arm holdings plc
1 10 fulbourn road
cambridge cb1 9nj
united kingdom
telephone 44 01223 400400
facsimile 44 01223 400410
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arm holdings plc annual report 2013 strategic report
arm holdings plc annual report 2013 strategic report arm holdings plc
strategic report 2013
our vision
  operational highlights 2
  financial highlights 3
  chairman’s review 4
  chief executive’s statement 6
 o ur 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
 o ur commitment
 governance 38
 sustainability 44
  risk management and principal risks 47
o ur financial review
  chief financial officer’s review 52
  summary accounts 58
 glossary 60
g overnance 
  chairman’s 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 flow statement 
  consolidated statement of changes  
in shareholders’ equity 
  notes to the financial statements 
  company balance sheetuk gaap 
  notes to the financial statements
uk gaap 
  independent auditors’ report to the 
members of arm holdings plc
g lossary and g roup 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 
afford to buy a smart device an entry
level mobile computer may have up to 
four arm
®
based chips
downloads
more information about arm and our 
end market opportunities are available 
on our web site
reports available online
  strategic report
  governance and financial report
  corporate responsibility report
arm’s 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 to governance 
sustainability and risk management and a summary of our 
financial management
a copy of the governance and financial report can be downloaded 
from wwwarmcomreporting2013 
the governance and financial report contains the details about 
how we run the business and remunerate management and how 
we organise ourselves financially
online you can find 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
stra tegi c  
repo rt
g ove rnan ce an d  
finan cial r epo rt
o nline  
repo rting
wel come t o our  
stra tegic rep or t
wwwarmcomreporting2013
the auditors’ report on the financial statements and the auditors’ statement under section 
496 of the companies act on whether the information given in strategic report and 
directors’ report for the financial year ended 31 december 2013 is consistent with the 
group financial statements were both unqualified and can be found on page 55 of the 
governance and financial report
if want to inform us of a change address 
or have lost your share certificate or have 
an enquiry about dividend payments 
please contact
equiniti shareholder services
aspect house 
spencer road 
lancing 
bn99 6da uk
phone 0871 384 2139
wwwequiniticom
for all other enquires please contact one of  
arm’s investor relations team
ian t hornton
head of investor relations 
arm holdings plc 
1 10 fulbourn road 
cambridge cb1 9nj
phone 44 1223 400796
email ianthorntonarmcom
phil sparks
investor relations manager 
arm holdings plc 
1 10 fulbourn road 
cambridge cb1 9nj
phone 44 1223 405566
email philipsparksarmcom
l aura faid
investor relations associate 
arm holdings plc 
liberty house 
moorbridge road 
maidenhead sl6 8lt
phone 44 1628 427800
email laurafaidarmcom
designed and produced by radley yeldar wwwrycom 
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®
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is process chlorine free pcf made at a mill with iso 14001 environmental 
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arm arm powered artisan and cortex are registered trademarks of arm 
limited arm7 arm9 arm1 1 pop and mali are trademarks of arm limited
inve stor rel ation s 
contac t d eta il s audito rs’ st atem ent
  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 armbased chips 
have been shipped and our partners are shipping 
more than 25 billion every quarter
our vision is to enable everyone to use 
technology to innovate and create new products 
and business models from students to startups 
to thoughtleading companies we are enabling 
people and devices to connect in ways that have 
never been possible before arm works in 
partnership with global companies to develop 
products that will help to make the world a 
better place for everyone
this report and my statement on pages 61 1  
help bring this vision to life
simon segars
chief executive officer
1 arm holdings plc
strategic report 2013
2
operati onal high ligh t s
a chieving more 
10 billion armbased chips 
arm’s customers reported that they had shipped more 
than 10 billion armbased chips into everything from 
phones and tablets to smart sensors and servers this 
takes the cumulative total of armbased chips shipped 
to over 50 billion
400 million armbased chips with  
mali
tm
 graphics 
arm’s mali graphics processor brings games and 
user interfaces to life with stunning 3d graphics
121 licences 
50 companies signed 121 licences by the end of 2013 
arm has signed more than 1000 licences with 348 
companies
1st armv8based chip shipped 
the armv8a architecture adds 64bit computing 
amongst other advances and is suitable for a wide 
range of devices from mobile phones to servers
1st arm biglittle
tm
 technologybased 
chip shipped 
biglittle technology further improves performance in 
energyefficient computing devices and first shipped in 
the samsung exynos family of chips
arm hired net 441 fulltime employees in 2013 
more than 70 of these new employees joined 
our rd 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 high ligh t s
a pla tform for gr owth
revenues 
11 18m 
22
normalised operating margin
49
normalised eps
206p
40
cash generation
£345m
29
full year dividend
57p
27
ifrs operating margin
21
 includes exceptional items of £101 million
ifrs eps
74p
35
includes exceptional items of £101 million
revenues
£715m
24 arm holdings plc
strategic report 2013
4
overview of the year
2013 was another successful year for arm 
during 2013 group revenue grew 22 to 
11177 million £7146 million this growth 
enabled us to invest in both rd and the 
business infrastructure that underpins future 
growth at the same time as improving 
profitability and increasing returns to 
shareholders by balancing increased longterm 
investment plans with improving profitability in 
the near term we were able to increase the 
dividend by 27 to 57 pence per share
the 121 licences that we signed in 2013 
demonstrate that we have a portfolio of 
processors and supporting technologies 
that enable 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 
lowpower 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
ch airman’ s revie w
inno v a ting for  
the digit al w orld
sir j ohn buc hanan
chairman
smart and connected digital devices are increasingly being used 
by billions of people all over the world and arm’s technology 
is at the heart of many of the chips used in today’s 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
our vision our performance our commitment our financial report
arm’s 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 beneficial 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 wellfunded competition in both these 
new areas and also in the mobile computing 
market where arm has a large share 
arm’s 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 
and a diverse 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 arm’s ceo since 2001 had 
decided to retire effective from 1 july 2013 
simon segars previously arm’s president 
became the group’s 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 company’s 
ip divisions simon’s proven technology 
expertise and management skills across a 
range of senior executive roles made him 
an excellent choice for ceo and he is highly 
qualified to take the group forward
chairman succession
in january 2014 arm announced my decision 
to step down from the arm board due to 
a medical condition my successor is stuart 
chambers who brings board and executive 
experience both in the uk and globally gained 
through his executive and nonexecutive 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 fine company
in conclusion i would like to thank all of 
arm’s employees for their effort and 
contribution in 2013 including the board 
warren and simon and the leadership team 
i look forward to seeing arm’s 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  
our people and the ability to deliver 
customer satisfaction in an increasingly 
demanding and competitive environment 
are the key determinants 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 arm’s 
chief executive officer and lead the group 
through its next stage of development in his 
12 years in charge warren oversaw
  arm’s strategy to transform mobile 
phones into smartphones and evolving 
into tablet computers
  arm technology being chosen for 
use beyond mobile devices with our 
customers deploying armbased chips 
in everything from sensors to servers
  more than 45 billion armbased chips 
shipped by 150 companies during 
his tenure
  arm broadening its technology offering to 
include a range of processors for different 
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 arm’s original handful of engineers 
embarking upon a new business designing 
processors that small business has now 
grown into a global technology leader 
with 2833 employees arm’s 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 arm’s employees 
has also been significant 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
ch ief executive’ s statement
vision for the future
arm holdings plc
strategic report 2013 7
from mobile phones to the internet 
of things
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 
next five 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 goods in the 
home industrial equipment and even light 
bulbs t ogether these factors are leading to 
the creation of a massive “internet of things”
internet of thin gs
t o better understand the business drivers for 
the internet of things we commissioned a 
report from the economist intelligence unit 
go to wwwarmcomiot to download 
the report
go to wwwarmcomiot  
to download the report
arm is well positioned to take advantage 
of the growth in the mobile devices market 
to benefit 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 
today’s 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 things about being 
ceo of arm is seeing our 
technology used in many of the most 
innovative products available today 
simon segars
chief executive officer
our vision our performance our commitment our financial report arm holdings plc
strategic report 2013
8
for more information on technology in health and wellness 
daniel kraft md presenting the “future of t echnology in 
health  medicine” at arm’s t echcon 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  hp’s moonshot” at arm’s t echcon 2013
for more information on how the internet of things can make 
the world a better and more efficient place nandini ramani 
vp java platform at oracle presenting “enabling compelling 
services for iot” at arm’s t echcon 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 we’ve 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 fitness 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 office 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 efficiency 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 hyperconnectivity  it is forecast that there 
will be a fivefold 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 t o 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 world’s population grows and the 
standard of living increases therefore it is 
important that we maximise the benefit 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 cloudbased computing these 
sensors can be linked together across very 
large areas to maximise the productivity of 
farms and regions
ch ief executive’ s statement continued
armbased 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 benefits 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 fields and orchards 
with the innovation taking place around 
armbased sensors and the emergence of 
lowcost and longrange wireless technologies 
we see lowercost devices being deployed in 
vast numbers to provide granular data to the 
agricultural industry 9
our vision our performance our commitment our financial report
for more information on how streetline is making parking 
smarter near you download the streetline’s parker app
for more information on how the scope tablet is being used 
in thai schools arm technology is addressing many of the 
world’s 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 arm’s 
t echcon 2013
smart parking with streetline networks
smart parking reduces traffic and pollution 
making happier citizens and more cost 
efficient cities dust networks’ wireless 
mesh network solution featuring the arm 
cortex
®
m3 processor  enables streetline 
networks to reliably gather the realtime 
status of municipal metered parking spots 
and use that data to reduce traffic congestion
improving education in thailand with tablets
the “one t ablet per child” otpc policy 
was launched by prime minister yingluck’s 
government in 2012 in an attempt to improve 
thai education in 2013 otpc tablets were 
provided to the ministry of education by firms 
including shenzhen scope featuring rockchip 
rk3066 with dualcore arm cortexa9 
processor and quadcore arm mali400 mp4 
graphics processing unit gpu with an 
average cost of around 80 per tablet
t ransport 
in 2008 for the first time in history over 
half of the world’s 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 
efficient 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 haven’t 
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 
effectively engage with them through the 
use of 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 armbased 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 cel’s 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 cortexm3 processor arm holdings plc
strategic report 2013
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 t ogether 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 selflessness constructive 
proactivity partner and customer focus and 
responsiveness in addition we encourage all 
employees to take pride in innovation and in 
their own selfdevelopment 
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 arm’s broad and 
diverse ecosystem
more than twothirds of arm’s employees 
are engineers specifying and inventing 
new technology to be licensed arm’s 
nonengineering 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 finance teams manage 
financial 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 t oday we 
have 31 offices in 15 countries with rd 
development sites in uk us china france 
germany t aiwan 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 
offices in the major regions where our 
customers develop armbased 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 
us today and i am confident that they will help 
the arm team to continue to develop create 
and license technology for years to come
  delivery of results
  t eamwork and selflessness
  constructive proactivity
  partner and customer focus
  responsiveness
  innovation
  personal development
we are  
supp orte d by 
  families
  communities
  local government
  suppliers
  investors
we supp ort 
  100s customers
  1000s 
ecosystem partners
  1000000 developers
  listen and understand 
customer and partner needs
  partner and customer focus
  responsiveness
  being a good neighbour to 
local communities
  increasing shareholder value
external
arm ’s share d principle s an d behavi our s
2833  
empl oyees
internal
multidiscipline teams work 
together to determine strategy
manage across diverse companies 
and ecosystem
ch ief executive’ s statement continued 11
our vision our performance our commitment our financial report
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 benefit both from increasing 
sales of computer chips and also increasing 
our market share with our smart power 
efficient technologies 
mobile communications and mobile 
computers were just the first markets to 
need smart electronics and almost all mobile 
devices sold today contain at least one 
armbased chip the smartphone market 
grew by about half in 2013 with many 
consumers upgrading from voiceonly 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 efficiency 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 first arm
based server chips sold we expect these 
markets to become increasingly significant 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 cortexm 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 offer our customers a more 
joinedup 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 arm’s 
business lines in addition he will manage two 
crossfunctional 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 
officer  t ogether antonio and ian will 
develop the ecosystem of companies that is 
so important to arm’s longterm success
well positioned for the future
arm’s 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 arm’s employees so 
that they can develop the next generation of 
technology that will enable our customers 
to create 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 arm’s own internal 
culture and is something we carefully 
manage as we grow in size both in terms of 
increased headcount and market influence 
and responsibility
as the new ceo of arm i am excited by 
this opportunity i am confident that arm’s 
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
chief executive officer
  architecture
  cpu
  physical design
  media processing
  systems  software
  development solutions
  partner enablement
commercial operation s
t ec hnical operation s arm holdings plc
strategic report 2013
12
“wearable” technology is helping to keep us fit and healthy many people 
use armbased 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 armbased devices can be found 
on pages 32–37 and also online
wwwarmcomreporting2013
helping
people perfo rm 13
our vision our performance our commitment our financial report arm holdings plc
strategic report 2013
our mar ketplace
where the market is now
14
the semiconductor industry develops chips that efficiently 
manage all of the world’s 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 
efficient 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 efficient 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 1000 companies 
in arm’s connected community 
arm shares knowledge experience and 
innovations with these companies enabling 
greater collaboration
where arm fits within the industry
arm is the global leader in the design of 
semiconductor ip components that form 
some of the critical elements within system
onchip 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 
lowpower and highperformance chip and 
that an oem can create complex programs 
using a combination of thirdparty 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 wellpositioned 
to benefit from this trend
100s of chip  
design companies
10 ip  
specialists 
10 t ools  
providers 
10  
fabricators 
10  
operating  
systems 
1000s of 
application developers 
1000s  
of service  
providers 
1000s  
of oems 
1000000000s  
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 entrylevel 
smartphones and tablets these are forecast 
to grow at about a 20 cagr over the 
next five years as consumers in emerging 
economies buy their first smartphones 
although these are entrylevel handsets these 
devices can still contain multiple armbased 
chips and the main applications processor 
will often have several arm processors 
an entrylevel smartphone will typically 
generate four times the royalty revenue of a 
simple voiceonly phone the midrange 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 affordable 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 office
  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 lowcost the chips within 
them often cost less than 1 and they are 
expected to be deployed in very high volume
read more on page 36
efficient networking – moving more 
data without using more energy
with mobile computing connecting us to each 
other  and increased machinetomachine 
communications between smart sensors 
it is forecast that mobile internet traffic will 
increase 12fold between 2012 and 2017 
as it and communications equipment is 
using an increasing proportion of the world’s 
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 technologybased systemonchip 
designs are well placed to provide lower 
power options for enterprise applications 
such as servers and networking equipment 
read more on page 34
trends within the semiconductor industry and its marketplace 
are bringing new opportunities and new competitive threats
our vision our performance our commitment our financial report arm holdings plc
strategic report 2013
16
our b u siness model
ho w and where  
we make money
arm is the world’s leading semiconductor intellectual property 
ip supplier  the technology we design is at the heart of many 
of the 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 our designs alongside their own 
technology to create smart energyefficient chips
arm licenses technology 
to semico partner 
arm designs technology 
for energyefficient chips
1  arm designs technology to go into 
energyefficient 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 2–3 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 t ypically 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 
difficult and expensive for our partners’ rd 
teams to develop for themselves it is more 
cost effective 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 rd 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 rd costs over the whole 
industry making digital electronics affordable 
and therefore available to more and more 
people across the world
t echnologies that are suitable  
for the arm business model
arm’s licensing business started in the early 
1990s with the development of our first 
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 2–3 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 
are generating 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 profitable as our partners design our 
technology into a broader range of end 
markets as our customers include the 
world’s largest semiconductor companies 
their regular royalty payments have become 
a reliable cash flow 
our vision our performance our commitment our financial report
arm technology in the  
hands of millions
oem customer builds 
consumer products
partner develops chips 
using arm’s designs
3  each arm design is suitable for a wide range 
of end applications and so can be reused 
in different chip families addressing multiple 
markets each new chip family generates a 
new stream of royalties an arm design 
may be used in many different chips and 
may ship for over 20 years 
4  arm’s flexible business model has proven 
to be suitable for different technologies 
end products licensing strategies and a 
broad range of ecosystem partners
business development
per chip royalty arm holdings plc
strategic report 2013
18
our global markets
the majority of arm’s revenues are earned from semiconductor 
companies that are based all over the world these companies sell 
their armbased 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 arm’s royalty revenues 
are derived from the chips in these oem products and arm therefore 
benefits 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 offices in 15 countries these offices both support local 
customers and also benefit 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 offices in noida india and 
oulu finland
our gl obal reach
where we w ork  
t ogether
nort h a merica
locations
8
employees
669
u k
locations
4
employees
1185
31
offices arou nd 
the world
348 
partners in  
18 cou ntries 19
r est of eur ope
locations
10
employees
355
as ia paci fic
locations
9
employees
624
 10bn
armbased chips  
sold in 2013

1000 
companies form 
the arm ecosystem 
bu ilding produ cts 
arou nd a common 
platform
2833 
employees 
work ing across 
14 cou ntries

75 
of the world’s 
popu lation u sed an 
armbased produ ct  
in 2013
our vision our performance our commitment our financial report arm holdings plc
strategic report 2013
20
strategy an d key per formance in dicat or s
our stra tegy for  
l ongterm gr owth
arm’s strategy is for our technology to continue to gain 
market share in longterm 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 
we expect arm technology to increase market share in  
other application areas
  building the base of licences that will drive future royalties
  growing the number of armbased chips
  increasing market penetration in target end markets
increase value per smart  
electronic device
as consumer products become smarter they often contain 
multiple armbased chips increasing our royalty opportunity 
smarter phones and tvs can generate 5–20 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 rd outsourcing and can command an 
upfront licence fee and an ongoing royalty
  developing and licensing new technology to generate additional 
royalty streams 
reinvestment and  
shareholder return
arm’s financial discipline balances the need for continued 
investment to generate longterm future growth whilst increasing 
today’s profitability and shareholder returns
  investing in arm’s product development and 
deployment capability
  growing normalised operating margins eps  
cash generation and dividends 
1
2
3



read more on page 27
read more on page 26
read more on page 25
read more on page 22 21
kpis
increase market  
penetration
arm has achieved a more than 95 penetration of mobile 
handsets as other end markets require smarter processors 
we expect arm technology to increase market share in  
other application areas
  building the base of licences that will drive future royalties
  growing the number of armbased chips
  increasing market penetration in target end markets
increase value per smart  
electronic device
as consumer products become smarter they often contain 
multiple armbased chips increasing our royalty opportunity 
smarter phones and tvs can generate 5–20 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 rd outsourcing and can command an 
upfront licence fee and an ongoing royalty
  developing and licensing new technology to generate additional 
royalty streams 
reinvestment and  
shareholder return
arm’s financial discipline balances the need for continued 
investment to generate longterm future growth whilst increasing 
today’s profitability and shareholder returns
  investing in arm’s product development and 
deployment capability
  growing normalised operating margins eps  
cash generation and dividends 
progress against strategy
our vision our performance our commitment our financial report arm holdings plc
strategic report 2013
22
kpi
building the base of licences 
tha t will drive future 
r oy al ties
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 1000 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 first 
ever arm processor licence
about a quarter of the deals signed in 2013 
were signed with companies taking their first 
arm processor licence the majority of these 
new partners are established semiconductor 
companies choosing arm technology for 
the first time as the trend towards smarter 
products gains pace so semiconductor 
companies are finding 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 reequip their rd teams with the 
latest processors for existing product lines 
in addition arm’s technology is becoming 
increasingly relevant to growing markets such 
as sensors computers and servers leading 
to more new customers acquiring their first 
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 1062
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
arm7911  5
cortexa family  29
cortexr family  7
cortexm family  39
mali  16
other  4
other includes architecture and subscription licences
the samsung chromebook delivers 
outstanding and hasslefree performance 
at an affordable price as of may 2013 
the samsung arm chromebook has led 
amazon’s list of bestselling laptops it is 
based on the samsung exynos 5 dual 
systemonchip which is powered by a 
dualcore arm cortexa15 processor 
and a quadcore arm malit604 gpu
1
increase market 
penetration 23
in 2013 arm’s 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 arm’s increasing relevance 
to equipment manufacturers as they choose 
armbased chips over chips containing 
proprietary processor designs 
arm’s total market share rose to 35 up 
from 32 in the prior year  the mobile 
phone was the first consumer electronic 
device where armbased chips started to 
be widely deployed in 2013 armbased 
chips could be found in more than 95 of the 
world’s mobile phones arm’s partners sold 
48 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 first time arm’s partners sold more chips 
into nonmobile markets than into mobile 
devices overall they sold 56 billion chips into 
nonmobile applications
the future opportunity
arm expects unit shipments and 
royalty revenues to grow faster than the 
semiconductor industry as arm continues 
to gain market share shipments of 
armbased 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
gr o wing the number  
of armbased chips 
shipments of arm processorbased chips bn
39
61
79
87
104
arm partners reported the highest ever number of armbased 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
arm911 22
cortexa family  17
cortexr family  4
cortexm family  30
nearly all mali graphics processors were in chips 
 containing a cortexa family processor
our vision our performance our commitment our financial report arm holdings plc
strategic report 2013
24
arm has seen 
increased design 
activ ity in enterprise 
networking  and 
the first armbased 
lowpower base 
stations were 
annou nced in 
february 2013
kpi
increasing market 
penetra tion in t ar get  
end market s
arm has increased market penetration into 
each of its key end markets in mobile phones 
settop 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 processorbased chips in 
most of the applications processors and 
baseband modems
enterprise networking 5
arm has seen increased design activity 
in enterprise networking and the first 
armbased lowpower basestations were 
announced by huawei and nsn in february 
2013 sales of armbased enterprise 
networking chips are expected to gradually 
ramp up over the next few years
digital tv s 50
as digital tvs become smarter they are more 
likely to need an arm processorbased 
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
the future opportunity
all of these target end markets have 
promising longterm growth prospects 
and arm’s market share gains look set to 
continue as many of arm’s partners have 
announced new products in these areas
market penetration 
y ear
mobile phones  

