enhance the future economic benefit of the
asset.
Although an independent valuation is made of any intangible assets purchased as part of a business combination, the directors are primarily
responsible for determining the fair value of intangible assets.
In-process research and development projects purchased as part of a business combination may meet the criteria set out in IFRS 3 (revised),
Business combinations, for recognition as intangible assets other than goodwill. Management tracks the status of in-process research and
development intangible assets such that their amortisation commences when the assets are brought into use.
Order backlog is derecognised when it has been fully amortised.
Amortisation is calculated so as to write off the cost of intangible assets, less their estimated residual values, which are adjusted (if appropriate)
at each balance sheet date, on a straight-line basis over the expected useful economic lives of the assets concerned. The principal economic lives
used for this purpose are:
Computer software Three to five years
Patents and licences Three to eleven years
In-process research and development One to five years
Developed technology One to seven years
Existing agreements and customer relationships One to six years
Core technology Five years
Trademarks and tradenames One to five years
Order backlog One year

Income taxes
The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the balance sheet date in the countries
where the Groups subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
During the period legislation was enacted to allow UK companies to elect for the Research and Development Expenditure Credit (RDEC) on
qualifying expenditure incurred since 1 April 2013, instead of the existing super-deduction rules. At the balance sheet date management has
concluded that the election will be made and therefore the RDEC is recorded as income included in profit before tax, netted against research and
development expenses as the RDEC is of the nature of a government grant. In previous periods there was a reduction in the income tax expense.
Deferred income taxes are computed using the liability method. Under this method, deferred tax assets and liabilities are determined based on
temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted rates and laws that will
be in effect when the differences are expected to reverse. The deferred tax is not accounted for if it arises from initial recognition of an asset or
liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will arise against which the temporary differences will
be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary
difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets
and liabilities arising in the same tax jurisdiction are offset, where the taxation authority permits a single net payment.
In the period a decision to elect into the UK patent box regime was made. The UK patent box regime seeks to tax all profits attributable to
patented technology at a reduced rate of 10%. The rules are to be phased in over five years from 1 April 2013 a company will be entitled
to only 60% of the deduction in financial year 2013/14, rising to 100% by 2017/18. As relevant patent box profits are taxed at 10% and other
profits are taxed at UK statutory rates, deferred tax assets and liabilities are measured using the average rates expected to apply on realisation
or settlement.
In the UK and the US, the Group is entitled to a tax deduction for amounts treated as compensation on exercise of certain employee share
options or vest of share awards under each jurisdictions tax rules. As explained under Share-based payments below, a compensation expense
is recorded in the Groups income statement over the period from the grant date to the vesting date of the relevant options and awards. As there
is a temporary difference between the accounting and tax bases, a deferred tax asset is recorded. The deferred tax asset arising is calculated by
comparing the estimated amount of tax deduction to be obtained in the future (based on the Companys share price at the balance sheet date)
with the cumulative amount of the compensation expense recorded in the income statement. If the amount of estimated future tax deduction
exceeds the cumulative amount of the compensation expense at the statutory rate, the excess is recorded directly in equity, against retained
earnings.
Impairment of assets
Non-financial assets that have an indefinite useful life, for example goodwill, are not subject to amortisation but are tested annually for impairment.
Non-financial assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the non-financial assets carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an assets fair value less costs to sell and value-in-use. For purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (each a cash generating unit, CGU). Where the recoverable
amount of a CGU is measured based on a value-in-use calculation, all cash inflows and outflows associated with the CGU are taken into account
whether these are explicitly charged or not. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at each reporting date.
The annual impairment tests in 2013 and 2012 showed there was no impairment with respect to goodwill. Furthermore, no trigger events have
been identified that would suggest the impairment of any of the Groups other intangible assets.
The Group considers at each reporting date whether there is any indication that tangible fixed assets are impaired. If there is such an indication, the
Group carries out an impairment test by measuring the assets recoverable amounts, which are the higher of the assets fair values less costs to sell
and their values in use. If the recoverable amounts are less than the carrying amounts an impairment loss is recognised, and the assets are written
down to their recoverable amounts.
ARM Holdings plc
72
continued
Impairment of assets continued
In the case of equity securities classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered as an
indicator that the securities are permanently impaired. If any such evidence exists for AFS financial assets, the cumulative loss measured as the
difference between the acquisition cost and the current fair value, less any permanent impairment loss on that financial asset previously recognised
in the income statement is removed from equity and recognised in the income statement. Impairment losses recognised in the income
statement on equity instruments are not reversed.
When securities classified as AFS are sold, the accumulated fair value adjustments recognised through other comprehensive income are recycled
through the income statement.
Impairment testing of trade receivables is described under Accounts receivable below.
Provisions
Provisions for legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; and it is more
likely than not that an outflow of resources will be required to settle the obligation; and the amount of the outflow can be reliably estimated.
Exceptional items
Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial
performance of the Group. They are material items of income or expense that have been shown separately due to the significance of their nature.
Segment reporting
At 31 December 2013, the Group was organised on a world-wide basis into three business segments, namely the Processor Division (PD), the
Physical IP Division (PIPD) and the System Design Division (SDD). This is based upon the Groups internal organisation and management structure
and is the primary way in which the Chief Operating Decision Maker (CODM) and the rest of the Board are provided with financial information.
The directors believe that the CODM is the Chief Executive Officer of the Group.
Segment expenses are expenses that are directly attributable to a segment together with the relevant portion of other expenses that can
reasonably be allocated by segment. Foreign exchange gains or losses, investment income, interest payable and similar charges, share of joint
venture results, and tax are not allocated by segment.
Segment assets and liabilities include items that are directly attributable to a segment plus an allocation on a reasonable basis of shared items.
Corporate assets and liabilities are not included in business segments and are thus unallocated. At 31 December 2013 and 2012, these comprised
cash and cash equivalents, short- and long-term deposits, AFS financial assets, loans and receivables, embedded derivatives, and the fair value of
currency exchange contracts. Current and deferred tax assets and liabilities and VAT are also not included in business segments and are thus
unallocated.
As part of the ongoing evolution of the business, the Groups divisional structure was re-organised on 1 January 2014. As a result of this change,
the Groups business segments may change for future reporting periods in order to reflect this new organisation.
Principles of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries. Intra-group transactions,
including sales, profits, receivables and payables, have been eliminated on consolidation. All subsidiaries use uniform accounting policies.
Business combinations
The results of subsidiaries acquired are included in the income statement from the date of acquisition. Assets and liabilities existing at the date
of acquisition are recorded at their fair values reflecting their condition at that date.
Earn-outs paid as part of an acquisition are assessed on an individual basis and treated as either part of the acquisition consideration or as
employee compensation depending on the nature of the agreement.
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when it is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that
control ceases.

Principles of consolidation continued
Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20%
and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the
investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the Groups share of the profit or loss
of the investee after the date of acquisition.
Joint ventures
Joint ventures are all arrangements in which the Group has joint control with one or more other parties, whereby each party has a right to a
share of the net assets of the arrangement. Investments in joint ventures are accounted for using the equity method of accounting. Under the
equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the Groups share
of the profit or loss of the investee after the date of acquisition.
Research and development expenditure
All ongoing research expenditure is expensed in the period in which it is incurred. Where a product is technically feasible, production and sale are
intended, a market exists, expenditure can be measured reliably, and sufficient resources are available to complete the project, development costs
are capitalised and amortised on a straight-line basis over the estimated useful life of the respective product. The Group believes its current
process for developing products is essentially completed concurrently with the establishment of technological feasibility, which is evidenced by a
working model. Accordingly, development costs incurred after the establishment of technological feasibility have not been significant and,
therefore, no costs have been capitalised to date.
Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it
is incurred. Any collaborative agreement whereby a third party agrees to partially fund the Groups research and development is recognised over
the period of the agreement as a credit within research and development expenses.
Government grants
Grants in respect of specific research and development projects are recognised as receivable when there is reasonable assurance that they will be
received and the conditions to obtain them have been complied with. They are credited to the income statement in the same period as the
related research and development costs for which the grant is compensating. The grant income is presented as a deduction from the related
expense.
Share-based payments
The Group issues equity-settled share-based payments to certain employees. In accordance with IFRS 2, Share-based payments, equity-settled
share-based payments are measured at fair value at the date of grant. Fair value is measured by use of the Black-Scholes pricing model. The fair
value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based
on the Groups estimate of the number of shares that will eventually vest.
The Group operates Save As You Earn (SAYE) schemes in the UK and an Employee Share Purchase Plan (ESPP) in the US, India, Japan, South
Korea and Taiwan. Options under the SAYE schemes are granted at a 20% discount to the market price of the underlying shares on the date of
announcement of the scheme and at a 15% discount to the lower of the market prices at the beginning and end of the scheme for the ESPP. The
UK SAYE schemes are approved by the UK tax authorities, which stipulates that the saving period must be at least 36 months. The Group has
recognised a compensation charge in respect of the SAYE plans and ESPPs. The charges for these are calculated as detailed above.
The Group also has an LTIP on which it is also required to recognise a compensation charge under IFRS 2, calculated as detailed above.
The share-based payments charge is allocated to cost of sales, research and development expenses, sales and marketing expenses, and general
and administrative expenses on the basis of headcount.
Employers taxes on share options
Employers National Insurance in the UK and equivalent taxes in other jurisdictions are payable on the exercise of certain share options and vesting
of share awards. In accordance with IFRS 2, this is treated as a cash-settled transaction. A provision is made, calculated using the intrinsic value of
the relevant options and awards at the balance sheet date, and pro-rated over the vesting period of the options and awards.
73
continued
Impairment of assets continued
In the case of equity securities classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered as an
indicator that the securities are permanently impaired. If any such evidence exists for AFS financial assets, the cumulative loss measured as the
difference between the acquisition cost and the current fair value, less any permanent impairment loss on that financial asset previously recognised
in the income statement is removed from equity and recognised in the income statement. Impairment losses recognised in the income
statement on equity instruments are not reversed.
When securities classified as AFS are sold, the accumulated fair value adjustments recognised through other comprehensive income are recycled
through the income statement.
Impairment testing of trade receivables is described under Accounts receivable below.
Provisions
Provisions for legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; and it is more
likely than not that an outflow of resources will be required to settle the obligation; and the amount of the outflow can be reliably estimated.
Exceptional items
Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial
performance of the Group. They are material items of income or expense that have been shown separately due to the significance of their nature.
Segment reporting
At 31 December 2013, the Group was organised on a world-wide basis into three business segments, namely the Processor Division (PD), the
Physical IP Division (PIPD) and the System Design Division (SDD). This is based upon the Groups internal organisation and management structure
and is the primary way in which the Chief Operating Decision Maker (CODM) and the rest of the Board are provided with financial information.
The directors believe that the CODM is the Chief Executive Officer of the Group.
Segment expenses are expenses that are directly attributable to a segment together with the relevant portion of other expenses that can
reasonably be allocated by segment. Foreign exchange gains or losses, investment income, interest payable and similar charges, share of joint
venture results, and tax are not allocated by segment.
Segment assets and liabilities include items that are directly attributable to a segment plus an allocation on a reasonable basis of shared items.
Corporate assets and liabilities are not included in business segments and are thus unallocated. At 31 December 2013 and 2012, these comprised
cash and cash equivalents, short- and long-term deposits, AFS financial assets, loans and receivables, embedded derivatives, and the fair value of
currency exchange contracts. Current and deferred tax assets and liabilities and VAT are also not included in business segments and are thus
unallocated.
As part of the ongoing evolution of the business, the Groups divisional structure was re-organised on 1 January 2014. As a result of this change,
the Groups business segments may change for future reporting periods in order to reflect this new organisation.
Principles of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries. Intra-group transactions,
including sales, profits, receivables and payables, have been eliminated on consolidation. All subsidiaries use uniform accounting policies.
Business combinations
The results of subsidiaries acquired are included in the income statement from the date of acquisition. Assets and liabilities existing at the date
of acquisition are recorded at their fair values reflecting their condition at that date.
Earn-outs paid as part of an acquisition are assessed on an individual basis and treated as either part of the acquisition consideration or as
employee compensation depending on the nature of the agreement.
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when it is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that
control ceases.

Principles of consolidation continued
Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20%
and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the
investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the Groups share of the profit or loss
of the investee after the date of acquisition.
Joint ventures
Joint ventures are all arrangements in which the Group has joint control with one or more other parties, whereby each party has a right to a
share of the net assets of the arrangement. Investments in joint ventures are accounted for using the equity method of accounting. Under the
equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the Groups share
of the profit or loss of the investee after the date of acquisition.
Research and development expenditure
All ongoing research expenditure is expensed in the period in which it is incurred. Where a product is technically feasible, production and sale are
intended, a market exists, expenditure can be measured reliably, and sufficient resources are available to complete the project, development costs
are capitalised and amortised on a straight-line basis over the estimated useful life of the respective product. The Group believes its current
process for developing products is essentially completed concurrently with the establishment of technological feasibility, which is evidenced by a
working model. Accordingly, development costs incurred after the establishment of technological feasibility have not been significant and,
therefore, no costs have been capitalised to date.
Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it
is incurred. Any collaborative agreement whereby a third party agrees to partially fund the Groups research and development is recognised over
the period of the agreement as a credit within research and development expenses.
Government grants
Grants in respect of specific research and development projects are recognised as receivable when there is reasonable assurance that they will be
received and the conditions to obtain them have been complied with. They are credited to the income statement in the same period as the
related research and development costs for which the grant is compensating. The grant income is presented as a deduction from the related
expense.
Share-based payments
The Group issues equity-settled share-based payments to certain employees. In accordance with IFRS 2, Share-based payments, equity-settled
share-based payments are measured at fair value at the date of grant. Fair value is measured by use of the Black-Scholes pricing model. The fair
value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based
on the Groups estimate of the number of shares that will eventually vest.
The Group operates Save As You Earn (SAYE) schemes in the UK and an Employee Share Purchase Plan (ESPP) in the US, India, Japan, South
Korea and Taiwan. Options under the SAYE schemes are granted at a 20% discount to the market price of the underlying shares on the date of
announcement of the scheme and at a 15% discount to the lower of the market prices at the beginning and end of the scheme for the ESPP. The
UK SAYE schemes are approved by the UK tax authorities, which stipulates that the saving period must be at least 36 months. The Group has
recognised a compensation charge in respect of the SAYE plans and ESPPs. The charges for these are calculated as detailed above.
The Group also has an LTIP on which it is also required to recognise a compensation charge under IFRS 2, calculated as detailed above.
The share-based payments charge is allocated to cost of sales, research and development expenses, sales and marketing expenses, and general
and administrative expenses on the basis of headcount.
Employers taxes on share options
Employers National Insurance in the UK and equivalent taxes in other jurisdictions are payable on the exercise of certain share options and vesting
of share awards. In accordance with IFRS 2, this is treated as a cash-settled transaction. A provision is made, calculated using the intrinsic value of
the relevant options and awards at the balance sheet date, and pro-rated over the vesting period of the options and awards.
ARM Holdings plc
74
continued
Retirement benefit costs
The Group contributes to defined contribution plans substantially covering all employees in Europe and the US and to government pension
schemes for employees in Japan, South Korea, Taiwan, PR China, Israel and India. The Group contributes to these plans based upon various fixed
percentages of employee compensation, and such contributions are expensed as incurred.
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Costs, net
of any lease incentives, in respect of operating leases are charged on a straight-line basis over the lease term even if payments are not made on
such a basis.
Finance leases
Leases in which substantially all of the risks and rewards of ownership are transferred to the lessee are classified as finance leases. Assets held
under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each
determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease liability. Lease
payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are charged directly to the income statement.
Foreign currency translation
(a) Functional and presentation currency The functional currency of each Group entity is the currency of the primary economic environment
in which that entity operates. The consolidated financial statements are presented in sterling, which is the presentation currency of the Group.
(b) Transactions and balances Transactions denominated in foreign currencies have been translated into the functional currency of each Group
entity at actual rates of exchange at the date of transaction. Monetary assets and liabilities denominated in foreign currencies have been translated
at closing rates of exchange at the balance sheet date. Exchange differences have been included in general and administrative expenses.
(c) Group companies The results and financial positions of all Group entities (none of which has the currency of a hyper-inflationary economy)
not based in the UK are translated into sterling as follows:
(i) Assets and liabilities for each balance sheet presented are translated at the closing rates of exchange at the balance sheet date.
(ii) Income and expenses for each income statement presented are translated at the rates of exchange at the time of each transaction during the
period.
(iii) All resulting exchange differences are recognised as a separate component of equity, being taken through other comprehensive income via the
cumulative translation adjustment.
When a foreign operation is partially disposed of or sold, exchange differences that were recognised through other comprehensive income are
recognised in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
translated at the closing rates of exchange.
Derivative financial instruments
The Group utilises currency exchange contracts to manage the exchange risk on actual transactions related to accounts receivable, denominated
in a currency other than the functional currency of the business. The Groups currency exchange contracts do not subject the Group to risk from
exchange rate movements because the gains and losses on such contracts offset losses and gains, respectively, on the transactions being hedged.
The currency exchange contracts are recorded at fair value and the related foreign currency accounts receivable are revalued to spot rates at each
period end. The fair value of forward exchange contracts is determined using quoted forward exchange rates at the balance sheet date. The fair
value of foreign currency options is based upon valuations performed by management and the respective banks holding the currency instruments.
All recognised gains and losses resulting from the settlement of the contracts are recorded within general and administrative expenses in the
income statement. The Group does not enter into currency exchange contracts for the purpose of hedging anticipated transactions.
Embedded derivatives
In accordance with IAS 39, Financial instruments: recognition and measurement, the Group has reviewed all its contracts for embedded
derivatives that are required to be separately accounted for if they do not meet certain requirements set out in the standard. From time to time,
the Group may enter into contracts denominated in a currency (typically US dollars) that is neither the functional currency of the Group entity nor
the functional currency of the customer or the collaborative partner. Where there are uninvoiced amounts on such contracts, the Group carries
such derivatives at fair value. The resulting gain or loss is recognised in the income statement under general and administrative expenses.

Investment income, and interest payable and similar charges
Investment income, and interest payable and similar charges relate to interest income and expense, which is accrued on a time basis, by reference
to the principal outstanding and at the effective interest rate applicable.
Dividends
Distributions to owners of the Company are not recognised in the income statement under IFRS, but are disclosed as a component of the
movement in shareholders equity. A liability is recorded for a dividend when the dividend is approved by the Companys shareholders. Interim
dividends are recognised as a distribution when paid.
Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary
shares in issue during the year, excluding those held as treasury stock, which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential
ordinary shares. The Company had two categories of dilutive potential ordinary shares during the year: those being share options granted to
employees and directors where the exercise price is less than the average market price of the Companys ordinary shares during the year and the
awards made under the Companys RSU, DAB plan, and LTIP schemes. For 2013 and 2012, no shares that were allocated for awards under the
LTIP were included in the diluted EPS calculation as the performance criteria could not be measured until the conclusion of the performance
period.
Reconciliations of the earnings and weighted average number of shares used in the calculations are shown on the face of the consolidated income
statement.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held with banks, and other short-term highly liquid investments with original maturities
of three months or less. The carrying amount approximates to fair value because of the short-term maturity of these instruments.
Short- and long-term deposits
The Group considers all highly-liquid investments with original maturity dates of greater than three months and maturing in less than one year
to be short-term deposits. Deposits with a maturity date of greater than one year from the balance sheet date are classified as long-term.
Accounts receivable
Accounts receivable are initially recognised at fair value. A provision for impairment of trade receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.
Accounts receivable are first assessed individually for impairment. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation, and default or delinquency in payments (more than 90 days overdue) are considered indicators that the
trade receivable may be impaired. Where there is no objective evidence of impairment for an individual receivable, it is included in a group of
receivables with similar credit risk characteristics and these are collectively assessed for impairment.
In the case of impairment, the carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is
recognised in the income statement within general and administrative expenses. When a trade receivable is uncollectible, it is written off against
the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against general and
administrative expenses in the income statement.
Property, plant and equipment
Property, plant and equipment is stated at historic cost less accumulated depreciation and any recognised impairment loss. The cost of property,
plant and equipment is their purchase cost, together with any costs directly attributable to bringing the asset to its working condition for its
intended use. External costs and internal costs are capitalised to the extent they enhance the future economic benefit of the asset.
Assets in the course of construction are carried at cost less any recognised impairment loss. Depreciation of these assets commences when the
assets are ready for their intended use.

75
continued
Retirement benefit costs
The Group contributes to defined contribution plans substantially covering all employees in Europe and the US and to government pension
schemes for employees in Japan, South Korea, Taiwan, PR China, Israel and India. The Group contributes to these plans based upon various fixed
percentages of employee compensation, and such contributions are expensed as incurred.
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Costs, net
of any lease incentives, in respect of operating leases are charged on a straight-line basis over the lease term even if payments are not made on
such a basis.
Finance leases
Leases in which substantially all of the risks and rewards of ownership are transferred to the lessee are classified as finance leases. Assets held
under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each
determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease liability. Lease
payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are charged directly to the income statement.
Foreign currency translation
(a) Functional and presentation currency The functional currency of each Group entity is the currency of the primary economic environment
in which that entity operates. The consolidated financial statements are presented in sterling, which is the presentation currency of the Group.
(b) Transactions and balances Transactions denominated in foreign currencies have been translated into the functional currency of each Group
entity at actual rates of exchange at the date of transaction. Monetary assets and liabilities denominated in foreign currencies have been translated
at closing rates of exchange at the balance sheet date. Exchange differences have been included in general and administrative expenses.
(c) Group companies The results and financial positions of all Group entities (none of which has the currency of a hyper-inflationary economy)
not based in the UK are translated into sterling as follows:
(i) Assets and liabilities for each balance sheet presented are translated at the closing rates of exchange at the balance sheet date.
(ii) Income and expenses for each income statement presented are translated at the rates of exchange at the time of each transaction during the
period.
(iii) All resulting exchange differences are recognised as a separate component of equity, being taken through other comprehensive income via the
cumulative translation adjustment.
When a foreign operation is partially disposed of or sold, exchange differences that were recognised through other comprehensive income are
recognised in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
translated at the closing rates of exchange.
The Group utilises currency exchange contracts to manage the exchange risk on actual transactions related to accounts receivable, denominated
in a currency other than the functional currency of the business. The Groups currency exchange contracts do not subject the Group to risk from
exchange rate movements because the gains and losses on such contracts offset losses and gains, respectively, on the transactions being hedged.
The currency exchange contracts are recorded at fair value and the related foreign currency accounts receivable are revalued to spot rates at each
period end. The fair value of forward exchange contracts is determined using quoted forward exchange rates at the balance sheet date. The fair
value of foreign currency options is based upon valuations performed by management and the respective banks holding the currency instruments.
All recognised gains and losses resulting from the settlement of the contracts are recorded within general and administrative expenses in the
income statement. The Group does not enter into currency exchange contracts for the purpose of hedging anticipated transactions.
Embedded derivatives
In accordance with IAS 39, Financial instruments: recognition and measurement, the Group has reviewed all its contracts for embedded
derivatives that are required to be separately accounted for if they do not meet certain requirements set out in the standard. From time to time,
the Group may enter into contracts denominated in a currency (typically US dollars) that is neither the functional currency of the Group entity nor
the functional currency of the customer or the collaborative partner. Where there are uninvoiced amounts on such contracts, the Group carries
such derivatives at fair value. The resulting gain or loss is recognised in the income statement under general and administrative expenses.

Investment income, and interest payable and similar charges
Investment income, and interest payable and similar charges relate to interest income and expense, which is accrued on a time basis, by reference
to the principal outstanding and at the effective interest rate applicable.
Dividends
Distributions to owners of the Company are not recognised in the income statement under IFRS, but are disclosed as a component of the
movement in shareholders equity. A liability is recorded for a dividend when the dividend is approved by the Companys shareholders. Interim
dividends are recognised as a distribution when paid.
Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary
shares in issue during the year, excluding those held as treasury stock, which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential
ordinary shares. The Company had two categories of dilutive potential ordinary shares during the year: those being share options granted to
employees and directors where the exercise price is less than the average market price of the Companys ordinary shares during the year and the
awards made under the Companys RSU, DAB plan, and LTIP schemes. For 2013 and 2012, no shares that were allocated for awards under the
LTIP were included in the diluted EPS calculation as the performance criteria could not be measured until the conclusion of the performance
period.
Reconciliations of the earnings and weighted average number of shares used in the calculations are shown on the face of the consolidated income
statement.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held with banks, and other short-term highly liquid investments with original maturities
of three months or less. The carrying amount approximates to fair value because of the short-term maturity of these instruments.
Short- and long-term deposits
The Group considers all highly-liquid investments with original maturity dates of greater than three months and maturing in less than one year
to be short-term deposits. Deposits with a maturity date of greater than one year from the balance sheet date are classified as long-term.
Accounts receivable
Accounts receivable are initially recognised at fair value. A provision for impairment of trade receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.
Accounts receivable are first assessed individually for impairment. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation, and default or delinquency in payments (more than 90 days overdue) are considered indicators that the
trade receivable may be impaired. Where there is no objective evidence of impairment for an individual receivable, it is included in a group of
receivables with similar credit risk characteristics and these are collectively assessed for impairment.
In the case of impairment, the carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is
recognised in the income statement within general and administrative expenses. When a trade receivable is uncollectible, it is written off against
the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against general and
Property, plant and equipment
Property, plant and equipment is stated at historic cost less accumulated depreciation and any recognised impairment loss. The cost of property,
plant and equipment is their purchase cost, together with any costs directly attributable to bringing the asset to its working condition for its
intended use. External costs and internal costs are capitalised to the extent they enhance the future economic benefit of the asset.
Assets in the course of construction are carried at cost less any recognised impairment loss. Depreciation of these assets commences when the
assets are ready for their intended use.