enterprise 
networking  

digital tv s  

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 armbased 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
100
116
132
148
169
09
10
11
12
13
arm royalty per mobile phone has continued to increase
kpi
increasing the v alue  
tha t arm receives for every 
smart device sold
2
increase value  
per smart  
electronic device
sales of chips into smart devices such as 
smartphones and highend digital tvs 
generate higher royalty revenue than basic 
phones and tvs
t ypically arm’s 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 perchip royalty
during 2013 the total number of 
smartphones sold increased by about 50 
we also saw sales of armbased mobile 
computers such as tablets grow to 
200 million in this period shipments of 
arm’s advanced cortexa family of 
processor doubled to 18 billion 
cortexa processors typically command 
a higher percentage perchip royalty than 
previous arm families which helped arm’s 
dollar processor royalty revenue to grow by 
19 despite the overall industry only growing 
by 1
the future opportunity
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 cortexa 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 entrylevel  
smartphone is promoting 3g uptake 
and dual sim cards in china by bringing 
consumers costeffective mobiles that 
are comparable to the world’s top 
smartphones the soc is based on 
mediatek mt6572 which brings one of 
the first dualcore soc with integrated 
platform for the lower end of the 
midmarket smartphones featuring power
efficient dualcore arm cortexa7 cpu 
and arm mali400 gpu
our vision our performance our commitment our financial report arm holdings plc
strategic report 2013
26
physical ip revenues m
359 362
413 438
492
522
487
562
637 653
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
devel oping and licensing 
new technol og y t o genera te 
additional r oy al ty 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 
hd video
many consumer electronic devices utilise 
3d graphics and highdefinition 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 mediat ek and samsung launched 
computing mobile and consumer electronics 
devices incorporating chips based on arm’s 
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 arm’s foundry partners
during 2013 arm saw strong licensing 
especially for advanced processes signing 
three foundry platform licences for arm’s 
physical ip that will drive future royalty 
revenues in addition arm signed 16 
licences for pop ip preconfigured physical 
ip components which assist partners in 
implementing arm processors we also 
received our first royalty revenue from 
physical ip used in 20nm manufacturing 
process and we created test chips at 16nm 
and 14nm which may yield royalty revenue 
in 2014 and beyond
the future opportunity
with a growing base of customers just starting 
to sell their chips in high quantities we expect 
that the number of chips enabled by arm’s 
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 
systemonchip which is designed using 
the arm biglittle technology featuring 
quadcore arm cortexa15 processor 
running at 19ghz and quadcore 
cortexa7 processor at 13ghz  
as well as arm malit628 mp6 gpu 27
number of employees at yearend
1024 1710
1191 1889
1382
1652
2115
2392
2833 1961
09
10
11
12
13
number of engineers t otal 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 
to maximise their capability and potential
in 2013 arm hired a net additional 
441 people the majority of our new 
hires were engineers to increase our rd 
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 
and 3d 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
onyear  expenditure on research and 
development under ifrs accounting was 
£203 million representing 28 of revenues 
and 22 growth yearonyear 
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
the future opportunity
arm expects to continue to invest in its 
employees as we develop our engineering 
capability and operational execution 
as arm technology is designed into more 
end markets we expect the business to 
become more profitable
kpi
investing in arm’s pr oduct 
devel opment and depl o yment 
cap ability
in 2013 arm hired 
a net additional 
441 people the 
majority of ou r 
new hires were 
engineers to 
increase ou r rd 
capability
our vision our performance our commitment our financial report arm holdings plc
strategic report 2013
28
arm’s business model and its exposure to 
structural growth markets means that arm 
is well positioned to grow its profitability 
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 profits
arm’s financial 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 world’s largest 
semiconductor companies their regular 
royalty payments have become a reliable cash 
flow given our broad base of partners and 
end markets arm is not overly reliant on any 
one company or consumer product for its 
future profits and cash
during 2013 arm generated £3445 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 
arm increased the dividend by 27 to 
57 pence 
the future opportunity
as royalty revenues become a greater 
proportion of arm’s overall revenues arm’s 
profitability and cash generation is expected 
to increase
150 312
263 404
303
361
451
456
491 215 
09
10
11
12
13
operating margin under ifrs normalised operating margin
operating margin 
normalised net cash generation

 £m
861
1799
2038
2673
3445
09
10
11
12
13
 including exceptional items of £1013 million
 normalised figures are based on ifrs adjusted for acquisitionrelated charges and charges relating to amortisation of 
intangible assets other than goodwill that have arisen on acquisitions sharebased payment costs profit or loss on disposal 
and impairment of availableforsale investments restructuring charges share of results in joint venture linaro™related 
charges and exceptional charges
 normalised net cash generation is defined as movement on cash cash equivalents shortterm and longterm deposits 
adding back dividend payments investment and acquisition consideration other acquisitionrelated payments sharebased 
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 inflows from share option exercises
kpi
gr owing normalised opera ting 
margins eps cash genera tion 
and dividends
arm’s financial 
discipline focu ses 
inv estment in 
areas of max imu m 
opportu nity such 
as the recru itment 
of more engineers 
to dev elop the 
nex t generation 
of technology 29
full year dividend
57p
27
ifrs operating margin
21
 includes exceptional items of £101 million
earnings per share pence
31 55
64 93
82
115
125
147
206 74
09
10
11
12
13
diluted eps under ifrs normalised diluted eps
dividend per share pence
242
290
348
450
 570
09
10
11
12
13
our vision our performance our commitment our financial report
normalised net cash generation
£345m
29
ifrs eps
74p
35
includes exceptional items of £101 million arm holdings plc
strategic report 2013
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 armbased chips can be small and energyefficient 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 armbased devices can be found  
on page 36 and also online
wwwarmcomreporting2013
our vision our performance our commitment our financial report arm holdings plc
strategic report 2013
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 2–4 years in many fastgrowing 
and emerging economies the smartphone 
penetration rate is much lower and 
growing rapidly 2013 was the first 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 
to the internet will live in asia already  
entrylevel 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 five years it is 
estimated that entrylevel 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
midrange smartphones are also forecast to 
grow rapidly with a cumulative total of  
two billion devices sold over the next five 
years a midrange smartphone needs to have 
the same functionality as the most advanced 
devices launched 12 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
t o meet the needs of such a diverse market 
arm has developed a family of processors 
and graphics technology that provides 
different levels of capability and performance 
whilst minimising size which reduces chip cost 
and improves battery life
arm’s cortexa family of processors is 
used in almost every smartphone and tablet 
computer  this includes the tiny cortexa5 
which is used in some android phones and 
provides sufficient computing for entry
level smartphones costing as little as 35 
in premium mobile computers you may find 
a highperformance cortexa15 processor  
which provides a complete computing 
experience in products such as the samsung 
galaxy note 3 and the hp chromebook
mobile c omputing
better mobile  
experiences
jame s bruce
director of mobile solutions
james has led arm’s mobile segment marketing 
team since 2013 he and his team maintain 
relationships throughout the mobile value chain 
including influential handset oems network 
operators and major software developers for 
mobile devices
smart mobile devices are making the world a more connected 
place smartphones and tablets are becoming more affordable 
and wireless highspeed 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 
and services new ways of working and new business models 
the mobile revolution is connecting a changing world 33
in 2013 we saw the first mobile computing 
devices based on arm’s next generation 
armv8 architecture this introduces even 
higher performance and greater power
efficiency as well as adding faster multimedia 
and improved security we also saw the first 
consumer products based on arm’s new big
little technology in a biglittle system 
we have combined a “big” highperformance 
processor with our most powerefficient 
“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 biglittle 
technology and armv8based processors 
arm’s 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 of their chips for mobile devices 
beyond china both mediatek and samsung 
announced that they were using mali graphics 
in their chips for highend mobile applications 
as with arm’s processor  mali offers 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 cortexa class 
processor also use our physical ip 
technology to help create the most efficient 
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 fitness 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 
offer us information whenever we need it 
streetline directs car drivers to the locations 
of available parking spaces across a city 
farmers and fishermen 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 effortlessly 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 arm’s broad range of high
performance and lowpower technologies 
will provide a common platform for much 
of this innovation
yulong coolpad 7231 
entrylevel smartphone 
entrylevel smartphones costing less 
than 150 are expected to grow to over 
half the market by 2018
in 2013 we saw 
the first mobile 
compu ting 
dev ices based 
on arm’s nex t 
generation armv8 
architectu re 
this introdu ces 
ev en better high
performance and 
power efficiency
mix of smartphones in 2018
entrylevel 1050
midrange 500
premium 350
source gartner january 2014 and arm forecasts
our vision our performance our commitment our financial report arm holdings plc
strategic report 2013
34
enterpri se in fra structure
increasing efficiency in 
network infrastructure  
and da t a centres 
increasing capability within the 
enterprise without increasing 
energy use
when combined with the emergence 
of other intelligent devices wearables 
computers and machinetomachine 
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 efficiency 
arm’s cortexa9 was our first processor 
to offer the performance and sustained 
throughput to be suitable in networking 
equipment or servers platforms based on 
cortexa9 started shipping in 2012 and the 
momentum has continued with cortexa15 
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 
and carrier equipment have announced 
armbased chips for this market including 
altera broadcom cavium freescale ibm 
hisilicon lsi t exas instruments and xilinx 
in february 2013 several leading carrier 
equipment providers announced armbased 
solutions for base stations including huawei 
and nokia solutions networks in 2013 
arm’s 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 lowpower equipment over 
the next few years we estimate that arm’s 
share in 2018 will be in the range of 2535 
as outlined opposite
charlene marini
v ice president of embedded segments
charlene joined arm in 2004 and has held multiple 
marketing roles in the group today charlene 
leads a 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 five years we estimate a 12fold increase in 
mobile data traffic  35
2018 
opportunity
chip t am 
m
chip value 
bn
t arget
penetration
mobile 
infrastructure 80 45 60
wireline 
infrastructure 60 25 30
corporate 
networks 940 60 30
cable
broadband
wlan 260 20 30
other 60 30 20
t otal 1400 18 2535
armbased 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 profitability 
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 
workloadspecific chips
by identifying a specific server workload it is 
possible to integrate many of the companion 
chips into a single chip creating a systemon
chip soc design replacing data transfers 
between different chips to transfers within 
an integrated chip and adding designedfor
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 first armv8 architecture
based chip for servers and advanced micro 
devices and cavium inc announced that 
they would have armv8based chips in 
2014 baidu inc a leading chinese web 
services company announced that they were 
deploying the first armbased storage server 
in their data centre and that the lowenergy 
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 armbased 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 armbased servers including dell and hp 
 15
licences signed by 
arm for enterprise 
network ing 
and serv ers in 2013
our vision our performance our commitment our financial report arm holdings plc
strategic report 2013
36
embedded co mputing
embedding intelligence 
everywhere
embedded intelligence creating an 
internet of thin gs
in 2013 approximately 19 billion smart 
microcontrollers were sold globally as these 
chips are used in a wide range of end 
markets they are generalpurpose controllers 
developed to be usable in all sorts of devices 
they can be very low cost and in 2013 the 
average selling price of a microcontroller 
was about 1
in 2013 there were about 3 billion arm
based microcontrollers and smart embedded 
chips sold over the last five years much of 
the growth in the embedded market can be 
attributed to armbased chips
many armbased microcontrollers used an 
arm cortexm 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 cortexm 
class processors in 2013
connecting intelligence to create 
an internet of thin gs
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 for example 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 a tk in son 
director of emerging technologies arm
gary is based in cambridge uk and spends his 
time travelling the world looking for new technology 
that already has or may have a use for armbased 
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  sensors 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 arm’s 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 armbased 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 benefit from a common underlying 
architecture making software and software 
tools reusable regardless of application 
which makes it easier and cheaper to develop 
internet of things devices for different 
end markets 
in 2013 arm acquired sensinode oy 
based in finland the team from sensinode 
is developing lowpower 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 
t ransportation t racking of luggage in an airport or shipping container around the world  
or even locating car keys in the home
intervehicle 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 effectiveness of existing networks
smart meters grids and appliances to use energy more efficiently
manufacturing t racking of critical equipment across a large site
more efficiently controlling throughput across a manufacturing process
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 needs them
agriculture remote monitoring of water and nutrient levels in the soil to control water 
and fertiliser 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 av erage price of 
a microcontroller 
was abou t 1 this 
cou ld decline as 
volu mes increase
our vision our performance our commitment our financial report arm holdings plc
strategic report 2013
38
go vernance
go vernance a t arm
this year’s 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 
wwwarmcomreporting2013 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 effectively 
and exercise judgement to manage the risks 
that we face to levels that are commensurate 
with the nature of our business there are 
welldefined differences between the roles 
of the executive and nonexecutive directors 
and their combined contributions as an 
experienced but healthily diverse board add 
value to the debate decisionmaking and 
development of strategy that are so crucial 
to the group’s success
the board actively considers longterm 
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 group’s 
performance and for overseeing the 
management of risk we seek to do this 
through a strong and effective governance 
system and by setting and following the 
standards that we expect from all our 
employees these standards are enshrined 
in arm’s 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 o’donovan 
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 fit 
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 
49 of this document
arm is committed to good corporate governance corporate 
responsibility and the highest ethical standards we believe that 
effective 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 officer 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 nonexecutive 
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 rd and our relationships 
with our customers are dependent upon 
the continuing efforts of our employees 
we need our employees to be engaged 
across the organisation it is therefore vital 
that all levels of staff are consulted and 
involved in decision making processes 
t o 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 group’s 
schemes to encourage share ownership 
diversity
after the changes referred to above the 
board will comprise three executive directors 
the chairman and five nonexecutive 
directors within this there are eight men 
80 and two women 20 which is 
broadly in line with the gender diversity of 
arm’s 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 arm’s code of business conduct 
and ethics a copy of which is published on 
the corporate website at wwwarmcom 
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 
wwwarmcomreporting2013 and a summary 
of highlights from the year are included in the 
cr section of this strategic report
investor relations
the board makes considerable efforts 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 officer  the chief financial 
officer and the vp of investor relations 
contact details for the investor relations team 
can be found on the inside back cover of 
this report
our vision our performance our c ommitment our financial 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
 sta with job grades 7–12 
 consisting of 136 of 2833 employees arm holdings plc
strategic report 2013
40
t otal directors’ pay 
in line with arm’s longstanding commitment to ethical values and culture our aim is to ensure that remuneration policies and practices drive 
behaviours that are in the longterm 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 benefits must be at a level that will attract retain and motivate highcalibre 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 group’s continuing strong performance is due principally to the proven abilities of our 
executive team
director
t otal amount  
of salary and fees  
£
all taxable  
benefits  
£
bonus payments  
£
2013 2012 2013 2012 2013 2012
executive
simon segars 400000  280000  73186  93284  543454  370605 
tim score 415000  400000  26031  25178  599374  529436 
mike muller 285000  275000  14940  15087  403718  349428 
warren east retired 30 june 2013 250000  490000 17041 15087 –  622617 
mike inglis retired 31 march 2013 71250  280000 11293 14692 –  355781 
t udor brown retired 3 may 2012 –  77586  – 9741 –  – 
t otal 1421250  1802586 142491 173069 1546546  2227867 
nonexecutive
sir john buchanan appointed 3 may 2012 390000  258879  –  –  –  – 
andy green 55000  52000  –  –  –  – 
larry hirst 55000  52000  –  –  –  – 
eric meurice appointed 1 july 2013 27500  –  –  –  –  – 
kathleen o’donovan 70000  65000  –  –  –  – 
janice roberts 61399  58314  –  –  –  – 
philip rowley 70000  65000  –  –  –  – 
doug dunn retired 3 may 2012 –  62069  –  –  –  – 
y oung sohn retired 31 december 2012 –  59906  –  –  –  – 
t otal 728899  673168  –  –  –  – 
t otal 2150149  2475754 142491 173069 1546546  2227867 
   all the executive directors receive family healthcare and annual travel insurance as part of their benefits in kind in addition tim score has the use of a company car with fuel benefit and 
warren east tudor brown mike inglis and mike muller received a car and petrol allowance simon segars receives living £61283 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 
taxefficient 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 first half of 2013 simon segars’ salary was £300000 following his appointment to ceo on 1 july 2013 his salary increased to £500000 resulting in an average for the year  
of £400000
go vernance
remunera tion summary 41
money and other assets receivable for 
periods of more than one financial year  
£
all pension  
related benefits  
£
t otal  
£
2013 2012 2013 2012 2013 2012
1207360 3319547 44000  30800 2268000 4094236
1727783 4783187 44156  42560 2812344 5780361
1193633 3276928 32148  31020 1929439 3947463
3123688 5532865 25000 49000 3415729 6709569
1680367 3341919 7125 28418 1770035 4020810
 – 1380904 – 10167 – 1478398
8932831 21635350 152429 191965 12195547 26030837
 –  –  –  –  390000  258879 
 –  –  –  –  55000  52000 
 –  –  –  –  55000  52000 
 –  –  –  –  27500  – 
 –  –  –  –  70000  65000 
 –  –  –  –  61399  58314 
 –  –  –  –  70000  65000 
 –  –  –  –  –  62069 
 –  –  –  –  –  59906 
 –  –  –  –  728899  673168 
8932831 21635350 152429 191965 12924446 26704005
our vision our performance our c ommitment our financial report 42
arm holdings plc
strategic report 2013
arm is working with literacy bridge to reach 40000 mothers in 
ghana to help improve maternal health pre and post natal
wwwarmcomreporting2013
sharing
kn owle dge 43
our vision our performance our c ommitment our financial report arm holdings plc
strategic report 2013
44
su stainab ility
delivering a social imp act 
thr ough our technol og y   
our comp any and our people
our ambition is to address global challenges 
achieve lasting impact and connect our 
charitable partnerships to our longterm 
business goals our approach is to
  work on longterm strategic partnerships 
with charities
  use external expertise to define the areas 
of greatest potential
  coordinate and drive collaboration 
between the projects we support 
sustainability and corporate responsibility 
cr are an important part of arm’s 
business our products are focused on 
energyefficiency and our business model 
is founded on partnership we are one of 
a handful of companies whose technology 
reaches from the billionaire to the subsistence 
farmer  t ogether  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 arm’s cr programme
our people across the world make the 
company successful our sustainability 
and cr activities help engage and support 
them around the broader benefits 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 
staff 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 vision our performance our c ommitment our financial report
our people
arm’s success relies upon a motivated 
innovative and highly skilled workforce 
working in an efficient friendly working 
environment maintaining this is our aim 
treating everyone equally is an important 
part of our approach so we provide the 
same benefits 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 
reflection feedback and direct experience as 
well as formal and onthejob training 
our charity fundraising and volunteering 
programme t eam arm encourages 
teamwork and engagement with arm’s cr 
areas of interest and strategic charity partners
we are investing more in t eam arm in 2014 
to deliver a wider range of opportunities 
for employee engagement in everything 
from charity hackathons to mentoring 
young engineers
arm finished 2013 with 2833 established 
employees an increase of 18 in 31 offices 
across 15 countries staff turnover dropped 
from 80 to 68
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 year’s 
graduate intake took part in the week 
supported by 70 senior staff from across 
the business maintaining a global culture 
and unity of purpose is critical and we 
invest accordingly
our responsible behaviour
arm’s 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 beneficial aspects of our 
business model and products
t o 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 7000 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 network’s 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 efforts 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 affects 
everyone despite independent assessment 
of arm as an environmentally lowimpact 
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 
a reduction 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 reflecting this arm has worked 
this year with shift a specialist nonprofit 
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 confident that our risk in this area 
is low but no company can afford to be 
complacent we have therefore adopted 
a general human rights policy in addition 
to related existing policies including those 
on conflict 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
strategic report 2013
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 offer  
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 benefits 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 first major sponsor of 
code club a nonprofit organisation helping 
primary school children learn computer 
coding arm’s early support taking a leap 
of faith in the founders’ vision led to the 
expansion of the team from two parttime 
founders to four fulltime and two parttime 
members of staff we saw the potential 
for the idea to scale and supported the 
entrepreneurial spirit of the two cofounders 
arm employees run 15 clubs and there are 
now a total of over 1500 clubs across the uk 
supporting 22000 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 “t alking 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 longterm 
strategy aiming to empower the world’s 
poorest families in 2013 we partnered with 
unicef in ghana on a major 18month 
project that will allow literacy bridge to prove 
their model at a scale of 40000 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 bridge’s prior work on agriculture 
which was outside the remit of the unicef’s 
project and provided the additional support 
needed this is an example of a company’s 
freedom to look at the big picture and 
across different issue areas something that 
is challenging for sectorfocused 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 lifechanging in a small health trial in jirapa 
district people adopted 90 of applicable 
health messages from the t alking book
in 2014 arm will continue its support for 
literacy bridge focusing on its rd efforts 
to use arm’s cortex m0 within a new chip 
that will deliver a significant reduction in 
manufacturing costs and power consumption 
of the technology
 
helping our local communities
arm’s approach to local community support 
is twofold 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 office 
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 different and so we build 
relationships at a local level and encourage 
each office 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 offices
arm is now working with community 
leaders to understand the most pressing local 
needs whether this is oneoff emergency 
support or longterm help for the areas of 
greatest deprivation 
this is a programme that we will be focusing 
on in 2014 we are confident 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 have self
assessed the cr report at gri level b 
and it can be found at wwwarmcom
reporting2013
su stainab ility continued
there were so many 
things we didn’t k now 
abou t raising healthy 
children bu t du e to the 
talk ing book we listen 
and learn healthy ways 
to raise ou r children
nadowli kuubataanono traditional birth attendant in the 
jirapa district ghana 47
r isk management an d principal ri sks
identifying and  
managing risks
at a strategic level our risk management 
objectives are to
  identify arm’s most significant strategic 
and operational risks
  develop plans to manage the risks 
identified with a clear owner assigned to 
each risk
  ensure that business growth plans are 
properly supported by an effective 
risk infrastructure 
  help executives improve the control and 
coordination of risk taking across the 
business and
  ensure arm’s assurance activities are 
focused on the organisation’s 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 defines 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 identified 
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 identified through senior 
management discussion topdown and 
regular reporting from every part of the 
business bottomup relevant risks are 
entered onto the crr and given an owner 
at senior management level arm’s ongoing 
operations and internal controls may mitigate 
the likelihood andor 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 
t echnology officer  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 committee’s 
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 
effectively the executive committee and the 
board review the crr on a regular basis 
internal audit assurance
arm’s internal audit function develops an 
annual internal audit plan designed to provide 
assurance that the management activities 
for the key risks identified are designed and 
operating effectively
arm has a robust risk management process in place to 
identify key 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
our vision our performance our c ommitment our financial report arm holdings plc
strategic report 2013
48
2 a competitor’s product or 
technology may lead to loss of 
market share
arm faces competition both from large 
semiconductor companies and from smaller 
ip companies intel is developing x86based 
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 costefficient 
lowpower chips t ogether we have created 
a highly competitive market and oems have 
enjoyed a wide choice of chips at different 
capabilities and pricing
arm’s established ecosystem includes many 
software and chip design engineers who 
understand how to build armbased chips 
and write software optimised for arm 
processors arm has enabled thousands 
of companies to offer 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 armbased chips
3 arm may face challenges managing 
its business in new geographic markets
chinese semiconductor companies have 
become responsible for an increasingly 
significant proportion of arm’s 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 
different 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 offices in both china and india 
for many years and 19 of our workforce is 
split between these two countries we have 
regional development offices 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 
arm’s business
4 we could suffer significant damage 
to our brand and reputation
arm’s 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 
confidential or proprietary information 
a fault or bug associated with one of arm’s 
products could damage arm’s corporate 
reputation and lead to a loss of brand value
mitigation
arm has rigorous quality assurance and 
verification 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 satisfied with 
our products or behaviour 
arm’s principal risks and uncertainties are 
outlined below
1 a change in the industry business 
dynamic may lead to loss of market 
share andor 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 startup 
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 arm’s 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 1000 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 
arm’s management team reviews our 
strategy and our longterm product 
development plans to test that we are 
developing the technology to meet the future 
needs of the industry
  see pages 14–17 for an overview of 
the industry and arm’s market position
r isk management an d principal ri sks continued
vi sion fo r t he future 49
7 arm may have to defend itself 
against thirdparties 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 thirdparties 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 
management’s attention
any assertion of intellectual property rights 
by a thirdparty 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 thirdparties except 
under strictly maintained procedures and with 
the benefit of appropriate licence rights in the 
event that a thirdparty 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 thirdparty’s intellectual property rights
from time to time arm enters into 
crosslicensing agreements and nonassert 
agreements with leading technology 
companies in 2013 arm was part of a 
consortium of companies that acquired rights 
to the patent portfolio of mips t echnologies 
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 financial impact 
of arm acquiring the patent portfolio 
of mips
8 significant concentration in our 
customer base may increase the risk 
to arm’s 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 2–3 new 
processors each year  reducing the impact of a 
customer asking us to change the specification 
of a product
9 assumptions that fundamentally 
underpin arm’s valuation may be 
undermined leading to a sudden 
depreciation of share price
arm’s valuation is based on the financial 
markets’ view of our growth opportunity 
and the value of arm’s assets revisions to 
assessments of our future markets could 
impact estimated cash flows changes to 
assumptions about the value of arm’s assets 
including goodwill could lead to the 
impairment of certain of arm’s assets
mitigation
at least once every year  we present to the 
financial markets the latest forecasts on the 
growth of the semiconductor industry and 
arm’s view of our opportunity to win share 
within that market
5 arm’s 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 
profitable in the future as a result of such a 
market change
mitigation
arm has wellestablished product 
specification and development processes 
and we work with thought leaders within 
various industries to ensure our technology 
is suitable for next generation digital products 
we spend some of our rd budget on 
longer term programmes to investigate 
how new scientific developments might 
impact the industry and how technologies 
in adjacent markets might impact arm and 
our ecosystem
6 arm’s current people processes 
andor 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 find our existing organisational 
structure culture and infrastructure cannot be 
adapted to meet the greater number of staff
mitigation
our multiyear planning process includes 
product development reviews alongside 
longterm 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 sufficient detail to identify 
early problems with specific teams locations 
or departments
our vision our performance our c ommitment our financial report
see pages 32 to 37 for an overview 
of arm’s main markets arm holdings plc
strategic report 2013
50 51
mad e 
t o mea sure
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 efficiently created 3d printers need smart electronics to 
control them and armbased chips are an ideal choice
wwwarmcomreporting2013
our vision our performance our commitment our financial r eview 52
arm holdings plc
strategic report 2013
arm’s 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 
sharebased payment charges relating to the 
issuance of arm sharebased remuneration 
to employees of the group acquisition
related charges linarorelated charges arm’s 
share of the results in joint venture changes 
in the value of and profit on disposal of 
availableforsale 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 figures allow for 
clearer comparisons of performance from 
year to year  and enable users of the accounts 
to better assess the underlying financial 
performance of the group
selected financial dataifrs
2013 
£m
2012 
£m
2011 
£m
2010 
£m
2009 
£m
revenues 7146 5769 4918 4066 3050
cost of revenues 393 319 277 261 255
gross profit 6753 5450 4641 3805 2795
t otal operating expenses before exceptional items 4205 3369 3152 2735 2339
exceptional items 1013 – – – –
t otal operating expenses after exceptional items 5218 3369 3152 2735 2339
profit from operations 1535 2081 1489 1070 456
operating margin 215 361 303 263 150
investment income net 131 136 80 31 16
share of results in joint venture 40 07 – – –
profit before tax 1626 2210 1569 1101 472
tax 578 603 443 241 68
profit for the year 1048 1607 1126 860 404
dividends paid 689 518 422 343 290
capital expenditure 170 332 130 74 69
research and development expenditure 2029 1663 1654 1397 1122
cash short and longterm deposits 7135 5276 4290 2918 1418
shareholders’ funds 13114 12061 10612 8949 7387
employees at end of year number 2833 2392 2116 1889 1710
c hief financial officer ’s revie w for t he future  
our financial stra tegy
this review discusses the group’s results against our key 
financial performance indicators and provides an overview of our 
financial strategy including how we intend to grow shareholder 
returns over the medium term and our approach to treasury 
and tax planning 53
normalised costs and expenses reconciled to ifrs costs and expenses
normalised 
£m
sharebased 
payments
£m
intangible 
amortisation  
and acquisition
related charges
£m
impairment  
of investments  
net of profit  
on disposals
£m
exceptional  
items
£m
linarorelated 
charges
£m
ifrs
£m
2013
cost of revenues 372 21 – – – – 393
research and development expenses 1483 451 95 – – – 2029
sales and marketing expenses 767 121 06 – – – 894
general and administrative expenses 1015 147 15 35 – 70 1282
t otal operating expenses before exceptional items 3265 719 116 35 – 70 4205
exceptional items – – – – 1013 – 1013
t otal operating expenses after exceptional items 3265 719 116 35 1013 70 5218
2012
cost of revenues 298 21 – – – – 319
research and development expenses 1340 258 65 – – – 1663
sales and marketing expenses 643 77 09 – – – 729
general and administrative expenses 859 98 14 06 – – 977
t otal net operating expenses 2842 433 88 06 – – 3369
growing revenues
during 2013 arm achieved record dollar 
revenues of 11177 million an increase of 
22 over the previous year  2013 sterling 
revenues of £7146 million were up 24 
yearonyear
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 
firstever arm processor licence t otal dollar 
licensing revenues in 2013 were 4479 million 
up 32 yearonyear 
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 arm’s 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 
armbased chips since 2009 dollar royalty 
revenues have grown at a cagr of 23 
outperforming the semiconductor industry by 
1020 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 financial statements
delivering efficiency
t o 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 arm’s 
revenues have grown more quickly than 
costs giving rise to an increase in normalised 
operating margin from 312 in 2009 to 
491 in 2013 over the same period ifrs 
operating margin rose from 150 to 215
developing new technology
as semiconductor technology becomes more 
complex the cost of designing chips and 
microprocessors increases this trend benefits 
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 effort 
than the last at 31 december 2013 arm 
employed 1961 engineers a 19 increase 
in the year 2012 1652 this represented 
69 of arm’s total employees 2012 69 
normalised research and development 
expenditure in 2013 was £1483 million ifrs 
£2029 million compared with £1340 million 
in 2012 ifrs £1663 million with the 
increase reflecting our ongoing investment in 
new technology development
in the year to 31 december 2013 arm filed 
210 patent applications worldwide bringing 
the total number of patents owned by arm 
to approximately 3500 
our vision our performance our commitment our financial r eview arm holdings plc
strategic report 2013
54
c hief financial officer ’s revie w continued for t he future
the following table shows nongaap measures used in this report including reconciliations from the ifrs measures they exclude 
acquisitionrelated charges sharebased payment costs and related payroll taxes restructuring charges profit on disposal and impairment 
of availableforsale investments share of results in joint venture linarorelated costs and exceptional items
2013 
£m
2012 
£m
2011 
£m
2010 
£m
2009 
£m
profit from operations  
per income statement 1535 2081 1489 1070 456
intangible amortisation and acquisitionrelated charges 116 88 64 114 162
sharebased payment costs and related payroll taxes 740 454 577 419 247
restructuring charges – – – 04 84
profitloss on saleimpairment of investments 35 06 18 – 02
linarorelated charges 70 – 69 44 –
exceptional items 1013 – – – –
normalised profit from operations 3509 2629 2217 1643 951
normalised operating margin 491 456 451 404 312
investment income net 131 136 80 31 16
normalised profit before tax 3640 2765 2297 1674 967
t ax per ifrs income statement 578 603 443 241 68
t ax impact of above charges 156 110 142 170 191
normalised profit after tax 2906 2052 1712 1263 708
normalised diluted eps pence 2059 1470 1245 934 545
ifrs diluted eps pence 743 1151 819 636 311
supporting our growth 
arm continues to invest in our finance it  
hr and legal teams to ensure that we have 
a robust infrastructure to support growth 
in the year to 31 december 2013 arm’s 
normalised general and administrative costs 
were £1015 million ifrs £1282 million 
compared with £859 million in 2012 ifrs 
£977 million as well as increasing our 
research and development capacity we 
invested in our teams that support the 
deployment of arm’s technology and in the 
development of the organisation 
paying our taxes
arm’s 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 offering 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 arm’s tax strategy and regularly 
reviews key developments that may influence 
the group’s global tax position
this includes approximately 500 patents 
acquired from mips t echnologies inc in 
january 2014
nurturing the ecosystem
t o ensure that arm’s products offer 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 longterm 
product development roadmap in october 
2013 arm held its annual technology 
conference where 5000 engineers and 
developers from across the arm partnership 
came together to learn about arm’s roadmap 
and to share their knowledge and experience 
of using arm technology  whilst discussing 
their plans for developing future armbased 
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 arm’s normalised sales and marketing 
spend was £767 million ifrs £894 million 
compared with £643 million in 2012 ifrs 
£729 million the yearonyear increase 
reflects the increased investment in customer 
support and marketing activities 55
managing our financial assets
arm’s business model is highly cash 
generative between 2009 and 2013 arm 
paid out £2262 million in dividends and 
our normalised net cash balance grew 
from £1418 million at the end of 2009 to 
£7063 million at the end of 2013
dividends 
the directors are recommending payment 
of a final dividend in respect of 2013 of 36 
pence per share which taken together with 
the interim dividend of 21 pence per share 
paid in october 2013 gives a total dividend 
in respect of 2013 of 57 pence per share an 
increase of 27 over 45 pence per share in 
2012 the total cash outflow from dividends 
paid in 2013 amounted to £689 million 
2012 £518 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 
of ifrs diluted earnings per share
subject to shareholder approval the final 
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 14 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 flat share count over 
time by offsetting dilution from sharebased 
remuneration with further share buybacks 
a large proportion of arm’s products 
are developed in the uk where the 
government offers credits to companies 
with rd 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 t ax on profits earned 
from patented technologies the lower rate 
of tax is being phasedin between april 2013 
and april 2017
arm also develops technology in the us and 
france where the respective governments 
also offer rd tax credits in 2013 arm’s 
normalised effective tax rate was 202 ifrs 
355 which reflects the benefit of the 
patent box legislation and other rd credits
arm’s normalised profit before tax in 2013 
was £3640 million ifrs £1626 million 
arm’s total tax contribution worldwide 
in 2013 amounted to £1625 million 
2012 £1524 million of which £1338 million 
2012 £1217 million related to tax collected 
on behalf of the tax authorities for employee 
payroll taxes £233 million 2012 £261 million 
related to corporation taxes £17 million 
2012 £13 million to property taxes and 
£37 million 2012 £33 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 identified a 
strategic opportunity to buyin ip rather than 
developing it internally such opportunities can 
take the form of an acquisition an investment 
in a startup company or the acquisition or 
licensing of thirdparty patents 
in 2013 arm spent a total of £211 million 
on two acquisitions 2012 £nil sensinode 
a finnish company with expertise in low
power radio communications software and 
geomerics a 3dgraphics software business 
more details on these acquisitions can be 
found in note 19 to the financial statements
acquisition of patent portfolios and 
indemnification 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 t echnologies inc’s portfolio of 
approximately 500 patents in february 2013 
the consortium acquired the patent rights 
for 350 million of which arm contributed 
1675 million arm’s contribution was 
classified within current assets as available
forsale 1005 million and other intangibles 
670 million in the financial statements 
the availableforsale financial asset 
represented arm’s 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 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
our vision our performance our commitment our financial r eview arm holdings plc
strategic report 2013
56
c hief financial officer ’s revie w continued for t he future
treasury policy
the group has established treasury policies 
aimed both at mitigating the impact of foreign 
exchange fluctuations on reported profits 
and cash flows and at ensuring appropriate 
returns are earned on the group’s cash 
resources the consolidated cash cash 
equivalents and deposits was £7063 million 
net of accrued interest of £72 million as at 
31 december 2013 2012 £5202 million 
net of accrued interest of £74 million 
net investment 
income was £131 million for 2013 compared 
to £136 million in 2012 the decrease is due 
primarily to the lower interest rates available 
on cash deposits in 2013
further information on financial risk 
management including currency interest 
rate securities price credit and liquidity risks 
is provided in notes 1 c 11 and 17 to the 
financial statements on pages 77 90 and 97
analysis of cash and normalised cash flow
2013 
£m
2012 
£m
2011 
£m
2010 
£m
2009 
£m
cash and cash equivalents 438 463 268 294 345
shortterm deposits 5441 3400 3191 2474 1055
shortterm marketable securities – – – – 18
longterm deposits 1256 1413 831 150 –
less interest accrued 72 74 50 17 –
normalised net cash at end of year 7063 5202 4240 2901 1418
less
normalised net cash at start of year 5202 4240 2901 1418 788
cash inflow from exercise of share options 60 56 85 240 191
cash inflow from sale of availablefor sale securities – – – 01 07
add back
cash outflow from payment of dividends 689 518 422 343 290
cash outflow from advance payment to the mips 
patent consortium – 1045 – – –
cash outflowinflow from investments and 
acquisitions net of cash acquired 256 88 173 110 97
cash outflow from investment in joint venture 37 75 – – –
cash outflow from restructuring payments – – – 45 35
cash outflow from other acquisitionrelated 
payments 46 38 31 – –
cash outflow from sharebased payroll taxes 163 144 124 32 07
cash outflow from payments related to linaro 35 35 34 27 –
cash outflow from ip indemnity and similar charges 418 – – – –
normalised net cash generation 3445 2673 2038 1799 861
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 significant longterm strategic advantage in 
owning this intellectual property purchased 
the patents outright for 4m in the first 
quarter of 2014 as a result of this there is 
no future cash to be received from bridge 
crossing and subsequently the availablefor
sale investment has been impaired giving 
rise to a noncash exceptional charge of 
£595 million
in the second and third quarters of 2013 
arm acquired a patent portfolio and 
indemnified a licensee’s legal costs related 
to that patent portfolio for a total cost of 
£418 million the cost of acquiring the patent 
portfolio and associated indemnification costs 
have been classified as exceptional items in 
the financial statements more details on the 
exceptional items can be found in note 6 to 
the financial statements 
equity investments
arm occasionally invests in innovative 
companies that operate in arm’s key 
markets any such investments are made 
on commercial terms usually alongside 
venture capital firms and other financial 
investors at the end of december 2013 
arm’s investment portfolio was valued at 
£139 million 2012 £138 million  57
principal risks and uncertainties
in line with the guidance for the preparation 
of an operating and financial review the 
principal risk factors faced by the group 
are identified 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 20f for the year ended 
31 december 2013 which is available on 
arm’s website at wwwarmcom 
further details of the group’s 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
arm’s strategy is to deploy this internal 
organisation to develop and license 
technology to semiconductor companies 
so that armbased products gain market 
share in longterm 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 arm’s progress against 
its longterm strategic objectives
pd revenues including revenues from 
services in 2013 were £5962 million  
9315 million compared with 
£4739 million 7498 million in 2012 
pd licensing revenues are driven by 
customers’ ongoing rd programmes 
royalty revenues increased in 2013 as arm 
technology continued to gain market share
pipd revenues in 2013 were £820 million 
1291 million compared with £683 million 
1084 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 £364 million 571 million compared 
with £347 million 549 million in 2012
profit before tax in the year for pd was 
£1696 million compared to £2306 million 
in 2012 normalised profit before tax in 2013 
for pd was £3455 million compared to 
£2667 million in 2012 the decrease in profit 
before tax reflects the exceptional items that 
were charged to the income statement in 
2013 under the normalised measure profit 
before tax in pd increased mainly as a result 
of increased revenues 
loss before tax in the year for pipd 
was £87 million compared to a loss of 
£145 million in 2012 normalised profit 
before tax in 2013 for pipd was £54 million 
compared to a normalised loss before tax 
of £34 million in 2012 loss before tax 
in the period for sdd was £62 million 
compared to £54 million in 2012 normalised  
profit before tax in 2013 for sdd was 
£12 million compared to £14 million 
in 2012 the improved results in both of 
these business segments are primarily due 
to increased revenues
as part of the ongoing evolution of the 
business the group’s divisional structure was 
reorganised on 1 january 2014 as a result 
of this change the group’s business segments 
may change for future reporting periods in 
order to reflect this new organisation
a more detailed segmental analysis is 
provided in note 2 to the financial statements
this strategic report is approved by the 
board of directors
by order of the board
t im sc ore
chief financial officer
our vision our performance our commitment our financial r eview arm holdings plc
strategic report 2013
58
for the year ended 31 december
2013 
£m
2012 
£m
revenues 7146 5769
cost of revenues 393 319
gross profit 6753 5450
operating expenses
research and development 2029 1663
sales and marketing 894 729
general and administrative 1282 977
t otal operating expenses before exceptional items 4205 3369
exceptional items 1013 –
t otal operating expenses after exceptional items 5218 3369
profit from operations 1535 2081
investment income 133 139
interest payable and similar charges 02 03
share of results in joint venture 40 07
profit before tax 1626 2210
t ax including £86 million in respect of exceptional items 578 603
profit for the year 1048 1607
earnings per share
basic and diluted earnings 1048 1607
number of shares millions
basic weighted average number of shares 13964 13751
effect of dilutive securities employee incentive schemes 154 207
diluted weighted average number of shares 14118 13958
basic eps 75p 117p
diluted eps 74p 115p
all the profit for the year is attributable to the owners of the company and all activities relate to continuing operations 
summary acc ount s
consolid a ted 
income st a tement 59
our vision our performance our commitment our financial r eview
for the year ended 31 december
2013 
£m
2012 
£m
assets
current assets
cash and cash equivalents 438 463
shortterm deposits 5441 3400
fair value of currency exchange contracts 51 14
accounts receivable 1362 1245
availableforsale financial assets 12 –
prepaid expenses and other assets 398 1356
current tax assets 69 139
inventories 30 23
t otal current assets 7801 6640
noncurrent assets
longterm deposits 1256 1413
loans and receivables 30 21
availableforsale financial assets 139 138
investment in joint venture 65 68
prepaid expenses and other assets 16 20
property  plant and equipment 336 361
goodwill 5259 5194
other intangible assets 829 112
deferred tax assets 653 701
t otal noncurrent assets 8583 8028
t otal assets 16384 14668
liabilities 
current liabilities
accounts payable 70 59
embedded derivatives 70 25
accrued and other liabilities 881 793
finance lease liabilities 27 29
current tax liabilities 188 166
deferred revenue 1567 1264
t otal current liabilities 2803 2336
noncurrent liabilities
accrued and other liabilities 26 –
finance lease liabilities 15 29
deferred tax liabilities 01 –
deferred revenue 425 242
t otal noncurrent liabilities 467 271
t otal liabilities 3270 2607
net assets 13114 12061
capital and reserves attributable to owners of the company
share capital 07 07
share premium account 181 122
capital reserve 3543 3543
share option reserve 614 614
retained earnings 8206 7033
cumulative translation adjustment 563 742
t otal equity 13114 12061
summary acc ount s
consolid a ted 
balance sheet 60
arm holdings plc
strategic report 2013
apps application software that runs within the chip
arm7911 arm7 processor was one of arm’s first commercial products 
arm9 and arm11 processors followed later 
armv8 latest family of arm processor designs
biglittle combination of two different arm processors on a single chip one big that delivers highperformance when 
needed with the other little running most of the time enabling long batterylife
cagr compound annual growth rate
cortex arm’ s 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  
for example 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 t erm 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 arm’ s family of 3d graphics processors
microcontroller mcu a microcontroller is a generalpurpose computer chip which hascan 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 arm’s 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 specific foundry’s 
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 settop box
systemonchip 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
g l ossary
key terms explained arm holdings plc
strategic report 2013
our vision
  operational highlights 2
  financial highlights 3
  chairman’s review 4
  chief executive’s statement 6
 o ur 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
 o ur commitment
 governance 38
 sustainability 44
  risk management and principal risks 47
o ur financial review
  chief financial officer’s review 52
  summary accounts 58
 glossary 60
g overnance 
  chairman’s 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 flow statement 
  consolidated statement of changes  
in shareholders’ equity 
  notes to the financial statements 
  company balance sheetuk gaap 
  notes to the financial statements
uk gaap 
  independent auditors’ report to the 
members of arm holdings plc
g lossary and g roup 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 
afford to buy a smart device an entry
level mobile computer may have up to 
four arm
®
based chips
downloads
more information about arm and our 
end market opportunities are available 
on our web site
reports available online
  strategic report
  governance and financial report
  corporate responsibility report
arm’s 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 to governance 
sustainability and risk management and a summary of our 
financial management
a copy of the governance and financial report can be downloaded 
from wwwarmcomreporting2013 
the governance and financial report contains the details about 
how we run the business and remunerate management and how 
we organise ourselves financially
online you can find 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
stra tegi c  
repo rt
g ove rnan ce an d  
finan cial r epo rt
o nline  
repo rting
wel come t o our  
stra tegic rep or t
wwwarmcomreporting2013
the auditors’ report on the financial statements and the auditors’ statement under section 
496 of the companies act on whether the information given in strategic report and 
directors’ report for the financial year ended 31 december 2013 is consistent with the 
group financial statements were both unqualified and can be found on page 55 of the 
governance and financial report
if want to inform us of a change address 
or have lost your share certificate or have 
an enquiry about dividend payments 
please contact
equiniti shareholder services
aspect house 
spencer road 
lancing 
bn99 6da uk
phone 0871 384 2139
wwwequiniticom
for all other enquires please contact one of  
arm’s investor relations team
ian t hornton
head of investor relations 
arm holdings plc 
1 10 fulbourn road 
cambridge cb1 9nj
phone 44 1223 400796
email ianthorntonarmcom
phil sparks
investor relations manager 
arm holdings plc 
1 10 fulbourn road 
cambridge cb1 9nj
phone 44 1223 405566
email philipsparksarmcom
l aura faid
investor relations associate 
arm holdings plc 
liberty house 
moorbridge road 
maidenhead sl6 8lt
phone 44 1628 427800
email laurafaidarmcom
designed and produced by radley yeldar wwwrycom 
this report has been printed on cocoon offset a paper which is certified by 
the forest stewardship council
®
 and contains 100 recycled waste the paper 
is process chlorine free pcf made at a mill with iso 14001 environmental 
management system accreditation this report was produced using the pureprint
®
 