ARM Holdings plc
76
continued
Property, plant and equipment continued
Depreciation is calculated so as to write off the cost of property, plant and equipment, less their estimated residual values, which are adjusted,
if appropriate, at each balance sheet date, on a straight-line basis over the expected useful economic lives of the assets concerned. The principal
economic lives used for this purpose are:
Freehold buildings 25 years
Leasehold improvements Five to ten years or term of lease, whichever is shorter
Computer equipment Three to five years
Fixtures and fittings, and motor vehicles Three to five years
Provision is made against the carrying value of property, plant and equipment where an impairment in value is deemed to have occurred. Asset
lives and residual values are reviewed on an annual basis.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within general and
Financial assets
The Group classifies its financial assets in the following categories: at fair value through the income statement, loans and receivables, and available-
for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of
financial assets at initial recognition.
(a) Financial assets at fair value through the income statement Financial assets at fair value through the income statement are financial assets
held for trading that is, assets that have been acquired principally for the purpose of selling in the short term. Assets in this category are classified
as current assets. They are initially recognised at fair value with transaction costs being expensed in the income statement. Specifically, the Groups
currency exchange contracts and embedded derivatives fall within this category. Gains or losses arising from changes in the fair value of financial
assets at fair value through the income statement are presented in the income statement within general and administrative expenses in the period
in which they arise.
(b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are
classified as non-current assets. Accounts receivable, cash and cash equivalents, and short- and long-term deposits are classified as Loans
and receivables (see note 17).
Loans and receivables are measured initially at fair value and then subsequently measured at amortised cost.
(c) Available-for-sale financial assets AFS financial assets are non-derivatives that are either designated in this category or not classified in any of
the other categories. They are included in non-current assets unless management intends to dispose of the assets within 12 months of the balance
sheet date.
Equity investments that are not publicly traded are also classified as AFS and are initially recorded at fair value plus transaction costs. Given that the
markets for these assets are not active, the Group establishes fair value by using valuation techniques. The estimated fair value of these investments
approximated to cost less any permanent diminution in value (based on estimates determined by management), except where independent
valuation information is obtained. Unrealised holding gains or losses on such securities are recognised, net of related taxes, through other
comprehensive income via a revaluation reserve, except where there is evidence of permanent impairment (in which case the loss is recognised
through the income statement within general and administrative expenses or exceptional items where appropriate).
Current investments have been valued based on the amount that is recoverable.
Accounts payable
Accounts payable are recognised at face value as they are settled within 12 months.
Share capital
Ordinary shares issued by the Company are recorded at the proceeds received, net of direct issue costs.

1c Financial risk management
The Group operates in the intensely competitive semiconductor industry, which has been characterised by price erosion, rapid technological
change, short product life cycles, cyclical market patterns, and heightened foreign and domestic competition. Significant technological changes
in the industry could affect operating results.
The Groups operations expose it to a variety of financial risks that include currency risk, interest rate risk, securities price risk, credit risk and
liquidity risk.
Given the size of the Group, the directors have not delegated the responsibility for monitoring financial risk management to a sub-committee of
the Board. The policies set by the directors are implemented by the Groups finance and treasury departments. The Group has a treasury policy
that sets out specific guidelines to manage currency risk, interest rate risk, credit risk and liquidity risk and also sets out circumstances where it
would be appropriate to use financial instruments to manage these.
Currency risk
The Groups earnings and liquidity are affected by fluctuations in foreign currency exchange rates, principally in respect of the US dollar, reflecting
the fact that most of its revenues and cash receipts are denominated in US dollars, while a significant proportion of its costs are settled in sterling.
The Group seeks to use currency exchange contracts and currency options to manage the US dollar/sterling risk as appropriate, by monitoring
the timing and value of anticipated US dollar receipts (which tend to arise from low-volume, high-value licence deals and royalty receipts)
in comparison with its requirement to settle certain expenses in US dollars. The Group reviews the resulting exposure on a regular basis and
hedges this exposure using currency exchange contracts and currency options for the sale of US dollars as appropriate. Such contracts are entered
into with the objective of matching their maturity with projected US dollar cash receipts.
The Group is also exposed to currency risk in respect of the foreign currency denominated assets and liabilities of its overseas subsidiaries. At
present, the Group does not consider this to be a significant risk since the Group does not intend to move assets between group companies.
The Group has elected not to apply hedge accounting, and all movements in the fair value of derivative foreign exchange instruments are recorded
in the income statement, offsetting the foreign exchange movements on the accounts receivable, and cash and cash equivalents balances being
hedged.
In addition, certain customers remit royalties and licence fees in other currencies, primarily the Euro and Japanese yen. The Group is also required
to settle certain expenses in these currencies, primarily in its French, German and Japanese subsidiaries, and as the net amounts involved are not
considered significant, the Group does not take out forward-settling currency exchange contracts in these currencies.
Interest rate risk
Floating rate cash earns interest based on relevant national LIBID or base rate equivalents and is therefore exposed to cash flow interest rate risk.
The proportion of funds held in fixed rather than floating rate deposits is determined in accordance with the policy outlined under Liquidity risk
below. Other financial assets, such as AFS financial assets, are not directly exposed to interest rate risk.
The Group had no derivative financial instruments to manage interest rate fluctuations in place at the year end since the level of financing was not
considered significant, and as such no hedge accounting is applied. The Groups cash flow is carefully monitored on a daily basis. Excess cash,
considering expected future cash flows, is placed on either short- or long-term deposits to maximise the interest income thereon. Daily surpluses
are swept into higher-interest earning accounts overnight.
Securities price risk
The Group is exposed to equity securities price risk on AFS financial assets. As there can be no guarantee that there will be a future market for
these securities (which are generally unlisted at the time of investment) or that the value of such investments will rise, the directors evaluate
each investment opportunity on its merits before committing the Groups funds. The directors review holdings in such companies on a regular
basis to determine whether continued investment is in the best interests of the Group. Funds for such ventures are limited in order that the
financial effect of any potential decline of the value of investments will not be substantial in the context of the Groups financial results.
Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks
and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions.
At 31 December 2013 and 2012, the Group had no significant concentrations of credit risk. The amount of exposure to any individual
counterparty is subject to a limit, which is reassessed periodically by the directors.

77
continued
Property, plant and equipment continued
Depreciation is calculated so as to write off the cost of property, plant and equipment, less their estimated residual values, which are adjusted,
if appropriate, at each balance sheet date, on a straight-line basis over the expected useful economic lives of the assets concerned. The principal
economic lives used for this purpose are:
Freehold buildings 25 years
Leasehold improvements Five to ten years or term of lease, whichever is shorter
Computer equipment Three to five years
Fixtures and fittings, and motor vehicles Three to five years
Provision is made against the carrying value of property, plant and equipment where an impairment in value is deemed to have occurred. Asset
lives and residual values are reviewed on an annual basis.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within general and
Financial assets
The Group classifies its financial assets in the following categories: at fair value through the income statement, loans and receivables, and available-
for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of
financial assets at initial recognition.
(a) Financial assets at fair value through the income statement Financial assets at fair value through the income statement are financial assets
held for trading that is, assets that have been acquired principally for the purpose of selling in the short term. Assets in this category are classified
as current assets. They are initially recognised at fair value with transaction costs being expensed in the income statement. Specifically, the Groups
currency exchange contracts and embedded derivatives fall within this category. Gains or losses arising from changes in the fair value of financial
assets at fair value through the income statement are presented in the income statement within general and administrative expenses in the period
in which they arise.
(b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are
classified as non-current assets. Accounts receivable, cash and cash equivalents, and short- and long-term deposits are classified as Loans
and receivables (see note 17).
Loans and receivables are measured initially at fair value and then subsequently measured at amortised cost.
(c) Available-for-sale financial assets AFS financial assets are non-derivatives that are either designated in this category or not classified in any of
the other categories. They are included in non-current assets unless management intends to dispose of the assets within 12 months of the balance
sheet date.
Equity investments that are not publicly traded are also classified as AFS and are initially recorded at fair value plus transaction costs. Given that the
markets for these assets are not active, the Group establishes fair value by using valuation techniques. The estimated fair value of these investments
approximated to cost less any permanent diminution in value (based on estimates determined by management), except where independent
valuation information is obtained. Unrealised holding gains or losses on such securities are recognised, net of related taxes, through other
comprehensive income via a revaluation reserve, except where there is evidence of permanent impairment (in which case the loss is recognised
through the income statement within general and administrative expenses or exceptional items where appropriate).
Current investments have been valued based on the amount that is recoverable.
Accounts payable
Accounts payable are recognised at face value as they are settled within 12 months.
Share capital
Ordinary shares issued by the Company are recorded at the proceeds received, net of direct issue costs.

1c Financial risk management
The Group operates in the intensely competitive semiconductor industry, which has been characterised by price erosion, rapid technological
change, short product life cycles, cyclical market patterns, and heightened foreign and domestic competition. Significant technological changes
in the industry could affect operating results.
The Groups operations expose it to a variety of financial risks that include currency risk, interest rate risk, securities price risk, credit risk and
liquidity risk.
Given the size of the Group, the directors have not delegated the responsibility for monitoring financial risk management to a sub-committee of
the Board. The policies set by the directors are implemented by the Groups finance and treasury departments. The Group has a treasury policy
that sets out specific guidelines to manage currency risk, interest rate risk, credit risk and liquidity risk and also sets out circumstances where it
would be appropriate to use financial instruments to manage these.
Currency risk
The Groups earnings and liquidity are affected by fluctuations in foreign currency exchange rates, principally in respect of the US dollar, reflecting
the fact that most of its revenues and cash receipts are denominated in US dollars, while a significant proportion of its costs are settled in sterling.
The Group seeks to use currency exchange contracts and currency options to manage the US dollar/sterling risk as appropriate, by monitoring
the timing and value of anticipated US dollar receipts (which tend to arise from low-volume, high-value licence deals and royalty receipts)
in comparison with its requirement to settle certain expenses in US dollars. The Group reviews the resulting exposure on a regular basis and
hedges this exposure using currency exchange contracts and currency options for the sale of US dollars as appropriate. Such contracts are entered
into with the objective of matching their maturity with projected US dollar cash receipts.
The Group is also exposed to currency risk in respect of the foreign currency denominated assets and liabilities of its overseas subsidiaries. At
present, the Group does not consider this to be a significant risk since the Group does not intend to move assets between group companies.
The Group has elected not to apply hedge accounting, and all movements in the fair value of derivative foreign exchange instruments are recorded
in the income statement, offsetting the foreign exchange movements on the accounts receivable, and cash and cash equivalents balances being
hedged.
In addition, certain customers remit royalties and licence fees in other currencies, primarily the Euro and Japanese yen. The Group is also required
to settle certain expenses in these currencies, primarily in its French, German and Japanese subsidiaries, and as the net amounts involved are not
considered significant, the Group does not take out forward-settling currency exchange contracts in these currencies.
Interest rate risk
Floating rate cash earns interest based on relevant national LIBID or base rate equivalents and is therefore exposed to cash flow interest rate risk.
The proportion of funds held in fixed rather than floating rate deposits is determined in accordance with the policy outlined under Liquidity risk
below. Other financial assets, such as AFS financial assets, are not directly exposed to interest rate risk.
The Group had no derivative financial instruments to manage interest rate fluctuations in place at the year end since the level of financing was not
considered significant, and as such no hedge accounting is applied. The Groups cash flow is carefully monitored on a daily basis. Excess cash,
considering expected future cash flows, is placed on either short- or long-term deposits to maximise the interest income thereon. Daily surpluses
are swept into higher-interest earning accounts overnight.
Securities price risk
The Group is exposed to equity securities price risk on AFS financial assets. As there can be no guarantee that there will be a future market for
these securities (which are generally unlisted at the time of investment) or that the value of such investments will rise, the directors evaluate
each investment opportunity on its merits before committing the Groups funds. The directors review holdings in such companies on a regular
basis to determine whether continued investment is in the best interests of the Group. Funds for such ventures are limited in order that the
financial effect of any potential decline of the value of investments will not be substantial in the context of the Groups financial results.
Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks
and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions.
At 31 December 2013 and 2012, the Group had no significant concentrations of credit risk. The amount of exposure to any individual
counterparty is subject to a limit, which is reassessed periodically by the directors.

ARM Holdings plc
78
continued
1c Financial risk management continued
Credit risk continued
The Group has implemented policies that require appropriate credit checks on potential customers before sales commence. The Group generally
does not require collateral on accounts receivable, as many of its customers are large, well-established companies. The Group has not
experienced any significant losses related to individual customers or groups of customers in any particular industry or geographic area.
The Group markets and sells to a relatively small number of customers with individually large value transactions. The Group performs credit
checks on all customers (other than those paying in advance) in order to assess their creditworthiness and ability to pay its invoices as they
become due. As such, the balance of accounts receivable not owed by large companies is still deemed by the directors to be of low risk of default
due to the nature of the checks performed on them, and accordingly a relatively small allowance against these receivables is in place to cover this
low risk of default.
No credit limits were exceeded during the reporting period and the directors do not expect any significant losses from non-performance by these
counterparties, other than those already provided for.
Liquidity risk
The Groups policy is to maintain balances of cash and cash equivalents, and short- and long-term deposits, such that highly liquid resources
exceed the Groups projected cash outflows at all times. Surplus funds are placed on fixed- or floating-rate deposits depending on the prevailing
economic climate at the time (with reference to forward interest rates) and also on the required maturity of the deposit (as driven by the
expected timing of the Groups cash receipts and payments over the short- to medium-term).
Management monitors rolling forecasts of the Groups short- and medium-term expected cash flows. This is carried out at both a local and a
Group level, with the local subsidiaries being funded by the Group as required.
Capital risk management
The Groups objectives when managing capital are to safeguard the Groups ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an appropriate capital structure. The capital structure of the Group consists of
cash and cash equivalents, short- and long-term deposits and capital and reserves attributable to owners of the Company, as disclosed on the
consolidated balance sheet.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares, sell assets to raise cash or take on debt.
The Groups strategy is to have a capital structure that takes into account opportunities to invest in long-term profitable growth, prevailing trading
conditions and the desire to improve balance sheet efficiency over time. The Group introduced a dividend in 2004 which has grown each year
since. Between 2005 and 2008, an ongoing share buyback programme was in place whereby 16% of the issued share capital was bought back at
an average price of 1.22. In 2013, the interim dividend was increased by 26% and the directors are proposing a 27% increase in the final dividend,
reflecting the Boards long-term confidence in the business. As well as continuing to grow the dividend, the Board intends to undertake a limited
share buyback programme to maintain a flat share-count over time. No share buybacks were made in the current year. The capital structure is
continually monitored by the Group.
Valuation hierarchy
The Group classifies its financial instruments as follows: level 1 instruments are those valued using unadjusted quoted prices in active markets for
identical instruments; level 2 instruments are those valued using techniques based significantly on observable market data; and level 3 instruments
are those valued using information other than observable market data.
The Group has a team that performs the valuations of financial assets required for financial reporting purposes, including level 3 fair values. This
team reports to the Chief Financial Officer and to the Audit Committee.
The fair value of accounts and other receivables, other current financial assets, cash and cash equivalents, short- and long-term deposits, and
accounts and other payables approximate to their carrying amount.

2 Segmental reporting
At 31 December 2013 the Group was organised on a world-wide basis into three main business segments:
Processor Division (PD), encompassing those resources that are centred around microprocessor cores, including specific functions such as
graphics IP, system IP, embedded software and configurable digital signal processing (DSP) IP.
Physical IP Division (PIPD), concerned with the building blocks necessary for translation of a circuit design into actual silicon.
System Design Division (SDD), focused on the tools and models used to create and debug software and system-on-chip (SoC) designs.
This is based upon the Groups internal organisation and management structure and is the primary way in which the CODM is provided with
financial information. Whilst revenues are also reported into four main revenue streams (namely licensing, royalties, software and tools, and
services), the costs, operating results and balance sheets are only analysed into these three divisions. Further, the information provided to the
CODM is based on normalised profit before tax, a non-GAAP measure, and therefore this information is provided as well as the equivalent profit
stated under IFRS.
The reconciling items: intangible amortisation; acquisition-related charges; share-based payment costs including payroll taxes; disposal/impairment
of investments; exceptional items; share of results in joint venture; and Linaro-related charges are analysed below. Also analysed are revenues;
operating costs; investment income, net of interest payable and similar charges; profit/(loss) before tax; tax; profit/(loss) after tax; depreciation;
total assets and liabilities; net assets; and goodwill for each segment and the Group in total.
Business segment information
For the year ended 31 December 2013
Processor
Division
m
Physical IP
Division
m
System Design
Division
m
Unallocated
m
Group
m
Segmental income statement
Revenues 596.2 82.0 36.4 714.6
Operating costs (426.6) (90.7) (42.6) (1.2) (561.1)
Investment income, net of interest payable and similar charges 13.1 13.1
Profit/(loss) before tax 169.6 (8.7) (6.2) 7.9 162.6
Tax (57.8) (57.8)
Profit/(loss) for the year 169.6 (8.7) (6.2) (49.9) 104.8
Reconciliation to normalised profit before tax:
Amortisation on acquired intangibles and other acquisition-related charges 9.6 2.0 11.6
Share-based payment costs including payroll taxes 54.5 12.1 7.4 74.0
Impairment of investments, net of profit on disposal 3.5 3.5
Share of results in joint venture and Linaro-related charges 7.0 4.0 11.0
Normalised profit before tax 345.5 5.4 1.2 11.9 364.0
Segmental balance sheet
Total assets 389.4 400.1 31.6 817.3 1,638.4
Total liabilities (243.2) (46.0) (12.0) (25.8) (327.0)
Net assets 146.2 354.1 19.6 791.5 1,311.4
Other segmental items
Depreciation 9.6 2.8 2.0 14.4
Goodwill 151.5 360.2 14.2 525.9
Revenues (USD millions) 931.5 129.1 57.1 1,117.7

79
continued
1c Financial risk management continued
Credit risk continued
The Group has implemented policies that require appropriate credit checks on potential customers before sales commence. The Group generally
does not require collateral on accounts receivable, as many of its customers are large, well-established companies. The Group has not
experienced any significant losses related to individual customers or groups of customers in any particular industry or geographic area.
The Group markets and sells to a relatively small number of customers with individually large value transactions. The Group performs credit
checks on all customers (other than those paying in advance) in order to assess their creditworthiness and ability to pay its invoices as they
become due. As such, the balance of accounts receivable not owed by large companies is still deemed by the directors to be of low risk of default
due to the nature of the checks performed on them, and accordingly a relatively small allowance against these receivables is in place to cover this
low risk of default.
No credit limits were exceeded during the reporting period and the directors do not expect any significant losses from non-performance by these
counterparties, other than those already provided for.
Liquidity risk
The Groups policy is to maintain balances of cash and cash equivalents, and short- and long-term deposits, such that highly liquid resources
exceed the Groups projected cash outflows at all times. Surplus funds are placed on fixed- or floating-rate deposits depending on the prevailing
economic climate at the time (with reference to forward interest rates) and also on the required maturity of the deposit (as driven by the
expected timing of the Groups cash receipts and payments over the short- to medium-term).
Management monitors rolling forecasts of the Groups short- and medium-term expected cash flows. This is carried out at both a local and a
Group level, with the local subsidiaries being funded by the Group as required.
Capital risk management
The Groups objectives when managing capital are to safeguard the Groups ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an appropriate capital structure. The capital structure of the Group consists of
cash and cash equivalents, short- and long-term deposits and capital and reserves attributable to owners of the Company, as disclosed on the
consolidated balance sheet.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares, sell assets to raise cash or take on debt.
The Groups strategy is to have a capital structure that takes into account opportunities to invest in long-term profitable growth, prevailing trading
conditions and the desire to improve balance sheet efficiency over time. The Group introduced a dividend in 2004 which has grown each year
since. Between 2005 and 2008, an ongoing share buyback programme was in place whereby 16% of the issued share capital was bought back at
an average price of 1.22. In 2013, the interim dividend was increased by 26% and the directors are proposing a 27% increase in the final dividend,
reflecting the Boards long-term confidence in the business. As well as continuing to grow the dividend, the Board intends to undertake a limited
share buyback programme to maintain a flat share-count over time. No share buybacks were made in the current year. The capital structure is
continually monitored by the Group.
Valuation hierarchy
The Group classifies its financial instruments as follows: level 1 instruments are those valued using unadjusted quoted prices in active markets for
identical instruments; level 2 instruments are those valued using techniques based significantly on observable market data; and level 3 instruments
are those valued using information other than observable market data.
The Group has a team that performs the valuations of financial assets required for financial reporting purposes, including level 3 fair values. This
team reports to the Chief Financial Officer and to the Audit Committee.
The fair value of accounts and other receivables, other current financial assets, cash and cash equivalents, short- and long-term deposits, and
accounts and other payables approximate to their carrying amount.

2 Segmental reporting
At 31 December 2013 the Group was organised on a world-wide basis into three main business segments:
Processor Division (PD), encompassing those resources that are centred around microprocessor cores, including specific functions such as
graphics IP, system IP, embedded software and configurable digital signal processing (DSP) IP.
Physical IP Division (PIPD), concerned with the building blocks necessary for translation of a circuit design into actual silicon.
System Design Division (SDD), focused on the tools and models used to create and debug software and system-on-chip (SoC) designs.
This is based upon the Groups internal organisation and management structure and is the primary way in which the CODM is provided with
financial information. Whilst revenues are also reported into four main revenue streams (namely licensing, royalties, software and tools, and
services), the costs, operating results and balance sheets are only analysed into these three divisions. Further, the information provided to the
CODM is based on normalised profit before tax, a non-GAAP measure, and therefore this information is provided as well as the equivalent profit
stated under IFRS.
The reconciling items: intangible amortisation; acquisition-related charges; share-based payment costs including payroll taxes; disposal/impairment
of investments; exceptional items; share of results in joint venture; and Linaro-related charges are analysed below. Also analysed are revenues;
operating costs; investment income, net of interest payable and similar charges; profit/(loss) before tax; tax; profit/(loss) after tax; depreciation;
total assets and liabilities; net assets; and goodwill for each segment and the Group in total.
Business segment information
Processor
Division
m
Physical IP
Division
m
System Design
Division
m
Unallocated
m
Group
m
Revenues 596.2 82.0 36.4 714.6
Operating costs (426.6) (90.7) (42.6) (1.2) (561.1)
Tax (57.8) (57.8)
Reconciliation to normalised profit before tax:
Amortisation on acquired intangibles and other acquisition-related charges 9.6 2.0 11.6
Impairment of investments, net of profit on disposal 3.5 3.5
Share of results in joint venture and Linaro-related charges 7.0 4.0 11.0
Normalised profit before tax 345.5 5.4 1.2 11.9 364.0
Total assets 389.4 400.1 31.6 817.3 1,638.4
Net assets 146.2 354.1 19.6 791.5 1,311.4
Goodwill 151.5 360.2 14.2 525.9
Revenues (USD millions) 931.5 129.1 57.1 1,117.7

ARM Holdings plc
80
continued
2 Segmental reporting continued
Processor
Division
m
Physical IP
Division
m
System Design
Division
m
Unallocated
m
Group
m
Revenues 473.9 68.3 34.7 576.9
Operating costs (243.3) (82.8) (40.1) (2.6) (368.8)
Tax (60.3) (60.3)
Reconciliation to normalised profit/(loss) before tax:
Amortisation on acquired intangibles and other acquisition-related charges 5.5 2.5 0.8 8.8
Profit on sale of investments, net of impairment 0.6 0.6
Normalised profit/(loss) before tax 266.7 (3.4) 1.4 11.8 276.5
Total assets 284.6 409.2 32.5 740.5 1,466.8
Net assets 102.0 365.3 17.4 721.4 1,206.1
Goodwill 138.0 367.0 14.4 519.4
Revenues (USD millions) 749.8 108.4 54.9 913.1
There are no inter-segment revenues. Unallocated operating costs consist of foreign exchange gains and losses. Unallocated assets and liabilities
include: cash and cash equivalents; short- and long-term deposits; AFS financial assets; loans and receivables; embedded derivatives; fair value of
currency exchange contracts; deferred tax balances; current tax; and VAT.
During the year ended 31 December 2013 one customer (within all three business segments) accounted for 12% of the Groups total revenues
amounting to 87.6 million (2012: one customer accounted for 15%).
The results of each segment have been prepared using accounting policies consistent with those of the Group as a whole.

Geographical information
The Group manages its business segments on a global basis. The operations are based in three main geographical areas. The UK is the home
country of the parent company. The main operations are in the following principal territories:
Europe
United States
Asia Pacific
Analysis of revenue by destination*:

2013
m
2012
m
United States 280.3 215.9
South Korea 101.7 95.0
Taiwan 99.4 69.2
China 90.0 71.2
Japan 47.6 46.6
Switzerland 24.8 14.0
Singapore 24.6 9.2
Germany 13.4 15.4
Netherlands 8.5 15.8
Rest of Europe 19.7 19.0
Rest of Asia Pacific 3.6 4.4
Rest of North America 1.0 1.2
714.6 576.9
* Destination is defined as the location of the Groups customers operations.
The Groups revenue within the home country of the parent company amounted to 4.9 million and 5.5 million for the years ended
31 December 2013 and 2012 respectively. The Groups exports from the UK were 699.2 million and 560.3 million for the years ended
31 December 2013 and 2012 respectively.
Analysis of revenue by origin:

2013
m
2012
m
Europe* 705.3 567.8
714.6 576.9
* Includes the UK, which had total revenues of 704.1 million in 2013 (2012: 565.8 million).
Analysis of revenue by revenue stream:

2013
m
2012
m
Royalties 358.3 299.8
Licensing 285.6 214.0
Software and tools 36.4 34.7
Services 34.3 28.4
714.6 576.9

81
continued
Processor
Division
m
Physical IP
Division
m
System Design
Division
m
Unallocated
m
Group
m
Revenues 473.9 68.3 34.7 576.9
Operating costs (243.3) (82.8) (40.1) (2.6) (368.8)
Tax (60.3) (60.3)
Reconciliation to normalised profit/(loss) before tax:
Amortisation on acquired intangibles and other acquisition-related charges 5.5 2.5 0.8 8.8
Profit on sale of investments, net of impairment 0.6 0.6
Normalised profit/(loss) before tax 266.7 (3.4) 1.4 11.8 276.5
Total assets 284.6 409.2 32.5 740.5 1,466.8
Net assets 102.0 365.3 17.4 721.4 1,206.1
Goodwill 138.0 367.0 14.4 519.4
Revenues (USD millions) 749.8 108.4 54.9 913.1
There are no inter-segment revenues. Unallocated operating costs consist of foreign exchange gains and losses. Unallocated assets and liabilities
include: cash and cash equivalents; short- and long-term deposits; AFS financial assets; loans and receivables; embedded derivatives; fair value of
currency exchange contracts; deferred tax balances; current tax; and VAT.
During the year ended 31 December 2013 one customer (within all three business segments) accounted for 12% of the Groups total revenues
amounting to 87.6 million (2012: one customer accounted for 15%).
The results of each segment have been prepared using accounting policies consistent with those of the Group as a whole.