environmental print technology a guaranteed low carbon low waste independently 
audited process that reduces the environmental impact of the printing process 
printed using vegetable oil based inks by a carbonneutral
®
 printer certified to 
iso 14001 environmental management system and registered to emas the eco 
management audit scheme
arm arm powered artisan and cortex are registered trademarks of arm 
limited arm7 arm9 arm1 1 pop and mali are trademarks of arm limited
inve stor rel ation s 
contac t d eta il s audito rs’ st atem ent
  arm holdings plc
1 10 fulbourn road
cambridge cb1 9nj
united kingdom
telephone 44 01223 400400
facsimile 44 01223 400410
wwwarmcom
twitter armcommunity
pinterest armltd
facebookcomarmfans
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en abling innov ation 
eve ryw here
arm holdings plc annual report 2013 strategic report
arm holdings plc annual report 2013 strategic report arm holdings plc
1 10 fulbourn road
cambridge cb1 9nj
united kingdom
telephone 44 01223 400400
facsimile 44 01223 400410
wwwarmcom
twitter armcommunity
pinterest armltd
facebookcomarmfans
youtubecomarmflix
arm holdings plc annual report 2013 governance  financial report
effective gove rnance  
and st rong f inanci al 
pe rfo rmance
arm holdings plc annual report 2013 governance  financial report g overnance 
  chairman’s introduction 1
  board of directors 4
  corporate governance 6
  directors’ report 23
  directors’ remuneration report 29
f inancial 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 flow statement 62
  consolidated statement of changes  
in shareholders’ equity 63
  notes to the financial statements 64
  company balance sheetuk gaap 109
  notes to the financial statements 
uk gaap 110
  independent auditors’ report to the 
members of arm holdings plc 115
g lossary and g roup directory
 glossary 117
  group directory 118
  key shareholder information 120
o ur vision
  operational highlights 
  financial highlights 
  chairman’s review 
  chief executive’s statement 
 o ur performance
  our marketplace 
  our business model 
  our global reach 
  strategy and key  
performance indicators 
  mobile computing 
  enterprise infrastructure 
  embedded computing 
o ur c ommitment
  governance 
  sustainability 
  risk management and principal risks
o ur f inancial review
  chief financial officer’s review 
  summary accounts 
 glossary  
f ront 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 afford to buy a smart device 
an entrylevel mobile computer may have 
up to four arm
®
based chips
d ownloads
more information about arm and our 
end market opportunities are available 
on our website
reports available online
  strategic report
  governance and financial report
  corporate responsibility report
arm’s 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 to governance 
sustainability and risk management and a summary of our 
financial management
the governance and financial report contains the details about 
how we run the business and remunerate management and how 
we organise ourselves financially
online you can find 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
g ove rnance and  
f inanci al repo rt
  
s tra tegic r epo rt
  
o nline repo rting
welcome to our governance  
and financial repor t
wwwarmcomreporting2013
equiniti s hareholder s ervices
aspect house 
spencer road 
lancing 
bn99 6da uk
phone 0871 384 2139
wwwequiniticom
ian t hornton
head of investor relations 
arm holdings plc 
1 10 fulbourn road 
cambridge cb1 9nj
phone 44 1223 400796
email ianthorntonarmcom
phil s parks
investor relations manager 
arm holdings plc 
1 10 fulbourn road 
cambridge cb1 9nj
phone 44 1223 405566
email philipsparksarmcom
l aura faid
investor relations associate 
arm holdings plc 
liberty house 
moorbridge road 
maidenhead sl6 8lt
phone 44 1628 427800
email laurafaidarmcom
designed and produced by radley yeldar wwwrycom 
this report has been printed on cocoon offset a paper which is certified by 
the forest stewardship council
®
 and contains 100 recycled waste the paper 
is process chlorine free pcf made at a mill with iso 14001 environmental 
management system accreditation this report was produced using the pureprint
®
 
environmental print technology a guaranteed low carbon low waste independently 
audited process that reduces the environmental impact of the printing process 
printed using vegetable oil based inks by a carbonneutral
®
 printer certified to 
iso 14001 environmental management system and registered to emas the eco 
management audit scheme
arm arm powered artisan and cortex are registered trademarks of arm 
limited arm7 arm9 arm1 1 pop and mali are trademarks of arm limited
investor rel ations cont act det ails 
 
if want to inform us of a change address 
or have lost your share certificate or have 
an enquiry about dividend payments 
please contact
for all other enquires please contact one of  
arm’s investor relations team governance financial report
1
chairman’s i ntrodu ction
a strong and effective 
governance system
the board’s 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 effectively and exercise 
judgement to manage the risks that we face 
to levels that are commensurate with the 
nature of our business there are 
welldefined differences in roles between the 
executive and nonexecutive 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 group’s success 
the board actively considers longterm 
strategy monitors challenges and supports 
the work of the executive committee and 
is responsible 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 group’s performance and for 
overseeing the management of risk we seek 
to do this through a strong and effective 
governance system and by setting and 
following the standards that we expect from 
all our employees these standards are 
enshrined in arm’s 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 o’donovan who chairs the 
audit committee and with assistance from 
external advisers we need to ensure that 
dear shareholder
welcome to arm’s 2013 governance and 
financial report this is the first year we have 
created the annual report as two documents 
a strategic report containing an update on 
arm’s progress during the year  a summary of 
our approach to governance and our financial 
results and a separate document giving more 
detail on governance at arm and our full 
accounts we believe that these two 
documents together fulfil the best practice 
guidelines given by the uk government’s 
department for business innovation and 
skills as ever we welcome your feedback 
and you can contact us via the investor 
relations website at wwwarmcomir 
s ir john bu chanan
chairman
this report explains the board’s commitment to good 
corporate governance corporate responsibility and the 
highest ethical standards we believe that effective 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 fit 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 officer on 1 july 2013 and 
the strong financial 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 simon’s experience and calibre within arm 
to appoint to this role following an extensive 
externally conducted review of candidates 
worldwide simon’s 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 confirm that he 
is highly qualified 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 warren’s achievements 
acknowledged through the award of a cbe in 
the 2014 new y ear’s 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 nonexecutive 
director of t esco 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 fine 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 nonexecutive 
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 longstanding member of the 
nomination committee we offer our deep 
thanks and wish him well for the future
the board reflects a balance between 
technology sector  commercial financial 
and general business skills with a highly 
experienced international team leading the 
business in both executive and nonexecutive 
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 nonexecutive 
directors with appropriate skills experience 
and diversity to complement our existing 
board members and maintain collectively  
an effective 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 officer transition and 
ensuring that the group’s performance 
targets were achieved in the challenging 
and competitive economic environment 
the board also provided clear strategic 
direction and ensured that the group’s 
standards of conduct met its expectations
the roles and specific 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 five nonexecutive 
directors at the year end there were eight 
men 80 and two women 20 which 
broadly reflects the gender diversity of arm’s 
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 nonexecutive 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
chairman’s i ntrodu ction continued governance financial report
3
development of strategy
the board’s work on defining our short and 
longterm strategic priorities at this important 
stage in the group’s 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 significant opportunities that have been 
identified these opportunities are in areas 
that include the evolving internet of things 
efficient networking armpowered servers 
and security applications more details are 
included in the strategic report that forms the 
other part of arm’s annual report 2013
corporate governance framework 
and role of the board
the group’s 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 
sarbanesoxley act 2002 us the board 
values good corporate governance and this 
is reflected 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
arm’s 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 
rowley’s chairmanship undertook a review 
of executive remuneration policy during 2012 
which resulted in the approval of our new 
longt erm incentive plan by shareholders 
at the 2013 agm the changes which take 
effect in 2014 reflect the latest guidelines and 
the desire of shareholders for 
  the simplification 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 
figures 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 longterm performancerelated pay longer 
holding periods and increased shareholding 
requirements are appropriate and ensure 
that arm’s 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 group’s code of business 
conduct and ethics a copy of which is 
published on the corporate website at 
wwwarmcom 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 antitrust 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 benefit arm
  t eamwork and selflessness
  constructive proactivity
  partner and customer focus
  responsiveness
  innovation
  personal development 
corporate responsibility
full details of our cr strategy and 
achievements can be found in the main cr 
report wwwarmcomreporting2013 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 board’s primary responsibility is to 
promote the longterm success of the group 
for the benefit of customers employees and 
shareholders and i am confident 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
governance and financial report 2013
4
board of d ire ctors
the experience  
of the team
arm’s 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 
this report are as follows
chief executive officer
chief financial officer
chairman
until 1 march 201 4
independent  
nonexecutive director
s imon s egars 46
t im sc ore 53
s ir john bu chanan 70
a ndy g reen 58
committees
nomination committee chairman from 1 march 2014
current directorships
rexam plc chairman
t esco plc independent nonexecutive 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
current directorships
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 officer 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 field of embedded 
cpu architectures
committees
risk review committee
compliance committee
current directorships
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 officer 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  
until 1 march 2014
current directorships
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 financial operational and 
marketing positions including executive experience in different 
countries he is a former chief financial officer of bp plc and 
a former deputy chairman and senior independent director 
of vodafone group plc
committees
remuneration committee
nomination committee
current directorships
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 eskills uk the uk sector skills council for 
business and information t echnology is on the board and the 
president’s committee of the cbi and is a companion of the 
chartered management institute
chairman
from 1 march 201 4
s tuart cham bers 57 governance financial report
5
independent  
nonexecutive director
senior independent  
nonexecutive director
independent  
nonexecutive director
independent  
nonexecutive director
chief technology officer
independent  
nonexecutive director
larry h irst 62
kath leen o ’d onovan 56
eri c meuri ce 57
jani ce r o berts 58
mike mu ller 55
phil ip r ow ley 61
committees
remuneration committee chairman from 1 january 2014
audit committee until 31 december 2013
current directorships
mitie group plc nonexecutive 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 eskills 
uk the uk sector skills council for business and information 
t echnology he was awarded a cbe in 2006
committees
audit committee chairman
nomination committee
current directorships
invensys pension trustee ltd chairman
trinity mirror plc nonexecutive director and chairman of 
the audit committee
d s smith plc nonexecutive director
time on board
7 years 3 months
expertise
kathleen o’donovan joined the board in december 2006 
previously she was a nonexecutive 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 nonexecutive director of o2 plc prior to that she was 
chief financial officer of btr plc and invensys plc and before 
that she was a partner at ernst  y oung
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 officer 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 t elevision 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
remuneration committee
current directorships
mayfield fund venture adviser
realnetworks inc nonexecutive director
zebra t echnologies corporation nonexecutive director
time on board
3 years 2 months
expertise
janice roberts joined the board in january 2011 she is a 
venture adviser at mayfield fund having been a managing 
director from 20002013 mayfield is a silicon valleybased 
venture capital firm 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
current directorships
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 t echnology 
officer  in october 2001 he was appointed to the board
committees
remuneration committee chairman until 
31 december 2013
audit committee
nomination committee
current directorships
promethean world plc nonexecutive 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 qualified chartered accountant and was 
group finance director of kingfisher 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 officer of emi music worldwide arm holdings plc
governance and financial report 2013
6
corporate governan ce
a balanced  
 bo ard str u c ture
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 sarbanesoxley act 2002 us for 
the eighth successive year  the company’s 
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 group’s business 
the board’s core activities include
  providing leadership for the group
  active engagement in developing the 
group’s longterm strategy
  monitoring executive actions standards 
of conduct performance against business 
plans and budgets and ensuring that the 
necessary financial resources and people 
are in place for the group to meet 
its objectives
  obtaining assurance that material risks to 
the group are identified that appropriate 
systems of risk management and control 
exist to mitigate such risks and defining the 
group’s appetite for risk 
  board and executive 
management succession
  responsibility for the longterm success 
of the group having regard to the interests 
of all stakeholders 
  responsibility for ensuring the effectiveness 
of and reporting on our system of 
corporate governance
the board has a formal schedule of 
matters specifically reserved for its decision 
which include
  group strategy and major 
business decisions
  annual budgets and longterm plans
  major capital expenditure acquisitions 
disposals and investments
  financial reporting controls and 
financial structure 
  shareholder communications
  key policies 
  key advisers
the schedule was reviewed in january 2014 
composition and operation of 
the board
at the end of 2013 the board comprised 
three executive directors the chief executive 
officer  the chief financial officer and the 
chief t echnology officer the chairman 
and six independent nonexecutive 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  governance financial report
7
chairman
stuart chambers
key objectives  
leadership operation and 
governance of the board
board
11 directors – three executive directors the chairman  
and seven independent nonexecutive directors
key objectives  
the overall conduct of the group’s business and setting the group’s strategy
nomination  
committee
three independent  
nonexecutive 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 effective in discharging 
its responsibilities
r is k r eview 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 group’s strategic and business objectives  
and to monitor the progress of actions  
designed to mitigate such risks
exe cutive committee
14 members including the executive 
directors key division and function 
heads chairman simon segars
key objectives  
to focus on strategy the daytoday running  
of the business financial and competitive 
performance organisational development 
succession planning and implementation of policies
d is closure committee
six members chaired by the chief 
executive officer 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  
nonexecutive directors 
chairman kathleen 
o’donovan
key objectives  
to monitor the integrity of the 
group’s financial statements to 
review the effectiveness of the 
group’s internal controls over 
financial reporting and to provide 
oversight for the group’s risk 
management systems
r emuneration  
committee
four independent  
nonexecutive directors 
chairman larry hirst 
key objectives  
to review and make 
recommendations to the board  
on executive remuneration
chief exe cutive  
offi cer
simon segars 
 
 
key objectives  
to manage the group’s business 
and with the executive committee 
to implement group strategy 
and policies
board and committee stru cture arm holdings plc
governance and financial report 2013
8
conflicts
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 conflicts of interest questionnaires 
and any planned changes in their directorships 
outside the group are subject to prior 
approval by the board no conflicts of 
interest arose in 2013 or to date in 2014 
and no other situations have been identified 
that might lead to a conflict of interest 
in circumstances where a potential conflict 
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 nonexecutive directors on appointment 
and continues to do so on an ongoing 
basis the independence of the longer 
serving nonexecutive directors kathleen 
o’donovan and philip rowley has been 
considered kathleen o’donovan 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 nonexecutive 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 affect the 
judgement of any of them it is the policy 
of the board to review the continued 
appointment of nonexecutive 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 
nonexecutive directors’ expertise
kathleen o’donovan 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 nonexecutive 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 group’s 
technology and the practices of major us
based technology companies philip rowley 
and kathleen o’donovan are both financial 
experts with strong financial backgrounds 
the beneficial 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 
officer’s report on the status of the business 
incorporating industry and strategic 
development and the chief financial 
officer’s report incorporating financial 
market and investorrelated information 
on a cyclical basis board agendas also include 
detailed assessments of risk governance 
corporate responsibility public affairs 
performance by division and geographical 
area competitive landscape rd and 
organisationsuccession planning 
approximate allocation of board agenda time in 2013
strategy and risk 51
business updates
ﬁnancial 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 officer after the meeting 
the nonexecutive 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 confirmed 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 governan ce continued governance financial report
9
during 2013 the nonexecutive 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 lowpower  lowcost 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 nonexecutive directors 
without the executives present and the 
nonexecutive 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 financial year 
scheduled  
board meetings
conference calls 
ad hoc meetings
number 6 6
sir john buchanan 66 56
simon segars 66 66
andy green 66 66
larry hirst 56 66
eric meurice 23 33
mike muller 66 56
kathleen o’donovan 66 56
janice roberts 66 56
philip rowley 66 66
tim score 66 56
warren east retired 30 june 2013 33 33
mike inglis retired 31 march 2013 22 11
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 nonexecutive director 
of t esco plc
the chairman has primary responsibility for 
running the board and the chief executive 
officer 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 officer 
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 officer 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 officer 
on his appointment these priorities include 
development of the organisation and the next 
generation of executives working effectively 
with the board ensuring appropriate strategic 
decisions are made on investments employee 
motivation and customer focus  arm holdings plc
governance and financial report 2013
10
main responsibilities of the chairman include
  leadership of the board and creating the 
conditions for overall board and individual 
director effectiveness 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 effective and 
complementary board
  ensuring that there is effective 
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 
chief executive officer
main responsibilities of the chief executive 
officer include
  proposing and developing the group’s 
strategy and overall commercial 
objectives in conjunction with the 
executive committee
  daytoday management of the 
group’s business
  chairing the executive committee
  maintaining a close working relationship 
with the chairman 
  meeting regularly with arm’s leading 
customers for executive discussions on 
broad strategic and industry trends
  hosting discussions with influential 
media outlets
  fostering good relationships with 
arm’s larger shareholders and major 
financial 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 group’s 
expense is also administered through her 
annual report information and 
communication with shareholders 
and other 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 group’s 
position lies with the board 
the board delegates daytoday 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 efforts 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 
chief executive officer  the chief financial 
officer 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 
t erm 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 
group’s 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 
corporate governan ce continued governance financial report
11
at present over 30 sellside analysts write 
research reports on the group and their 
details appear on the group’s 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’ briefings 
the board also receives feedback from the 
group’s brokers and financial pr advisers 
who in turn obtain feedback from analysts 
and brokers following investor roadshows 
all shareholders can register to receive the 
group’s 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 questionandanswer 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 group’s website
board evaluation
the board undertakes an annual review of its 
effectiveness in order to provide the longest 
possible period in which to evaluate the 
performance of the board following the change 
of chief executive officer 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 findings 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 board’s role
  the operation of the board which was 
observed first hand
  the operation of each of the 
audit remuneration and 
nomination committees
the overall conclusion was that individual 
board members are satisfied that the board 
works well and operates effectively in an 
environment where there is constructive 
challenge from the nonexecutive directors 
they are also satisfied with the contribution 
made by their colleagues and that board 
committees operate properly and efficiently 
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 
strategic planning and review process 
to the nonexecutive directors
  the number and scheduling of 
board meetings
  increased focus on strategy which has been 
addressed by the chief executive officer 
including a strategy update within each of 
his reports and scheduling an additional 
fullday meeting in april 2014
  a continuing programme of development 
sessionsteachins for the nonexecutive 
directors in order to provide them with 
a more detailed appreciation of possible 
strategic and technological developments 
the first of these on the internet of 
things technology was held in february 
2014 and further sessions are planned
  continuing development and 
documentation of risk assessment 
and risk appetite arm holdings plc
governance and financial report 2013
12
the nonexecutive 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 
specific 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 first three months this will include 
several days with the chief executive officer 
in silicon valley to see the group’s 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 group’s key customer event of the 
year andor the arm t echcon in the us 
board members are also invited to attend the 
annual analyst and investor day these events 
offer the opportunity to understand more 
about the business products technology 
development roadmap customer base and 
investor perspective
t raining
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 nonexecutive are encouraged 
to attend suitable training courses at the 
group’s expense 
t erms of reference
the terms of reference of the audit 
remuneration and nomination committees 
are published on the group’s website at 
wwwarmcom
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 group’s 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 identified 
through the operational planning process 
particularly corporatelevel 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 officer  chief financial 
officer  the chief t echnology officer  
the chief operating officer  the chief 
information officer  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 officer  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 group’s website at 
wwwarmcom 
management structure
the group has a traditional uk board 
structure with a unitary board comprising 
the chairman executive and nonexecutive 
directors the audit and remuneration 
committees are made up of independent 
nonexecutive 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 assurancehead 
of internal audit also has a separate reporting 
line to the chairman of the audit committee
corporate governan ce continued governance financial report
13
g o v ernance re view t eams operational review meetings
committees
board
remuneration  
committee
business 
review meeting
kpi financial 
sign off 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 t eam
management  
system t eam
customer 
satisfaction t eam
corporate product 
approval t eam
security  
review t eam
business 
continuity t eam
health safety and 
environment t eam
executive committee
disclosure committee
holdings board audit committee
business  
assurance  
internal audit
management stru cture arm holdings plc
governance and financial report 2013
14
audit committee
  