Geographical information
The Group manages its business segments on a global basis. The operations are based in three main geographical areas. The UK is the home
country of the parent company. The main operations are in the following principal territories:
Europe
United States
Asia Pacific
Analysis of revenue by destination*:

2013
m
2012
m
South Korea 101.7 95.0
Taiwan 99.4 69.2
China 90.0 71.2
Japan 47.6 46.6
Switzerland 24.8 14.0
Singapore 24.6 9.2
Germany 13.4 15.4
Netherlands 8.5 15.8
Rest of Europe 19.7 19.0
Rest of Asia Pacific 3.6 4.4
Rest of North America 1.0 1.2
714.6 576.9
* Destination is defined as the location of the Groups customers operations.
The Groups revenue within the home country of the parent company amounted to 4.9 million and 5.5 million for the years ended
31 December 2013 and 2012 respectively. The Groups exports from the UK were 699.2 million and 560.3 million for the years ended
31 December 2013 and 2012 respectively.
Analysis of revenue by origin:

2013
m
2012
m
Europe* 705.3 567.8
714.6 576.9
* Includes the UK, which had total revenues of 704.1 million in 2013 (2012: 565.8 million).
Analysis of revenue by revenue stream:

2013
m
2012
m
Royalties 358.3 299.8
Licensing 285.6 214.0
Software and tools 36.4 34.7
Services 34.3 28.4
714.6 576.9

ARM Holdings plc
82
continued
Geographical information continued
Analysis of non-current assets (excluding deferred tax assets, goodwill and other intangible assets):

2013
m
2012
m
Europe* 172.0 193.8
Asia Pacific 5.0 3.1
184.2 202.1
* Includes the UK, which had non-current assets (excluding deferred tax assets, goodwill and other intangible assets) of 171.0 million in 2013 (2012: 192.8 million), of which long-term deposits accounted
for 125.6 million (2012: 141.3 million).
3 Key management compensation and directors emoluments
Key management compensation
The directors are of the opinion that the key management of the Group comprises the executive and non-executive directors of ARM Holdings
plc together with the Executive Committee (comprising all directors of ARM Limited and certain senior management). These persons have
authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly. At 31 December 2013, key
management comprised 21 people (2012: 19).
The aggregate amounts of key management compensation are set out below:

2013
m
2012
m
Salaries and short-term employee benefits 9.5 8.9
Share-based payments 6.1 3.4
Post-employment benefits 0.2 0.2
15.8 12.5
Directors emoluments
The aggregate emoluments of the directors of the Company are set out below:

2013
m
2012
m
Aggregate emoluments in respect of qualifying services 3.8 4.9
Aggregate payments for pension-related benefits 0.2 0.2
Aggregate gains on exercise of share options 3.9 1.8
Aggregate amounts receivable in shares under the DAB Plan 12.9 11.5
Aggregate amounts receivable under the LTIP 17.2 21.2
38.0 39.6
Detailed disclosures of directors emoluments are shown on page 46 and 47. Details of directors interests in share options and awards are shown
on pages 48 to 53, which form part of the financial statements.

4 Employee information
The average monthly number of persons, including executive directors, employed by the Group during the year was:

2013
Number
2012
Number
By segment
Processor Division 1,667 1,398
Physical IP Division 615 557
System Design Division 316 306
2,598 2,261

2013
Number
2012
Number
By activity
Research and development 1,803 1,581
Sales and marketing 425 367
General and administrative 370 313
2,598 2,261

2013
m
2012
m
Staff costs (for the above persons)
Wages and salaries 185.4 161.5
Medical care costs 5.5 5.0
Share-based payments (note 20) 59.2 37.1
Social security costs 35.1 30.2
Movement on provision for social security costs on share awards (1.4) (6.1)
Other pension costs 8.7 8.0
292.5 235.7

83
continued
Geographical information continued
Analysis of non-current assets (excluding deferred tax assets, goodwill and other intangible assets):

2013
m
2012
m
Europe* 172.0 193.8
Asia Pacific 5.0 3.1
184.2 202.1
* Includes the UK, which had non-current assets (excluding deferred tax assets, goodwill and other intangible assets) of 171.0 million in 2013 (2012: 192.8 million), of which long-term deposits accounted
for 125.6 million (2012: 141.3 million).
3 Key management compensation and directors emoluments
Key management compensation
The directors are of the opinion that the key management of the Group comprises the executive and non-executive directors of ARM Holdings
plc together with the Executive Committee (comprising all directors of ARM Limited and certain senior management). These persons have
authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly. At 31 December 2013, key
management comprised 21 people (2012: 19).
The aggregate amounts of key management compensation are set out below:

2013
m
2012
m
Salaries and short-term employee benefits 9.5 8.9
Share-based payments 6.1 3.4
Post-employment benefits 0.2 0.2
15.8 12.5
Directors emoluments
The aggregate emoluments of the directors of the Company are set out below:

2013
m
2012
m
Aggregate emoluments in respect of qualifying services 3.8 4.9
Aggregate payments for pension-related benefits 0.2 0.2
Aggregate gains on exercise of share options 3.9 1.8
Aggregate amounts receivable in shares under the DAB Plan 12.9 11.5
Aggregate amounts receivable under the LTIP 17.2 21.2
38.0 39.6
Detailed disclosures of directors emoluments are shown on page 46 and 47. Details of directors interests in share options and awards are shown
on pages 48 to 53, which form part of the financial statements.

4 Employee information
The average monthly number of persons, including executive directors, employed by the Group during the year was:

2013
Number
2012
Number
By segment
Processor Division 1,667 1,398
Physical IP Division 615 557
System Design Division 316 306
2,598 2,261

2013
Number
2012
Number
By activity
Research and development 1,803 1,581
Sales and marketing 425 367
General and administrative 370 313
2,598 2,261

2013
m
2012
m
Staff costs (for the above persons)
Wages and salaries 185.4 161.5
Medical care costs 5.5 5.0
Share-based payments (note 20) 59.2 37.1
Social security costs 35.1 30.2
Movement on provision for social security costs on share awards (1.4) (6.1)
Other pension costs 8.7 8.0
292.5 235.7

ARM Holdings plc
84
continued
5 Profit before tax: analysis of expenses by nature
The following items have been charged/(credited) to the income statement in arriving at profit before tax:

2013
m
2012
m
Staff costs, including share-based payments (note 4) 292.5 235.7
Cost of inventories recognised as an expense 2.8 3.2
Depreciation of property, plant and equipment owned assets (note 12) 11.6 9.5
Depreciation of property, plant and equipment under finance leases (note 12) 2.8 1.3
Amortisation of other intangible assets (note 14)
Cost of revenues 0.3 0.3
Research and development expenses 6.9 2.3
Sales and marketing expenses 0.6 0.9
General and administrative expenses 5.8 3.1
Government grants research and development expenditure credit (5.8)
Exceptional items (note 6)
Impairment of current AFS financial asset 59.5
IP indemnity and similar charges 41.8
Impairment of non-current AFS financial assets (note 11) 6.8 1.4
Profit on disposal of AFS financial assets (3.3) (0.8)
Other operating lease rentals payable
Plant and machinery 26.2 24.0
Property 8.7 7.6
Accounts receivables impairment (including movement in provision) 4.0 0.4
Fair value movement on embedded derivatives 4.5 3.7
Other foreign exchange gains (3.3) (1.9)
Services provided by the Groups auditor and its associates
During the year the Group (including its overseas subsidiaries) obtained the following services from the Groups auditor and its associates:

2013
m
2012
m
Fees payable to the Groups auditor and its associates for the audit of the Company
and consolidated financial statements 0.3 0.3
Fees payable to the Groups auditor and its associates for other services:
The audit of the Groups subsidiaries 0.2 0.2
Audit-related assurance services (services pursuant to section 404 of the Sarbanes-Oxley Act) 0.3 0.3
Other assurance services 0.1 0.1
Statutory audit, financial reporting and other related services 0.9 0.9
Tax advisory services 0.1 0.2
Tax compliance services 0.1
All other non-audit services* 0.1 0.1
1.1 1.3
* All other non-audit services consist predominantly of fees for the performance of royalty audits.

6 Exceptional items
IP indemnity and similar charges
As noted in prior financial statements, the Group had been in discussions with a licensee to re-negotiate the terms upon which the Group would
indemnify that licensee. During 2013, terms were executed and the Group incurred indemnification costs amounting to $18.0 million. Further in
relation to legal proceedings regarding the same patent portfolio, for a consideration of $45.4 million, ARM entered into a licence agreement with
a third party covering patents being asserted against ARM technology in litigation between the patentee and a number of licensees of ARM
technology. The licence was entered into in full and final settlement of any indemnity claims with respect to the asserted patents and will prevent
any future assertion of the patents against ARM technology. Total indemnification, settlement and licence costs of $63.4 million (41.8 million)
were expensed as an exceptional item in 2013, resulting in a tax deduction in current tax of 9.7 million.
Impairment of available-for-sale financial assets (current)
During the year, the Group participated in a consortium, via a trust, to acquire certain patent rights. These rights were not subject to actual or
threatened legal proceedings. Of the Groups total contribution to the consortium, $100.5 million was classified within current AFS financial assets
(60.7 million after translation at 31 December 2013 exchange rates) and $67 million, the residual, was classified within other intangible assets
(37.4 million after amortisation to 31 December 2013). The available-for-sale financial asset represented ARMs right to receive cash from the
Group's financial interest in the consortium, as it was anticipated that a programme of licensing the patents to third parties would be undertaken
by the trust. The other intangible asset consists of IP rights that are being amortised over a period of eight and a half years, being the average
remaining life of the underlying patent portfolio.
In Q4 2013, the trust made a strategic decision not to pursue a licensing programme and the portfolio was put up for sale by auction. The Group
acquired the patents in January 2014 for $4.0 million (2.4 million) which will be accounted for as an additional intangible asset. As there is no
longer an expectation of any future cash flows with respect to licensing of the patents by the trust, the AFS financial asset has been impaired down
to the value of the Groups share of the auction proceeds, giving rise to a non-cash exceptional charge of $98.5 million (59.5 million). As
disclosed in note 7, a deferred tax asset has not been recognised in relation to this exceptional item, increasing the current tax charge by 18.3
million.
7 Tax
Analysis of charge in the year:

2013
m
2012
m
Current tax:
Current tax on profits for the year 56.5 47.5
Adjustments in respect of prior years (0.2) (0.5)
Total current tax 56.3 47.0
Deferred tax:
Origination and reversal of temporary differences (4.1) 11.8
Impact of change in the UK statutory tax rate 0.1 1.5
Impact of change due to the UK patent box regime 5.5
Total deferred tax 1.5 13.3
Income tax expense 57.8 60.3
Analysis of tax on items charged to equity:

2013
m
2012
m
Deferred tax charge on outstanding share options and awards 4.8 9.7
Current tax benefit on share options and awards (27.0) (27.4)
Deferred tax credit on AFS financial assets (0.1)

85
continued
5 Profit before tax: analysis of expenses by nature
The following items have been charged/(credited) to the income statement in arriving at profit before tax:

2013
m
2012
m
Staff costs, including share-based payments (note 4) 292.5 235.7
Cost of inventories recognised as an expense 2.8 3.2
Depreciation of property, plant and equipment owned assets (note 12) 11.6 9.5
Depreciation of property, plant and equipment under finance leases (note 12) 2.8 1.3
Amortisation of other intangible assets (note 14)
Cost of revenues 0.3 0.3
Research and development expenses 6.9 2.3
Sales and marketing expenses 0.6 0.9
General and administrative expenses 5.8 3.1
Government grants research and development expenditure credit (5.8)
Exceptional items (note 6)
Impairment of current AFS financial asset 59.5
IP indemnity and similar charges 41.8
Impairment of non-current AFS financial assets (note 11) 6.8 1.4
Profit on disposal of AFS financial assets (3.3) (0.8)
Other operating lease rentals payable
Plant and machinery 26.2 24.0
Property 8.7 7.6
Accounts receivables impairment (including movement in provision) 4.0 0.4
Fair value movement on embedded derivatives 4.5 3.7
Other foreign exchange gains (3.3) (1.9)
Services provided by the Groups auditor and its associates
During the year the Group (including its overseas subsidiaries) obtained the following services from the Groups auditor and its associates:

2013
m
2012
m
Fees payable to the Groups auditor and its associates for the audit of the Company
and consolidated financial statements 0.3 0.3
Fees payable to the Groups auditor and its associates for other services:
The audit of the Groups subsidiaries 0.2 0.2
Audit-related assurance services (services pursuant to section 404 of the Sarbanes-Oxley Act) 0.3 0.3
Other assurance services 0.1 0.1
Statutory audit, financial reporting and other related services 0.9 0.9
Tax advisory services 0.1 0.2
Tax compliance services 0.1
All other non-audit services* 0.1 0.1
1.1 1.3
* All other non-audit services consist predominantly of fees for the performance of royalty audits.

6 Exceptional items
IP indemnity and similar charges
As noted in prior financial statements, the Group had been in discussions with a licensee to re-negotiate the terms upon which the Group would
indemnify that licensee. During 2013, terms were executed and the Group incurred indemnification costs amounting to $18.0 million. Further in
relation to legal proceedings regarding the same patent portfolio, for a consideration of $45.4 million, ARM entered into a licence agreement with
a third party covering patents being asserted against ARM technology in litigation between the patentee and a number of licensees of ARM
technology. The licence was entered into in full and final settlement of any indemnity claims with respect to the asserted patents and will prevent
any future assertion of the patents against ARM technology. Total indemnification, settlement and licence costs of $63.4 million (41.8 million)
were expensed as an exceptional item in 2013, resulting in a tax deduction in current tax of 9.7 million.
Impairment of available-for-sale financial assets (current)
During the year, the Group participated in a consortium, via a trust, to acquire certain patent rights. These rights were not subject to actual or
threatened legal proceedings. Of the Groups total contribution to the consortium, $100.5 million was classified within current AFS financial assets
(60.7 million after translation at 31 December 2013 exchange rates) and $67 million, the residual, was classified within other intangible assets
(37.4 million after amortisation to 31 December 2013). The available-for-sale financial asset represented ARMs right to receive cash from the
Group's financial interest in the consortium, as it was anticipated that a programme of licensing the patents to third parties would be undertaken
by the trust. The other intangible asset consists of IP rights that are being amortised over a period of eight and a half years, being the average
remaining life of the underlying patent portfolio.
In Q4 2013, the trust made a strategic decision not to pursue a licensing programme and the portfolio was put up for sale by auction. The Group
acquired the patents in January 2014 for $4.0 million (2.4 million) which will be accounted for as an additional intangible asset. As there is no
longer an expectation of any future cash flows with respect to licensing of the patents by the trust, the AFS financial asset has been impaired down
to the value of the Groups share of the auction proceeds, giving rise to a non-cash exceptional charge of $98.5 million (59.5 million). As
disclosed in note 7, a deferred tax asset has not been recognised in relation to this exceptional item, increasing the current tax charge by 18.3
million.
7 Tax
Analysis of charge in the year:

2013
m
2012
m
Current tax:
Current tax on profits for the year 56.5 47.5
Total current tax 56.3 47.0
Deferred tax:
Origination and reversal of temporary differences (4.1) 11.8
Impact of change in the UK statutory tax rate 0.1 1.5
Impact of change due to the UK patent box regime 5.5
Total deferred tax 1.5 13.3
Income tax expense 57.8 60.3
Analysis of tax on items charged to equity:

2013
m
2012
m
Deferred tax charge on outstanding share options and awards 4.8 9.7
Current tax benefit on share options and awards (27.0) (27.4)
Deferred tax credit on AFS financial assets (0.1)

ARM Holdings plc
86
continued
7 Tax continued
The tax charge for the year was different from the standard rate of corporation tax in the UK, as explained below:

2013
m
2012
m
Profit before tax at the corporation tax rate of 23.25% (2012: 24.5%) 37.8 54.2
Effects of:
Adjustments in respect of foreign tax rates 4.1 5.0
Research and development tax credits * (6.6) (5.5)
Current impact of the UK patent box regime (4.8)
Remeasurement of deferred tax assets due to reduction in UK statutory tax rate 0.1 1.5
Remeasurement of deferred tax assets due to the UK patent box regime 5.5
US deferred tax assets not recognised ** 17.5 3.4
Foreign withholding tax 3.0 1.0
Impact of share-based payments (1.5) 0.3
Other *** 2.9 0.9
Total taxation 57.8 60.3
* The provisions extending the US federal R&D tax credits into 2012 were signed on 2 January 2013. As a result of the provisions being enacted in 2013, 2012 R&D tax credits of 2.1 million have been
accounted for in 2013.
** Includes the tax impact of the exceptional charge of 59.5 million for the impairment of an AFS financial asset which gave rise to a tax loss that has not been recognised because it is not probable that
the loss will be utilised.
*** Includes expenditure disallowable for tax purposes.
Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using the tax rate relevant to each tax jurisdiction.
The movement on the deferred tax account is shown below:

2013
m
2012
m
At 1 January 70.1 105.9
Amount acquired with subsidiary undertaking (1.2)
Income statement charge (1.5) (13.3)
Adjustment in respect of share-based payments (4.8) (9.7)
Prior year movement from/(to) current tax assets 3.0 (11.6)
Exchange differences (0.4) (1.3)
Revaluation of AFS financial asset 0.1
At 31 December 65.2 70.1
Deferred tax assets have been partially recognised in respect of tax losses and other temporary differences giving rise to deferred tax assets
because it is not probable that the unrecognised portion of these assets will be recovered.
The amount of deferred tax assets unrecognised at 31 December 2013 was 23.2 million (2012: 4.4 million). The unrecognised deferred tax
assets relate to historic losses of acquired subsidiaries and the loss arising on the impairment of an AFS financial asset. The losses may remain
unutilised due to restrictions imposed by local tax legislation and availability of relevant future profits.
No deferred tax has been recognised in respect of a further 33.2 million (2012: 35.0 million) of unremitted earnings of overseas subsidiaries
because the Group is in a position to control the timing of the reversal of these differences and either it is possible that such differences will not
reverse in the foreseeable future or no tax is payable on the reversal.

7 Tax continued
At the balance sheet date the UK Government had enacted a 2% reduction in the main rate of UK corporation tax from 23% to 21% from
1 April 2014 and a further 1% reduction to 20% from 1 April 2015. The UK Government has also introduced the new patent box regime, which
seeks to tax all profits attributable to patented technology at a reduced rate of 10%. The rules are to be phased in over five years from
1 April 2013 a company will be entitled to only 60% of the deduction in financial year 2013/14, rising to 100% by 2017/18. The impact of these
changes on the deferred tax balances of the Group is included in the tax charge.
The movements in deferred tax assets and liabilities (prior to offsetting of balances within the same tax jurisdiction as permitted by IAS 12) during
the year are shown below. Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an
intention to settle the balances net.
Deferred tax assets

Amounts
relating to
share-based
payments
m
Temporary
differences
relating to
fixed assets
m
Tax losses
and R&D tax
credits carried
forward
m
Temporary
differences
relating to
reserves
m
Other
m
Total
m
At 1 January 2013 43.5 2.6 15.1 9.5 0.6 71.3
Amount acquired with subsidiary undertaking 0.5 0.5
Prior year movement from current tax assets 3.0 3.0
Income statement credit/(charge) 0.8 1.3 (2.8) (1.5) 0.3 (1.9)
Movement on deferred tax arising on outstanding share options and
awards
(4.8) (4.8)
Unutilised current year share option deductions (6.7) 6.7
At 31 December 2013 (prior to offsetting) 32.8 3.9 22.1 8.0 0.9 67.7
Offsetting of deferred tax liabilities (2.4)
At 31 December 2013 (after offsetting) 65.3
At 1 January 2012 59.5 4.6 30.9 12.7 107.7
Prior year movement to current tax assets (11.6) (11.6)
Income statement (charge)/credit (0.1) (2.0) (9.1) (3.2) 0.6 (13.8)
awards
(9.7) (9.7)
The deferred tax asset to be recovered after more than one year is 35.2 million (2012: 29.6 million).

87
continued
7 Tax continued
The tax charge for the year was different from the standard rate of corporation tax in the UK, as explained below:

2013
m
2012
m
Profit before tax at the corporation tax rate of 23.25% (2012: 24.5%) 37.8 54.2
Effects of:
Adjustments in respect of foreign tax rates 4.1 5.0
Research and development tax credits * (6.6) (5.5)
Current impact of the UK patent box regime (4.8)
Remeasurement of deferred tax assets due to reduction in UK statutory tax rate 0.1 1.5
Remeasurement of deferred tax assets due to the UK patent box regime 5.5
US deferred tax assets not recognised ** 17.5 3.4
Foreign withholding tax 3.0 1.0
Impact of share-based payments (1.5) 0.3
Other *** 2.9 0.9
Total taxation 57.8 60.3
* The provisions extending the US federal R&D tax credits into 2012 were signed on 2 January 2013. As a result of the provisions being enacted in 2013, 2012 R&D tax credits of 2.1 million have been
accounted for in 2013.
** Includes the tax impact of the exceptional charge of 59.5 million for the impairment of an AFS financial asset which gave rise to a tax loss that has not been recognised because it is not probable that
the loss will be utilised.
*** Includes expenditure disallowable for tax purposes.
Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using the tax rate relevant to each tax jurisdiction.
The movement on the deferred tax account is shown below:

2013
m
2012
m
At 1 January 70.1 105.9
Amount acquired with subsidiary undertaking (1.2)
Income statement charge (1.5) (13.3)
Adjustment in respect of share-based payments (4.8) (9.7)
Prior year movement from/(to) current tax assets 3.0 (11.6)
Revaluation of AFS financial asset 0.1
Deferred tax assets have been partially recognised in respect of tax losses and other temporary differences giving rise to deferred tax assets
because it is not probable that the unrecognised portion of these assets will be recovered.
The amount of deferred tax assets unrecognised at 31 December 2013 was 23.2 million (2012: 4.4 million). The unrecognised deferred tax
assets relate to historic losses of acquired subsidiaries and the loss arising on the impairment of an AFS financial asset. The losses may remain
unutilised due to restrictions imposed by local tax legislation and availability of relevant future profits.
No deferred tax has been recognised in respect of a further 33.2 million (2012: 35.0 million) of unremitted earnings of overseas subsidiaries
because the Group is in a position to control the timing of the reversal of these differences and either it is possible that such differences will not
reverse in the foreseeable future or no tax is payable on the reversal.

7 Tax continued
At the balance sheet date the UK Government had enacted a 2% reduction in the main rate of UK corporation tax from 23% to 21% from
1 April 2014 and a further 1% reduction to 20% from 1 April 2015. The UK Government has also introduced the new patent box regime, which
seeks to tax all profits attributable to patented technology at a reduced rate of 10%. The rules are to be phased in over five years from
1 April 2013 a company will be entitled to only 60% of the deduction in financial year 2013/14, rising to 100% by 2017/18. The impact of these
changes on the deferred tax balances of the Group is included in the tax charge.
The movements in deferred tax assets and liabilities (prior to offsetting of balances within the same tax jurisdiction as permitted by IAS 12) during
the year are shown below. Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an
intention to settle the balances net.
Deferred tax assets

Amounts
relating to
share-based
payments
m
Temporary
differences
relating to
fixed assets
m
Tax losses
and R&D tax
credits carried
forward
m
Temporary
differences
relating to
reserves
m
Other
m
Total
m
At 1 January 2013 43.5 2.6 15.1 9.5 0.6 71.3
Prior year movement from current tax assets 3.0 3.0
Income statement credit/(charge) 0.8 1.3 (2.8) (1.5) 0.3 (1.9)
awards
(4.8) (4.8)
At 1 January 2012 59.5 4.6 30.9 12.7 107.7
Prior year movement to current tax assets (11.6) (11.6)
Income statement (charge)/credit (0.1) (2.0) (9.1) (3.2) 0.6 (13.8)
awards
(9.7) (9.7)
The deferred tax asset to be recovered after more than one year is 35.2 million (2012: 29.6 million).

ARM Holdings plc
88
continued
7 Tax continued
Deferred tax liabilities

Amounts relating to
intangible assets
arising on acquisition
m
Temporary difference
on AFS financial assets
m
Other
m
Total
m
At 1 January 2013 1.1 0.1 1.2
Movement in respect of amortisation of intangible assets (0.2) (0.2)
Other short-term differences (0.1) (0.1) (0.2)
At 31 December 2013 (prior to offsetting) 2.5 2.5
Offsetting of deferred tax assets (2.4)
At 1 January 2012 1.3 0.1 0.4 1.8
Movement through reserves (0.1) (0.1)
Other short-term differences (0.3) (0.3)
At 31 December 2012 (prior to offsetting) 1.1 0.1 1.2
At 31 December 2012 (after offsetting)
The deferred tax liability due after more than one year prior to offsetting is 1.2 million (2012: 0.8 million).
8 Dividends

2013
m
2012
m
Final 2011 paid at 2.09 pence per share 28.8
Interim 2012 paid at 1.67 pence per share 23.0
68.9 51.8
In addition, the directors are proposing a final dividend in respect of the financial year ended 31 December 2013 of 3.6 pence per share, which will
absorb an estimated 51 million of shareholders funds. Subject to approval at the 2014 AGM, it will be paid on 16 May 2014 to shareholders who
are on the register of members on 22 April 2014.

9 Accounts receivable

2013
m
2012
m
Trade debtors (including receivables from related parties see note 24) 140.3 119.1
Less: Provision for impairment of trade debtors (9.7) (2.4)
Trade debtors, net 130.6 116.7
Amounts recoverable on contracts 5.6 7.8
Current accounts receivable 136.2 124.5
Movements in the Groups provision for impairment of trade debtors are as follows:

2013
m
2012
m
At 1 January (2.4) (1.7)
Charge to income statement (4.0) (0.4)
Reclassification from deferred income (3.5) (0.4)
Foreign exchange 0.2 0.1
At 31 December (9.7) (2.4)
See also note 17 for further disclosure regarding the credit quality of the Groups gross trade debtors.
10 Prepaid expenses and other assets

2013
m
2012
m
Other receivables 18.1 10.4
Prepayments and accrued income 21.7 125.2
Current prepaid expenses and other assets 39.8 135.6
Plus: non-current prepayments and accrued income 1.6 2.0
Total prepaid expenses and other assets 41.4 137.6
Included within prepayments and accrued income at 31 December 2012 was a prepayment amounting to 103.7 million, being the Groups
advance contribution to acquire rights to MIPS Technologies, Inc.s portfolio of patents. The Group has determined that the participation in the
consortium conferred on the Group two separate rights: an intangible asset, conferring the right to use the assets in the Groups own business of
41.9 million (see note 14), and an AFS financial asset of 63.4 million (see note 11), conferring the right to certain potential future revenue
streams arising from the licensing activities of the trust.

89
continued
7 Tax continued
Deferred tax liabilities

Amounts relating to
intangible assets
arising on acquisition
m
Temporary difference
on AFS financial assets
m
Other
m
Total
m
At 1 January 2013 1.1 0.1 1.2
Other short-term differences (0.1) (0.1) (0.2)
At 31 December 2013 (prior to offsetting) 2.5 2.5
At 1 January 2012 1.3 0.1 0.4 1.8
Movement through reserves (0.1) (0.1)
Other short-term differences (0.3) (0.3)
At 31 December 2012 (prior to offsetting) 1.1 0.1 1.2
At 31 December 2012 (after offsetting)
The deferred tax liability due after more than one year prior to offsetting is 1.2 million (2012: 0.8 million).
8 Dividends

2013
m
2012
m
68.9 51.8
In addition, the directors are proposing a final dividend in respect of the financial year ended 31 December 2013 of 3.6 pence per share, which will
absorb an estimated 51 million of shareholders funds. Subject to approval at the 2014 AGM, it will be paid on 16 May 2014 to shareholders who
are on the register of members on 22 April 2014.