 
committee composition and meeting 
attendance during 2013
name of director position meetings attended
kathleen o’donovan senior independent director committee chairman 66
larry hirst independent nonexecutive director 56
janice roberts independent nonexecutive director 66
philip rowley independent nonexecutive director 66
kathleen o’donovan has chaired the 
committee since january 2011 she is 
qualified as the committee financial expert 
as defined in the sarbanesoxley act 2002 
us philip rowley is also qualified to fulfil this 
role both have recent and relevant financial 
expertise in compliance with the code 
provision c31 the external auditors chief 
executive officer  chief financial officer  the 
vp finance arm group the vp business 
assurancehead of internal audit the head 
of t ax and the company secretary attend 
all meetings in order to ensure that all the 
information required by the committee for it 
to operate effectively is available the group 
chairman and other board members also 
attend committee meetings from time to time 
kath leen o ’d onovan
committee chairman
“the committee’s key objectives are to provide effective 
financial governance and to assist the board in ensuring the 
integrity of the group’s financial reporting the committee 
oversees the external and internal audit processes and reviews 
the risk management framework the effectiveness of the risk 
management processes and the system of internal control 
the committee will continue to evolve its activities in the light 
of guidance 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 group’s 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 
assurancehead of internal audit the 
chairman of the risk review committee 
the external auditors the chief financial 
officer 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 
committee and the external audit partner 
again organised a meeting for the ukbased 
pricewaterhousecoopers llp audit and 
tax teams and the arm finance 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 group’s expectations 
from the internal and external audit processes governance financial report
15
in line with the requirement in the uk 
corporate governance code applicable 
to financial years commencing on or after 
1 october 2012 based on both internal and 
external audit reviews and confirmations from 
management the committee and the board 
believe that the annual report taken as a 
whole is fair  balanced and understandable 
and provides the information necessary 
for shareholders to assess the company’s 
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 indepth review of the 
group’s 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 group’s 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 sarbanesoxley 
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 nonaudit services and assessing 
their nature extent and cost effectiveness 
  assessing the external auditors’ 
independence and objectivity the 
effectiveness of the audit process and fees 
  undertaking an assessment of the 
effectiveness of the committee which 
took place early in 2014 and concluded 
that its performance was effective
  monitoring the integrity of the financial 
statements of the group and any formal 
announcements relating to the group’s 
financial performance and reviewing any 
significant financial reporting judgements 
and the clarity of disclosures
  reviewing the effectiveness of the group’s 
internal controls over financial reporting
  providing oversight of the group’s risk 
management framework and process
  making recommendations to the board in 
relation to the appointment remuneration 
and resignation or dismissal of the group’s 
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 
by the board
financial reporting judgements
each quarter  the committee reviewed 
accounting papers prepared by management 
on areas of financial 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 
of 2013 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 
management’s assessment that no 
reasonable variation in key assumptions 
would affect 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 group’s participation 
in a consortium of technology companies 
that acquired rights to mips t echnologies 
inc’s portfolio of patents in february 
2013 consideration of the impairment 
of the value of 1005 million which was 
classified as an availableforsale afs 
financial 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 noncash exceptional charge of 
£595 million the committee reviewed 
the situation in detail and concurred with 
management’s view that this impairment 
was necessary  more details are contained 
in note 6 on page 85
  consideration of management’s 
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 group’s 
general counsel arm holdings plc
governance and financial report 2013
16
  consideration of the key judgements 
made in estimating the group’s tax charge 
and review of any tax provisions in respect 
of open areas together with assessment 
from independent experts
  consideration of the group’s tax strategy 
and key developments that may influence 
the group’s global tax position
internal audit
the committee noted further improvements 
in the development and effectiveness of the 
business assuranceinternal 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 
lloyd’s register quality assurance
as well as the committee’s formal meeting 
with the vp business assuranceinternal 
audit the chairman of the committee meets 
him informally throughout the year in order to 
provide the opportunity for open and timely 
dialogue t ypically 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 pwc’s audit 
strategy and the audit approach key areas 
of focus and audit plan produced as a result 
pwc explained their riskbased 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 financial statements
in addition to the private meetings held with 
the external auditors and the committee 
the chairman of the committee meets with 
the pwc team on a regular basis to provide 
the opportunity for an open communication 
regarding any concerns as well as to 
understand their assessment of key 
judgements as they arise
auditor effectiveness and 
partner rotation
pricewaterhousecoopers llp have been the 
group’s 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 fifth yearend the last 
audit partner rotation took place early in 2012 
the committee considers that the relationship 
with the auditors is working well and remains 
satisfied with their objectivity and effectiveness 
this view is supported by a review of the 
effectiveness 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 effective accordingly 
the committee has not considered it 
necessary to date to require the firm 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 satisfied 
that the auditors’ procedures are sufficient to 
maintain their independence and objectivity  
the committee has also considered the level 
of nonaudit 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 group’s choice of external 
auditor  the committee also keeps under 
review the value for money of the audit 
policy on auditors providing  
nonaudit services
t o avoid the possibility of the auditors’ 
objectivity and independence being 
compromised there is an agreed policy in 
place on the provision of nonaudit services 
by the auditors which sets out arrangements 
for approving
  services that require general preapproval 
by the committee
  services that require specific pre
approval by the committee before 
work commences 
  services that cannot be provided by 
the auditors
this nonaudit services policy is reviewed 
annually the group’s 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 costeffective 
manner  given their familiarity with the 
group’s business in other cases the group 
has engaged another independent firm 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 financial statements 
kathleen o’donovan
committee chairman
5 march 2014
audit committee continued governance financial report
17
nomination committee
as announced on 27 january 2014 it is with 
much regret that i stepped 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 finalising 
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 defining 
the skills and attributes required for future 
nonexecutive director appointments to ensure 
that the board comprises individuals with the 
requisite skills knowledge and experience to 
ensure that it is effective in discharging its duties
s ir john bu chanan
nomination committee chairman  
until 1 march 2014
“the committee’s key task in 2013 was the selection of a 
new chief executive officer which resulted in the promotion 
of simon segars to the role on 1 july 2013 this followed 
an extensive externally conducted review of candidates 
worldwide and simon’s proven technology expertise and 
management skills across a range of senior executive roles 
resulted in him being selected the committee also identified 
and appointed eric meurice who has significant experience 
in the semiconductor industry to the board on 1 july 2013 
as an additional independent nonexecutive director again 
this appointment followed an extensive externally conducted 
review of candidates” arm holdings plc
governance and financial report 2013
18
nomination committee composition and 
meeting attendance during 2013
name of director position meetings attended
sir john buchanan chairman 33
kathleen o’donovan senior independent director 44
philip rowley independent nonexecutive director 44
andy green independent nonexecutive director  
appointed 21 february 2013 33
during the year  the activities of the 
committee included engaging external search 
firms to seek and introduce candidates and 
interviewing a number of candidates in each 
case for the following roles
  chief executive officer 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 nonexecutive 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 nonexecutive director  
kathleen o’donovan 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 firms 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 firms
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 
committee’s 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 effective board we will also 
be looking for financial expertise in light of 
the forthcoming retirement of philip rowley 
in may 2014 following his nine years’ service 
on the board 
sir john buchanan
chairman until 1 march 2014
5 march 2014
nomination committee continued governance financial report
19
corporate governan ce report
 