9 Accounts receivable

2013
m
2012
m
Trade debtors (including receivables from related parties see note 24) 140.3 119.1
Less: Provision for impairment of trade debtors (9.7) (2.4)
Trade debtors, net 130.6 116.7
Amounts recoverable on contracts 5.6 7.8
Current accounts receivable 136.2 124.5
Movements in the Groups provision for impairment of trade debtors are as follows:

2013
m
2012
m
At 1 January (2.4) (1.7)
Charge to income statement (4.0) (0.4)
Reclassification from deferred income (3.5) (0.4)
Foreign exchange 0.2 0.1
At 31 December (9.7) (2.4)
See also note 17 for further disclosure regarding the credit quality of the Groups gross trade debtors.
10 Prepaid expenses and other assets

2013
m
2012
m
Other receivables 18.1 10.4
Current prepaid expenses and other assets 39.8 135.6
Plus: non-current prepayments and accrued income 1.6 2.0
Total prepaid expenses and other assets 41.4 137.6
Included within prepayments and accrued income at 31 December 2012 was a prepayment amounting to 103.7 million, being the Groups
advance contribution to acquire rights to MIPS Technologies, Inc.s portfolio of patents. The Group has determined that the participation in the
consortium conferred on the Group two separate rights: an intangible asset, conferring the right to use the assets in the Groups own business of
41.9 million (see note 14), and an AFS financial asset of 63.4 million (see note 11), conferring the right to certain potential future revenue
streams arising from the licensing activities of the trust.

ARM Holdings plc
90
continued
11 Available-for-sale financial assets
Non-current investments
2013
m
2012
m
Net book value
At 1 January 13.8 27.3
Additions (including capitalised interest of 0.2 million in 2012) 8.9 3.2
Revaluation recognised through other comprehensive income (0.4)
Disposals (1.7) (14.9)
Foreign exchange translation (0.3)
Impairment recognised through income statement (general and administrative expenses) (6.8) (1.4)

Current investments
2013
m
2012
m
Net book value
At 1 January
Additions 63.4
Impairment recognised through income statement (as an exceptional item, see note 6) (59.5)
At 31 December 1.2
All investments noted above are considered to be Level 3 financial assets. See note 17.

11 Available-for-sale financial assets continued
Those unlisted companies in which the Group has invested are generally early-stage development enterprises, which are generating value for
shareholders through research and development activities, and most do not currently report profits. The fair value of these investments is
considered to approximate to cost or is determined using independent valuation information where available.
The Groups investments include the following companies:
Amantys Limited
Ambiq Micro Inc.
Cambridge Innovation Capital plc
Carbon Design Systems Inc.
Cyclos Semiconductor Inc.
Marmalade Technologies Limited (formerly Ideaworks 3D Limited)
Shanghai Walden Venture Capital Enterprise
Thunder Software Technology Co. Ltd
Triad Semiconductor Inc.
During the year the Group disposed of its investments in Arteris Holdings Inc and eSol Co. Ltd.
At 31 December 2013 and 2012, the Group had no listed investments.
Available-for-sale financial assets include the following:

2013
m
2012
m
Unlisted equity securities UK 6.2 3.7
Unlisted equity securities China 1.9 2.0
Unlisted equity securities Japan 0.9
Unlisted equity securities US 1.4 5.9
Convertible loan notes UK 1.3 1.3
Convertible loan notes US 3.1
Total non-current financial assets 13.9 13.8
Available-for-sale financial assets are denominated in the following currencies:

2013
m
2012
m
Sterling 9.5 12.5
US dollars 4.4 1.3
Total financial assets 13.9 13.8
A permanent 10% fall in the underlying value of those unlisted companies in which the Group has invested as at 31 December 2013 would have
reduced the Groups post-tax profit by 1.1 million (2012: 1.0 million) and resulted in a nil (2012: nil) reduction in other components of equity.

91
continued
11 Available-for-sale financial assets
2013
m
2012
m
Net book value
At 1 January 13.8 27.3
Additions (including capitalised interest of 0.2 million in 2012) 8.9 3.2
Revaluation recognised through other comprehensive income (0.4)
Impairment recognised through income statement (general and administrative expenses) (6.8) (1.4)

Current investments
2013
m
2012
m
Net book value
At 1 January
Additions 63.4
Impairment recognised through income statement (as an exceptional item, see note 6) (59.5)
At 31 December 1.2
All investments noted above are considered to be Level 3 financial assets. See note 17.

11 Available-for-sale financial assets continued
Those unlisted companies in which the Group has invested are generally early-stage development enterprises, which are generating value for
shareholders through research and development activities, and most do not currently report profits. The fair value of these investments is
considered to approximate to cost or is determined using independent valuation information where available.
The Groups investments include the following companies:
Amantys Limited
Ambiq Micro Inc.
Cambridge Innovation Capital plc
Carbon Design Systems Inc.
Cyclos Semiconductor Inc.
Marmalade Technologies Limited (formerly Ideaworks 3D Limited)
Shanghai Walden Venture Capital Enterprise
Thunder Software Technology Co. Ltd
Triad Semiconductor Inc.
During the year the Group disposed of its investments in Arteris Holdings Inc and eSol Co. Ltd.
At 31 December 2013 and 2012, the Group had no listed investments.
Available-for-sale financial assets include the following:

2013
m
2012
m
Unlisted equity securities UK 6.2 3.7
Unlisted equity securities China 1.9 2.0
Unlisted equity securities Japan 0.9
Unlisted equity securities US 1.4 5.9
Convertible loan notes UK 1.3 1.3
Convertible loan notes US 3.1
Total non-current financial assets 13.9 13.8
Available-for-sale financial assets are denominated in the following currencies:

2013
m
2012
m
Sterling 9.5 12.5
US dollars 4.4 1.3
Total financial assets 13.9 13.8
A permanent 10% fall in the underlying value of those unlisted companies in which the Group has invested as at 31 December 2013 would have
reduced the Groups post-tax profit by 1.1 million (2012: 1.0 million) and resulted in a nil (2012: nil) reduction in other components of equity.

ARM Holdings plc
92
continued
12 Property, plant and equipment

Freehold
buildings
m
Leasehold
improvements
m
Computer
equipment
m
Fixtures, fittings
and motor
vehicles
m
Assets in the
course of
construction
m
Total
m
Cost
At 1 January 2013 0.2 23.1 48.8 6.4 3.5 82.0
Additions 2.5 8.1 1.8 2.6 15.0
Acquisitions 0.1 0.1 0.2
Transfers 0.9 2.3 (3.2)
Reclassification* (3.2) (1.7) (4.9)
Disposals (1.7) (5.7) (1.0) (0.4) (8.8)
Exchange differences (0.6) (1.0) (0.3) (0.1) (2.0)
At 31 December 2013 0.2 24.2 49.4 7.0 0.7 81.5
Accumulated depreciation
At 1 January 2013 0.1 13.9 27.5 4.4 45.9
Charge for the year 2.3 11.0 1.1 14.4
Acquisitions 0.1 0.1
Reclassification* (3.2) (3.2)
Disposals (1.5) (5.7) (1.0) (8.2)
Exchange differences (0.2) (0.8) (0.1) (1.1)
At 31 December 2013 0.1 14.5 28.9 4.4 47.9
Net book value
At 31 December 2013 0.1 9.7 20.5 2.6 0.7 33.6

Freehold
buildings
m
Leasehold
improvements
m
Computer
equipment
m
Fixtures, fittings
and motor
vehicles
m
Assets in the
course of
construction
m
Total
m
Cost
At 1 January 2012 0.2 18.0 32.5 5.7 0.9 57.3
Additions 1.7 14.0 1.1 12.4 29.2
Transfers 4.9 4.9 (9.8)
Disposals (1.1) (1.8) (0.2) (3.1)
At 31 December 2012 0.2 23.1 48.8 6.4 3.5 82.0
At 1 January 2012 0.1 13.5 21.8 3.8 39.2
Disposals (1.1) (1.8) (0.2) (3.1)
At 31 December 2012 0.1 13.9 27.5 4.4 45.9
Net book value
At 31 December 2012 0.1 9.2 21.3 2.0 3.5 36.1
Net book value at 1 January 2012 0.1 4.5 10.7 1.9 0.9 18.1
Included within computer equipment are assets with net book value of 6.6 million (2012: 7.7 million) held under finance leases.
* Reclassification from property, plant and equipment to intangible assets (software).

13 Goodwill
m
At 1 January 2012 542.5
Exchange differences (23.1)
At 31 December 2012 519.4
Acquisition Sensinode (note 19) 6.4
Acquisition Geomerics (note 19) 10.0
During the fourth quarter of 2013, the directors tested the Groups balance of goodwill for impairment in accordance with IAS 36,Impairment of
assets. No impairment charge was recorded as a result of this annual impairment test.
Goodwill is allocated to the Groups CGUs according to business segment. The carrying amounts of goodwill by CGU at 31 December 2013 are
summarised below:

Processor
Division
m
Physical IP
Division
m
System Design
Division
m
Group
m
Goodwill relating to Artisan 119.0 357.1 476.1
Goodwill relating to Geomerics 10.0 10.0
Goodwill relating to Falanx 9.4 9.4
Goodwill relating to Axys 7.3 7.3
Goodwill relating to KEG and KSI 6.9 6.9
Goodwill relating to Sensinode 5.8 5.8
Goodwill relating to Prolific 3.1 3.1
Goodwill relating to Obsidian 3.0 3.0
Goodwill relating to Logipard 2.2 2.2
Goodwill relating to other acquisitions 2.1 2.1
Goodwill at 31 December 2013 151.5 360.2 14.2 525.9
The recoverable amount for each CGU has been measured based on a value-in-use calculation.
Allocation of goodwill relating to Artisan
The directors believed that, in addition to forming the basis of the Physical IP Division (PIPD), the Groups acquisition of Artisan in 2004 would
provide a benefit to the Processor Division (PD) for the following reasons:
The development of faster and more power-efficient microprocessors as a result of collaboration between PD and PIPD engineering teams.
This is expected to generate more PD licensing deals at higher values.
The potential for PD to win more microprocessor licensing business as a result of ARM being able to offer both processor and physical IP in-
house.
The goodwill relating to Artisan was allocated between the two divisions accordingly.
Processor Division
PD encompasses those resources that are centred around microprocessor cores, including specific functions such as graphics IP, system IP,
embedded software IP and configurable DSP IP.
The key assumptions in the value-in-use calculations were:
Period of projected cash flows The directors have used a ten-year forecast period with an assumed terminal growth rate after 2023 of 3% per
annum. Given the long-term nature of the ARM licensing and royalty business model, it is considered appropriate to use a ten-year forecast period
to assess the expected future cash flows to be generated from the assets under review.
Revenue growth Revenue growth assumptions are based on financial budgets and forecasts approved by senior management, taking into account
typical semiconductor industry growth rates and ARMs historical experience in the context of wider industry and economic conditions.
93
continued
12 Property, plant and equipment

Freehold
buildings
m
Leasehold
improvements
m
Computer
equipment
m
Fixtures, fittings
and motor
vehicles
m
Assets in the
course of
construction
m
Total
m
Cost
At 1 January 2013 0.2 23.1 48.8 6.4 3.5 82.0
Additions 2.5 8.1 1.8 2.6 15.0
Acquisitions 0.1 0.1 0.2
Transfers 0.9 2.3 (3.2)
Reclassification* (3.2) (1.7) (4.9)
Disposals (1.7) (5.7) (1.0) (0.4) (8.8)
Exchange differences (0.6) (1.0) (0.3) (0.1) (2.0)
At 31 December 2013 0.2 24.2 49.4 7.0 0.7 81.5
At 1 January 2013 0.1 13.9 27.5 4.4 45.9
Acquisitions 0.1 0.1
Reclassification* (3.2) (3.2)
Disposals (1.5) (5.7) (1.0) (8.2)
At 31 December 2013 0.1 14.5 28.9 4.4 47.9
Net book value
At 31 December 2013 0.1 9.7 20.5 2.6 0.7 33.6

Freehold
buildings
m
Leasehold
improvements
m
Computer
equipment
m
Fixtures, fittings
and motor
vehicles
m
Assets in the
course of
construction
m
Total
m
Cost
At 1 January 2012 0.2 18.0 32.5 5.7 0.9 57.3
Additions 1.7 14.0 1.1 12.4 29.2
Transfers 4.9 4.9 (9.8)
Disposals (1.1) (1.8) (0.2) (3.1)
At 31 December 2012 0.2 23.1 48.8 6.4 3.5 82.0
At 1 January 2012 0.1 13.5 21.8 3.8 39.2
Disposals (1.1) (1.8) (0.2) (3.1)
At 31 December 2012 0.1 13.9 27.5 4.4 45.9
Net book value
At 31 December 2012 0.1 9.2 21.3 2.0 3.5 36.1
Net book value at 1 January 2012 0.1 4.5 10.7 1.9 0.9 18.1
Included within computer equipment are assets with net book value of 6.6 million (2012: 7.7 million) held under finance leases.

13 Goodwill
m
At 1 January 2012 542.5
Acquisition Sensinode (note 19) 6.4
Acquisition Geomerics (note 19) 10.0
During the fourth quarter of 2013, the directors tested the Groups balance of goodwill for impairment in accordance with IAS 36,Impairment of
assets. No impairment charge was recorded as a result of this annual impairment test.
Goodwill is allocated to the Groups CGUs according to business segment. The carrying amounts of goodwill by CGU at 31 December 2013 are
summarised below:

Processor
Division
m
Physical IP
Division
m
System Design
Division
m
Group
m
Goodwill relating to Artisan 119.0 357.1 476.1
Goodwill relating to Geomerics 10.0 10.0
Goodwill relating to Falanx 9.4 9.4
Goodwill relating to Axys 7.3 7.3
Goodwill relating to KEG and KSI 6.9 6.9
Goodwill relating to Sensinode 5.8 5.8
Goodwill relating to Prolific 3.1 3.1
Goodwill relating to Obsidian 3.0 3.0
Goodwill relating to Logipard 2.2 2.2
Goodwill relating to other acquisitions 2.1 2.1
The recoverable amount for each CGU has been measured based on a value-in-use calculation.
Allocation of goodwill relating to Artisan
The directors believed that, in addition to forming the basis of the Physical IP Division (PIPD), the Groups acquisition of Artisan in 2004 would
provide a benefit to the Processor Division (PD) for the following reasons:
The development of faster and more power-efficient microprocessors as a result of collaboration between PD and PIPD engineering teams.
This is expected to generate more PD licensing deals at higher values.
The potential for PD to win more microprocessor licensing business as a result of ARM being able to offer both processor and physical IP in-
house.
The goodwill relating to Artisan was allocated between the two divisions accordingly.
Processor Division
PD encompasses those resources that are centred around microprocessor cores, including specific functions such as graphics IP, system IP,
embedded software IP and configurable DSP IP.
ARM Holdings plc
94
continued
13 Goodwill continued
Operating margins Operating margins have been assumed to remain constant over the period of the calculation.
Discount rate Future cash flows are discounted at a rate of 10% per annum post tax.
Conclusion The directors are confident that the amount of goodwill allocated to PD is appropriate and that the assumptions used in estimating
its fair value are appropriate. Whilst it is conceivable that a key assumption in the calculation could change, the directors believe that no reasonably
foreseeable changes to key assumptions would result in an impairment of goodwill, such is the margin by which the estimated fair value exceeds
the carrying value.
Physical IP Division
PIPD is concerned with the building blocks necessary for translation of a circuit design into actual silicon.
This timescale is consistent with ARMs experience in developing the processor licensing and royalty model. ARM has signed more than 1,000
processor licences with around 350 customers since the formation of the Group with less than half of these paying royalties thus far. As royalty
revenues are a function of cumulative licensing, royalty growth gathers momentum as the licensing base grows ARM processor royalties have
increased from $72 million in 2003 to $495 million in 2013.
typical semiconductor industry growth rates and ARMs historical experience in the context of wider industry and economic conditions. Since the
acquisition of Artisan at the end of 2004, PIPD has accelerated the development of leading-edge physical IP technology. As semiconductor process
geometries shrink, PIPD is expected to have more licensing opportunities across a broader range of foundries and other semiconductor
companies.
US dollar licence revenues increased by 25% year-on-year in 2013 and royalty revenues increased by 13%. The increase in revenues was due
mainly to the successful delivery of new products licensed in the previous year. Further licensing of new technology was achieved in the year and as
a result, backlog at the end of 2013 was at a similar level to the beginning of the year. This continuing licensing activity is expected to translate into
growth in royalty revenues in future years. The directors believe that the investment in the physical IP technology portfolio in recent years will not
only generate growth in physical IP revenue in future years, but also contribute significantly to the success of PD due to the synergistic benefits of
the combined technologies. An estimate of the increased benefits to PD arising as a result of the combination with physical IP products is taken in
to account in calculating the value-in-use for PIPD. Over the ten-year period of the forecast it is estimated that on average 8% of PD revenues
would be allocated to PIPD. Demand for Processor Optimisation Packs (POPs) continued to be strong in 2013, with a number of Partners taking
licences alongside PD processors. POPs enable an enhanced and deterministic outcome for licensees when implementing ARM processors.
Operating margins Operating margins are assumed to increase gradually over time to approximately 15% by the end of the forecast period.
In 2013, PIPD continued to make progress and recorded a profit on a normalised basis for the first time. This was mostly as a result of increased
revenues offset by continued investment in the development of leading-edge technology. Margins are expected to improve significantly in future
years as licence revenues from leading-edge products gather pace. Growth in high-margin royalty revenues will further improve profitability.
Costs are expected to grow relatively slowly in real terms.
Conclusion The directors are confident that the amount of goodwill allocated to PIPD and the assumptions used in estimating its fair value are
appropriate. Whilst it is conceivable that a key assumption in the calculation could change, the directors believe that no reasonably foreseeable
changes to key assumptions would result in an impairment of goodwill, such is the margin by which the estimated fair value exceeds the carrying
value. The overall assessment is most sensitive to changes in the assumed revenues and benefits provided to the Processor Division (see Note 1,
Critical Estimates and Judgements). The directors have considered the impact of a number of scenarios on the overall valuation of the PIPD
business, including a considerable reduction in the benefits assumed to be provided to the Processor Division. The results of this sensitivity analysis
showed that applying a range of reasonable variations to the key assumptions would not change the conclusion that no impairment in the carrying
value of the goodwill is required at 31 December 2013.

System Design Division
SDD develops and sells the tools and models used to create and debug software and SoC designs.
Period of projected cash flows The directors have used a five-year forecast period with an assumed terminal growth rate after 2018 of 3% per
annum. It is considered appropriate to use a five-year forecast period to properly reflect the weighted average period over which the benefits of
the acquisitions of Axys, KEG and KSI are expected to accrue.
Operating margins Operating margins are assumed to grow gradually during the period.
Conclusion The directors are confident that the amount of goodwill allocated to SDD and the assumptions used in estimating its fair value
are appropriate. Whilst it is conceivable that a key assumption in the calculation could change, the directors believe that no reasonably
foreseeable changes to key assumptions would result in an impairment of goodwill, such is the margin by which the estimated fair value
exceeds the carrying value.
14 Other intangible assets

Computer
software
m
Patents and
licences
m
In-process
research and
development
m
Developed
technology
m
Existing
agreements
and customer
relationships
m
Core
technology
m
Trademarks
and
tradenames
m
Order
backlog
m
Total
m
Cost
At 1 January 2013 14.1 26.8 5.9 39.6 53.3 16.8 4.5 2.0 163.0
Additions 2.0 74.1 7.5 0.3 83.9
Reclassification* 4.9 4.9
Disposals and derecognitions (1.5) (2.0) (3.5)
Exchange differences (0.1) (0.1) (0.4) (0.8) (0.3) (0.1) (1.8)
At 31 December 2013 19.4 100.9 5.8 46.7 52.8 16.5 4.4 246.5
Accumulated amortisation
At 1 January 2013 10.3 23.1 5.9 37.7 52.8 15.5 4.5 2.0 151.8
Charge for the year 2.3 8.3 1.5 0.6 0.9 13.6
Exchange differences (0.1) (0.2) (0.8) (0.3) (0.1) (1.5)
At 31 December 2013 14.3 31.4 5.8 39.0 52.6 16.1 4.4 163.6
Net book value
At 31 December 2013 5.1 69.5 7.7 0.2 0.4 82.9
The net book value of patents and licences includes a patent licence agreement for interconnect technology used in SoCs, with a carrying value of
16.0 million at 31 December 2013 (2012: nil) and a remaining useful life of 9 years, and IP rights acquired from Bridge Crossing LLC (see note 6)
with a carrying value of 37.4 million at 31 December 2013 (2012: nil) and a remaining useful life of 8 years.

95
continued
Operating margins Operating margins have been assumed to remain constant over the period of the calculation.
Conclusion The directors are confident that the amount of goodwill allocated to PD is appropriate and that the assumptions used in estimating
its fair value are appropriate. Whilst it is conceivable that a key assumption in the calculation could change, the directors believe that no reasonably
foreseeable changes to key assumptions would result in an impairment of goodwill, such is the margin by which the estimated fair value exceeds
the carrying value.
Physical IP Division
PIPD is concerned with the building blocks necessary for translation of a circuit design into actual silicon.
This timescale is consistent with ARMs experience in developing the processor licensing and royalty model. ARM has signed more than 1,000
processor licences with around 350 customers since the formation of the Group with less than half of these paying royalties thus far. As royalty
revenues are a function of cumulative licensing, royalty growth gathers momentum as the licensing base grows ARM processor royalties have
increased from $72 million in 2003 to $495 million in 2013.
typical semiconductor industry growth rates and ARMs historical experience in the context of wider industry and economic conditions. Since the
acquisition of Artisan at the end of 2004, PIPD has accelerated the development of leading-edge physical IP technology. As semiconductor process
geometries shrink, PIPD is expected to have more licensing opportunities across a broader range of foundries and other semiconductor
companies.
US dollar licence revenues increased by 25% year-on-year in 2013 and royalty revenues increased by 13%. The increase in revenues was due
mainly to the successful delivery of new products licensed in the previous year. Further licensing of new technology was achieved in the year and as
a result, backlog at the end of 2013 was at a similar level to the beginning of the year. This continuing licensing activity is expected to translate into
growth in royalty revenues in future years. The directors believe that the investment in the physical IP technology portfolio in recent years will not
only generate growth in physical IP revenue in future years, but also contribute significantly to the success of PD due to the synergistic benefits of
the combined technologies. An estimate of the increased benefits to PD arising as a result of the combination with physical IP products is taken in
to account in calculating the value-in-use for PIPD. Over the ten-year period of the forecast it is estimated that on average 8% of PD revenues
would be allocated to PIPD. Demand for Processor Optimisation Packs (POPs) continued to be strong in 2013, with a number of Partners taking
licences alongside PD processors. POPs enable an enhanced and deterministic outcome for licensees when implementing ARM processors.
Operating margins Operating margins are assumed to increase gradually over time to approximately 15% by the end of the forecast period.
In 2013, PIPD continued to make progress and recorded a profit on a normalised basis for the first time. This was mostly as a result of increased
revenues offset by continued investment in the development of leading-edge technology. Margins are expected to improve significantly in future
years as licence revenues from leading-edge products gather pace. Growth in high-margin royalty revenues will further improve profitability.
Costs are expected to grow relatively slowly in real terms.
Conclusion The directors are confident that the amount of goodwill allocated to PIPD and the assumptions used in estimating its fair value are
appropriate. Whilst it is conceivable that a key assumption in the calculation could change, the directors believe that no reasonably foreseeable
changes to key assumptions would result in an impairment of goodwill, such is the margin by which the estimated fair value exceeds the carrying
value. The overall assessment is most sensitive to changes in the assumed revenues and benefits provided to the Processor Division (see Note 1,
Critical Estimates and Judgements). The directors have considered the impact of a number of scenarios on the overall valuation of the PIPD
business, including a considerable reduction in the benefits assumed to be provided to the Processor Division. The results of this sensitivity analysis
showed that applying a range of reasonable variations to the key assumptions would not change the conclusion that no impairment in the carrying
value of the goodwill is required at 31 December 2013.

System Design Division
SDD develops and sells the tools and models used to create and debug software and SoC designs.
Period of projected cash flows The directors have used a five-year forecast period with an assumed terminal growth rate after 2018 of 3% per
annum. It is considered appropriate to use a five-year forecast period to properly reflect the weighted average period over which the benefits of
the acquisitions of Axys, KEG and KSI are expected to accrue.
Operating margins Operating margins are assumed to grow gradually during the period.
Conclusion The directors are confident that the amount of goodwill allocated to SDD and the assumptions used in estimating its fair value
are appropriate. Whilst it is conceivable that a key assumption in the calculation could change, the directors believe that no reasonably
foreseeable changes to key assumptions would result in an impairment of goodwill, such is the margin by which the estimated fair value
exceeds the carrying value.
14 Other intangible assets

Computer
software
m
Patents and
licences
m
In-process
research and
development
m
Developed
technology
m
Existing
agreements
and customer
relationships
m
Core
technology
m
Trademarks
and
tradenames
m
Order
backlog
m
Total
m
Cost
At 1 January 2013 14.1 26.8 5.9 39.6 53.3 16.8 4.5 2.0 163.0
Additions 2.0 74.1 7.5 0.3 83.9
Exchange differences (0.1) (0.1) (0.4) (0.8) (0.3) (0.1) (1.8)
At 31 December 2013 19.4 100.9 5.8 46.7 52.8 16.5 4.4 246.5
At 1 January 2013 10.3 23.1 5.9 37.7 52.8 15.5 4.5 2.0 151.8
Exchange differences (0.1) (0.2) (0.8) (0.3) (0.1) (1.5)
At 31 December 2013 14.3 31.4 5.8 39.0 52.6 16.1 4.4 163.6
Net book value
At 31 December 2013 5.1 69.5 7.7 0.2 0.4 82.9
The net book value of patents and licences includes a patent licence agreement for interconnect technology used in SoCs, with a carrying value of
16.0 million at 31 December 2013 (2012: nil) and a remaining useful life of 9 years, and IP rights acquired from Bridge Crossing LLC (see note 6)
with a carrying value of 37.4 million at 31 December 2013 (2012: nil) and a remaining useful life of 8 years.

ARM Holdings plc
96
continued
14 Other intangible assets continued

Computer
software
m
Patents and
licences
m
In-process
research and
development
m
Developed
technology
m
Existing
agreements
and customer
relationships
m
Core
technology
m
Trademarks
and
tradenames
m
Order
backlog
m
Total
m
Cost
At 1 January 2012 10.4 25.4 6.2 41.0 55.5 17.6 4.7 2.1 162.9
Additions 4.0 1.4 5.4
Exchange differences (0.1) (0.3) (1.4) (2.2) (0.8) (0.2) (0.1) (5.1)
At 31 December 2012 14.1 26.8 5.9 39.6 53.3 16.8 4.5 2.0 163.0
At 1 January 2012 9.0 20.8 6.2 37.7 54.6 15.3 4.7 2.1 150.4
At 31 December 2012 10.3 23.1 5.9 37.7 52.8 15.5 4.5 2.0 151.8
Net book value
At 31 December 2012 3.8 3.7 1.9 0.5 1.3 11.2
15 Accrued and other liabilities

2013
m
2012
m
Accruals:
Provision for payroll taxes on share awards 15.1 16.5
Employee bonus and sales commissions 26.5 23.8
Other accruals (including 2.6 million non-current (2012: nil)) 40.0 31.0
Total accruals 81.6 71.3

Other taxation and social security 4.4 3.4
Other payables 4.7 4.6
Total accrued and other liabilities 90.7 79.3
16 Finance lease liabilities

2013
m
2012
m
Gross finance lease liabilities minimum lease payments:
Within one year 2.9 3.1
In the second to fifth years inclusive 1.5 3.0
Less: future finance charges (0.2) (0.3)
Present value of lease obligations 4.2 5.8

Amounts due for settlement within 12 months 2.7 2.9
Amounts due for settlement after 12 months 1.5 2.9
The Group has entered into a three- and a four-year finance lease arrangement in respect of certain IT equipment.

17 Financial instruments
(a) Financial instruments by category
The accounting policies for financial instruments have been applied to the line items below:
Financial assets

Loans and
receivables
m
Assets at fair
value through
the income
statement
m
Available-
for-sale
m
Total
m
At 31 December 2013
Currency exchange contracts 5.1 5.1
Accounts receivable (gross of impairment provision) 145.9 145.9
Available-for-sale financial assets unlisted 1.2 1.2
Total current financial assets 733.8 5.1 1.2 740.1
Available-for-sale financial assets - unlisted 13.9 13.9
Total non-current financial assets 128.6 13.9 142.5
Total financial assets 862.4 5.1 15.1 882.6
At 31 December 2012
Total current financial assets 513.2 1.4 514.6
Financial liabilities

2013
m
2012
m
Liabilities at amortised cost at 31 December:
Accrued and other liabilities* 56.3 46.8
67.5 58.5
Liabilities at fair value through the income statement at 31 December:
Total financial liabilities 74.5 61.0
* Non-financial liabilities are excluded from the accrued and other liabilities balance, as this analysis is required only for financial instruments.

97
continued
14 Other intangible assets continued

Computer
software
m
Patents and
licences
m
In-process
research and
development
m
Developed
technology
m
Existing
agreements
and customer
relationships
m
Core
technology
m
Trademarks
and
tradenames
m
Order
backlog
m
Total
m
Cost
At 1 January 2012 10.4 25.4 6.2 41.0 55.5 17.6 4.7 2.1 162.9
Additions 4.0 1.4 5.4
At 31 December 2012 14.1 26.8 5.9 39.6 53.3 16.8 4.5 2.0 163.0
At 1 January 2012 9.0 20.8 6.2 37.7 54.6 15.3 4.7 2.1 150.4
At 31 December 2012 10.3 23.1 5.9 37.7 52.8 15.5 4.5 2.0 151.8
Net book value
At 31 December 2012 3.8 3.7 1.9 0.5 1.3 11.2
15 Accrued and other liabilities

2013
m
2012
m
Accruals:
Provision for payroll taxes on share awards 15.1 16.5
Employee bonus and sales commissions 26.5 23.8
Other accruals (including 2.6 million non-current (2012: nil)) 40.0 31.0
Total accruals 81.6 71.3

Other taxation and social security 4.4 3.4
Other payables 4.7 4.6
Total accrued and other liabilities 90.7 79.3
16 Finance lease liabilities

2013
m
2012
m
Gross finance lease liabilities minimum lease payments:
Within one year 2.9 3.1
In the second to fifth years inclusive 1.5 3.0
Less: future finance charges (0.2) (0.3)

Amounts due for settlement within 12 months 2.7 2.9
Amounts due for settlement after 12 months 1.5 2.9
The Group has entered into a three- and a four-year finance lease arrangement in respect of certain IT equipment.

17 Financial instruments
(a) Financial instruments by category
The accounting policies for financial instruments have been applied to the line items below:
Financial assets

Loans and
receivables
m
Assets at fair
value through
the income
statement
m
Available-
for-sale
m
Total
m
At 31 December 2013
Available-for-sale financial assets unlisted 1.2 1.2
Total current financial assets 733.8 5.1 1.2 740.1
At 31 December 2012
Total current financial assets 513.2 1.4 514.6
Financial liabilities

2013
m
2012
m
Liabilities at amortised cost at 31 December:
Accrued and other liabilities* 56.3 46.8
67.5 58.5
Liabilities at fair value through the income statement at 31 December:
Total financial liabilities 74.5 61.0
* Non-financial liabilities are excluded from the accrued and other liabilities balance, as this analysis is required only for financial instruments.

ARM Holdings plc
98
continued
17 Financial instruments continued
(a) Financial instruments by category continued
Valuation hierarchy
As at 31 December 2013, the Groups financial instrument assets consisted of currency exchange contracts at fair value through the income
statement (level 2) of 5.1 million (2012: 1.4 million) and AFS financial assets (level 3) of 1.2 million (current) and 13.9 million (non-current)
(2012: 13.8 million non-current).
As at 31 December 2013, the Groups financial instrument liabilities consisted of embedded derivatives (level 2) of 7.0 million (2012:
2.5 million). The Group had no level 1 financial instruments as at 31 December 2013 (2012: nil).
Level 2 currency exchange contracts comprise forward exchange contracts and foreign currency options. The fair value of the forward exchange
contracts is determined using forward exchange rates as quoted in an active market. The fair value of foreign currency options is based upon
valuations performed by management and the respective banks holding the currency instruments.
Level 2 embedded derivatives are fair valued using forward exchange rates that are quoted in an active market.
Level 3 AFS financial assets consist of unlisted equity investments and other current investments. The estimated fair value of the unlisted equity
investments approximates to cost less any permanent diminution in value (based on managements estimate of forecast profitability and
achievement of set objectives by the relevant entity), except where independent valuation information is obtained, e.g. through the occurrence
of funding or other transactions in the relevant entity's equity instruments.
The current investment was initially held at the value of the expected licensing programme related to the MIPS patent portfolio. This was estimated
by reference to the amounts that it was expected certain potential licensees would be prepared to pay for a licence. At 31 December 2013 the
value of the current investment has been based on the amount that is recoverable from an auction process which was held in January 2014.
Whilst it is conceivable that a key assumption in the Level 3 calculation could change, the directors believe that no reasonably foreseeable changes
to key assumptions would result in a significant change in fair value.
Maturity of financial liabilities
The table below analyses the Groups financial liabilities into relevant maturity groupings based on the remaining period from the balance sheet to
the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months
equal their carrying balances as the impact of discounting is not significant.

Less than
six months
m
Between
six months and
one year
m
Between
one and
two years
m
Over
two years
m
At 31 December 2013:
Accounts payable 7.0
Accrued and other liabilities 52.8 0.9 2.6
Finance lease liabilities 1.0 1.7 1.2 0.3
Embedded derivatives 2.4 1.6 2.2 0.8

During 2012, the Group entered into a three-month fixed-rate debt facility for $160 million (99.8 million) to facilitate the contribution to acquire
rights to MIPS Technologies, Incs portfolio of patents (see note 6). This facility was fully settled by 31 December 2012. The Group had no
borrowings during 2013.

Loans and receivables
During 2010 the Group invested 2.5 million in an interest-free charitable bond with Future Business. This was recognised in loans and receivables
at its initial fair value of 1.9 million, measured using the effective interest method, which resulted in a charge of 0.6 million being recognised as
interest payable and similar charges during 2010. In addition, during 2013 the Group invested a further 0.7 million with Future Business. The
carrying value of the total loan amounted to 3.0 million at 31 December 2013 (2012: 2.1 million), with 0.1 million being recognised as interest
receivable during 2013 (2012: 0.1 million).
Short-term deposits The effective interest rate on short-term deposits outstanding at the year end was 1.85% (2012: 2.70%) and these deposits
have an average maturity of 178 days (2012: 190 days).
Long-term deposits The effective interest rate on long-term deposits outstanding at the year end was 1.65% (2012: 3.32%) and these deposits
This table analyses the Groups derivative financial instruments into relevant maturity groupings based on the remaining period from the balance
sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Amounts due within
12 months equal their carrying balances as the impact of discounting is not significant.

Less than three
months
m
Over three months
but less than
six months
m
Between
six months and
one year
m
Greater than
one year
m
Foreign exchange forward contracts held-for-trading at 31 December 2013
Outflow $98.0 $13.0 $23.0 $9.0
Inflow 60.9 8.0 14.7 6.0
Foreign exchange options held-for-trading at 31 December 2013
Outflow (maximum) $41.0 $29.3 $26.2
Inflow (maximum) 26.8 19.4 17.6
Outflow $51.0 $8.0 $12.0
Inflow 31.9 5.0 7.5
Fair value of currency exchange contracts
The fair value of currency exchange contracts is estimated using the settlement rates. The estimation of the fair value of the asset in respect of
currency exchange contracts was 5.1 million at 31 December 2013 (2012: 1.4 million). The resulting gains and losses on the movement of the
fair value of currency exchange contracts are recognised in the income statement under general and administrative expenses, amounting to a gain
of 3.4 million (2012: 8.3 million).

99
continued
Valuation hierarchy
As at 31 December 2013, the Groups financial instrument assets consisted of currency exchange contracts at fair value through the income
statement (level 2) of 5.1 million (2012: 1.4 million) and AFS financial assets (level 3) of 1.2 million (current) and 13.9 million (non-current)
(2012: 13.8 million non-current).
As at 31 December 2013, the Groups financial instrument liabilities consisted of embedded derivatives (level 2) of 7.0 million (2012:
2.5 million). The Group had no level 1 financial instruments as at 31 December 2013 (2012: nil).
Level 2 currency exchange contracts comprise forward exchange contracts and foreign currency options. The fair value of the forward exchange
contracts is determined using forward exchange rates as quoted in an active market. The fair value of foreign currency options is based upon
valuations performed by management and the respective banks holding the currency instruments.
Level 2 embedded derivatives are fair valued using forward exchange rates that are quoted in an active market.
Level 3 AFS financial assets consist of unlisted equity investments and other current investments. The estimated fair value of the unlisted equity
investments approximates to cost less any permanent diminution in value (based on managements estimate of forecast profitability and
achievement of set objectives by the relevant entity), except where independent valuation information is obtained, e.g. through the occurrence
of funding or other transactions in the relevant entity's equity instruments.
The current investment was initially held at the value of the expected licensing programme related to the MIPS patent portfolio. This was estimated
by reference to the amounts that it was expected certain potential licensees would be prepared to pay for a licence. At 31 December 2013 the
value of the current investment has been based on the amount that is recoverable from an auction process which was held in January 2014.
Whilst it is conceivable that a key assumption in the Level 3 calculation could change, the directors believe that no reasonably foreseeable changes
to key assumptions would result in a significant change in fair value.
Maturity of financial liabilities
The table below analyses the Groups financial liabilities into relevant maturity groupings based on the remaining period from the balance sheet to
the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months
equal their carrying balances as the impact of discounting is not significant.

Less than
six months
m
Between
six months and
one year
m
Between
one and
two years
m
Over
two years
m
Accrued and other liabilities 52.8 0.9 2.6

During 2012, the Group entered into a three-month fixed-rate debt facility for $160 million (99.8 million) to facilitate the contribution to acquire
rights to MIPS Technologies, Incs portfolio of patents (see note 6). This facility was fully settled by 31 December 2012. The Group had no
borrowings during 2013.

Loans and receivables
During 2010 the Group invested 2.5 million in an interest-free charitable bond with Future Business. This was recognised in loans and receivables
at its initial fair value of 1.9 million, measured using the effective interest method, which resulted in a charge of 0.6 million being recognised as
interest payable and similar charges during 2010. In addition, during 2013 the Group invested a further 0.7 million with Future Business. The
carrying value of the total loan amounted to 3.0 million at 31 December 2013 (2012: 2.1 million), with 0.1 million being recognised as interest
receivable during 2013 (2012: 0.1 million).
Short-term deposits The effective interest rate on short-term deposits outstanding at the year end was 1.85% (2012: 2.70%) and these deposits
Long-term deposits The effective interest rate on long-term deposits outstanding at the year end was 1.65% (2012: 3.32%) and these deposits
This table analyses the Groups derivative financial instruments into relevant maturity groupings based on the remaining period from the balance
sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Amounts due within
12 months equal their carrying balances as the impact of discounting is not significant.

Less than three
months
m
Over three months
but less than
six months
m
Between
six months and
one year
m
Greater than
one year
m
Outflow $98.0 $13.0 $23.0 $9.0
Inflow 60.9 8.0 14.7 6.0
Outflow $51.0 $8.0 $12.0
Inflow 31.9 5.0 7.5
Fair value of currency exchange contracts
The fair value of currency exchange contracts is estimated using the settlement rates. The estimation of the fair value of the asset in respect of
currency exchange contracts was 5.1 million at 31 December 2013 (2012: 1.4 million). The resulting gains and losses on the movement of the
fair value of currency exchange contracts are recognised in the income statement under general and administrative expenses, amounting to a gain
of 3.4 million (2012: 8.3 million).

ARM Holdings plc
100
continued
(b) Credit quality of financial assets
Trade debtors
On a quarterly basis, all trade debtors more than three months overdue are considered for impairment on a line-by-line basis. Either a provision
is made or the lack thereof is justified, with review by senior members of the Groups finance team.

2013
m
2012
m
Trade debtors (gross of impairment provision):
Not yet due 76.1 80.1
Under 90 days overdue 41.2 27.3
Over 90 days overdue but not provided for 13.2 9.3
Fully provided for 9.8 2.4
Total 140.3 119.1
As shown above, at 31 December 2013 trade debtors less than 90 days overdue amounted to 41.2 million. Of those outstanding at
31 December 2013, 22.8 million had been collected by 3 March 2014 and 15.3 million were owed by large, established customers. Similarly,
debtors more than 90 days overdue and not provided for amounted to 13.2 million of which 5.0 million had been collected by 3 March 2014
and 4.2 million was owed by large, established customers. For the remainder, discussions regarding repayment are ongoing and repayment
schedules have been agreed with the customers concerned. These will be monitored on a quarterly basis in accordance with the control outlined
above. No further analysis has been provided here on the quality of these debts as they are not felt to pose a material threat to the Groups future
results.
As shown above, at 31 December 2013, trade debtors fully provided for amounted to 9.8 million (2012: 2.4 million). Of those provided for at
31 December 2013, 4.0 million relates to trade debtors that are up to six months overdue (2012: 0.6 million) and 5.8 million relates to trade
debtors that are over six months overdue (2012: 1.8 million).
At 31 December 2013, no individual customer accounted for over 10% of accounts receivable (2012: one).
Credit risk
Financial instrument counterparties are subject to pre-approval by the directors and such approval is limited to financial institutions with a Moodys
rating of at least A2/P-1, a Fitch rating of at least A/F1, or UK building societies with over 2 billion in assets, except in certain jurisdictions where
the cash holding concerned is immaterial. At 31 December 2013 and 2012, the majority of the Groups cash and cash equivalents, short- and long-
term deposits were deposited with major clearing banks and building societies in the UK and US in the form of money market deposits and
corporate bonds for varying periods of up to three years. At 31 December 2013, 98% (2012: 93%) of the Groups cash and cash equivalents, and
short- and long-term deposits were deposited with major clearing banks and building societies fulfilling these criteria. The majority of the Groups
cash currently falling outside of the counterparty criteria is held with building societies that were within criteria when the deposits were placed.
Interest rate risk
At 31 December 2013, the Group had 713.7 million (2012: 523.6 million) of interest-bearing assets. At 31 December 2013, 93% (2012: 91%)
of interest-bearing assets (comprising cash and cash equivalents, short- and long-term deposits, loans and receivables, and the Groups convertible
loan notes) are at fixed rates and are therefore exposed to fair value interest rate risk. Had interest rates been 1% (100 basis points) lower
throughout the year, interest receivable would have reduced by approximately 5.8 million (2012: 5.3 million) and profit after tax by 4.6 million
(2012: 4.0 million).

(b) Credit quality of financial assets continued
Currency risk
At 31 December 2013, the Group had outstanding currency exchange contracts to sell $143 million (2012: $71 million) for sterling. In addition,
the Group utilises option instruments which have various provisions that, depending on the spot rate at maturity, give either the Group or the
counterparty the option to exercise. At 31 December 2013, the Group had outstanding currency options under which the Group may, under
certain circumstances, be required to sell up to $97 million (2012: $90 million) for sterling. A common scenario with options of this type is that the
spot price at expiry is such that neither the Group nor the counterparty chooses to exercise the option. At 31 December 2013, the Group had
$230 million (2012: $190 million) of accounts receivable denominated in US dollars at that date, and US dollar cash and cash equivalents, and
short-term deposits of $14 million (2012: $22 million). Thus the Groups US dollar assets exceeded its currency exchange contracts and currency
options at the year end. Management assesses the volume and timing of currency exchange contracts taking into consideration both the current
and expected future level of US dollar assets. Based on the predictable nature of the Groups cash flows, the Group typically has a greater value of
currency exchange contracts outstanding than US dollar assets held. As such, after the balance sheet date, the Group has entered into additional
currency exchange contracts, returning the Group to its usual position in this regard, at the date of this report.
At 31 December 2013, if sterling had strengthened by 10% against foreign currencies with all other variables held constant, post-tax profit for the
year would have been 9.5 million lower (2012: 12.1 million lower), mainly as a result of the mix of financial instruments at respective year ends.
18 Share capital

2013
m
2012
m
Authorised
2,200,000,000 ordinary shares of 0.05 pence each (2012: 2,200,000,000) 1.1 1.1

2013 2012

Number of
shares
m
Value
m
Number of
shares
m
Value
m
Issued and fully paid
At 1 January 1,380.8 0.7 1,351.3 0.7
Allotted under employee incentive schemes 19.5 29.5
At 31 December 1,400.3 0.7 1,380.8 0.7
During 2013, the aggregate consideration received on issue of new share capital allotted under employee incentive schemes was 5.9 million
(2012: 5.6 million).
19 Acquisitions
There were two acquisitions made in 2013: Sensinode Oy, acquired on 19 July 2013 for $11.7 million (7.7 million), and Geomerics Limited,
acquired on 12 December 2013 for 13.4 million. The Group acquired the entire share capital of both entities, which have been accounted for
as acquisitions.
Sensinode, a company based in Oulu, Finland, is a provider of software technology for the Internet of Things (IoT). Sensinode is a pioneer in
software for low-cost, low-power internet-connected devices and has been a key contributor to open standards for IoT. This acquisition enables
Sensinodes expertise and technology to be accessible to the ARM Partnership and through the ARM mbed project it will enable rapid
deployment of new and innovative IoT applications.
Geomerics, a company based in Cambridge, United Kingdom, is a leader in lighting technology for the gaming and entertainment industries.
The acquisition expands ARM's position at the forefront of the visual computing and graphics industries. Additionally, the agreement enables
Geomerics to build on their existing partnerships as well as accelerate their development in the mobile market.
For the above reasons, combined with the ability to hire the workforce of both Sensinode and Geomerics, including the founders and the
management team, the Group paid a premium for both companies, giving rise to goodwill. All intangible assets were recognised at their fair values,
with the residual excess over net assets being recognised as goodwill.
101
continued
(b) Credit quality of financial assets
Trade debtors
On a quarterly basis, all trade debtors more than three months overdue are considered for impairment on a line-by-line basis. Either a provision
is made or the lack thereof is justified, with review by senior members of the Groups finance team.

2013
m
2012
m
Trade debtors (gross of impairment provision):
Not yet due 76.1 80.1
Under 90 days overdue 41.2 27.3
Over 90 days overdue but not provided for 13.2 9.3
Fully provided for 9.8 2.4
Total 140.3 119.1
As shown above, at 31 December 2013 trade debtors less than 90 days overdue amounted to 41.2 million. Of those outstanding at
31 December 2013, 22.8 million had been collected by 3 March 2014 and 15.3 million were owed by large, established customers. Similarly,
debtors more than 90 days overdue and not provided for amounted to 13.2 million of which 5.0 million had been collected by 3 March 2014
and 4.2 million was owed by large, established customers. For the remainder, discussions regarding repayment are ongoing and repayment
schedules have been agreed with the customers concerned. These will be monitored on a quarterly basis in accordance with the control outlined
above. No further analysis has been provided here on the quality of these debts as they are not felt to pose a material threat to the Groups future
results.
As shown above, at 31 December 2013, trade debtors fully provided for amounted to 9.8 million (2012: 2.4 million). Of those provided for at
31 December 2013, 4.0 million relates to trade debtors that are up to six months overdue (2012: 0.6 million) and 5.8 million relates to trade
debtors that are over six months overdue (2012: 1.8 million).
At 31 December 2013, no individual customer accounted for over 10% of accounts receivable (2012: one).
Credit risk
Financial instrument counterparties are subject to pre-approval by the directors and such approval is limited to financial institutions with a Moodys
rating of at least A2/P-1, a Fitch rating of at least A/F1, or UK building societies with over 2 billion in assets, except in certain jurisdictions where
the cash holding concerned is immaterial. At 31 December 2013 and 2012, the majority of the Groups cash and cash equivalents, short- and long-
term deposits were deposited with major clearing banks and building societies in the UK and US in the form of money market deposits and
corporate bonds for varying periods of up to three years. At 31 December 2013, 98% (2012: 93%) of the Groups cash and cash equivalents, and
short- and long-term deposits were deposited with major clearing banks and building societies fulfilling these criteria. The majority of the Groups
cash currently falling outside of the counterparty criteria is held with building societies that were within criteria when the deposits were placed.
Interest rate risk
At 31 December 2013, the Group had 713.7 million (2012: 523.6 million) of interest-bearing assets. At 31 December 2013, 93% (2012: 91%)
of interest-bearing assets (comprising cash and cash equivalents, short- and long-term deposits, loans and receivables, and the Groups convertible
loan notes) are at fixed rates and are therefore exposed to fair value interest rate risk. Had interest rates been 1% (100 basis points) lower
throughout the year, interest receivable would have reduced by approximately 5.8 million (2012: 5.3 million) and profit after tax by 4.6 million
(2012: 4.0 million).

(b) Credit quality of financial assets continued
Currency risk
At 31 December 2013, the Group had outstanding currency exchange contracts to sell $143 million (2012: $71 million) for sterling. In addition,
the Group utilises option instruments which have various provisions that, depending on the spot rate at maturity, give either the Group or the
counterparty the option to exercise. At 31 December 2013, the Group had outstanding currency options under which the Group may, under
certain circumstances, be required to sell up to $97 million (2012: $90 million) for sterling. A common scenario with options of this type is that the
spot price at expiry is such that neither the Group nor the counterparty chooses to exercise the option. At 31 December 2013, the Group had
$230 million (2012: $190 million) of accounts receivable denominated in US dollars at that date, and US dollar cash and cash equivalents, and
short-term deposits of $14 million (2012: $22 million). Thus the Groups US dollar assets exceeded its currency exchange contracts and currency
options at the year end. Management assesses the volume and timing of currency exchange contracts taking into consideration both the current
and expected future level of US dollar assets. Based on the predictable nature of the Groups cash flows, the Group typically has a greater value of
currency exchange contracts outstanding than US dollar assets held. As such, after the balance sheet date, the Group has entered into additional
currency exchange contracts, returning the Group to its usual position in this regard, at the date of this report.
At 31 December 2013, if sterling had strengthened by 10% against foreign currencies with all other variables held constant, post-tax profit for the
year would have been 9.5 million lower (2012: 12.1 million lower), mainly as a result of the mix of financial instruments at respective year ends.
18 Share capital

2013
m
2012
m
Authorised

2013 2012

Number of
shares
m
Value
m
Number of
shares
m
Value
m
Issued and fully paid
At 1 January 1,380.8 0.7 1,351.3 0.7
Allotted under employee incentive schemes 19.5 29.5
At 31 December 1,400.3 0.7 1,380.8 0.7
During 2013, the aggregate consideration received on issue of new share capital allotted under employee incentive schemes was 5.9 million
(2012: 5.6 million).
19 Acquisitions
There were two acquisitions made in 2013: Sensinode Oy, acquired on 19 July 2013 for $11.7 million (7.7 million), and Geomerics Limited,
acquired on 12 December 2013 for 13.4 million. The Group acquired the entire share capital of both entities, which have been accounted for
as acquisitions.
Sensinode, a company based in Oulu, Finland, is a provider of software technology for the Internet of Things (IoT). Sensinode is a pioneer in
software for low-cost, low-power internet-connected devices and has been a key contributor to open standards for IoT. This acquisition enables
Sensinodes expertise and technology to be accessible to the ARM Partnership and through the ARM mbed project it will enable rapid
deployment of new and innovative IoT applications.
Geomerics, a company based in Cambridge, United Kingdom, is a leader in lighting technology for the gaming and entertainment industries.
The acquisition expands ARM's position at the forefront of the visual computing and graphics industries. Additionally, the agreement enables
Geomerics to build on their existing partnerships as well as accelerate their development in the mobile market.
For the above reasons, combined with the ability to hire the workforce of both Sensinode and Geomerics, including the founders and the
management team, the Group paid a premium for both companies, giving rise to goodwill. All intangible assets were recognised at their fair values,
with the residual excess over net assets being recognised as goodwill.
ARM Holdings plc
102
continued
19 Acquisitions continued
From 19 July 2013 to 31 December 2013, the acquisition of Sensinode contributed 0.1 million in revenue and incurred a loss of nil. If Sensinode
had been consolidated from 1 January 2013, the consolidated income statement would have included 0.2 million of revenue and 0.9 million of
pre-tax loss.
From 12 December 2013 to 31 December 2013, the acquisition of Geomerics contributed nil in revenue and incurred a loss of 0.1 million.
If Geomerics had been consolidated from 1 January 2013, the consolidated income statement would have included 0.7 million of revenue and
1.1 million of pre-tax loss.
The following table summarises the consideration and provisional fair values of the assets acquired and liabilities assumed at the date of each
acquisition.