internal controlrisk 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 group’s risks are 
managed within a systematic process of risk 
identification 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 effectively 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 confirms that the necessary actions 
have been or are being taken to remedy any 
significant failings or weaknesses identified 
from this process in a timely 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 
effectiveness while implementation of 
internal control systems is the responsibility 
of management the group has implemented 
an internal control system designed to 
help ensure
  the effective and efficient operation of 
the group and its divisions by enabling 
management to respond appropriately to 
significant risks to achieving the group’s 
business objectives
  the safeguarding of assets from 
inappropriate use or from loss and fraud 
and ensuring that liabilities are identified 
and managed
  the quality of internal and 
external reporting
  compliance with applicable laws and 
regulations and with internal policies on the 
conduct of the group’s business and
  the ability to recover in a timely manner 
from the effects of disasters or major 
accidents that originate outside the 
group’s direct control
compliance with section 404 of the 
sarbanesoxley act 2002 us has been 
successfully achieved for each financial year 
since it became effective for foreign private 
issuers in 2006 this is reported on in more 
detail in the annual report on form 20f 
that is filed with the sec the processes and 
procedures for identifying evaluating and 
managing the significant business operational 
financial compliance and other risks facing 
the group have been successfully integrated 
into daytoday 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 financial compliance 
and operational controls is fully documented 
and compliance is monitored through 
periodic controls testing during each year  
the effectiveness of individual controls is 
also reviewed with their owners within the 
divisions and functions to ensure efficacy 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 identified control issues with group
level significance 
the board has reviewed and approved the 
system of internal control including internal 
controls over the consolidation process 
and financial reporting which have been in 
place for the year under review and up to 
the date of approval of the annual report 
and financial statements these controls 
consist of extensive reviews by qualified and 
experienced individuals underpinned by a 
system of checklists which ensures that all 
elements of the financial statements and 
appropriate disclosures are considered and 
accurately stated 
control systems are designed to manage 
rather than eliminate the risks inherent in a 
fastmoving hightechnology business and 
can therefore provide only reasonable 
and not absolute assurance against material 
misstatement or loss
remuneration committee
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 t echnology officer  the chief financial 
officer  the chief operating officer  the 
vp finance arm group the vp business 
assurancehead of internal audit and the 
company secretary the group’s process 
for the identification 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 significant 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
governance and financial report 2013
20
during 2013 the committee in conjunction 
with management undertook an indepth 
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 confirmed that the level of residual risk 
is regarded as acceptable and within normal 
parameters for a company operating in arm’s 
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 group’s strategy the guiding principles 
will continue to be refined 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 findings 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 
20f for the year ended 31 december 2013 
which is available on the group’s website at 
wwwarmcom
 compliance committee
the compliance committee consists of 
the general counsel the chief operating 
officer  the chief financial officer  the evp  
people the vp business assurancehead 
of internal audit the chief information 
officer  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 financial employment health and 
safety environmental business continuity and 
security processes and policies
disclosure committee
the disclosure committee comprises the 
chief executive officer  the chief financial 
officer  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 group’s financial condition in all 
material respects
management structure 
in addition there are various committees 
governance review t eams 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 officer and the weekly 
business review meeting chaired by the chief 
operating officer  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 t eams 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 financial and operational 
audits in line with the plan agreed with the 
audit committee additional resource 
was provided by cosourcing arrangements 
in 2013 and this will continue in 2014 
the group successfully achieved certificate 
renewal for iso 9001 in december 2013 
the group also has certification for 
iso 27001 the international standard for 
information security management and for 
iso 22301 the international standard for 
business continuity management both of 
which were maintained throughout the year 
the group’s 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 effectiveness and efficiency 
resulting in continuous maintenance and 
improvement of the system adapting to 
changes in business operations as necessary 
corporate governan ce report continued governance financial report
21
t o demonstrate compliance with the 
sarbanesoxley act the internal audit 
function also maintains the documented 
controls over financial reporting and confirms 
the operation of them either by direct testing 
or through a monitored self assessment 
programme the management system 
is audited externally by lloyd’s register 
quality assurance for compliance with 
the requirements of iso 90012008 iso 
270012005 iso 223012012 and as part of 
its business assurance scheme supports the 
sarbanesoxley compliance activity
any significant control failings identified 
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 significant control failures to the audit 
committee there were no significant 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 confidence and without 
fear of recrimination if they prefer  they can 
do so anonymously through an independent 
thirdparty telephone line the thirdparty 
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 confidential 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 
antibribery and anticorruption 
measures
the group’s code of business conduct 
and ethics which is available on the group’s 
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 reflect 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 reflecting 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 
confident that our risk in this area is low 
we have adopted a specific human rights 
policy within our code of business conduct 
and ethics in addition to our existing 
policies on conflict 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 
staff 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 p rogramme
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 arm’s 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 firm 
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 flagship labina
box lib product which is now shipping 
this allows educators to use stateoftheart 
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 
energymicrosilabs 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 
benefits 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
governance and financial report 2013
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 
officer and the chief financial officer 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 wwwarm
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 
reconfirm their understanding of key policies 
each year to help reinforce awareness 
the group operates from a global 
portfolio of offices located in 15 countries 
the portfolio is made up entirely of offices 
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 group’s principal activity involves the 
use of itbased 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 group’s ongoing environmental impact 
analysis informs management about key 
environmental factors and how it can reduce 
the impacts associated with them in 2013 
the group’s advanced compute resource 
requirement continued to build upon the 
success of its ceeda gold certified energy 
efficient data centre award winning data 
centre in cambridge by commissioning the 
design and build of a second major data 
centre hub in austin t exas this installation 
has the potential to harness geothermal 
energy as part of its design and therefore 
could have a power usage effectiveness 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 120000 
sq ft office 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 office 
construction as demonstrated in the design 
briefs of other office expansions developed 
during 2013 these building standards ensure 
high environmental performance of the 
group’s built environment throughout its 
entire lifecycle
the group has continued to partner with 
companies working in the lowimpact building 
technology field we have test installations 
in place with intellisense enlight and alert 
me in our cambridge offices to improve 
environmental performance using energy
efficient arm technology areas such as 
lighting control and environmental monitoring 
of plant for improved building efficiency 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 group’s 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 
benefits 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 offices
more detail about the group’s approach to 
environmental matters and health and safety 
is included in the cr report
business model
a detailed description of arm’s business 
model is set out on pages 16 to 17 of the 
strategic report
by order of the board
patricia alsop
company secretary
corporate governan ce report continued governance financial report
23
d ire ctors’ report
additional st a tutory  
 informa tion
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 
riscbased 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 group’s business originates 
overseas and to serve its customers better  
the group has sales offices around the world 
these include eight offices in the us and 
offices in shanghai shenzhen and beijing pr 
china shiny okohama japan seoul south 
korea t aipei t aiwan kfar saba israel paris 
france grasbrunn germany and bangalore 
india design offices are based in cambridge 
sheffield and blackburn uk sophia antipolis 
and grenoble france grasbrunn germany 
trondheim norway sentjernej slovenia 
lund sweden oulu finland austin t exas 
olympia washington and san jose california 
in the us shanghai pr china hsinchu 
t aiwan 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 group’s 
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
f uture developments
the group’s 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 thirdparty tools and software vendors 
to ensure that their products will operate 
with the group’s 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
g oing concern
after dividend payments of £689 million the 
highly cash generative nature of the business 
enabled the group to increase its cash cash 
equivalents and deposits to £7063 million 
net of accrued interest of £72 million 
at the end of 2013 this was an increase 
from £5202 million net of accrued interest 
of £74 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 satisfied that at the time of approving 
the financial statements it is appropriate to 
adopt the going concern basis in preparing 
the financial 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 final dividend in respect of the year to 
31 december 2013 of 36 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 final dividend combined with the 
interim dividend of 21 pence per share paid in 
october 2013 makes a total of 57 pence per 
share for the year  an increase of 27 on the 
total dividend of 45 pence per share for 2012 
the total cost of dividends paid or to be paid 
in respect of the year to 31 december 2013 
is approximately £80 million
share buyback programme
no share buybacks were undertaken in 2013 
and no shares have been repurchased 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 
1400263804 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 financial 
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 t ransparency rules 
and the uk corporate governance code september 2012 arm holdings plc
governance and financial report 2013
24
research and development rd
development of ip is at the heart of the 
group’s activities and 69 of the group’s 
workforce is employed in engineering 
activities within this rd 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
efficient highperformance 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 lowpower  lowleakage 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 rd expenses of 
£2029 million in 2013 representing 28 of 
revenues compared with £1663 million in 
2012 representing 29 of revenues rd 
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 financial statements
donations
during the year the group made donations 
for charitable purposes as follows 
2013 
£000
2012 
£000
promotion of education 3623 1420
relief of poverty 552 553
other 503 373
medical research 624 265
local charities 678 140
environmental 899 17
total 6879 2768
arm’s investment of £25 million in an 
interestfree charitable bond in future 
business made in 2010 remains in place 
future business is a cambridgebased social 
enterprise which provides business advice 
coaching and affordable workspace to 
entrepreneurs startup businesses charities 
and voluntary organisations
arm employees are encouraged to offer 
their time and expertise to help charities and 
other groups in need the group operates 
a matching gift donation programme 
for individual employees’ fundraising 
efforts the group does not make any 
political donations 
more details of the group’s charitable work 
and fundraising activities can be found in the 
corporate responsibility report available 
on the group’s website at wwwarmcom
reporting2013
global green house gas emissions
methodology
our report covers emissions within 
operations that fall under the group’s financial 
control as such data used represents our 
global operations with regional conversion 
factors applied as required 
our emission factors are from defradecc 
ghg conversion factors for company 
reporting our environmental impact 
assessment of arm’s 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 
group’s 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 co 2e 11067 10547
co 2e intensity tonnes co 2e 
per employee 337 382
scope 3 emissions
business travel tonnes co 2e 10186 10112
dire ctors’ report continued governance financial report
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 officer
tim score chief financial officer
mike muller chief t echnology officer
andy green independent non
executive director 
larry hirst cbe independent non
executive director
eric meurice independent nonexecutive 
director – appointed 1 july 2013 
kathleen o’donovan senior independent 
director and financial expert 
janice roberts independent non
executive director 
philip rowley independent nonexecutive 
director and financial expert
warren east former chief executive officer 
– retired 30 june 2013
mike inglis former chief commercial officer 
– retired 31 march 2013
reelection 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 reelection at 
the 2014 agm in line with the provisions 
of the uk corporate governance code 
2010 all directors will present themselves 
for reelection annually if eligible unless 
the directors have agreed otherwise
see pages 4 to 5 for the biographies of the 
directors at the date of this report
the interests of the directors in the 
company’s ordinary shares of 005 pence 
all of which were beneficially held are 
disclosed in the remuneration report
the directors have the benefit of directors’ 
and officers’ 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 office at all times 
arm may by ordinary resolution from time 
to time vary the minimum andor maximum 
number of directors
the directors may appoint a director to fill a 
casual vacancy or as an additional director to 
hold office until the next agm who shall then 
be eligible for election
share capital
at 31 december 2013 arm’s share 
capital comprised a single class of ordinary 
shares of 005 pence each and there were 
1400263804 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  
in the 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 
vote on 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 
to vote shall have one vote for every 
ordinary share held
3 shareholders are entitled to a dividend 
where declared or paid out of profits 
available for such purposes
4 shareholders are entitled to participate in 
a return of capital on a windingup arm holdings plc
governance and financial report 2013
26
the notice of the agm specifies 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 
arm’s 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 612 of 
arm’s 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 company’s 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 gifford  co 505
thornburg investment 
management 501
fidelity management and research 
corporation 492
the capital group companies inc 416
janus capital management llc 305
save for the above the company has not 
been notified 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
arm’s 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 
nonexecutive directors from £05m to £1m 
this aggregate limit has not been increased 
since 2007 further details are contained in the 
circular and notice of 2014 agm
dire ctors’ report continued
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 
139650000 ordinary shares at a minimum 
price of 005 pence each the maximum price 
was an amount equal to 105 of the average 
of the closing midmarket prices of arm’s 
ordinary shares as derived from the london 
stock exchange daily official list for the five 
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 140891000 
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 governance financial report
27
resolutions will also be proposed at the 2014 
agm to
  authorise the directors generally to allot 
up to £232470 in nominal amount of 
ordinary shares
  authorise the directors to allot up to a 
further £232470 in nominal amount of 
ordinary shares in connection with a rights 
issue as defined 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 offer” as defined in the notice of 
agm up to an aggregate nominal amount 
of £35222 or ii in connection with a pre
emptive offer up to an aggregate nominal 
amount of £35222 or iii in connection 
with a rights issue up to a further nominal 
amount of £35222 in each case as if 
section 5611 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 company’s articles of 
association provides for the indemnification 
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 financial year and up to the date of signing 
the annual report
change of control
all of arm’s equitybased 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 significant agreements to which 
arm is a party that take effect 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 qualified staff 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 staff becoming disabled while 
with the group their needs and abilities 
would be assessed and the group would 
where possible seek to offer alternative 
employment to them if they were no longer 
able to continue in their current role
employee involvement
t o 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 decisionmaking process t o 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 group’s 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 group’s 
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 effectiveness is contained in 
the “our commitment” section and in the full 
corporate responsibility report available on 
our website
financial instruments
the group’s financial risk management and 
policies and exposure to risks in relation to 
financial instruments are detailed in note 1c arm holdings plc
governance and financial report 2013
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 g eneral meeting agm
the agm will be held at 110 fulbourn road 
cambridge cb1 9nj uk on 1 may 2014 
at 200pm 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 financial statements in accordance 
with applicable law and regulations
company law requires the directors to 
prepare financial statements for each financial 
year  under that law the directors have 
prepared the group financial statements 
in accordance with international financial 
reporting standards ifrss as adopted 
by the european union and the parent 
company financial 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 financial statements unless 
they are satisfied that they give a true and 
fair view of the state of affairs of the group 
and the company and of the profit or loss 
of the group for that period in preparing 
these financial 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 financial 
statements respectively 
  prepare the financial 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 
sufficient to show and explain the company’s 
transactions and disclose with reasonable 
accuracy at any time the financial position 
of the company and the group and enable 
them to ensure that the financial statements 
and the remuneration report comply with 
the companies act 2006 and with regards 
to the group financial 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 
and detection of fraud and other irregularities
the directors are responsible for the 
maintenance and integrity of the annual 
report included on the group’s website in 
accordance with the uk legislation governing 
the preparation and dissemination of financial 
statements legislation in the uk governing 
the preparation and dissemination of financial 
statements may differ from legislation in 
other jurisdictions
each of the directors whose names and 
functions are listed in the biographies on 
pages 4 to 5 confirm that to the best 
of their knowledge
  the group financial statements which have 
been prepared in accordance with ifrss 
as adopted by the eu give a true and 
fair view of the assets liabilities financial 
position and profit 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 
of the 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 office 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 
company’s 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 company’s auditors are aware of 
that information
by order of the board
patricia alsop
company secretary  
arm holdings plc 
company number 2548782
dire ctors’ report continued governance financial report
29
dear shareholder
2013 was a busy year for the committee with the introduction 
and implementation of the new longterm incentive plan 
ltip which also involved making changes to the annual bonus 
plan for the purposes of simplification of the overall package 
this followed consultation with major shareholders and 
representative bodies which started in 2012 the committee 
also approved new salary and benefits arrangements for 
simon segars on his promotion to chief executive officer
in line with arm’s longstanding commitment to ethical values 
and culture our aim is to ensure that remuneration policies and 
practices drive behaviours that are in the longterm 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 benefits must be at a level that will attract retain 
and motivate highcalibre 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 group’s continuing strong performance is due 
principally to the proven abilities of our executive team
phil ip r ow ley 
remuneration committee chairman  
until 31 december 2013
d ire ctors’ remuneration report
  arm holdings plc
governance and financial report 2013
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 benefits package 
including an l tip topup for simon segars 
on his appointment as chief executive 
officer  pay was increased to the same 
level as applied for the retiring chief 
executive officer see details on page 46
  approval of a base pay increase for the 
executive directors of 348 for 2013 and 
300 for 2014 compared to the average 
increases for the workforce as a whole of 
47 for 2013 and 435 for 2014 
  setting of performance targets for the 
bonus plan and new l tip
  approval of prorated vesting under 
the l tip and deferred annual bonus 
dab plans for former chief executive 
officer warren east and former chief 
commercial officer 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 l tip 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 
976 vote in favour 23 vote against 
4850706 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 l tip  in line with 
my earlier commitment i also consulted with 
shareholders in december 2013 over the eps 
targets applicable to the new l tip and we 
have taken shareholders’ views into account in 
setting the new l tip 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 
remuneration committee chairman  
until 31 december 2013
remuneration committee
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
t otal number 
of meetings
meetings 
attended
philip rowley independent non
executive director 
committee 
chairman until 31 
december 2013
55
andy green independent non
executive director 
55
larry hirst independent non
executive director 
committee 
chairman from 1 
january 2014
55
janice roberts independent  
nonexecutive  
director joined  
28 february 2013
55
given their diverse business experience 
the independent nonexecutive directors 
who made up the committee in 2013 
offer 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 
us compensation matters
d ire ctors’ remuneration report continued governance financial report
31
operation of the committee
the chief executive officer 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 
to the committee
the committee’s terms of reference are 
published on the corporate website at 
wwwarmcom
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 abi’s principles of 
remuneration published in november 2013
remuneration p olicy 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 benefits 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 longterm strategy and has proved 
motivational and successful in achieving strong 
business performance over the past few years 
the committee believes that a director’s total 
remuneration should be monitored against 
their worth in the external market with total 
reward linked to corporate and individual 
performance t o 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 significant amount ie more than 
70 of total potential remuneration is 
performancerelated
  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 benefits
  a significant element of performance
related remuneration is provided in the 
form of shares
  elements of performancerelated 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 group’s equity plans
the committee does not specifically 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 benefits 
through the annual employee engagement 
survey or direct with their line manager 
the committee believes that the new l tip 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 l tip also rebalances the package 
towards longterm 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 off than under the old arrangements
relative importance of spend on pay £m and percentage change
350
50
100
150
200
250
300
sta pay distributions to
shareholders
research and
development costs
tax
2012 2011 2013 2012 2011 2013 2012 2011 2013 2012 2011 2013
2357
2250
2925 48
241
625
476
804
313
286
1663
1586
2029
49
220
603
443
578
361
–41
the above graph illustrates the relative importance of spend on pay compared with other disbursements from profit 
ie distributions to shareholders the development of new products and tax these were the most significant outgoings 
for the group in the last financial year arm holdings plc
governance and financial report 2013
32
remuneration p olicy 
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 group’s 
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 
the committee considers the following
 pay levels at companies of similar size 
by reference to market capitalisation and 
revenue on a geographic and global basis
 external market conditions
 pay and benefits elsewhere in the group
 individual performance skills experience 
and potential
 corporate performance on environmental 
social and corporate governance issues 
clawback does not apply to base salary 
in accordance 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 
or to 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 director’s role 
or responsibilities or if the 
salary is significantly below the 
current market rate in such 
circumstances increases may 
be phased over a number 
of years and be conditional 
on performance
none although the overall performance 
of each executive director is considered by 
the committee 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 benefits prorated where 
applicable and any untaken holiday
fees for outplacement and legal advice may also 
be paid by the group
d ire ctors’ remuneration report pol icy governance financial report
33
component of remuneration package  
and how it supports business strategy
operation and clawback maximum potential value performance conditions  
targets assessment and areas of discretion 
performancerelated bonus
in respect of 2014 financial 
year onwards
to incentivise executive directors 
to achieve performance 
objectives that are directly linked 
to the group’s shortterm 
financial and strategic goals
bonus if earned is paid wholly in cash for 
2014 onwards 
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 specific to each 
executive director
clawback provisions exist that require 
bonus to be forfeited ie offset 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 restatement
maximum bonus 125 of 
base salary
bonus payable at target 85 
of base salary 
target means the achievement 
of appropriate maximum 
targets in respect of both 
normalised operating profit 
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
 t otal revenue 50 of target bonus
 individual performance measures specific 
to each executive director which flex the 
amount of bonus by a factor of 075 to 125
revenue and profit growth are regarded as 
the most appropriate shortterm metrics for 
continuing the group’s performance
the committee retains discretion to adjust 
bonus targets for any financial year to reflect 
intervening events including acquisitions 
or disposals
the numerical values of targets for any particular 
financial year will not be disclosed in advance or 
during that year as the committee considers 
this information to be commercially sensitive 
the actual targets will be disclosed in the 
following financial year
performancerelated bonus 
in respect of years up to and 
including 2013
to incentivise executive directors 
to achieve performance 
objectives that are directly linked 
to the group’s shortterm 
financial and strategic goals
revenue and profit growth 
are regarded as the most 
appropriate shortterm 
metrics for continuing the 
group’s performance
bonus earned in respect of 2013 was subject 
to the provisions of the dab plan this was 
the final 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 03 for 1 to 2 for 1 match subject 
to threeyear eps growth of cpi  4 to cpi 
12 pa respectively
deferred and any matching shares in relation 
to 2013 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 £3135m with 
0 payout at £2577m rising in a linear way 
to 25 at £2946m 
 the nop portion of bonus can continue to 
accrue linearly above the target of £3135m 
on a straightline basis subject to the overall 
maximum of 150 of base salary
 50 of bonus was dependent on achieving 
a us revenue target of us1096m 
with 0 payout at us9132m rising to 
25 at 10301m
 the revenue portion of bonus can continue 
to accrue above the target of us1096m so 
that for every 1 increase in revenue bonus 
is increased by 25 of the target subject to 
the overall maximum of 150 of base salary 
 bonus amount is then subject to an individual 
performance multiplier which flexes the 
payment by 075 to 125 again subject to the 
overall maximum of 150 of base salary  arm holdings plc
governance and financial report 2013
34
component of remuneration package  
and how it supports business strategy
operation and clawback maximum potential value performance conditions  
targets assessment and areas of discretion 
longt erm incentive 
plan 2013 
first operation in 2014
to incentivise executive directors 
to achieve performance 
objectives that are directly linked 
to the group’s longterm financial 
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 1875 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 
of 375 of base salary
50 of the vested shares will be subject to 
additional holding periods with 25 released 
after four years and the remaining 25 
released after five years during these new 
holding periods shares may not be sold even 
if the 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 group’s 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 
or behaviour
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 
offer in order to recruit
for the 2014 award vesting is based on
threeyear total shareholder return 
tsr growth relative to the ftse all world 
technology index 25
threeyear tsr growth relative to the  
ftse 350 25
threeyear normalised eps growth 50 
with threshold at 15 annual growth including 
cpi and the upper performance target at 22 
annual growth 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 more difficult to satisfy than the original 
condition was intended to be at the time the 
award was granted
shareholding requirement
to align executive directors’ 
interests with those of 
shareholders over a longer time 
period they are required to 
build a shareholding of 200 
of base 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
d ire ctors’ remuneration report pol icy continued governance financial report
35
component of remuneration package  
and how it supports business strategy
operation and clawback maximum potential value performance conditions  
targets assessment and areas of discretion 
longt erm  
incentive plan
in respect of years up to and 
including 2013
to incentivise executive directors 
to achieve performance 
objectives that are directly 
linked to the group’s longterm 
financial and strategic goals
to align executive directors’ 
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 
threeyear performance period
dividend shares are added at vesting
maximum award limit of 400 
in exceptional circumstances was 
never used
vesting is based on
threeyear tsr growth relative to the 
ftse all world technology index 50
threeyear tsr growth relative to the 
ftse 350 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 straightline 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 officer 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 benefits
to provide competitive 
benefits in line with market 
practice to enable the group to 
recruit and retain highcalibre 
executive directors
to reward innovation 
and invention
other benefits are provided appropriate 
to the location of the executive director 
and include provision of a car or car and 
fuel allowance longterm sickness and 
disability insurance death in service benefit 
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 
of providing benefits
the committee reserves 
the discretion to provide such 
situationspecific benefits as 
may be required in the interests 
of the group’s 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
governance and financial report 2013
36
component of remuneration package  
and how it supports business strategy
operation and clawback maximum potential value performance conditions  
targets assessment and areas of discretion 
overseas benefits
relocation allowances
to provide competitive 
benefits in line with market 
practice to enable the group to 
recruit and retain highcalibre 
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 benefits 
appropriate to the country in which they 
are working
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 
for the duration of the assignment
flights home for executive and family
school fees for executive director’s children
cost of personal tax advice
cost of visas for executive and family
cost of transporting executive and family’s 
personal effects
legal and estate agents fees associated with 
properties in home and overseas locations
reasonable market cost of 
providing benefits for the 
duration of the term abroad
not applicable
oneoff recruitment cash
equity awards
to provide an appropriately 
attractive package to persuade an 
external hire to accept an offer 
of employment andor 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 andor provide equity 
that vests in the three years prior to potential 
vesting of the first 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 employer’s 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 
and accelerated payment
the committee has discretion to determine 
appropriate performance conditions for any 
award of rsus any ltip award or any grant 
of options taking account of the circumstances 
of each individual case performance conditions 
would normally be applied on an equivalent 
basis to those applicable to awards made to 
other executive directors in the same calendar 
year performance conditions may but would 
not necessarily 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 
in the 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
f ees for nonexecutive 
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 nonexecutive 
positions at other companies
executive directors are permitted to retain any 
fees paid andor shares offered in connection 
with external nonexecutive roles that 
they undertake
the amounts received are 
disclosed annually 
details are provided on 
page 54
not applicable
d ire ctors’ remuneration report pol icy continued governance financial report
37
component of remuneration package  
and how it supports business strategy
operation and clawback maximum potential value performance conditions  
targets assessment and areas of discretion 
nonexecutive directors’ 
ned and chairman’s fees
to attract and retain an 
appropriately experienced 
chairman and independent 
nonexecutive directors 
of suitable calibre to fulfil 
a range of different roles 
including financial expertaudit 
committee chairman senior 
independent director and 
committee chairmen
to pay fees that reflect 
responsibilities and workload 
undertaken and which 
are competitive with 
peer companies 
ned fees are proposed by the executive 
directors and approved by the board as a 
whole the chairman’s 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 nonexecutive 
directors will remain within the limit stated in 
our articles of association currently £05m 
which we are seeking approval to increase to 
£10m 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 longhaul travel 
to attend board meetings in 
the uk to reflect 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 £1us160
selection of p erformance measures 
and how targets are set 
ltip
performance measures for the new l tip 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 l tip vesting was approved by 
shareholders as part of the approval of the 
new l tip at the 2013 agm 
the normalised eps growth performance 
condition which accounts for 50 of total 
l tip vesting has been set as follows
125 vesting for annual growth of 15 
including cpi rising on a straightline basis 
to 50 vesting for annual growth of 22 
including cpi
the committee has set this range for the l tip 
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 longterm eps performance 
such as macro or semiconductor industry 
cycles and currency fluctuations these may 
have impacts that would not necessarily be 
seen as underperformance by the group 
the committee is also keen not to encourage 
shortterm views or behaviour where in 
theory investment in the longterm future 
either organically or by acquisition may be 
discouraged if the eps range is set at too 
high a 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 financial 
year  these metrics are currently nop and 
group revenue a personal performance 
multiplier is then applied related to 
achievement of specific 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 
financial year  arm holdings plc
governance and financial report 2013
38
changes to executive directors’ 
remuneration for 2014
the former l tip 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 group’s approach 
remains fit for purpose over the next stage 
of its development the replacement of 
the dab plan and former l tip with the 
new bonus plan and l tip 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 usdominated 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 
for 2014
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 l tip  
dab pension and other benefits and the 
total potential value it should be noted that 
these do not reflect the new l tip scheme 
as entitlements under the new l tip will not 
start to vest for three years and we are in a 
transitional period between the old and new 
l tip 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 l tipdab vesting
ontarget performance – 85 of base salary 
in cash bonus 100 l tip vesting 100 dab 
matching shares
maximum performance – 125 of base salary 
in cash bonus 200 l tip vesting 200 dab 
matching shares 
the total remuneration for each of the 
executive directors that could result from 
the proposed remuneration policy in 2014 
under three different performance levels is 
shown below
simon segars 
percentagesamounts £000s
fixed elements annual variable
multiple period variable
100
31
fixed
ontarget
maximum
615
1534
2221
29 40
43 29 28
tim score
percentagesamounts £000s
100
44
fixed
ontarget
maximum
500
1550
2409
24 32
57 22 21
mike muller
percentagesamounts £000s
100
44
fixed
ontarget
maximum
342
1066
1657
24 32
57 22 21
d ire ctors’ remuneration report pol icy continued
notes
1 the fixed element is base salary for 2014 plus the value 
of pension allowances and benefits
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 year’s 
remuneration arrangements as the ontarget bonus was 
100 and the maximum bonus was 150
 increase in pay and benefits from 2012 to 2013 for ceo compared  
to employees
ceo employees
base salary 20 47
benefits and pension 656 50
bonus –127 96
   the percentages for the ceo reflect the pay and benefits for warren east for the first half of the year and for simon segars 
for the second half of the year
   the large increase in the benefits 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 ceo’s bonus percentage reflects 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 £300000 to £500000 since his bonus is calculated on prorata 
basis his bonus for 2013 was lower than that received by warren east for 2012 despite the higher overall percentage paid governance financial report
39
service contracts
our policy is for notice periods for executive 
directors to be of one year’s duration and 
each of the executive directors’ service 
contracts reflects this these agreements 
provide for each of the directors to provide 
services to the group on a fulltime basis 
and contain restrictive covenants for 
periods of three to six months following 
termination of employment relating to non
competition nonsolicitation of the group’s 
customers nondealing with customers and 
nonsolicitation of the group’s suppliers 
and employees in addition each service 
contract contains an express obligation of 
confidentiality in respect of the group’s trade 
secrets and confidential 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 financial 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 
nonexecutive directors are available to view 
in the corporate governance section of our 
website at wwwarmcomreporting2013
the term of appointment for nonexecutive 
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 
with effect from 1 january  
t ermination of employment
in the event of termination of an executive 
director’s contract of employment 
compensation would be based on salary and 
contractual benefits 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 l tip  the former l tip  
and the former dab plan
contractual provisionsplan rules exit payment policy
service contracts payment of contractual entitlements including payment in lieu of 
notice in appropriate circumstances where certainty and protection 
of restrictive 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 
be made at the discretion of the group
this would include base salary and contractual benefits prorated 
where applicable and any untaken holiday
fees for outplacement and legal advice may also be paid by the group
l tip for good leavers conditional awards under the ltip would normally 
vest prorata to time served and the extent to which the performance 
conditions are satisfied at the date of termination of employment
for bad leavers unvested share awards would lapse on termination 
of employment
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 confirm future intentions to 
the committee including that he or she will not accept a fulltime 
executive role in a commercial organisation if the committee 
determines that the executive director is a good leaver and 
subject to satisfaction of performance targets prorated vesting of 
entitlements under 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 
death or leaving as a result of disability or ill health prorata bonus 
may be paid for the year of cessation
bad leavers would not receive performancerelated bonus awards in 
relation to the year of cessation
clawback provisions exist that require bonus to be forfeited ie offset 
of bonus accruing in that year or an equivalent value repaid should 
it be necessary for the group to restate to a material extent the 
financial 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 had been correctly stated also taking into account any negative 
impact of the restatement
f ormer dab p lan 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 
satisfied for good leavers only arm holdings plc
governance and financial report 2013
40
dire ctors’ remuneration report imp lementation
 ba l an c ing shor t and  
 l ongterm remunera tion
base salary increase for 2013 and 2014
for 2013 the average increase in base salaries 
for the executive directors was 348 and 
the average increase for the workforce as 
a whole was 47 on his appointment as 
chief executive officer on 1 july 2013 the 
committee approved a salary increase for 
simon segars to £500000 which was at the 
same level as the retiring chief executive 
officer  for 2014 the average increases are 
30 for the executive directors and 435 
for the workforce as a whole within the 
overall increase for 2014 the range was 34 
for the us rising to 80 in asia reflecting 
local market conditions and salary inflation 
shareholding requirements
in order to align executives’ interests with 
those of shareholders over a longer time 
period all executive committee members 
are now 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 l tip  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 l tip 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 
37 million shares with a value of £368 million 
at 3 march 2014 this currently equates to a 
multiple of 10 times base salaries 
current incentive arrangements and 
their operation in respect of 2013 
financial year
for 2013 there were four key incentive 
schemes in operation across the workforce 
as a whole these are as follows
for executive directors and senior managers
  the final annual bonus award under the 
dab plan
  an annual conditional award under 
the l tip 
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 simplified remuneration arrangements 
we significantly outperformed our 
international peer group over the last three 
years which resulted in 1837 vesting of the 
l tip 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 t o put the awards that 
are currently outstanding under the l tip and 
dab plan into context the share price was 
568 pence per share for the february 2012 
awards and 9245 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 l tip and final 
dab plan awards were made 
shares earned are satisfied through the issue 
of new shares any treasury shares available 
would be used first
each of the executive directors achieved a 
personal performance multiplier of at least 
115 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 
reflect the main currency in which revenues 
are earned 
the nop target range was from zero payout 
at £2577 million up to 25 at £2946 million 
and 50 at £3135 million all at the group 
budget exchange rate of £1us160
shares representing the deferred element of 
bonus earned in 2010 and awarded in 2011 
vested in february 2014 with the maximum 
21 ratio of matching shares being triggered 
this ratio was achieved because eps growth 
was 1204 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 031 basis rising to 21 
when eps growth is in excess of cpi plus 12 
per annum these targets are directly related 
to the group’s financial results and encourage 
achievement of the group’s shortterm 
financial 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” governance financial report
41
new bonus p lan for 2014
as part of the new structure for executive 
remuneration and in particular the new l tip 
which was consulted on with shareholders 
in 201213 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
t arget constitutes the achievement of 
appropriate maximum targets in respect 
of both nop and total revenue and prior 
to any personal performance adjustment
the amount is subject to the achievement 
of two performance targets and then adjusted 
for individual performance 
  nop – 50 of target bonus
  t otal revenue – 50 of target bonus
  individual performance multiplier specific 
to each executive director  which flexes the 
bonus amount by a factor of 075 to 1 25
revenue and profit growth are regarded 
as the best drivers to increase market share 
and continue the group’s outperformance 
of semiconductor market growth
the committee retains discretion to adjust 
bonus targets for any financial year to reflect 
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 
prerequisite to continuation in the role of 
executive director  performance is reviewed 
on an indepth 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 financial 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 financial 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 five 
years was 125 of salary with a range from 
84 payout for 2009 to 150 for 2011 
as shown below 
notes
1   2010 maximum bonus was limited to 125 of base salary 
2  for 201 1 2012 and 2013 maximum bonus was 150 of base salary
3  for 2014 onwards maximum bonus is 125 of base salary
average percentage bonus paid over the past ﬁve years to executive directors
5769
200
150
100
50
0 2009 2010 2011 2012 2013
 of base salary arm holdings plc
governance and financial report 2013
42
linkage of bonus targets to 
business strategy
the personal performance multiplier depends 
on the achievement of predetermined 
objectives which are reviewed and approved 
by the committee each year  these include 
key strategic objectives related to each 
director’s 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
longt erm incentive plan
former l tip
under the former l tip  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 satisfied 
over a threeyear performance period 
from 1 january of the year of award 
with no subsequent retesting permitted 
the performance conditions are based on 
the company’s tsr when measured against 
that of two comparator groups each testing 
half of the shares comprised in the award 
the first index comprises uk companies 
across all sectors ftse 350 and the second 
comprises predominantly us companies 
within the hitech sector ftse all world 
t echnology 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 company’s 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 straightline basis additional shares may 
vest to cover dividends paid by the company 
during the performance period no shares will 
be received for belowmedian performance 
in addition no shares will vest unless the 
committee is satisfied that there has been 
a sustained improvement in the underlying 
financial performance of the group
the vesting of the 2011 l tip awards in 
february 2014 was at 1837 as a result of 
our significant outperformance compared to 
our international peer group over the past 
three years subject to achievement of the 
performance conditions the final outstanding 
awards under the former l tip will vest 
in 2016
new l tip
the new l tip 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
threeyear relative tsr growth relative to 
the ftse all world t echnology index 25
threeyear relative tsr growth relative to 
the ftse 350 25
threeyear 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 five years during these new 
holding periods shares may not be sold even 
if the participant has left the group
dire ctors’ remuneration report imp lementation continued governance financial report
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 longterm another key factor was the 
need for the group to have the flexibility to 
make appropriate investments with a view 
to generating longterm 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 significantly 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 l tip award it would be the 
committee’s intention to confirm any such 
change to shareholders in advance
f ormer share option schemes
the remaining shares of the final 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 executive’s basic salary or 11 
in the case of the chief executive officer 
plus additional amounts in accordance 
with the group’s salary sacrifice 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 efficient 
way at the 1011 of basic salary level 
the difference is paid as an additional cash 
allowance and subject to appropriate tax and 
other deductions
compensation for loss of office
no payments were made during 2013 
to former executive directors by way of 
compensation for loss of office or pay in 
lieu of notice arm holdings plc
governance and financial report 2013
44
performance graphs
a performance graph showing the 
company’s tsr together with the tsrs for 
the ftse allworld t echnology 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 company’s shares was 
1231 over this period compared with 148 
for the ftse allworld t echnology index for 
the same period
the committee considers the ftse 
allworld t echnology index to be an 
appropriate choice as the index contains 
companies from the us asia and europe 
and therefore reflects the global environment 
in which the group operates in addition 
the index includes many companies that are 
currently the group’s customers as well as 
companies that use arm technology in their 
end products
dire ctors’ remuneration report imp lementation continued
1 400
1200
1000
800
600
400
200
dec 09 dec 08 dec 10 dec 11 dec 12 dec 13
arm   ftse allworld technology   ftse 350
arm total shareholder return performance from 31 december 2008 to 31 december 2013
ceo’s pay for the last five financial years
y ear 2009 2010 2011 2012 2013
ceo’s total single figure £
warren east retired 30 june 2013 2010584 7570679 7744982 6709569 3415729
simon segars appointed ceo 1 july 2013 – – – – 2064907
ceo’s total single figure £ 2010584 7570679 7744982 6709569 5480636
bonus  of maximum award  67 100 100 85 91
l tip  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 ceo’s total single figure for 2013 represents the pay benefits and pension received by warren east for the first 
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 figure also includes the pay benefits bonus 
and pension received by simon segars for the second half of the year as well as the market value of the shares received by him under the ltip and dab plans in respect of the financial year to  
31 december 2013 governance financial report
45
nonexecutive directors
during 2013 the chairmen of the audit and 
remuneration committees each received 
a total fee of £70000 per annum and the 
other nonexecutive directors each received 
a total fee of £55000 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 £60000 per annum 
  additional fees for committee chairmen 
and the senior independent director of 
£16000 per annum
this is believed to more fairly reflect the 
workload undertaken by committee 
chairmen and the senior independent 
director  the additional fee of 2500 per 
meeting which is paid to nonexecutive 
directors who are based in the us and travel 
to the uk for board meetings will continue 
at this level this is to reflect their additional 
time commitment 
the chairman’s fee for 2013 was at the 
rate of £390000 per annum and increased 
by 26 for 2014 to the rate of £400000 
per annum
nonexecutive 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 benefits and no element 
of their fees is performancerelated
in addition to the interests disclosed above 
the executive directors have interests in 
dividend shares that could be awarded 
under the former and current l tips and 
the former dab plan the amount of which 
will depend on the extent to which the 
performance criteria are satisfied and on the 
dividends declared during the performance 
period changes in directors’ interests in the 
company’s 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 t owers watson were appointed 
by the committee in 2010 and committee 
members continue to be satisfied 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 t owers watson in 
2013 included advice on the structure and 
targets for the new l tip  new ceo and senior 
executive packages and the remuneration 
policy summary in this report for which total 
fees of £52000 were paid during the year  
the committee also received advice from 
kepler associates who provided independent 
verification of t otal shareholder return tsr 
calculations for the l tip 
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 five 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 
l tip was introduced are at least as strong 
today  these are the broadbased nature of 
our equity plans which cover all employees 
and the need to be able to compete with us 
companies worldwide for the highcalibre 
engineers and executives required to secure 
the group’s 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 five years has been 
685 arm holdings plc
governance and financial report 2013
46
dire ctors’ remuneration report imp lementation continued
audited information
the following information has been audited by the company’s auditors pricewaterhousecoopers llp  as required by the companies act 2006
director
t otal amount of salary and fees  
£
all taxable benefits  
£
bonus payments  
£
2013 2012 2013 2012 2013 2012
executive
simon segars 400000  280000  73186  93284  543454  370605 
tim score 415000  400000  26031  25178  599374  529436 
mike muller 285000  275000  14940  15087  403718  349428 
warren east retired 30 june 2013 250000  490000  17041  15087  –  622617 
mike inglis retired 31 march 2013 71250  280000  11293 14692  –  355781 
tudor brown retired 3 may 2012 –  77586  –  9741  –  – 
t otal 1421250  1802586  142491  173069  1546546  2227867 
nonexecutive
sir john buchanan appointed 3 may 2012 390000  258879  –  –  –  – 
andy green 55000  52000  –  –  –  – 
larry hirst 55000  52000  –  –  –  – 
eric meurice appointed 1 july 2013 27500  –  –  –  –  – 
kathleen o’donovan 70000  65000  –  –  –  – 
janice roberts 61399  58314  –  –  –  – 
philip rowley 70000  65000  –  –  –  – 
doug dunn retired 3 may 2012 –  62069  –  –  –  – 
y oung sohn retired 31 december 2012 –  59906  –  –  –  – 
t otal 728899  673168  –  –  –  – 
t otal 2150149  2475754  142491  173069  1546546  2227867 
 all the executive directors receive family healthcare and annual travel insurance as part of their benefits in kind in addition tim score has the use of a company car with fuel benefit 
and warren east tudor brown mike inglis and mike muller received a car and petrol allowance simon segars receives £61283 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 
taxefficient 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 the value of shares received by tudor brown mike inglis and warren east on ltip and dab plans on their retirements
 for the first half of 201 3 simon segars’ salary was £300000 following his appointment to ceo on 1 july 201 3 his salary increased to £500000 resulting in an average for the year of £400000
executive directors’ annual salaries were increased from 1 january 2014 each by 3 to the following amounts simon segars £5 15000 tim score £427 450 and mike muller £293550
the group has adopted the single total figure 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 figure table the comparative amounts have been amended to reflect the new guidance governance financial report
47
money and other assets receivable  
for periods of more than one financial year  
£
all pensionrelated benefits  
£
t otal  
£
2013 2012 2013 2012 2013 2012
 1207360  3319547  44000  30800 2268000 4094236
1727783 4783187 44156  42560 2812344 5780361
1193633 3276928 32148  31020 1929439 3947463
3123688 5532865 25000  49000 3415729 6709569
1680367 3341919 7125  28418 1770035 4020810
 – 1380904 –  10167  – 1478398
8932831 21635350  152429  191965 12195547  26030837 
 –  –  –  –  390000  258879 
 –  –  –  –  55000  52000 
 –  –  –  –  55000  52000 
 –  –  –  –  27500  – 
 –  –  –  –  70000  65000 
 –  –  –  –  61399  58314 
 –  –  –  –  70000  65000 
 –  –  –  –  –  62069 
 –  –  –  –  –  59906 
 –  –  –  –  728899  673168 
8932831  21635350  152429  191965 12924446 26704005  arm holdings plc
governance and financial report 2013
48
deferred annual bonus p lan in respect of 2013 financial year
this was the final operation of the dab plan which will be replaced by the new annual bonus plan and l tip 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 l tip 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 flexes the payment by 075 to 125 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 t arget actual
bonus  achieved  
of base salary
revenue us10960m us11177m 550
nop £3135m £3326m 629
total 1179
  nop for bonus purposes is calculated using the group budget exchange rate of £1us160 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
t otal  
bonus  