Sensinode
19 July 2013
Geomerics
12 December 2013

m

$m

m
Cash, accounts receivable, other current assets, property, plant and equipment 0.3 0.5 0.2
Intangible assets 2.8 4.3 5.0
Accrued and other liabilities (0.5) (0.8) (0.8)
Loans payable (1.1) (1.6)
Deferred tax liabilities (net) (0.2) (0.3) (1.0)
Net assets acquired 1.3 2.1 3.4
Goodwill 6.4 9.6 10.0
Consideration 7.7 11.7 13.4
The consideration for both acquisitions was paid in cash. All transaction expenses incurred by the Group have been charged to the income
statement within general and administrative expenses.
Other
During 2013 the Group made a payment of 2.0 million (2012: 2.2 million) in respect of time-based and performance bonuses due as a result of
the acquisition of Obsidian Software Inc in 2011. The Group also made payments of 0.6 million (2012: 0.8 million) in respect of time-based and
performance bonuses due as a result of the acquisition of Prolific Inc in 2011.
20 Share-based payments
Since 2006, the Company has issued RSUs to employees, which are actual share awards on vesting rather than options to buy shares at a fixed
exercise price.
The main RSU awards (to employees in all jurisdictions other than France) vest 25% on each anniversary over four years. RSU awards to our
French employees vest 50% after two years, and then a further 25% after three and four years.
Additionally, the Company operates a DAB plan. Under the DAB plan, which is for directors and selected senior management within the Group,
participants are required to defer 50% of any related annual bonus into shares on a compulsory basis. These shares will be deferred for three
years, and then a matching award will be made depending on the achievement of an EPS performance condition over that time. This scheme will
be replaced after the February 2014 grant and replaced with a cash-only bonus. For details of the new scheme, see the Remuneration Report on
page 41.
The Company also operates the LTIP, also for directors and selected senior management, whereby share awards are made and vest depending
on the Companys TSR performance compared to two comparator groups over the three-year performance period. Grants were made for the
last time under this scheme in February 2013 and it will be replace by a new LTIP for 2014 grants onwards. For details of the new scheme, see the
Remuneration Report on page 42.
The Company also offers SAYE schemes for employees and executive directors of the Group. The number of options granted is related to the
value of savings made by the employee. The period of savings is three or five years. The option price for grants is set at 80% of the market share
price prior to the announcement of the grant, and the right to exercise normally only arises for a six-month period once the savings have been
completed. The Company also operates a savings-related option scheme for employees in the US, India, Japan, South Korea and Taiwan, namely
the ESPP. The number of options granted is related to the value of savings made by the employee. The period of savings is six months, with the
option price being at 85% of the lower of the market share price at the beginning and end of the scheme.

20 Share-based payments continued
The Group has in the past issued share options under several additional schemes, whereby shares in the Company can be granted to employees
and directors. Options are granted with a fixed exercise price equal to the market price of the shares under option at the date of grant. These
schemes are the UK Inland Revenue Executive Approved Share Option Plan (the Executive Scheme), the Unapproved Scheme (the
Unapproved Scheme), the French Scheme and various schemes that the Company assumed on the acquisition of Artisan in 2004. Shares
options in these schemes are no longer granted, although the Company reserves the right to award options to employees going forward. Shares
relating to these schemes have all vested in prior years and therefore there is no share-based payment charge associated with them for 2012
or 2013.
As disclosed in note 4, staff expenses arising from these share-based compensation schemes of 59.2 million (2012: 37.1 million) were charged
to the income statement in the year. This is in line with the Groups policies for recognition and measurement of the costs associated with these
remuneration schemes as outlined in note 1.
The fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model, except for the ESPP whose fair
value is the intrinsic value of the award at the date of vest. The following assumptions for each option grant during 2013 and 2012 were as follows:
Grant date 16 Feb 2013 23 Jun 2013 30 Apr 2013 31 Oct 2013 16 Feb 2012 23 Jun 2012 16 Aug 2012
Scheme ESPP SAYE ESPP ESPP ESPP SAYE ESPP
Share price at grant date 9.25 7.725 9.96 9.94 5.905 5.06 5.74
Exercise price 4.964 7.9616 5.6525 8.449 4.42 3.9616 4.876
Number of employees 391 350 151 605 373 490 372
Shares under option 330,676 210,605 35,386 228,335 333,464 720,922 306,497
Vesting period (years) 3-5 3-5
Expected volatility 37%-40% 38%-43%
Expected life (years) 3-5 3-5
Risk-free rate 0.5% 0.5%
Dividend yield 0.58% 0.69%
Fair value per option 4.286 1.828-2.510 4.3075 1.491 1.485 1.728-2.175 0.864

103
continued
19 Acquisitions continued
From 19 July 2013 to 31 December 2013, the acquisition of Sensinode contributed 0.1 million in revenue and incurred a loss of nil. If Sensinode
had been consolidated from 1 January 2013, the consolidated income statement would have included 0.2 million of revenue and 0.9 million of
pre-tax loss.
From 12 December 2013 to 31 December 2013, the acquisition of Geomerics contributed nil in revenue and incurred a loss of 0.1 million.
If Geomerics had been consolidated from 1 January 2013, the consolidated income statement would have included 0.7 million of revenue and
1.1 million of pre-tax loss.
The following table summarises the consideration and provisional fair values of the assets acquired and liabilities assumed at the date of each
acquisition.

Sensinode
19 July 2013
Geomerics
12 December 2013

m

$m

m
Cash, accounts receivable, other current assets, property, plant and equipment 0.3 0.5 0.2
Intangible assets 2.8 4.3 5.0
Accrued and other liabilities (0.5) (0.8) (0.8)
Loans payable (1.1) (1.6)
Deferred tax liabilities (net) (0.2) (0.3) (1.0)
Net assets acquired 1.3 2.1 3.4
Goodwill 6.4 9.6 10.0
Consideration 7.7 11.7 13.4
The consideration for both acquisitions was paid in cash. All transaction expenses incurred by the Group have been charged to the income
statement within general and administrative expenses.
Other
During 2013 the Group made a payment of 2.0 million (2012: 2.2 million) in respect of time-based and performance bonuses due as a result of
the acquisition of Obsidian Software Inc in 2011. The Group also made payments of 0.6 million (2012: 0.8 million) in respect of time-based and
performance bonuses due as a result of the acquisition of Prolific Inc in 2011.
20 Share-based payments
exercise price.
The main RSU awards (to employees in all jurisdictions other than France) vest 25% on each anniversary over four years. RSU awards to our
French employees vest 50% after two years, and then a further 25% after three and four years.
page 41.
last time under this scheme in February 2013 and it will be replace by a new LTIP for 2014 grants onwards. For details of the new scheme, see the
Remuneration Report on page 42.
The Company also offers SAYE schemes for employees and executive directors of the Group. The number of options granted is related to the

Unapproved Scheme), the French Scheme and various schemes that the Company assumed on the acquisition of Artisan in 2004. Shares
options in these schemes are no longer granted, although the Company reserves the right to award options to employees going forward. Shares
relating to these schemes have all vested in prior years and therefore there is no share-based payment charge associated with them for 2012
or 2013.
As disclosed in note 4, staff expenses arising from these share-based compensation schemes of 59.2 million (2012: 37.1 million) were charged
to the income statement in the year. This is in line with the Groups policies for recognition and measurement of the costs associated with these
remuneration schemes as outlined in note 1.
The fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model, except for the ESPP whose fair
value is the intrinsic value of the award at the date of vest. The following assumptions for each option grant during 2013 and 2012 were as follows:
Grant date 16 Feb 2013 23 Jun 2013 30 Apr 2013 31 Oct 2013 16 Feb 2012 23 Jun 2012 16 Aug 2012
Scheme ESPP SAYE ESPP ESPP ESPP SAYE ESPP
Share price at grant date 9.25 7.725 9.96 9.94 5.905 5.06 5.74
Exercise price 4.964 7.9616 5.6525 8.449 4.42 3.9616 4.876
Number of employees 391 350 151 605 373 490 372
Shares under option 330,676 210,605 35,386 228,335 333,464 720,922 306,497
Vesting period (years) 3-5 3-5
Expected volatility 37%-40% 38%-43%
Expected life (years) 3-5 3-5
Risk-free rate 0.5% 0.5%
Dividend yield 0.58% 0.69%
Fair value per option 4.286 1.828-2.510 4.3075 1.491 1.485 1.728-2.175 0.864

ARM Holdings plc
104
continued
The fair value of RSUs, LTIP and DAB awards granted was estimated on the date of grant using the Black-Scholes option pricing model. As all are
share awards with no exercise price, all awards have been deemed to have an exercise price of 0.0000001 in the Black-Scholes model. The
assumptions for each grant during 2013 and 2012 were as follows:
Grant date 8 Feb 2013 8 Feb 2013 8 Feb 2013 8 Feb 2013 8 May 2013 8 May 2013
Scheme DAB RSU French RSU LTIP RSU French RSU
Share price at grant date 9.245 9.245 9.245 9.245 10.46 10.46
Number of employees 53 2,207 93 55 102 3
Shares awarded 466,174 7,686,539 286,900 742,469 258,224 6,645
Vesting period (years) 3 1-4 2-4 3 1-4 2-4
Expected volatility 37% 30%-37% 35%-37% 37% 30%-38% 34%-38%
Expected life (years) 3 1-4 2-4 3 1-4 2-4
Risk-free rate 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
Dividend yield 0.49% 0.49% 0.49% 0.49% 0.43% 0.43%
Fair value per share 9.111 9.067-9.200 9.067-9.155 9.111 10.282-10.415 10.282-10.37

Grant date 13 Aug 2013 13 Aug 2013 13 Aug 2013 12 Nov 2013 12 Nov 2013
Scheme RSU French RSU LTIP RSU French RSU
Share price at grant date 8.89 8.89 8.89 9.495 9.495
Number of employees 134 4 1 252 9
Shares awarded 318,934 6,347 11,280 494,746 16,478
Vesting period (years) 1-4 2-4 3 1-4 2-4
Expected volatility 31%-36% 32%-36% 36% 31%-36% 31%-36%
Expected life (years) 1-4 2-4 3 1-4 2-4
Risk-free rate 0.5% 0.5% 0.5% 0.5% 0.5%
Dividend yield 0.55% 0.55% 0.55% 0.52% 0.52%
Fair value per share 8.69-8.836 8.69-8.787 8.738 9.30-9.446 9.30-9.397

Grant date 8 Feb 2012 8 Feb 2012 8 Feb 2012 8 Feb 2012 8 May 2012
Scheme DAB RSU French RSU LTIP RSU
Number of employees 50 1,918 91 54 108
Shares awarded 850,741 3,012,604 128,067 1,102,625 159,720
Vesting period (years) 1-4 2-4 3 1-4
Expected volatility 39% 34%-45% 39%-45% 39% 37%-42%
Expected life (years) 3 1-4 2-4 3 1-4
Risk-free rate 0.5% 0.5% 0.5% 0.5% 0.5%
Dividend yield 0.61% 0.61% 0.61% 0.61% 0.69%
Fair value per share 5.577 5.542-5.671 5.542- 5.611 5.577 4.933-5.035

Grant date 8 May 2012 13 Aug 2012 13 Aug 2012 12 Nov 2012 12 Nov 2012
Scheme French RSU RSU French RSU RSU French RSU
Shares awarded 4,230 213,201 960 275,270 2,490
Vesting period (years) 2-4 1-4 2-4 1-4 2-4
Expected volatility 38%-42% 35%-41% 38%-41% 31%-40% 38%-40%
Expected life (years) 2-4 1-4 2-4 1-4 2-4
Risk-free rate 0.5% 0.5% 0.5% 0.5% 0.5%
Dividend yield 0.69% 0.66% 0.66% 0.53% 0.53%
Fair value per share 4.933-5.001 5.592-5.703 5.592-5.665 6.976-7.087 6.976-7.05
The expected volatility was primarily based upon historical volatility adjusted for past one-time events that are not expected to re-occur.
The expected life is the expected period to exercise.
A reconciliation of option and share award movements over the year to 31 December 2013 is shown below. Share awards do not have an
exercise price and therefore the reconciliation below shows only the number of awards, with no corresponding weighted average exercise prices.
2013 2012
Options Number
Weighted average
exercise price
RSUs/LTIP/DAB
Number Options Number
Weighted average
exercise price
RSUs/LTIP/DAB
Number
Outstanding at 1 January 3,738,922 1.994 23,255,834 6,581,438 1.221 35,215,062
Granted 805,002 6.765 14,972,806 1,360,883 4.280 14,448,979
Forfeited (57,969) 4.257 (974,255) (234,196) 3.570 (914,068)
Lapsed (47,313) 0.575 (10,589) 0.910
Exercised (2,468,723) 2.414 (17,026,729) (3,958,614) 1.404 (25,494,139)
Outstanding at 31 December 1,969,919 3.385 20,227,656 3,738,922 1.994 23,255,834
Exercisable at 31 December 392,451 0.723 985,557 0.685

105
continued
The fair value of RSUs, LTIP and DAB awards granted was estimated on the date of grant using the Black-Scholes option pricing model. As all are
share awards with no exercise price, all awards have been deemed to have an exercise price of 0.0000001 in the Black-Scholes model. The
assumptions for each grant during 2013 and 2012 were as follows:
Grant date 8 Feb 2013 8 Feb 2013 8 Feb 2013 8 Feb 2013 8 May 2013 8 May 2013
Scheme DAB RSU French RSU LTIP RSU French RSU
Share price at grant date 9.245 9.245 9.245 9.245 10.46 10.46
Number of employees 53 2,207 93 55 102 3
Shares awarded 466,174 7,686,539 286,900 742,469 258,224 6,645
Vesting period (years) 3 1-4 2-4 3 1-4 2-4
Expected volatility 37% 30%-37% 35%-37% 37% 30%-38% 34%-38%
Expected life (years) 3 1-4 2-4 3 1-4 2-4
Risk-free rate 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
Dividend yield 0.49% 0.49% 0.49% 0.49% 0.43% 0.43%
Fair value per share 9.111 9.067-9.200 9.067-9.155 9.111 10.282-10.415 10.282-10.37

Grant date 13 Aug 2013 13 Aug 2013 13 Aug 2013 12 Nov 2013 12 Nov 2013
Scheme RSU French RSU LTIP RSU French RSU
Shares awarded 318,934 6,347 11,280 494,746 16,478
Vesting period (years) 1-4 2-4 3 1-4 2-4
Expected volatility 31%-36% 32%-36% 36% 31%-36% 31%-36%
Expected life (years) 1-4 2-4 3 1-4 2-4
Risk-free rate 0.5% 0.5% 0.5% 0.5% 0.5%
Dividend yield 0.55% 0.55% 0.55% 0.52% 0.52%
Fair value per share 8.69-8.836 8.69-8.787 8.738 9.30-9.446 9.30-9.397

Grant date 8 Feb 2012 8 Feb 2012 8 Feb 2012 8 Feb 2012 8 May 2012
Scheme DAB RSU French RSU LTIP RSU
Number of employees 50 1,918 91 54 108
Shares awarded 850,741 3,012,604 128,067 1,102,625 159,720
Vesting period (years) 1-4 2-4 3 1-4
Expected volatility 39% 34%-45% 39%-45% 39% 37%-42%
Expected life (years) 3 1-4 2-4 3 1-4
Risk-free rate 0.5% 0.5% 0.5% 0.5% 0.5%
Dividend yield 0.61% 0.61% 0.61% 0.61% 0.69%
Fair value per share 5.577 5.542-5.671 5.542- 5.611 5.577 4.933-5.035

Grant date 8 May 2012 13 Aug 2012 13 Aug 2012 12 Nov 2012 12 Nov 2012
Scheme French RSU RSU French RSU RSU French RSU
Shares awarded 4,230 213,201 960 275,270 2,490
Vesting period (years) 2-4 1-4 2-4 1-4 2-4
Expected volatility 38%-42% 35%-41% 38%-41% 31%-40% 38%-40%
Expected life (years) 2-4 1-4 2-4 1-4 2-4
Risk-free rate 0.5% 0.5% 0.5% 0.5% 0.5%
Dividend yield 0.69% 0.66% 0.66% 0.53% 0.53%
Fair value per share 4.933-5.001 5.592-5.703 5.592-5.665 6.976-7.087 6.976-7.05
The expected volatility was primarily based upon historical volatility adjusted for past one-time events that are not expected to re-occur.
The expected life is the expected period to exercise.
A reconciliation of option and share award movements over the year to 31 December 2013 is shown below. Share awards do not have an
exercise price and therefore the reconciliation below shows only the number of awards, with no corresponding weighted average exercise prices.
2013 2012
Options Number
Weighted average
exercise price
RSUs/LTIP/DAB
Number Options Number
Weighted average
exercise price
RSUs/LTIP/DAB
Number
Outstanding at 1 January 3,738,922 1.994 23,255,834 6,581,438 1.221 35,215,062
Granted 805,002 6.765 14,972,806 1,360,883 4.280 14,448,979
Forfeited (57,969) 4.257 (974,255) (234,196) 3.570 (914,068)
Lapsed (47,313) 0.575 (10,589) 0.910
Exercised (2,468,723) 2.414 (17,026,729) (3,958,614) 1.404 (25,494,139)
Outstanding at 31 December 1,969,919 3.385 20,227,656 3,738,922 1.994 23,255,834
Exercisable at 31 December 392,451 0.723 985,557 0.685

ARM Holdings plc
106
continued
The weighted average share price at the date of exercise or vest of the above share options and awards was 9.29 (2012: 5.72). The following
options over ordinary shares were in existence at 31 December:
2013
Exercise price ()
Number
outstanding
Weighted
average
exercise price

Weighted
average
remaining life
Expected
Years
Weighted
average
remaining life
Contractual
Years
Outstanding options:
0.7 0.854 571,846 0.76 0.49 0.78
1.01 1.055 19,166 1.04 0.52 1.05
1.25 1,360 1.25 0.04 0.08
1.948 7.96 1,377,547 4.51 2.00 2.25
Total 1,969,919 3.38 1.55 1.81

Outstanding RSU/LTIP/DAB awards:
0.00 (RSUs) 16,792,567 1.20 1.20
0.00 (LTIP) 2,054,203 1.12 1.12
0.00 (DAB) 1,380,886 1.06 1.06
Total 20,227,656 1.18 1.18
2012
Exercise price ()
Number
outstanding
Weighted
average
exercise price

Weighted
average
remaining life
Expected
Years
Weighted
average
remaining life
Contractual
Years
0.47 0.854 1,514,873 0.72 0.87 1.37
1.005 1.055 46,114 1.04 1.03 2.05
1.25 32,813 1.25 0.54 1.08
1.325 4.464 2,145,122 2.93 1.77 1.97
Total 3,738,922 1.99 1.38 1.72

0.00 (RSUs) 16,750,069 0.93 0.93
0.00 (LTIP) 4,189,314 0.82 0.82
0.00 (DAB) 2,316,451 1.06 1.06
Total 23,255,834 0.92 0.92
21 Capital and other financial commitments

2013
m
2012
m
Contracts placed for future capital expenditure not provided for in the financial statements 9.8 0.6
Included in the amount for 2013 is 9.1 million of equipment relating to the expansion of the US high-performance computing cluster.

22 Operating lease commitments minimum lease payments
At 31 December 2013, the Group had commitments under non-cancellable operating leases as follows:
2013 2012

Land and
buildings
m
Other
m
Total
m
Land and
buildings
m
Other
m
Total
m
The future aggregate minimum lease payments under non-
cancellable operating leases are as follows:
Within one year 8.5 18.3 26.8 6.8 20.4 27.2
Later than one year and less than five years 23.1 5.3 28.4 16.9 21.5 38.4
After five years 9.0 9.0 6.7 6.7
At 31 December 40.6 23.6 64.2 30.4 41.9 72.3
The Group leases office buildings and EDA tools software under non-cancellable operating lease agreements. The remaining lease terms are
between two and ten years, and the majority of lease agreements are renewable at the end of the lease period at market rate.
23 Financial contingencies
It is common industry practice for licensors of technology to offer to indemnify their licensees for loss suffered by the licensee in the event that the
technology licensed is held to infringe the IP of a third party. Consistent with such practice, the Group provides such indemnification to its
licensees. The obligation for the Group to indemnify its licensees is subject to certain provisos and is usually contingent upon a third party bringing
an action against the licensee alleging that the technology licensed by the Group to the licensee infringes such third partys IP rights. The
indemnification obligations typically survive any termination of the licence and will continue in perpetuity.
The Group does not provide for any such indemnities unless it has received notification from the other party that they are likely to invoke the
indemnity. A provision is made if both of the following conditions are met: (i) information available prior to the issuance of the financial statements
indicates that it is probable that a liability had been incurred at the date of the financial statements; and (ii) the amount of the liability can be
reasonably estimated. Any such provision is based upon the directors estimate of the fair value of expected costs of any such claim.
At present, the Group is not a party in any legal proceedings in which the directors believe that it is probable that the resolution of such
proceedings will result in a material liability for the Group. Currently, there are legal proceedings against some of the Groups licensees in which it
is asserted that certain of the Groups technology infringes third-party patents, but in each of those proceedings the Group either presently has no
obligation to indemnify, because certain preconditions to indemnification have not been satisfied by such licensees, or to the extent that there is
any present obligation to indemnify, the Group does not believe that it is probable that the resolution of such proceedings will result in a material
liability for the Group. If preconditions to indemnification are satisfied then an indemnification obligation may arise which could result in a material
liability for the Group.
24 Related party transactions
During the year ended 31 December 2013 the Group incurred subscription costs of 7.0 million from Linaro Limited, an associated company
of the Group, representing ARMs committed aggregate contributions to Linaro for a period of two years. In respect of the subscription fees,
the Group was invoiced 4.3 million during the year to 31 December 2013 (2012: 4.2 million). As at 31 December 2013, 1.0 million (2012:
1.0 million) was owing to Linaro.
In addition the Group provided consulting and other services to Linaro amounting to 1.6 million (2012: 1.7 million). All fees have been charged
in accordance with the terms of the agreement. As at 31 December 2013, 0.3 million (2012: 1.0 million) was owed to the Group.
Further information relating to Linaro is disclosed in note 26.
Key management compensation is disclosed in note 3.
There were no other related party transactions during 2013 which require disclosure.
25 Post-balance sheet events
After the year end, the directors proposed payment of a final dividend in respect of 2013 of 3.6 pence per share. Subject to shareholder approval,
the final dividend will be paid on 16 May 2014 to shareholders on the register on 22 April 2014. The final dividend has not been recognised as a
distribution during the year ended 31 December 2013.

107
continued
The weighted average share price at the date of exercise or vest of the above share options and awards was 9.29 (2012: 5.72). The following
options over ordinary shares were in existence at 31 December:
2013
Exercise price ()
Number
outstanding
Weighted
average
exercise price

Weighted
average
remaining life
Expected
Years
Weighted
average
remaining life
Contractual
Years
0.7 0.854 571,846 0.76 0.49 0.78
1.01 1.055 19,166 1.04 0.52 1.05
1.25 1,360 1.25 0.04 0.08
1.948 7.96 1,377,547 4.51 2.00 2.25
Total 1,969,919 3.38 1.55 1.81

0.00 (RSUs) 16,792,567 1.20 1.20
0.00 (LTIP) 2,054,203 1.12 1.12
0.00 (DAB) 1,380,886 1.06 1.06
Total 20,227,656 1.18 1.18
2012
Exercise price ()
Number
outstanding
Weighted
average
exercise price

Weighted
average
remaining life
Expected
Years
Weighted
average
remaining life
Contractual
Years
0.47 0.854 1,514,873 0.72 0.87 1.37
1.005 1.055 46,114 1.04 1.03 2.05
1.25 32,813 1.25 0.54 1.08
1.325 4.464 2,145,122 2.93 1.77 1.97
Total 3,738,922 1.99 1.38 1.72

0.00 (RSUs) 16,750,069 0.93 0.93
0.00 (LTIP) 4,189,314 0.82 0.82
0.00 (DAB) 2,316,451 1.06 1.06
Total 23,255,834 0.92 0.92
21 Capital and other financial commitments

2013
m
2012
m
Contracts placed for future capital expenditure not provided for in the financial statements 9.8 0.6
Included in the amount for 2013 is 9.1 million of equipment relating to the expansion of the US high-performance computing cluster.

22 Operating lease commitments minimum lease payments
At 31 December 2013, the Group had commitments under non-cancellable operating leases as follows:
2013 2012

Land and
buildings
m
Other
m
Total
m
Land and
buildings
m
Other
m
Total
m
The future aggregate minimum lease payments under non-
cancellable operating leases are as follows:
Within one year 8.5 18.3 26.8 6.8 20.4 27.2
Later than one year and less than five years 23.1 5.3 28.4 16.9 21.5 38.4
After five years 9.0 9.0 6.7 6.7
At 31 December 40.6 23.6 64.2 30.4 41.9 72.3
The Group leases office buildings and EDA tools software under non-cancellable operating lease agreements. The remaining lease terms are
between two and ten years, and the majority of lease agreements are renewable at the end of the lease period at market rate.
23 Financial contingencies
It is common industry practice for licensors of technology to offer to indemnify their licensees for loss suffered by the licensee in the event that the
technology licensed is held to infringe the IP of a third party. Consistent with such practice, the Group provides such indemnification to its
licensees. The obligation for the Group to indemnify its licensees is subject to certain provisos and is usually contingent upon a third party bringing
an action against the licensee alleging that the technology licensed by the Group to the licensee infringes such third partys IP rights. The
indemnification obligations typically survive any termination of the licence and will continue in perpetuity.
The Group does not provide for any such indemnities unless it has received notification from the other party that they are likely to invoke the
indemnity. A provision is made if both of the following conditions are met: (i) information available prior to the issuance of the financial statements
indicates that it is probable that a liability had been incurred at the date of the financial statements; and (ii) the amount of the liability can be
reasonably estimated. Any such provision is based upon the directors estimate of the fair value of expected costs of any such claim.
At present, the Group is not a party in any legal proceedings in which the directors believe that it is probable that the resolution of such
proceedings will result in a material liability for the Group. Currently, there are legal proceedings against some of the Groups licensees in which it
is asserted that certain of the Groups technology infringes third-party patents, but in each of those proceedings the Group either presently has no
obligation to indemnify, because certain preconditions to indemnification have not been satisfied by such licensees, or to the extent that there is
any present obligation to indemnify, the Group does not believe that it is probable that the resolution of such proceedings will result in a material
liability for the Group. If preconditions to indemnification are satisfied then an indemnification obligation may arise which could result in a material
liability for the Group.
During the year ended 31 December 2013 the Group incurred subscription costs of 7.0 million from Linaro Limited, an associated company
of the Group, representing ARMs committed aggregate contributions to Linaro for a period of two years. In respect of the subscription fees,
the Group was invoiced 4.3 million during the year to 31 December 2013 (2012: 4.2 million). As at 31 December 2013, 1.0 million (2012:
1.0 million) was owing to Linaro.
In addition the Group provided consulting and other services to Linaro amounting to 1.6 million (2012: 1.7 million). All fees have been charged
in accordance with the terms of the agreement. As at 31 December 2013, 0.3 million (2012: 1.0 million) was owed to the Group.
Further information relating to Linaro is disclosed in note 26.
Key management compensation is disclosed in note 3.
There were no other related party transactions during 2013 which require disclosure.