bonus  
paid  
£
50 deferred 
 in shares  
£
shares  
awarded  
number
simon segars until 30 june 2013 300000 1179 1150  13559  201706 
simon segars from 1 july 2013 500000 1179 1150  13559  341748 
simon segars t otal for year 543454  271727  30327 
tim score 415000 1179 1225  14443  599374  299687  33447 
mike muller 285000 1179 1200  14148  403218  201609  22501 
 simon segars’ bonus was calculated prorated on a daily basis
 in addition to his dab bonus mike muller received a £500 bonus for filing a patent
money and other assets receivable for periods of more than one financial 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  
£
t otal  
received 
£
simon segars 734433  472927  1207360 
tim score 1049565  678218  1727783 
mike muller 726208  467425  1193633 
warren east retired 30 june 2013 1822138  1301550  3123688 
mike inglis retired 31 march 2013 921076  759291  1680367 
t otal 5253420  3679411  8932831 
dire ctors’ remuneration report imp lementation continued governance financial report
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  
£
t otal  
received 
£
simon segars 2376446  943101  3319547 
tim score 3408086  1375101  4783187 
mike muller 2348822  928106  3276928 
warren east retired 30 june 2013 3960771  1572094  5532865 
mike inglis retired 31 march 2013 2394880  947039  3341919 
t udor brown retired 3 may 2012 928941  451963  1380904 
t otal 15417946  6217404  21635350 
l tip vesting in 2013
the performance conditions applicable to the conditional awards granted on 8 february 2010 were satisfied 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
t otal award  
number
market value  
at vesting  
£
simon segars 125853 251706 5346 257052 2376446
tim score 180487 360974 7667 368641 3408086
mike muller 124390 248780 5284 254064 2348822
warren east retired 30 june 2013 209756 419512 8911 428423 3960771
mike inglis retired 31 march 2013 126829 253658 5388 259046 2394880
t otal 767315 1534630 32596 1567226 14489005
the amount vested above represents the maximum award under the l tip  this is based on the total shareholder return as calculated below
comparator group arm tsr percentile rank implied vesting
ftse 350 index 994 200
ftse all w orld t echnology index 100 200
overall 200
l tip vesting in 2014
the performance conditions applicable to the conditional awards granted on 8 february 2011 were satisfied in respect of the performance 
period ended 31 december 2013 to the extent of 1837 plus dividend shares which vested on 8 february 2014 as follows
director
conditional award 
number
vested award  
number
dividend shares 
number
t otal award  
number
market value  
at vesting  
£
simon segars 43863 80576 1392 81968 734433
tim score 62684 115150 1989 117139 1049565
mike muller 43372 79674 1376 81050 726208
t otal 149919 275400 4757 280157 2510206 arm holdings plc
governance and financial report 2013
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 813 1674
ftse all w orld t echnology index 900 2000
overall 1837
in accordance with the rules of the l tip  on his retirement on 31 march 2013 mike inglis received the following shares under the plan calculated 
on a prorata basis and reflecting the extent to which the performance conditions were satisfied at that date
grant
conditional award  
number
vested award  
number
dividend shares  
number
t otal award  
number
market value  
at vesting  
£
8 february 2011 44190 52683 – 52683 551064
8 february 2012 49295 35374 – 35374 370012
t otal 93485 88057 – 88057 921076
in accordance with the rules of the l tip  on his retirement on 30 june 2013 warren east received the following shares under the plan calculated 
on a prorata basis and reflecting the extent to which the performance conditions were satisfied at that date
grant
conditional  
award  
number
vested  
award  
number
dividend  
shares  
number
t otal  
award  
number
market value  
at vesting  
£
8 february 2011 77741 122434 – 122434 1085377
8 february 2012 86267 83109 – 83109 736761
t otal 164008 205543 – 205543 1822138
in accordance with the rules of the l tip  on his retirement on 3 may 2012 tudor brown received the following shares under the plan calculated 
on a prorata basis and reflecting the extent to which the performance conditions were satisfied at that date
grant
conditional award
number
vested award
number
dividend shares
number
t otal award
number
market value 
at vesting 
£
8 february 2010 106341  165679 –  165679  796088 
8 february 2011 36007  27649 – 27649  132853 
t otal 142348  193328 – 193328  928941 
the following conditional awards over ordinary shares were made under the l tip on 8 february 2014 simon segars 107770 tim score 89449 
and mike muller 61429 the midmarket 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
dire ctors’ remuneration report imp lementation continued governance financial report
51
deferred annual bonus p lan
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 confirmation of 2013 bonus is
director
shares deferred as part of  
the 2011 bonus  
number
shares deferred as part of  
the 2012 bonus  
number
shares deferred as part of  
the 2013 bonus  
number
t otal awards  
number 
simon segars 35387 20045 30327 85759
tim score 50572 28637 33447 112656
mike muller 34991 18900 22501 76392
t otal 120950 67582 86275 274807
the performance conditions applicable to the matching awards relating to the deferred elements of the annual bonus for 2010 were satisfied to 
the extent of 200 matching shares plus dividend shares which vested on 8 february 2014 as follows
director
shares deferred as part of  
the 2010 bonus  
number
matching shares  
number
matching shares  
value £
dividend shares  
number
t otal award  
number
simon segars 26391 52782 472927 456 79629
tim score 37847 75694 678218 654 114195
mike muller 26084 52168 467425 451 78703
t otal 90322 180644 1618570 1561 272527
the market value of an arm share on the date of vesting was 8960 pence the matching shares vesting above represent the maximum award 
under the dab plan this award is based on an eps growth rate before inflation 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 reflecting the extent to which the performance conditions were satisfied at that date
grant
shares deferred as part  
of the bonus  
number
matching shares  
number
matching shares value  
£
t otal award  
number
2011 26595 39831 416632 66426
2012 35651 29629 309919 65280
2013 19244 3130 32740 22374
t otal 81490 72590 759291 154080 arm holdings plc
governance and financial report 2013
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 reflecting the extent to which the performance conditions were satisfied at that date
grant
shares deferred as 
part of the bonus  
number
matching shares  
number
matching shares value  
£
t otal award 
number
2011 43985 73186 648794 117171
2012 62720 62550 554506 125270
2013 33677 11083 98251 44760
t otal 140382 146819 1301550 287201
the performance conditions applicable to the matching awards relating to the deferred elements of the annual bonus for 2009 were satisfied 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
t otal awards  
number 
simon segars 51006  102012  943101  1082  154100 
tim score 74370  148740  1375101  1578  224688 
mike muller 50195  100390  928106  1065  151650 
warren east 85024  170048  1572094  1804  256876 
mike inglis 51219  102438  947039  1087  154744 
t otal 311814  623628  5765441  6616  942058 
the market value of an arm share on the date of vesting was 9245 pence the matching shares vesting above represent the maximum award 
under the dab plan this award is based on an eps growth rate before inflation 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 
prorata basis and reflecting the extent to which the performance conditions were satisfied at that date
grant
shares deferred  
as part of  
the bonus  
number
matching  
shares  
number
matching  
shares  
award  
£
t otal award  
number
2010 43427  67659  325102  111086 
2011 22299  19875  95499  42174 
2012 29049  6527  31362  35576 
t otal 94775  94061  451963  188836 
dire ctors’ remuneration report imp lementation continued governance financial report
53
share awards
details of conditional awards made in the year to 31 december 2013 under the l tip 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 32449  9245 8 february 2016 600000 50
simon segars ltip 
 100 of payrise 
for 2013 on 
becoming ceo 13 august 2013 11280  8865 13 august 2016 200000 50
simon segars dab 
 50 of bonus 
paid in respect 
of 2012 8 february 2013 20045  9245 8 february 2016 370605 100
tim score ltip  100 of salary 8 february 2013 44889  9245 8 february 2016 830000 50
tim score dab 
 50 of bonus 
paid in respect  
of 2012 8 february 2013 28637  9245 8 february 2016 529436 100
mike muller ltip  100 of salary 8 february 2013 30827  9245 8 february 2016 570000 50
mike muller dab 
 50 of bonus 
paid in respect 
of 2012 8 february 2013 18900  9245 8 february 2016 349428 100
warren east  
retired 30 june 2013 ltip  100 of salary 8 february 2013 54083  9245 8 february 2016 1000000 50
warren east  
retired 30 june 2013 dab 
 50 of bonus 
paid in respect 
of 2012 8 february 2013 33677  9245 8 february 2016 622617 100
mike inglis  
retired 31 march 2013 dab 
 50 of bonus 
paid in respect 
of 2012 8 february 2013 19244  9245 8 february 2016 355781 100
  face value represents the maximum amount receivable under the award
  threshold for ltip is 50 vest when certain tsrrelated 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 75441 1325 92168 595362
tim score 114959 1325 92213 907749
mike muller 80830 1325 92211 638241
warren east retired 30 june 2013 136513 1325 92943 1087911
warren east retired 30 june 2013 4620 1948 8745 31402
w arren east retired 30 june 2013 141133 1119313
mike inglis retired 31 march 2013 80830 1325 93014 644736
t otal 493193 3905401
no options were exercised by directors after the year end except as described above there have been no changes in directors’ interests under 
the group’s equity schemes since the end of the 2013 financial year up to the date of approval of the remuneration report
the company’s register of directors’ interests contains full details of directors’ shareholdings and options to subscribe and conditional awards 
under the l tip  arm holdings plc
governance and financial report 2013
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’ beneficial interests in the company’s ordinary shares of 005 pence are as 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 –  – na –  –  – 
stuart chambers appointed 27 january 2014 10000  10000 na –  –  – 
simon segars 557222  479947 yes 136887  81823  – 
tim score 864824  742218 yes 177995  117056  18208 
mike muller 1425442  1340774 yes 122614  79975  – 
andy green –  – na –  –  – 
larry hirst –  – na –  –  – 
eric meurice appointed 1 july 2013 –  – na –  –  – 
kathleen o’donovan –  – na –  –  – 
janice roberts –  – na –  –  – 
philip rowley 40000  40000 na –  –  – 
warren east retired 30 june 2013 na  1419322 na –  –  – 
mike inglis retired 31 march 2013 na  99857 na –  –  – 
the following information is unaudited 
it is the company’s policy to allow executive directors to hold nonexecutive 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 nonexecutive director of national express group plc until 25 february 2014 and he received remuneration totalling £60500 
up to 31 december 2013 2012 £60500 mike muller is a nonexecutive director of intelligent energy limited in july 2012 and he received fees 
totalling £40000 up to 31 december 2013 2012 £16666 from appointment in july 2012 
warren east who retired on 30 june 2013 is a nonexecutive director of de la rue plc and he received remuneration totalling £26100 up to 
the date of his retirement 2012 £49000 for the full year mike inglis who retired on 31 march 2013 was a nonexecutive director of pace plc 
and he received remuneration totalling £10500 up to the date of his retirement 2012 £42000 for the full year
all of the executive directors are accruing benefits 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
remuneration committee chairman  
until 31 december 2013
5 march 2014
dire ctors’ remuneration report imp lementation continued 55
governance f inancial r eport
report on the group financial statements
our opinion
in our opinion the group financial statements defined below
•	 give a true and fair view of the state of the group’s affairs as at 31 december 2013 and of its profit and cash flows 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 financial statements which are prepared by arm holdings plc comprise
•	 the consolidated statement of financial 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 flow statement for the year then ended and
•	 the notes to the group financial statements which include a summary of significant accounting policies and other explanatory information
the financial reporting framework that has been applied in the preparation of the group financial statements comprises applicable law and ifrss 
as adopted by the european union
certain disclosures required by the financial reporting framework have been presented elsewhere in the annual report and accounts  
the “annual report” rather than in the notes to the financial statements these are crossreferenced from the financial statements and 
are identified as audited
what an audit of financial 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 financial statements sufficient to give reasonable assurance that the financial 
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 group’s circumstances and have been consistently applied and adequately disclosed
•	 the reasonableness of significant accounting estimates made by the directors and
•	 the overall presentation of the financial statements 
in addition we read all the financial and nonfinancial information in the annual report and accounts the “annual report” to identify material 
inconsistencies with the audited group 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
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 
effect of misstatements both individually and on the financial statements as a whole
based on our professional judgement we determined materiality for the group financial statements as a whole to be £132 million 
we based this assessment on the group’s profit 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 identified during our audit above £06 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 financial statements are a consolidation of 27 companies comprising the group’s operating businesses and head office entities 
our group audit focused on the two largest companies of the group arm limited and arm inc which contribute substantially all of 
the group’s third party revenue and profits and more than 80 of the group’s 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 
other group companies
substantially all audit work in respect of the group financial statements was performed by the group engagement team with the assistance 
of auditors from other pwc network firms in respect of specific account balances or transaction classes at some group companies 
independent auditors’ report to the members of arm holdings plc arm holdings plc
governance and financial report 2013
56
areas of particular audit focus
in preparing the financial statements the directors made a number of subjective judgements for example in respect of significant 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 
financial 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 effectiveness 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 identified by our audit we discussed these areas of focus with the audit committee their report on those matters that they considered 
to be significant issues in relation to the financial 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 significant 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 multielement 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 financial 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 significant judgements and estimates made by management in applying the group’s policy to specific 
contracts and obtained evidence including contractual agreements delivery records cash receipts and project plans
for the contracts selected we reperformed management’s 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 
how the scope of our audit addressed the area of focus
we discussed litigation with the group’s inhouse legal counsel and obtained confirmations from external legal advisors we assessed the 
adequacy of any provisions recognised and disclosures made in the group financial statements
we examined the group’s arrangements in response to litigation and ip risk and considered their accounting treatment 
where indemnification 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 arm’s contribution to a consortium to acquire rights over the patents of mips t echnologies inc we evaluated the accounting 
treatment adopted and considered the assumptions made in valuing the availableforsale asset acquired and its subsequent impairment we also 
examined evidence demonstrating the future use of the patents acquired in arm’s roadmap and assessed the assumptions used that support the 
carrying value in the balance sheet
independent auditors’ report to the members of arm holdings plc
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 significant 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 reflect an estimate of the arm’s length incremental benefit 
accruing to pd from pipd activity 
refer also to note 13 to the group financial statements
how the scope of our audit addressed the area of focus
we reviewed the methodology used in the directors’ cash flow projections and the process by which they were drawn up including reconciling 
them to the latest boardapproved 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 crossallocation of revenues to pipd from other divisions of the arm 
group and the growth and discount rates used within the cash flow forecasts 
risk of management override of internal controls 
isas uk  ireland require that we consider this 
how the scope of our audit addressed the area of focus
we assessed the overall control environment of the group including the arrangements for staff to “whistleblow” inappropriate actions and 
interviewed senior management and the group’s internal audit function
we examined the significant accounting estimates and judgements relevant to the financial 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 
g oing 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 group’s financial 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 financial 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 group’s 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 financial year for which the group financial statements are 
prepared is consistent with the group financial statements
governance f inancial r eport arm holdings plc
governance and financial report 2013
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 specified 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 company’s 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 c11 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 group’s performance business 
model and strategy on page 15 as required by c38 of the code the audit committee has set out the significant issues that it considered in 
relation to the financial 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 financial 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
we have no exceptions to report arising from this responsibility
independent auditors’ report to the members of arm holdings plc
continued 59
responsibilities for the financial 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 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 group financial statements in accordance with applicable law and isas uk  ireland 
those standards require us to comply with the auditing practices board’s ethical standards for auditors 
this report including the opinions has been prepared for and only for the company’s members as a body in accordance with chapter 3 of 
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 parent company financial 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
governance f inancial r eport arm holdings plc
governance and financial report 2013
60
consolidated income statement 
 