ARM Holdings plc
108
continued
26 Principal subsidiaries, associates, and joint ventures
Subsidiaries
Details of principal subsidiary undertakings are shown below. Not all subsidiaries are included as the list would be excessive in length. A full list is
filed in the Groups Annual Return. All investments are indirectly held unless otherwise shown.
Name of undertaking Country of registration Principal activity
Proportion of total
nominal value of
issued shares held
ARM Limited England and Wales Marketing, research and development of RISC-based
microprocessors and graphics IP.
100*
ARM Inc. US Marketing, research and development of RISC-based
microprocessors and physical IP.
100
ARM France SAS France Marketing, research and development of RISC-based
100
ARM Norway AS Norway Research and development of graphics IP. 100
ARM Embedded Technologies Pvt. Limited India Marketing, research and development of RISC-based
100
ARM Consulting (Shanghai) Co. Limited PR China Marketing, research and development of graphics IP. 100
* The Company itself owns less than 1% of the share capital of ARM Limited, the remaining shares are held indirectly through ARM Finance UK Limited and ARM Finance UK Three Limited. Both ARM
Finance UK Limited and ARM Finance UK Three Limited are 100% owned within the Group.
Associate
During 2010 the Group became a founder member of Linaro, a not-for-profit engineering company created to foster innovation in the Linux
community. Linaro (a company incorporated in the UK) is a company limited by guarantee and as such has no shareholders. The Group controls
only 25% of the board and therefore considers Linaro to be an associate rather than a subsidiary. The Group has not recognised any associate
profit or loss, or net assets on the basis that the entity is not-for-profit.
Joint venture
In 2012 the Group invested 7.5 million ($12.0 million) in a joint venture, Trustonic Limited (a company incorporated in the UK), representing a
40% shareholding. With the establishment of industry standards and demand for security enhanced services the focus of Trustonic is to accelerate
the wide deployment of secure, smart devices. During 2013 the Group invested a further 3.7 million (4.4 million) into the joint venture,
maintaining the 40% shareholding.
Investment in joint venture
2013
m
2012
m
At 1 January 6.8
Investment 3.7 7.5
Share of results for the period (4.0) (0.7)
The Groups share of the results of the joint venture, and its aggregated assets and liabilities, are as follows:
Trustonic Limited
Current assets
m
Non-current
assets
m
Current
liabilities
m
Income
m
Expenses
m
Tax
m
Loss for the
year
m
At 31 December 2013 3.9 6.5 (3.9) 2.5 (6.7) 0.2 (4.0)
At 31 December 2012 3.7 4.6 (1.5) (0.7) (0.7)
The Groups share of joint venture capital commitments amount to 0.1 million at 31 December 2013 (2012: 0.6 million).

At 31 December Note
2013
m
2012
m
Fixed assets
Investments 4 653.3 616.1
Current assets
Debtors 5 1.5 0.8
Cash at bank and in hand 0.7 0.9
2.2 1.7
Creditors: amounts falling due within one year 6 (46.0) (3.0)
Net current liabilities (43.8) (1.3)
Total assets less current liabilities 609.5 614.8
Net assets 609.5 614.8
Capital and reserves
Called-up share capital 7 0.7 0.7
Share premium account 8 18.1 12.2
Share option reserve 8 61.4 61.4
Profit and loss reserve 8 529.3 540.5
Total shareholders funds 9 609.5 614.8
The financial statements on pages 109 to 114 were approved by the Board of directors on 5 March 2014 and were signed on its behalf by:

Simon Segars, Tim Score,
Chief Executive Officer Chief Financial Officer

109
continued
26 Principal subsidiaries, associates, and joint ventures
Subsidiaries
Details of principal subsidiary undertakings are shown below. Not all subsidiaries are included as the list would be excessive in length. A full list is
filed in the Groups Annual Return. All investments are indirectly held unless otherwise shown.
Name of undertaking Country of registration Principal activity
Proportion of total
nominal value of
issued shares held
ARM Limited England and Wales Marketing, research and development of RISC-based
microprocessors and graphics IP.
100*
ARM Inc. US Marketing, research and development of RISC-based
100
ARM France SAS France Marketing, research and development of RISC-based
100
ARM Norway AS Norway Research and development of graphics IP. 100
ARM Embedded Technologies Pvt. Limited India Marketing, research and development of RISC-based
100
ARM Consulting (Shanghai) Co. Limited PR China Marketing, research and development of graphics IP. 100
Associate
During 2010 the Group became a founder member of Linaro, a not-for-profit engineering company created to foster innovation in the Linux
community. Linaro (a company incorporated in the UK) is a company limited by guarantee and as such has no shareholders. The Group controls
only 25% of the board and therefore considers Linaro to be an associate rather than a subsidiary. The Group has not recognised any associate
profit or loss, or net assets on the basis that the entity is not-for-profit.
Joint venture
In 2012 the Group invested 7.5 million ($12.0 million) in a joint venture, Trustonic Limited (a company incorporated in the UK), representing a
40% shareholding. With the establishment of industry standards and demand for security enhanced services the focus of Trustonic is to accelerate
the wide deployment of secure, smart devices. During 2013 the Group invested a further 3.7 million (4.4 million) into the joint venture,
maintaining the 40% shareholding.
Investment in joint venture
2013
m
2012
m
At 1 January 6.8
Investment 3.7 7.5
Share of results for the period (4.0) (0.7)
The Groups share of the results of the joint venture, and its aggregated assets and liabilities, are as follows:
Trustonic Limited
Current assets
m
Non-current
assets
m
Current
liabilities
m
Income
m
Expenses
m
Tax
m
Loss for the
year
m
At 31 December 2013 3.9 6.5 (3.9) 2.5 (6.7) 0.2 (4.0)
At 31 December 2012 3.7 4.6 (1.5) (0.7) (0.7)
The Groups share of joint venture capital commitments amount to 0.1 million at 31 December 2013 (2012: 0.6 million).

At 31 December Note
2013
m
2012
m
Fixed assets
Investments 4 653.3 616.1
Current assets
Debtors 5 1.5 0.8
Cash at bank and in hand 0.7 0.9
2.2 1.7
Creditors: amounts falling due within one year 6 (46.0) (3.0)
Net current liabilities (43.8) (1.3)
Total assets less current liabilities 609.5 614.8
Net assets 609.5 614.8
Capital and reserves
Called-up share capital 7 0.7 0.7
Share premium account 8 18.1 12.2
Share option reserve 8 61.4 61.4
Profit and loss reserve 8 529.3 540.5
Total shareholders funds 9 609.5 614.8
The financial statements on pages 109 to 114 were approved by the Board of directors on 5 March 2014 and were signed on its behalf by:

Simon Segars, Tim Score,
Chief Executive Officer Chief Financial Officer

ARM Holdings plc
110
Notes to the financial statements/UK GAAP
1 Principal accounting policies
The financial statements have been prepared in accordance with the Companies Act 2006 and applicable accounting standards in the UK. A
summary of the more important accounting policies, which have been consistently applied and reviewed by the board of directors in accordance
with Financial Reporting Standard (FRS) 18, Accounting policies, is set out below:
Basis of accounting The financial statements are prepared on a going concern basis and in accordance with the historical cost convention.
Investments in subsidiaries Investments in subsidiaries are initially recorded at cost. Where an acquisition satisfies the provisions of section 612
of the Companies Act 2006 for merger relief, the investment is stated at the nominal value of shares issued plus the fair value of any other
consideration.
Cash flow statement The Company has not presented a separate cash flow statement. The cash flows for the Company are included within the
consolidated financial statements.
Foreign currency Transactions denominated in foreign currencies have been translated into sterling at actual rates of exchange at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies have been translated at the closing rates of exchange at the balance
sheet date. Exchange differences have been included in operating profit.
Taxation Current tax is provided at amounts expected to be paid using the tax rates and laws that have been enacted or substantively enacted
by the balance sheet date.
Financial instruments The Company does not have any financial instruments, other than intercompany creditors and debtors, and cash. Due to
the short-term nature of these balances, the Company considers the fair value of these items to equal the carrying value. Because the Company is
included in the consolidated financial statements of the ARM Holdings plc Group which are publicly available, and the financial disclosures required
by FRS 29 are in note 17 of those financial statements, no disclosure has been presented in these financial statements.
Share schemes The Company issues equity-settled share-based payments, including an LTIP, to certain employees of subsidiary undertakings.
In accordance with FRS 20, equity-settled share-based payments are measured at fair value at the date of grant. Fair value is measured by use of
the Black-Scholes pricing model. The fair value determined at the grant date of the equity-settled share-based payments is expensed in the
accounts of the subsidiary companies on a straight-line basis over the vesting period, based on the Companys estimate of the number of shares
that will eventually vest.
The Company operates SAYE schemes in the UK and an ESPP in the US, India, Japan, South Korea and Taiwan. Options under the SAYE scheme
were at a 20% discount to market price of the underlying shares on the date of announcement of the scheme. The UK SAYE schemes are
approved by the Inland Revenue, which stipulates that the saving period must be at least 36 months.
The Company has taken advantage of the exemption available, and has applied the provisions of FRS 20 only to those options granted after
7 November 2002 and which were outstanding at 31 December 2004. The Company does not have any employees and as such, in accordance
with UITF 44, all share-based payments have been recorded as capital contributions to all subsidiaries. The Company recharges the relevant
amount of the share-based payments to its US subsidiary. Consequently, the amount recharged is offset against the carrying value of its
investments.
Share capital Ordinary shares issued by the Company are recorded at the proceeds received, net of direct issue costs.
Dividends A liability is recorded for a dividend when the dividend is approved by the Companys shareholders. Interim dividends are recognised
as a distribution when paid.
Deferred tax Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.
Deferred tax is measured at the average rates that are expected to apply in the period in which the timing difference is expected to reverse,
based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on an
undiscounted basis.

2 Profit for the financial year
As permitted by Section 408 of the Companies Act 2006, the parent companys profit and loss account has not been included in these financial
statements. The parent companys loss after taxation, including dividends receivable and before dividends payable was 1.5 million (2012:
1.9 million). The Company has no employees; all three executive directors (as at 31 December 2013) have contracts of service with ARM
Limited, a subsidiary of the Company. The emoluments of two of these directors are paid by ARM Limited, and one of the directors is paid
by ARM Inc, the details of which are disclosed in the remuneration report within this Annual Report. Audit fees are disclosed in note 5 to the
consolidated financial statements on page 84.
3 Dividends paid and proposed

2013
m
2012
m
Final dividend paid of 2.83 pence per ordinary share in respect of 2012 (2012: 2.09 pence in respect of 2011) 39.5 28.8
Interim dividend paid of 2.10 pence (2012: 1.67 pence) per ordinary share 29.4 23.0
68.9 51.8
In addition, the directors are proposing a final dividend in respect of the financial year ended 31 December 2013 of 3.6 pence per share which will
absorb an estimated 51 million of shareholders funds. It will be paid on 16 May 2014 to shareholders who are on the register of members on
22 April 2014, subject to approval by the shareholders at the 2014 AGM.
4 Investments
The cost and net book value of interests in Group undertakings held by the Company was 653.3 million at 31 December 2013 and
616.1 million at 31 December 2012. The Company took advantage of merger relief in 2004 and did not record the premium on the issue of
shares for the acquisition of Artisan Components Inc. (now ARM Inc.), and thus did not record the premium within the value of the investment
in the Company balance sheet at that time.

Investments in
subsidiary
undertakings
m
Cost and net book value
At 1 January 2013 616.1
Additions 0.1
Capital contributions arising from share-based payments 59.2
Recharge to subsidiary of share-based payments (22.1)
Where options and awards over the Companys shares have been issued to the employees of subsidiary undertakings, the fair value of employee
services performed (equal to the share-based payments) has been recorded as a capital contribution. The Company recharges the relevant
amount of the share-based payments to its US subsidiary. Consequently, the amount recharged is offset against the carrying value
of its investments.
The directors believe that the carrying value of the investments is supported by their underlying net assets.
Interests in Group undertakings
Details of subsidiary undertakings are as follows:
Name of undertaking
Country
of registration
Description
of shares held
Proportion of
nominal value
of issued
shares held
ARM Limited England and Wales Ordinary 1 shares less than 0.01%*
ARM IP Limited England and Wales Ordinary 1 shares 100%
ARM Finance UK Limited England and Wales Ordinary $1 shares 100%

111
1 Principal accounting policies
The financial statements have been prepared in accordance with the Companies Act 2006 and applicable accounting standards in the UK. A
summary of the more important accounting policies, which have been consistently applied and reviewed by the board of directors in accordance
with Financial Reporting Standard (FRS) 18, Accounting policies, is set out below:
Basis of accounting The financial statements are prepared on a going concern basis and in accordance with the historical cost convention.
Investments in subsidiaries Investments in subsidiaries are initially recorded at cost. Where an acquisition satisfies the provisions of section 612
of the Companies Act 2006 for merger relief, the investment is stated at the nominal value of shares issued plus the fair value of any other
consideration.
Cash flow statement The Company has not presented a separate cash flow statement. The cash flows for the Company are included within the
consolidated financial statements.
Foreign currency Transactions denominated in foreign currencies have been translated into sterling at actual rates of exchange at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies have been translated at the closing rates of exchange at the balance
sheet date. Exchange differences have been included in operating profit.
Taxation Current tax is provided at amounts expected to be paid using the tax rates and laws that have been enacted or substantively enacted
by the balance sheet date.
Financial instruments The Company does not have any financial instruments, other than intercompany creditors and debtors, and cash. Due to
the short-term nature of these balances, the Company considers the fair value of these items to equal the carrying value. Because the Company is
included in the consolidated financial statements of the ARM Holdings plc Group which are publicly available, and the financial disclosures required
by FRS 29 are in note 17 of those financial statements, no disclosure has been presented in these financial statements.
Share schemes The Company issues equity-settled share-based payments, including an LTIP, to certain employees of subsidiary undertakings.
In accordance with FRS 20, equity-settled share-based payments are measured at fair value at the date of grant. Fair value is measured by use of
the Black-Scholes pricing model. The fair value determined at the grant date of the equity-settled share-based payments is expensed in the
accounts of the subsidiary companies on a straight-line basis over the vesting period, based on the Companys estimate of the number of shares
that will eventually vest.
The Company operates SAYE schemes in the UK and an ESPP in the US, India, Japan, South Korea and Taiwan. Options under the SAYE scheme
were at a 20% discount to market price of the underlying shares on the date of announcement of the scheme. The UK SAYE schemes are
approved by the Inland Revenue, which stipulates that the saving period must be at least 36 months.
The Company has taken advantage of the exemption available, and has applied the provisions of FRS 20 only to those options granted after
7 November 2002 and which were outstanding at 31 December 2004. The Company does not have any employees and as such, in accordance
with UITF 44, all share-based payments have been recorded as capital contributions to all subsidiaries. The Company recharges the relevant
amount of the share-based payments to its US subsidiary. Consequently, the amount recharged is offset against the carrying value of its
investments.
Share capital Ordinary shares issued by the Company are recorded at the proceeds received, net of direct issue costs.
Dividends A liability is recorded for a dividend when the dividend is approved by the Companys shareholders. Interim dividends are recognised
as a distribution when paid.
Deferred tax Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.
Deferred tax is measured at the average rates that are expected to apply in the period in which the timing difference is expected to reverse,
based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on an
undiscounted basis.

2 Profit for the financial year
As permitted by Section 408 of the Companies Act 2006, the parent companys profit and loss account has not been included in these financial
statements. The parent companys loss after taxation, including dividends receivable and before dividends payable was 1.5 million (2012:
1.9 million). The Company has no employees; all three executive directors (as at 31 December 2013) have contracts of service with ARM
Limited, a subsidiary of the Company. The emoluments of two of these directors are paid by ARM Limited, and one of the directors is paid
by ARM Inc, the details of which are disclosed in the remuneration report within this Annual Report. Audit fees are disclosed in note 5 to the
consolidated financial statements on page 84.
3 Dividends paid and proposed

2013
m
2012
m
Final dividend paid of 2.83 pence per ordinary share in respect of 2012 (2012: 2.09 pence in respect of 2011) 39.5 28.8
Interim dividend paid of 2.10 pence (2012: 1.67 pence) per ordinary share 29.4 23.0
68.9 51.8
In addition, the directors are proposing a final dividend in respect of the financial year ended 31 December 2013 of 3.6 pence per share which will
absorb an estimated 51 million of shareholders funds. It will be paid on 16 May 2014 to shareholders who are on the register of members on
22 April 2014, subject to approval by the shareholders at the 2014 AGM.
4 Investments
The cost and net book value of interests in Group undertakings held by the Company was 653.3 million at 31 December 2013 and
616.1 million at 31 December 2012. The Company took advantage of merger relief in 2004 and did not record the premium on the issue of
shares for the acquisition of Artisan Components Inc. (now ARM Inc.), and thus did not record the premium within the value of the investment
in the Company balance sheet at that time.

Investments in
subsidiary
undertakings
m
Cost and net book value
At 1 January 2013 616.1
Additions 0.1
Capital contributions arising from share-based payments 59.2
Recharge to subsidiary of share-based payments (22.1)
Where options and awards over the Companys shares have been issued to the employees of subsidiary undertakings, the fair value of employee
services performed (equal to the share-based payments) has been recorded as a capital contribution. The Company recharges the relevant
amount of the share-based payments to its US subsidiary. Consequently, the amount recharged is offset against the carrying value
of its investments.
The directors believe that the carrying value of the investments is supported by their underlying net assets.
Interests in Group undertakings
Details of subsidiary undertakings are as follows:
Name of undertaking
Country
of registration
Description
of shares held
Proportion of
nominal value
of issued
shares held
ARM Limited England and Wales Ordinary 1 shares less than 0.01%*
ARM IP Limited England and Wales Ordinary 1 shares 100%
ARM Finance UK Limited England and Wales Ordinary $1 shares 100%

ARM Holdings plc
112
continued
4 Investments continued
The principal activity of ARM Limited is the marketing, research and development of RISC-based microprocessors and graphics IP. The remaining
shares in ARM Limited were held at the balance sheet date by ARM Finance UK Limited (AFL) and ARM Finance UK Three Limited (AFL3) (with
AFL3 itself being an indirect wholly owned subsidiary of AFL). The principal activities of both AFL and AFL3 are as intermediate holding companies.
5 Debtors

2013
m
2012
m
Deferred tax assets * 0.3 0.3
1.5 0.8
* A deferred tax asset in respect of timing differences arising on losses has been recognised, and it is expected that profits will be available in the future to offset these losses.
6 Creditors: amounts falling due within one year

2013
m
2012
m
Amounts owed to Group undertakings 45.7 2.7
Accruals 0.3 0.3
46.0 3.0
7 Called-up share capital

2013
m
2012
m
Authorised
Allotted, called-up and fully paid
19,495,454 ordinary shares of 0.05 pence each were issued in the year for cash consideration of 5.9 million (2012: 5.6 million) as a result of the
exercise of share options at various times during the year.
Share options and awards
The Company had the following options and awards outstanding over ordinary shares of 0.05 pence at 31 December 2013:

Year of grant
Number
of options
Range of
exercise prices

Weighted
average exercise
price

Latest date
of exercise
Executive Scheme 2004 1,360 1.25 1.25 29 January 2014
2005 14,166 1.055 1.055 3 February 2015
15,526 1.072
2003 Plan 2004 376,925 0.7-1.01 0.7086 29 November 2014
SAYE 2009 199,921 0.854 0.854 31 January 2015
2010 126,730 1.948 1.948 31 January 2016
2011 363,300 4.464 4.464 31 January 2017
2012 680,302 3.9616 3.9616 31 January 2018
2013 207,215 7.96 7.96 31 January 2019
1,577,468 4.0469
Total options 1,969,919 3.3847

7 Called-up share capital continued
Year of grant
Number
of share awards Latest vest date
RSU 2010 2,417,436 12 November 2014
2011 2,833,120 12 November 2015
2012 2,410,868 12 November 2016
2013 8,404,823 12 November 2017
16,066,247
French RSU 2010 128,769 12 November 2014
2011 153,375 12 November 2015
2012 130,087 12 November 2016
2013 314,089 12 November 2017
726,320
LTIP 2011 621,132 8 February 2014
2012 782,375 8 February 2015
2013 650,696 8 February 2016
2,054,203
DAB 2011 430,102 8 February 2014
2012 586,666 8 February 2015
2013 364,118 8 February 2016
1,380,886
Total awards 20,227,656
Total options and awards 22,197,575
exercise price. The main RSU awards (to employees in all jurisdictions other than France) vest 25% on each anniversary over four years. RSU
awards to our French employees vest 50% after two years, and then a further 25% after three and four years.
page 41.
last time under this scheme in February 2013 and it will be replaced by a new LTIP for 2014 grants onwards. For details of the new scheme, see
the Remuneration Report on page 42.
The Company also offers SAYE scheme for employees and executive directors of the Group. The number of options granted is related to the
Unapproved Scheme), the French Scheme and various schemes that the Company assumed on the acquisition of Artisan in 2004. Shares in
these schemes are no longer granted, although the Company reserves the right to award options to employees going forward. Shares relating
to these schemes have all vested in prior years and therefore there is no share-based payment charge associated with them for 2012 or 2013.
113
continued
4 Investments continued
The principal activity of ARM Limited is the marketing, research and development of RISC-based microprocessors and graphics IP. The remaining
shares in ARM Limited were held at the balance sheet date by ARM Finance UK Limited (AFL) and ARM Finance UK Three Limited (AFL3) (with
AFL3 itself being an indirect wholly owned subsidiary of AFL). The principal activities of both AFL and AFL3 are as intermediate holding companies.
5 Debtors

2013
m
2012
m
Deferred tax assets * 0.3 0.3
1.5 0.8
* A deferred tax asset in respect of timing differences arising on losses has been recognised, and it is expected that profits will be available in the future to offset these losses.
6 Creditors: amounts falling due within one year

2013
m
2012
m
Amounts owed to Group undertakings 45.7 2.7
Accruals 0.3 0.3
46.0 3.0
7 Called-up share capital

2013
m
2012
m
Authorised
Allotted, called-up and fully paid
19,495,454 ordinary shares of 0.05 pence each were issued in the year for cash consideration of 5.9 million (2012: 5.6 million) as a result of the
exercise of share options at various times during the year.
Share options and awards
The Company had the following options and awards outstanding over ordinary shares of 0.05 pence at 31 December 2013:

Year of grant
Number
of options
Range of
exercise prices

Weighted
average exercise
price

Latest date
of exercise
Executive Scheme 2004 1,360 1.25 1.25 29 January 2014
2005 14,166 1.055 1.055 3 February 2015
15,526 1.072
2003 Plan 2004 376,925 0.7-1.01 0.7086 29 November 2014
SAYE 2009 199,921 0.854 0.854 31 January 2015
2010 126,730 1.948 1.948 31 January 2016
2011 363,300 4.464 4.464 31 January 2017
2012 680,302 3.9616 3.9616 31 January 2018
2013 207,215 7.96 7.96 31 January 2019
1,577,468 4.0469
Total options 1,969,919 3.3847

Year of grant
Number
of share awards Latest vest date
RSU 2010 2,417,436 12 November 2014
2011 2,833,120 12 November 2015
2012 2,410,868 12 November 2016
2013 8,404,823 12 November 2017
16,066,247
French RSU 2010 128,769 12 November 2014
2011 153,375 12 November 2015
2012 130,087 12 November 2016
2013 314,089 12 November 2017
726,320
LTIP 2011 621,132 8 February 2014
2012 782,375 8 February 2015
2013 650,696 8 February 2016
2,054,203
DAB 2011 430,102 8 February 2014
2012 586,666 8 February 2015
2013 364,118 8 February 2016
1,380,886
Total awards 20,227,656
Total options and awards 22,197,575
exercise price. The main RSU awards (to employees in all jurisdictions other than France) vest 25% on each anniversary over four years. RSU
awards to our French employees vest 50% after two years, and then a further 25% after three and four years.
page 41.
last time under this scheme in February 2013 and it will be replaced by a new LTIP for 2014 grants onwards. For details of the new scheme, see
the Remuneration Report on page 42.
The Company also offers SAYE scheme for employees and executive directors of the Group. The number of options granted is related to the
Unapproved Scheme), the French Scheme and various schemes that the Company assumed on the acquisition of Artisan in 2004. Shares in
these schemes are no longer granted, although the Company reserves the right to award options to employees going forward. Shares relating
to these schemes have all vested in prior years and therefore there is no share-based payment charge associated with them for 2012 or 2013.
ARM Holdings plc
114
continued
For disclosures relating to the grants in the year and fair value assumptions, reconciliations of opening to closing option balances, and related items,
please refer to note 20 in the consolidated financial statements.
8 Reserves

Share premium
account
m
Share option
reserve
m
Profit and
loss reserve
m
At 1 January 2013 12.2 61.4 540.5
Premium on issue of share options 5.9
Credit in respect of capital contributions arising from share-based payments 59.2
Loss attributable to shareholders (1.5)
Equity dividends payable (68.9)
At 31 December 2013 18.1 61.4 529.3
The share option reserve represents the fair value of options granted on the acquisition of Artisan Components Inc. in 2004.
The Company considers the share option reserve and share premium account as non-distributable. Within the profit and loss reserve are credits
in respect of FRS 20 employee share-based payments in respect of services performed by employees of subsidiary undertakings and recorded as
a capital contribution. The Company also considers these credits as non-distributable. As such, approximately 324 million of the profit and loss
reserve is deemed distributable.
The Company did not undertake any share buy-backs during 2013. The quantum and frequency of share repurchases is not predetermined and
will take into account prevailing market conditions, the short- to medium-term cash needs of the business and the level of employee share-based
remuneration going forward. At 31 December 2013, there were nil (2012: nil) shares in the Company still held from purchases made in
prior years.
9 Reconciliation of movements in shareholders funds

2013
m
2012
m
Loss attributable to shareholders (1.5) (1.9)
Equity dividends payable (68.9) (51.8)
(70.4) (53.7)
New share capital issued 5.9 5.6
Credit in respect of capital contributions arising from share-based payments 59.2 37.1
Net reduction to shareholders funds (5.3) (11.0)
Opening shareholders funds 614.8 625.8
Closing shareholders funds 609.5 614.8
10 Capital commitments
The Company had no capital commitments at 31 December 2013 and 2012.
11 Financial commitments and contingencies
At 31 December 2013 and 2012 the Company had no annual commitments under non-cancellable operating leases and no contingencies.
The Company has taken advantage of the exemption from disclosure available to parent companies under FRS 8, Related party disclosures,
where transactions and balances between wholly owned Group entities have been eliminated on consolidation.


Report on the parent company financial statements
Our opinion
In our opinion the parent company financial statements, defined below:
give a true and fair view of the state of the Companys affairs as at 31 December 2013;
have been properly prepared in accordance with UK Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
The parent company financial statements, which are prepared by ARM Holdings plc, comprise:
the parent company balance sheet as at 31 December 2013;
the notes to the parent company financial statements, which include a summary of significant accounting policies and other
explanatory information.
The financial reporting framework that has been applied in their preparation comprises applicable law and UK Accounting Standards
(UK Generally Accepted Accounting Practice).
In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect of significant
accounting estimates. In making such estimates, they have made assumptions and considered future events.
What an audit of financial statements involves
We conducted our audit in accordance with International Standards on Auditing (UK & Ireland) (ISAs (UK & Ireland)). An audit involves
obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial
whether the accounting policies are appropriate to the parent companys circumstances, and have been consistently applied and
adequately disclosed;
the reasonableness of significant accounting estimates made by the directors;
the overall presentation of the financial statements.
In addition, we read all the financial and non-financial information in the annual report and accounts (the annual report) to identify material
inconsistencies with the audited parent company financial statements and to identify any information that is apparently materially incorrect based
on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent
material misstatements or inconsistencies we consider the implications for our report.
Opinions on matters prescribed by the Companies Act 2006
In our opinion:
The information given in the Strategic report and the Directors report for the financial year for which the parent Company financial statements
are prepared is consistent with the parent company financial statements.
The part of the Directors Remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

115
continued
For disclosures relating to the grants in the year and fair value assumptions, reconciliations of opening to closing option balances, and related items,
please refer to note 20 in the consolidated financial statements.
8 Reserves

Share premium
account
m
Share option
reserve
m
Profit and
loss reserve
m
At 1 January 2013 12.2 61.4 540.5
Premium on issue of share options 5.9
Credit in respect of capital contributions arising from share-based payments 59.2
Loss attributable to shareholders (1.5)
Equity dividends payable (68.9)
At 31 December 2013 18.1 61.4 529.3
The share option reserve represents the fair value of options granted on the acquisition of Artisan Components Inc. in 2004.
The Company considers the share option reserve and share premium account as non-distributable. Within the profit and loss reserve are credits
in respect of FRS 20 employee share-based payments in respect of services performed by employees of subsidiary undertakings and recorded as
a capital contribution. The Company also considers these credits as non-distributable. As such, approximately 324 million of the profit and loss
reserve is deemed distributable.
The Company did not undertake any share buy-backs during 2013. The quantum and frequency of share repurchases is not predetermined and
will take into account prevailing market conditions, the short- to medium-term cash needs of the business and the level of employee share-based
remuneration going forward. At 31 December 2013, there were nil (2012: nil) shares in the Company still held from purchases made in
prior years.
9 Reconciliation of movements in shareholders funds

2013
m
2012
m
Loss attributable to shareholders (1.5) (1.9)
Equity dividends payable (68.9) (51.8)
(70.4) (53.7)
New share capital issued 5.9 5.6
Credit in respect of capital contributions arising from share-based payments 59.2 37.1
Net reduction to shareholders funds (5.3) (11.0)
Opening shareholders funds 614.8 625.8
Closing shareholders funds 609.5 614.8
10 Capital commitments
The Company had no capital commitments at 31 December 2013 and 2012.
11 Financial commitments and contingencies
At 31 December 2013 and 2012 the Company had no annual commitments under non-cancellable operating leases and no contingencies.
The Company has taken advantage of the exemption from disclosure available to parent companies under FRS 8, Related party disclosures,
where transactions and balances between wholly owned Group entities have been eliminated on consolidation.


Report on the parent company financial statements
Our opinion
In our opinion the parent company financial statements, defined below:
give a true and fair view of the state of the Companys affairs as at 31 December 2013;
have been properly prepared in accordance with UK Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
The parent company financial statements, which are prepared by ARM Holdings plc, comprise:
the parent company balance sheet as at 31 December 2013;
the notes to the parent company financial statements, which include a summary of significant accounting policies and other
explanatory information.
The financial reporting framework that has been applied in their preparation comprises applicable law and UK Accounting Standards
(UK Generally Accepted Accounting Practice).
In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect of significant
accounting estimates. In making such estimates, they have made assumptions and considered future events.
What an audit of financial statements involves
We conducted our audit in accordance with International Standards on Auditing (UK & Ireland) (ISAs (UK & Ireland)). An audit involves
obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial
whether the accounting policies are appropriate to the parent companys circumstances, and have been consistently applied and
adequately disclosed;
the reasonableness of significant accounting estimates made by the directors;
the overall presentation of the financial statements.
In addition, we read all the financial and non-financial information in the annual report and accounts (the annual report) to identify material
inconsistencies with the audited parent company financial statements and to identify any information that is apparently materially incorrect based
on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent
material misstatements or inconsistencies we consider the implications for our report.
Opinions on matters prescribed by the Companies Act 2006
In our opinion:
The information given in the Strategic report and the Directors report for the financial year for which the parent Company financial statements
are prepared is consistent with the parent company financial statements.
The part of the Directors Remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

ARM Holdings plc
116
continued

Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion:
we have not received all the information and explanations we require for our audit; or
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
the parent company financial statements and the part of the Directors Remuneration report to be audited are not in agreement with the
accounting records and returns.
Under the Companies Act 2006 we are required to report if, in our opinion, certain disclosures of directors remuneration specified by law have
not been made. We have no exceptions to report arising from this responsibility.
Other information in the annual report
Under ISAs (UK & Ireland), we are required to report to you if, in our opinion, information in the annual report is:
materially inconsistent with the information in the audited parent company financial statements; or
apparently materially incorrect based on, or materially inconsistent with, our knowledge of the parent company acquired in the course
of performing our audit; or
Responsibilities for the financial statements and the audit
As explained more fully in the Directors Responsibilities Statement, the directors are responsible for the preparation of the parent company
financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the parent company financial statements in accordance with applicable law and ISAs
(UK & Ireland). Those standards require us to comply with the Auditing Practices Boards Ethical Standards for Auditors.
Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior
consent in writing.
Other matter
We have reported separately on the Group financial statements of ARM Holdings plc for the year ended 31 December 2013.

Charles Bowman
London
5 March 2014
Glossary

ARM7/9/11 ARM7 processor was one of ARMs first commercial products. ARM9 and ARM11 processors
followed later.
big.LITTLE Combination of two different ARM processors on a single chip: one (big) that delivers high-performance
when needed with the other (LITTLE) running most of the time, enabling long battery-life.
CAGR Compound annual growth rate.
DTV Digital TV.
Ecosystem Community of companies that work with ARM, including semiconductor companies, foundries, OEMs
and software providers.
Fabless semiconductor company A fabless semiconductor company designs computer chips. These chips are typically manufactured
by a foundry. For example Mediatek, NVIDIA and Qualcomm.
Foundry A foundry is a specialist company that manufacturers computer chips on behalf of fabless semiconductor
companies. For example TSMC and UMC.
Intellectual Property (IP) ARM designs technology for use in computer chips. The general term for the products that are designs
only, or are creations of the mind, is intellectual property.
Internet of Things (IoT) An increasing variety of digital devices are being connected to the internet either directly or indirectly via
a smartphone. From pedometers to thermostats to streetlights.
Licence A licence is a legal agreement that confers certain rights to our Partners. They pay an upfront free, which
is reported as licence revenue.
LTE Long Term Evolution (or 4G) is the next generation wireless standard for mobile phones. It is optimised
for data streaming allowing internet connections at speeds similar to broadband in the home.
Microcontroller (MCU) A microcontroller is a general-purpose computer chip which has been/can be used in many applications.
Most ARM processors are used in either an SoC or MCU.
Original Equipment
Manufacturer (OEM)
An OEM manufactures consumer products such as TVs or mobile phones. For example Apple, HTC
and LG.
Processor Optimisation Pack
(POP)
Physical IP components that have been selected and optimised to implement a processor on a specific
foundrys manufacturing process.
Royalty ARM receives a royalty on every chip that contains ARM technology. The royalty is usually a percentage
of the selling price of the chip and is reported as royalty revenue.
STB Set-top box.
System-on-Chip (SoC) A SoC is a computer chip where multiple functions have been integrated into a single chip. Most ARM
117
continued

Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion:
we have not received all the information and explanations we require for our audit; or
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
the parent company financial statements and the part of the Directors Remuneration report to be audited are not in agreement with the
accounting records and returns.
Under the Companies Act 2006 we are required to report if, in our opinion, certain disclosures of directors remuneration specified by law have
not been made. We have no exceptions to report arising from this responsibility.
Other information in the annual report
Under ISAs (UK & Ireland), we are required to report to you if, in our opinion, information in the annual report is:
materially inconsistent with the information in the audited parent company financial statements; or
apparently materially incorrect based on, or materially inconsistent with, our knowledge of the parent company acquired in the course
of performing our audit; or
Responsibilities for the financial statements and the audit
As explained more fully in the Directors Responsibilities Statement, the directors are responsible for the preparation of the parent company
financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the parent company financial statements in accordance with applicable law and ISAs
(UK & Ireland). Those standards require us to comply with the Auditing Practices Boards Ethical Standards for Auditors.
Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior
consent in writing.
Other matter
We have reported separately on the Group financial statements of ARM Holdings plc for the year ended 31 December 2013.

Charles Bowman
London
5 March 2014
Glossary

ARM7/9/11 ARM7 processor was one of ARMs first commercial products. ARM9 and ARM11 processors
followed later.
big.LITTLE Combination of two different ARM processors on a single chip: one (big) that delivers high-performance
when needed with the other (LITTLE) running most of the time, enabling long battery-life.
CAGR Compound annual growth rate.
DTV Digital TV.
Ecosystem Community of companies that work with ARM, including semiconductor companies, foundries, OEMs
and software providers.
Fabless semiconductor company A fabless semiconductor company designs computer chips. These chips are typically manufactured
by a foundry. For example Mediatek, NVIDIA and Qualcomm.
Foundry A foundry is a specialist company that manufacturers computer chips on behalf of fabless semiconductor
companies. For example TSMC and UMC.
Intellectual Property (IP) ARM designs technology for use in computer chips. The general term for the products that are designs
only, or are creations of the mind, is intellectual property.
Internet of Things (IoT) An increasing variety of digital devices are being connected to the internet either directly or indirectly via
a smartphone. From pedometers to thermostats to streetlights.
Licence A licence is a legal agreement that confers certain rights to our Partners. They pay an upfront free, which
is reported as licence revenue.
LTE Long Term Evolution (or 4G) is the next generation wireless standard for mobile phones. It is optimised
for data streaming allowing internet connections at speeds similar to broadband in the home.
Microcontroller (MCU) A microcontroller is a general-purpose computer chip which has been/can be used in many applications.
Most ARM processors are used in either an SoC or MCU.
Original Equipment
Manufacturer (OEM)
An OEM manufactures consumer products such as TVs or mobile phones. For example Apple, HTC
and LG.
Processor Optimisation Pack
(POP)
Physical IP components that have been selected and optimised to implement a processor on a specific
foundrys manufacturing process.
Royalty ARM receives a royalty on every chip that contains ARM technology. The royalty is usually a percentage
of the selling price of the chip and is reported as royalty revenue.
STB Set-top box.
System-on-Chip (SoC) A SoC is a computer chip where multiple functions have been integrated into a single chip. Most ARM
ARM Holdings plc
118
Group directory

ARM Holdings plc
110 Fulbourn Road
Cambridge CB1 9NJ
United Kingdom
Tel: +44 (0) 1223 400400
Fax: +44 (0) 1223 400410
ARM Limited
Liberty House
Moorbridge Road
Maidenhead
Berkshire SL6 8LT
United Kingdom
Tel: +44 (0) 1628 427700
Fax: +44 (0) 1628 427701
Rockingham Court
152 Rockingham Street
Sheffield S1 4EB
United Kingdom
Tel: +44 (0) 114 282 8000
Fax: +44 (0) 114 282 8001
Blackburn Design Centre
Belthorn House
Walker Road
Blackburn BB1 2QE
United Kingdom
Tel: +44 (0) 1254 893900
Fax: +44 (0) 1254 893901
Geomerics Limited
110 Fulbourn Road
Cambridge
CB1 9NJ
United Kingdom
Tel: +44 (0) 1223 400400
ARM France SAS
12 Avenue des Prs
BL204 Montigny le
Bretonneux
78059 Saint Quentin en
Yvelines, Cedex
France
Tel: +33 1 39 30 47 89
Fax: +33 1 39 30 47 88
25 Alle Pierre Ziller
Le Paros
BP 70124
06903 Sophia Antipolis Cedex
France
Tel: +33 4 97 23 51 00
Fax: +33 4 97 23 51 99
Miniparc Polytec
60 Rue des Berges
38000 Grenoble
France
Tel: +33 4 56 38 47 00
Fax: +33 4 56 38 47 01
ARM Germany GmbH
Bretonischer Ring 16
D-85630 Grasbrunn
Germany
Tel: +49 89 456 040-0
Fax: +49 89 456 040-19
Obrtna Cesta 18
SL-8310
Sentjernej
Slovenia
ARM Israel
3 Hagavish Street
44424 Kfar Saba
Israel
Tel: +972.9.7644888
Fax: +972.9.7644884
ARM Norway AS
Olav Tryggvassons gt. 39-41
7011 Trondheim
Norway
Tel: +47 7318 7500
Fax: +47 7351 3181
ARM Sweden AB
Lilla Fiskaregatan 12
SE-222 22 Lund
Sweden
Tel: +46 46 540 11 04
Fax: +46 46 14 48 08
ARM Finland Oy
Konekuja 2
Fl-90620 Oulu
Finland
Tel: +358 10 387 8680
ARM Belgium Services BVBA
Mechelsesteenweg 277
1800 Vilvoorde
Belgium
Tel: +32 2 3045598
ARM Inc.
150 Rose Orchard Way
San Jose, CA 95134-1358
United States
Tel: +1 408 576 1500
Fax: +1 408 576 1501
The Park on Barton Creek
3711 S. Mopac Expressway
Building 1, Suite 400
Austin, TX 78746
United States
Tel: +1 512 327 9249
Fax: +1 512 314 1078
5 East Street
Franklin, MA 02038
United States
Tel: +1 970 532 0767
Fax: +1 508 520 1907
2 Venture Suite 470
Irvine, CA 92618
United States
Tel: +1 408 576 1500
Fax: +1 949 623 8305
4965 Preston Park Blvd
Suite 650
Plano, TX 75093
United States
Tel: +1 972 312 1107
Fax: +1 972 312 1159
2002 Caton Way SW
Olympia
WA 98502-1119
United States
Tel: +1 408 576 1500
5375 Mira Sorrento Place
Suite 290
San Diego, CA 92121
United States
Tel: +1 858 453 1900
2320 130
th
Avenue NE
Building E, Suite 220
Bellevue
WA 98005
United States
Tel: +1 408 576 1500

ARM KK
Shinyokohama Square Bldg. 17F
2-3-12 Shin-Yokohama
Kohoku-Ku, Yokohama-Shi
Kanagawa 222-0033
Japan
Tel: +81 45 477 5260
Fax: +81 45 477 5261
ARM Korea Limited
8th Floor Kyungdong Building
4-4 Sunae-Dong
Bundang-Gu, Seongnam-si
Gyeonggi-do 463-020
Korea
Tel: +82 31 712 8234
Fax: +82 31 713 8225
ARM Embedded
Technologies Pvt. Limited
Bagmane World Technology Center SEZ
Citrine Block, 5
th
and 6
th
Floor
Marathahalli Outer Ring Road
Mahaderapura
Bangalore 560048
Tel: +91 80 4928 2000
Fax: +91 80 4112 7403
Unit no: F2 (II), 2
nd
Floor
S.B. Towers, Plot no: IA/I Sector 16A
Film City, Noida 201301
Uttar Pradesh
ARM Consulting
(Shanghai) Co. Ltd
35F, Building B,
New CHJ International Business Centre
No. 391 Guiping Road
Shanghai 200233
PR China
Tel: +86 21 6154 9000
Fax: +86 21 6154 9100
Room 602, Ideal Plaza
58 West Road
North 4th Ring Road
Haidian District
Beijing 100080
PR China
Tel: +86 10 8217 2000
Fax: +86 10 8217 2010
Unit 13B01, Anlian Plaza
No.4018, Jin Tian Road
Futian District
Shenzhen 518006
PR China
Tel: +86 755 8280 4836
Fax: +86 755 8280 4839
ARM Taiwan Limited
8F, No. 36, Ruihu Street
Nei-Hu District
Taipei City
11494
Taiwan (R.O.C)
Tel: +886 2 8752 1700
Fax: +886 2 2627 1682
7F, No. 2, Li-Hsin
6
th
Road Hsinchu Science Park
Hsinchu City
30078
Taiwan (R.O.C.)
Tel: +886 3 565 7100
Fax: +886 3 567 7128

119
Group directory

ARM Holdings plc
110 Fulbourn Road
Cambridge CB1 9NJ
United Kingdom
Tel: +44 (0) 1223 400400
Fax: +44 (0) 1223 400410
ARM Limited
Liberty House
Moorbridge Road
Maidenhead
Berkshire SL6 8LT
United Kingdom
Tel: +44 (0) 1628 427700
Fax: +44 (0) 1628 427701
Rockingham Court
152 Rockingham Street
Sheffield S1 4EB
United Kingdom
Tel: +44 (0) 114 282 8000
Fax: +44 (0) 114 282 8001
Blackburn Design Centre
Belthorn House
Walker Road
Blackburn BB1 2QE
United Kingdom
Tel: +44 (0) 1254 893900
Fax: +44 (0) 1254 893901
Geomerics Limited
110 Fulbourn Road
Cambridge
CB1 9NJ
United Kingdom
Tel: +44 (0) 1223 400400
ARM France SAS
12 Avenue des Prs
BL204 Montigny le
Bretonneux
78059 Saint Quentin en
Yvelines, Cedex
France
Tel: +33 1 39 30 47 89
Fax: +33 1 39 30 47 88
25 Alle Pierre Ziller
Le Paros
BP 70124
06903 Sophia Antipolis Cedex
France
Tel: +33 4 97 23 51 00
Fax: +33 4 97 23 51 99
Miniparc Polytec
60 Rue des Berges
38000 Grenoble
France
Tel: +33 4 56 38 47 00
Fax: +33 4 56 38 47 01
ARM Germany GmbH
Bretonischer Ring 16
D-85630 Grasbrunn
Germany
Tel: +49 89 456 040-0
Fax: +49 89 456 040-19
Obrtna Cesta 18
SL-8310
Sentjernej
Slovenia
ARM Israel
3 Hagavish Street
44424 Kfar Saba
Israel
Tel: +972.9.7644888
Fax: +972.9.7644884
ARM Norway AS
Olav Tryggvassons gt. 39-41
7011 Trondheim
Norway
Tel: +47 7318 7500
Fax: +47 7351 3181
ARM Sweden AB
Lilla Fiskaregatan 12
SE-222 22 Lund
Sweden
Tel: +46 46 540 11 04
Fax: +46 46 14 48 08
ARM Finland Oy
Konekuja 2
Fl-90620 Oulu
Finland
Tel: +358 10 387 8680
ARM Belgium Services BVBA
Mechelsesteenweg 277
1800 Vilvoorde
Belgium
Tel: +32 2 3045598
ARM Inc.
150 Rose Orchard Way
San Jose, CA 95134-1358
United States
Tel: +1 408 576 1500
Fax: +1 408 576 1501
The Park on Barton Creek
3711 S. Mopac Expressway
Building 1, Suite 400
Austin, TX 78746
United States
Tel: +1 512 327 9249
Fax: +1 512 314 1078
5 East Street
Franklin, MA 02038
United States
Tel: +1 970 532 0767
Fax: +1 508 520 1907
2 Venture Suite 470
Irvine, CA 92618
United States
Tel: +1 408 576 1500
Fax: +1 949 623 8305
4965 Preston Park Blvd
Suite 650
Plano, TX 75093
United States
Tel: +1 972 312 1107
Fax: +1 972 312 1159
2002 Caton Way SW
Olympia
WA 98502-1119
United States
Tel: +1 408 576 1500
5375 Mira Sorrento Place
Suite 290
San Diego, CA 92121
United States
Tel: +1 858 453 1900
2320 130
th
Avenue NE
Building E, Suite 220
Bellevue
WA 98005
United States
Tel: +1 408 576 1500

ARM KK
Shinyokohama Square Bldg. 17F
2-3-12 Shin-Yokohama
Kohoku-Ku, Yokohama-Shi
Kanagawa 222-0033
Japan
Tel: +81 45 477 5260
Fax: +81 45 477 5261
ARM Korea Limited
8th Floor Kyungdong Building
4-4 Sunae-Dong
Bundang-Gu, Seongnam-si
Gyeonggi-do 463-020
Korea
Tel: +82 31 712 8234
Fax: +82 31 713 8225
ARM Embedded
Technologies Pvt. Limited
Bagmane World Technology Center SEZ
Citrine Block, 5
th
and 6
th
Floor
Marathahalli Outer Ring Road
Mahaderapura
Bangalore 560048
Tel: +91 80 4928 2000
Fax: +91 80 4112 7403
Unit no: F2 (II), 2
nd
Floor
S.B. Towers, Plot no: IA/I Sector 16A
Film City, Noida 201301
Uttar Pradesh
ARM Consulting
(Shanghai) Co. Ltd
35F, Building B,
New CHJ International Business Centre
No. 391 Guiping Road
Shanghai 200233
PR China
Tel: +86 21 6154 9000
Fax: +86 21 6154 9100
Room 602, Ideal Plaza
58 West Road
North 4th Ring Road
Haidian District
Beijing 100080
PR China
Tel: +86 10 8217 2000
Fax: +86 10 8217 2010
Unit 13B01, Anlian Plaza
No.4018, Jin Tian Road
Futian District
Shenzhen 518006
PR China
Tel: +86 755 8280 4836
Fax: +86 755 8280 4839
ARM Taiwan Limited
8F, No. 36, Ruihu Street
Nei-Hu District
Taipei City
11494
Taiwan (R.O.C)
Tel: +886 2 8752 1700
Fax: +886 2 2627 1682
7F, No. 2, Li-Hsin
6
th
Road Hsinchu Science Park
Hsinchu City
30078
Taiwan (R.O.C.)
Tel: +886 3 565 7100
Fax: +886 3 567 7128

ARM Holdings plc
120
ARM Holdings plc is the parent
company of the Group
Company Number: 2548782
Incorporated in England & Wales
Domiciled in the UK
Public company limited by shares
Secretary and registered office
Patricia Alsop
110 Fulbourn Road
Cambridge CB1 9NJ
United Kingdom
Independent auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
United Kingdom
Stockbrokers
UBS Limited
2 Finsbury Avenue
London EC2M 2PP
United Kingdom
Goldman Sachs
Peterborough Court
133 Fleet Street
London EC4A 2BB
United Kingdom
Registrars
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
United Kingdom
Shareholder Helpline
0871 384 2139
Depositary
The Bank of New York Mellon
101 Barclays Street
New York
New York 10286
United States of America
Legal advisers
UK Law
Slaughter and May
One Bunhill Row
London EC1Y 8YY
United Kingdom
Linklaters
One Silk Street
London EC2Y 8HQ
United Kingdom
US Law
Davis Polk & Wardwell
99 Gresham Street
London EC2V 7NG
United Kingdom

For more shareholder information please
contact Ian Thornton at
investor.relations@arm.com
Our website contains information
for shareholders, including regular strategic,
business and financial updates.
www.arm.com/ir
Governance
Chairmans introduction 1
Board of directors 4
Corporate governance 6
Directors report 23
Directors remuneration report 29
Financial Report
Consolidated income statement 60
Consolidated statement
of comprehensive income 60
Consolidated balance sheet 61
Consolidated cash ow statement 62
in shareholders equity 63
Notes to the nancial statements 64
Company balance sheet/UK GAAP 109
UK GAAP 110
Glossary 117
Group directory 118
Key shareholder information 120
Our Vision
Operational highlights
Financial highlights
Chairmans review
Chief Executives statement
Our Performance
Our marketplace
Our business model
Our global reach
Strategy and key
performance indicators
Mobile computing
Enterprise infrastructure
Embedded computing
Our Commitment
Governance
Sustainability
Risk management and principal risks
Chief Financial Ofcers review
Summary accounts
Glossary
Front cover
Most major population centres are now
covered by 3G or 4G networks, and there
were more than two billion smartphones
and tablets connecting to the internet in
2013. With some mobile computers now
costing as little as $35, many more people
can now aford to buy a smart device.
An entry-level mobile computer may have
up to fourARM
-based chips.
Downloads
onourwebsite.
Strategic Report
ARMs annual report is in two parts. The Strategic Report contains
nancial management.
reportis also available online.
GOVERNANCE AND
FINANCIAL REPORT

STRATEGIC REPORT

ONLINE REPORTING
WELCOME TO OUR GOVERNANCE
AND FINANCIAL REPORT
Aspect House
Spencer Road
Lancing
BN99 6DA, UK
Phone: 0871 384 2139
www.equiniti.com
Ian Thornton
ARM Holdings plc
110 Fulbourn Road
Cambridge, CB1 9NJ
Phone: +44 1223 400796
Phil Sparks
ARM Holdings plc
110 Fulbourn Road
Cambridge, CB1 9NJ
Phone: +44 1223 405566
Laura Faid
ARM Holdings plc
Liberty House
Moorbridge Road
Maidenhead, SL6 8LT
Phone: +44 1628 427800


printer certied to
INVESTOR RELATIONS CONTACT DETAILS

please contact:
ARM Holdings plc
110 Fulbourn Road
Cambridge CB1 9NJ
United Kingdom
Telephone +44 (0)1223 400400
Facsimile +44 (0)1223 400410
www.arm.com
pinterest: ARMLtd
youtube.com/armix
ARM Holdings plc Annual Report 2013: Governance & Financial Report
EFFECTIVE GOVERNANCE
AND STRONG FINANCIAL
PERFORMANCE
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Simon Segars 734,433 472,927 1,207,360

Simon Segars 2,376,446 943,101 3,319,547

Simon Segars 125,853 251,706 5,346 257,052 2,376,446

Simon Segars 43,863 80,576 1,392 81,968 734,433

8 February 2011 44,190 52,683 52,683 551,064

8 February 2011 77,741 122,434 122,434 1,085,377

8 February 2010 106,341 165,679 165,679 796,088

Simon Segars 75,441 1.325 9.2168 595,362

and contains 100% recycled waste. The paper

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