for the year ended 31 december note 
2013 
£m 
2012 
£m 
revenues  2  7146 5769
cost of revenues   393 319
gross profit   6753 5450
operating expenses  
research and development   2029 1663
sales and marketing   894 729
general and administrative   1282 977
total operating expenses before exceptional items 4205 3369
exceptional items  6 1013 –
total operating expenses after exceptional items 5218 3369
profit from operations  1535 2081
investment income   133 139
interest payable and similar charges   02 03
share of results in joint venture  26 40 07
profit before tax  2 5 1626 2210
tax including £86 million in respect of exceptional items 7 578 603
profit for the year  2 1048 1607
earnings per share  
basic and diluted earnings   1048 1607
number of shares millions  
basic weighted average number of shares   13964 13751
effect of dilutive securities employee incentive schemes   154 207
diluted weighted average number of shares   14118 13958
basic eps   75p 117p
diluted eps   74p 115p
all the profit for the year is attributable to the owners of the company and all activities relate to continuing operations th e company has opted 
to present its own accounts under uk g aap 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 
 
 
for the year ended 31 december note 
2013 
£m 
2012 
£m 
profit for the year   1048 1607
other comprehensive income  
unrealised holding loss on availableforsale financia l assets net of tax of £nil 2012 £01m  11  – 03
currency translation adjustment   179 268
other comprehensive loss for the year   179 271
total comprehensive income for the year   869 1336
these items may be reclassified to the inco me statement if certain conditions are met 
the accompanying notes are an integral part of the financial statements 
  
consolidated balance sheet 
 
at 31 december 
note 
2013 
£m 
2012 
£m 
assets  
current assets  
cash and cash equivalents  17  438 463
shortterm deposits  17  5441 3400
fair value of currency exchange contracts  17  51 14
accounts receivable  9  1362 1245
availableforsale financial assets  11 17 12 –
prepaid expenses and other assets  10  398 1356
current tax assets   69 139
inventories   30 23
total current assets   7801 6640
noncurrent assets  
longterm deposits  17  1256 1413
loans and receivables  17  30 21
availableforsale financial assets  11 17  139 138
investment in joint venture 26 65 68
prepaid expenses and other assets  10  16 20
property plant and equipment  12  336 361
goodwill  13  5259 5194
other intangible assets  14  829 112
deferred tax assets  7  653 701
total noncurrent assets   8583 8028
total assets   16384 14668
liabilities   
current liabilities  
accounts payable  17  70 59
embedded derivatives 17 70 25
accrued and other liabilities  15  881 793
finance lease liabilities 16 27 29
current tax liabilities   188 166
deferred revenue   1567 1264
total current liabilities   2803 2336
noncurrent liabilities  
accrued and other liabilities 15 26 –
finance lease liabilities 16 15 29
deferred tax liabilities 7 01 –
deferred revenue   425 242
total noncurrent liabilities   467 271
total liabilities   3270 2607
net assets   13114 12061
capital and reserves attributable to owner s of the company 
share capital  18  07 07
share premium account   181 122
capital reserve  3543 3543
share option reserve   614 614
retained earnings   8206 7033
cumulative translation adjustment   563 742
total equity   13114 12061
the accompanying notes are an integral part of the financial statements the financial statements on pages 60 to 108 were appro ved 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 
017043armgovernancefinancials2013wordindd   60 10032014   2100 governance financial report
61
consolidated income statement 
 
for the year ended 31 december note 
2013 
£m 
2012 
£m 
revenues  2  7146 5769
cost of revenues   393 319
gross profit   6753 5450
operating expenses  
research and development   2029 1663
sales and marketing   894 729
general and administrative   1282 977
total operating expenses before exceptional items 4205 3369
exceptional items  6 1013 –
total operating expenses after exceptional items 5218 3369
profit from operations  1535 2081
investment income   133 139
interest payable and similar charges   02 03
share of results in joint venture  26 40 07
profit before tax  2 5 1626 2210
tax including £86 million in respect of exceptional items 7 578 603
profit for the year  2 1048 1607
earnings per share  
basic and diluted earnings   1048 1607
number of shares millions  
basic weighted average number of shares   13964 13751
effect of dilutive securities employee incentive schemes   154 207
diluted weighted average number of shares   14118 13958
basic eps   75p 117p
diluted eps   74p 115p
all the profit for the year is attributable to the owners of the company and all activities relate to continuing operations th e company has opted 
to present its own accounts under uk g aap 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 
 
 
for the year ended 31 december note 
2013 
£m 
2012 
£m 
profit for the year   1048 1607
other comprehensive income  
unrealised holding loss on availableforsale financia l assets net of tax of £nil 2012 £01m  11  – 03
currency translation adjustment   179 268
other comprehensive loss for the year   179 271
total comprehensive income for the year   869 1336
these items may be reclassified to the inco me statement if certain conditions are met 
the accompanying notes are an integral part of the financial statements 
  
consolidated balance sheet 
 
at 31 december 
note 
2013 
£m 
2012 
£m 
assets  
current assets  
cash and cash equivalents  17  438 463
shortterm deposits  17  5441 3400
fair value of currency exchange contracts  17  51 14
accounts receivable  9  1362 1245
availableforsale financial assets  11 17 12 –
prepaid expenses and other assets  10  398 1356
current tax assets   69 139
inventories   30 23
total current assets   7801 6640
noncurrent assets  
longterm deposits  17  1256 1413
loans and receivables  17  30 21
availableforsale financial assets  11 17  139 138
investment in joint venture 26 65 68
prepaid expenses and other assets  10  16 20
property plant and equipment  12  336 361
goodwill  13  5259 5194
other intangible assets  14  829 112
deferred tax assets  7  653 701
total noncurrent assets   8583 8028
total assets   16384 14668
liabilities   
current liabilities  
accounts payable  17  70 59
embedded derivatives 17 70 25
accrued and other liabilities  15  881 793
finance lease liabilities 16 27 29
current tax liabilities   188 166
deferred revenue   1567 1264
total current liabilities   2803 2336
noncurrent liabilities  
accrued and other liabilities 15 26 –
finance lease liabilities 16 15 29
deferred tax liabilities 7 01 –
deferred revenue   425 242
total noncurrent liabilities   467 271
total liabilities   3270 2607
net assets   13114 12061
capital and reserves attributable to owner s of the company 
share capital  18  07 07
share premium account   181 122
capital reserve  3543 3543
share option reserve   614 614
retained earnings   8206 7033
cumulative translation adjustment   563 742
total equity   13114 12061
the accompanying notes are an integral part of the financial statements the financial statements on pages 60 to 108 were appro ved 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 
017043armgovernancefinancials2013wordindd   61 10032014   2100 arm holdings plc
governance and financial report 2013
62
consolidated cash flow statement 
for the year ended 31 december 
note 
2013 
£m 
2012 
£m 
profit before tax   1626 2210
investment income net of interest payable and similar charges   131 136
share of results in joint venture  40 07
profit from operations   1535 2081
adjustments for  
depreciation and amortisation of property pl ant and equipment and intangible assets   280 174
compensation charge in respect of sharebased payments   592 371
provision for impairment of availableforsale financial assets including noncash exceptional item of £595 million  663 14
profit on disposal of availableforsale financial assets  33 08
loss on disposal of property plant and equipment   06 –
provision for doubtful debts   40 04
noncash foreign currency gains  36 07
movement in fair value of cu rrency exchange contracts   37 29
movement in fair value of embedded derivatives   44 37
changes in working capital  
accounts receivable   198 57
inventories   07 01
prepaid expenses and other assets   88 11
accounts payable   11 28
deferred revenue   531 373
accrued and other liabilities   83 48
cash generated by operations before tax   3386 2867
income taxes paid   233 261
net cash from operating activities   3153 2606
investing activities  
interest received net of interest paid of £02m 2012 £03m  132 112
purchases of property plant and equipment    135 202
advance payment to acquire intangible asset and availableforsale financial asset 10 – 1037
purchases of other intangible assets   318 54
purchases of availableforsale financial assets 11 89 30
proceeds on disposal of availableforsale financial assets  55 118
purchase of short and lo ngterm deposits net   1885 768
purchase of subsidiaries net of cash and borrowings acquired 19 211 –
investment in joint venture  26 37 75
provision of longterm loan  07 –
net cash used in investing activities   2495 1936
financing activities  
proceeds from borrowings   – 998
proceeds received on issuance of shares 18 59 56
refund of costs related to share issue  – 27
dividends paid to shareholders 8 689 518
repayment of borrowings  11 998
repayment of finance lease liabilities  33 33
net cash used in financing activities   674 468
net decreaseincrease in cash and cash equivalents   16 202
cash and cash equivalents at beginning of the year   463 268
effect of foreign exchange rate changes   09 07
cash and cash equivalents at end of the year    438 463
the accompanying notes are an integral part of the financial statements 
consolidated statement of changes in shareholders’ equity 
 
 attributable to the owners of the company 
for the year ended 31 december 
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 07 66 3516 614 5396 03 1010 10612
profit for the year  – – – – 1607 – – 1607
other comprehensive income   
unrealised holding loss on availableforsale 
financial assets net of tax of £01 million – – – – – 03 – 03
currency translation adjustment  – – – – – – 268 268
total comprehensive income for the year – – – – 1607 03 268 1336
shares issued on exercise of share options and 
awards note 18 – 56 – – – – – 56
dividends note 8 – – – – 518 – – 518
credit in respect of employee share schemes  – – – – 371 – – 371
movement on tax arising on share options 
and awards  – – – – 177 – – 177
refund of costs related to share issue  – – 27 – – – – 27
 – 56 27 – 30 – – 113
balance at 31 december 2012 07 122 3543 614 7033 – 742 12061
profit for the year  – – – – 1048 – – 1048
other comprehensive income   
currency translation adjustment  – – – – – – 179 179
total comprehensive income for the year – – – – 1048 – 179 869
shares issued on exercise of share options and 
awards note 18 – 59 – – – – – 59
dividends note 8 – – – – 689 – – 689
credit in respect of employee share schemes  – – – – 592 – – 592
movement on tax arising on share options 
and awards  – – – – 222 – – 222
 – 59 – – 125 – – 184
balance at 31 december 2013 07 181 3543 614 8206 – 563 13114
 capital reserve in 2004 the premium on the shares issued in part consideration for the acquisition of artisan components in c was credited to reserves on cons olidation 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 credi t to equity arising on acquisition  
 share option reserve this represents the fair value of opti ons granted on the acquisition of artisan components inc in 200 4  
 revaluation reserve the group includes on its balance sheet equity investments that are not publicly traded which are cla ssified as availableforsale 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 revalu ation 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 undistribut able 
  refund of costs related to share issue this represents th e refund of stamp duty costs incurred on the issue of shares fo r the acquisition of artisan components inc in 2004  
the accompanying notes are an integral part of the financial statements 
 
017043armgovernancefinancials2013wordindd   62 10032014   2100 governance financial report
63
consolidated cash flow statement 
for the year ended 31 december 
note 
2013 
£m 
2012 
£m 
profit before tax   1626 2210
investment income net of interest payable and similar charges   131 136
share of results in joint venture  40 07
profit from operations   1535 2081
adjustments for  
depreciation and amortisation of property pl ant and equipment and intangible assets   280 174
compensation charge in respect of sharebased payments   592 371
provision for impairment of availableforsale financial assets including noncash exceptional item of £595 million  663 14
profit on disposal of availableforsale financial assets  33 08
loss on disposal of property plant and equipment   06 –
provision for doubtful debts   40 04
noncash foreign currency gains  36 07
movement in fair value of cu rrency exchange contracts   37 29
movement in fair value of embedded derivatives   44 37
changes in working capital  
accounts receivable   198 57
inventories   07 01
prepaid expenses and other assets   88 11
accounts payable   11 28
deferred revenue   531 373
accrued and other liabilities   83 48
cash generated by operations before tax   3386 2867
income taxes paid   233 261
net cash from operating activities   3153 2606
investing activities  
interest received net of interest paid of £02m 2012 £03m  132 112
purchases of property plant and equipment    135 202
advance payment to acquire intangible asset and availableforsale financial asset 10 – 1037
purchases of other intangible assets   318 54
purchases of availableforsale financial assets 11 89 30
proceeds on disposal of availableforsale financial assets  55 118
purchase of short and lo ngterm deposits net   1885 768
purchase of subsidiaries net of cash and borrowings acquired 19 211 –
investment in joint venture  26 37 75
provision of longterm loan  07 –
net cash used in investing activities   2495 1936
financing activities  
proceeds from borrowings   – 998
proceeds received on issuance of shares 18 59 56
refund of costs related to share issue  – 27
dividends paid to shareholders 8 689 518
repayment of borrowings  11 998
repayment of finance lease liabilities  33 33
net cash used in financing activities   674 468
net decreaseincrease in cash and cash equivalents   16 202
cash and cash equivalents at beginning of the year   463 268
effect of foreign exchange rate changes   09 07
cash and cash equivalents at end of the year    438 463
the accompanying notes are an integral part of the financial statements 
consolidated statement of changes in shareholders’ equity 
 
 attributable to the owners of the company 
for the year ended 31 december 
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 07 66 3516 614 5396 03 1010 10612
profit for the year  – – – – 1607 – – 1607
other comprehensive income   
unrealised holding loss on availableforsale 
financial assets net of tax of £01 million – – – – – 03 – 03
currency translation adjustment  – – – – – – 268 268
total comprehensive income for the year – – – – 1607 03 268 1336
shares issued on exercise of share options and 
awards note 18 – 56 – – – – – 56
dividends note 8 – – – – 518 – – 518
credit in respect of employee share schemes  – – – – 371 – – 371
movement on tax arising on share options 
and awards  – – – – 177 – – 177
refund of costs related to share issue  – – 27 – – – – 27
 – 56 27 – 30 – – 113
balance at 31 december 2012 07 122 3543 614 7033 – 742 12061
profit for the year  – – – – 1048 – – 1048
other comprehensive income   
currency translation adjustment  – – – – – – 179 179
total comprehensive income for the year – – – – 1048 – 179 869
shares issued on exercise of share options and 
awards note 18 – 59 – – – – – 59
dividends note 8 – – – – 689 – – 689
credit in respect of employee share schemes  – – – – 592 – – 592
movement on tax arising on share options 
and awards  – – – – 222 – – 222
 – 59 – – 125 – – 184
balance at 31 december 2013 07 181 3543 614 8206 – 563 13114
 capital reserve in 2004 the premium on the shares issued in part consideration for the acquisition of artisan components in c was credited to reserves on cons olidation 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 credi t to equity arising on acquisition  
 share option reserve this represents the fair value of opti ons granted on the acquisition of artisan components inc in 200 4  
 revaluation reserve the group includes on its balance sheet equity investments that are not publicly traded which are cla ssified as availableforsale 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 revalu ation 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 undistribut able 
  refund of costs related to share issue this represents th e refund of stamp duty costs incurred on the issue of shares fo r the acquisition of artisan components inc in 2004  
the accompanying notes are an integral part of the financial statements 
 
017043armgovernancefinancials2013wordindd   63 10032014   2100 arm holdings plc
governance and financial report 2013
64
notes to the financial statements  
1 the group and a summary of its significant acco unting 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 coste ffectiveness and energyefficiency of highvolume embedded applic ations 
the group licenses and sells its technology and products to lead ing international electronics companies which in turn manufacture market and sell 
microcontrollers applicationspecific integrated circuits asics  and applicationspecific standard processors assps based on arm’s technology 
to systems companies for incorporation into a wide variety of end products 
by creating a network of partners and working with them to be st utilise arm’s technology the group is establishing its proces sor architecture 
and physical ip for use in many highvolume embedded microprocessor applications including mobile phones tablets digital tel evisions and pc 
peripherals enterprise networking and servers and smart cards and microcontrollers 
the group also licenses and sells development tools direct to sy stems companies and provides support services to its licensees systems 
companies and other systems designers 
the group’s 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 an d wales the registered office of the co mpany is 
110 fulbourn road cambridge cb1 9nj uk 
the company was formed on 16 october 1990 as a joint venture be tween apple computer uk limite d and acorn computers limited and 
operated under the name advanced risc machines holdings limite d until 10 march 1998 when its na me was changed to arm holdings plc its 
initial public offering was on 17 april 1998  
group undertakings include arm limi ted incorporated in the uk geomerics limited incorporated in the uk arm france sas in corporated 
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 fi nland arm inc incorporated in the us arm consulting shanghai co limited in corporated 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 the se 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 comp anies 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 co nvention as 
modified by the revaluation to fair value of availableforsale financial assets financial assets and liabilities at fair val ue 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 techno logies inc’s 
portfolio of patents  £1037 mi llion has been moved from ‘prepa yments and other assets’ within working capital movements to ‘a dvance payment 
to acquire intangible asset and availablefo rsale afs financial asset’ within investing activities  the reclassification ha s been made to better reflect 
the nature of the payment fo llowing 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 an d judgements that 
affect the amounts reported in the financial statements and acco mpanying 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 reasonab le under the 
circumstances the resulting accounting estimates will by definition seldom equa l the related actual results the estimates a nd assumptions 
that have significant risk of causing a mate rial adjustment to the carrying amounts of assets and liabilities within the next f inancial 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 re quires an estimation of the va lue in use of the cash generati ng units cgus to 
which goodwill is allocated as discussed in detail in note 13 estimating the value in use requires the grou p to make an estim ate of the expected 
future cash flows from the cgus and also to choose a suitable di scount rate in order to calculat e the present values of those c ash flows the 
discount rate is based on an estimate of the group’s weighted av erage cost of capital the group uses a posttax discount rate of 10 2012 
10 pretax discount rate of approximately 11 2012 11 
the most significant balance of goodwill is that allocated to th e physical ip division pipd th e cash flows relevant to this cgu are those of both 
the division itself and also a proportion of the cash flows gene rated 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 in cremental value provided by the combination of pd and pipd produ cts although 
these pd cash flows are not cross allocated to pipd in the segmental reporting note the directors consider that it is necessar y to include them in 
the estimation of the value in use of the pipd cgu this is be cause pd products are enhanced wh en combined with certain pipd pr oducts as a 
result the directors believe that pd is able and will be able in future to achieve higher reve nues than it would have done as a standalone entity 
the amount of these revenues is estimated by considering the percen tage of revenue that is achiev ed as a result of the combinat ion for each class 
of pd product while these percentages are not derived from external sources of inform ation as no such so urces exist the directors utilise their 
considerable knowledge and experience of the semiconductor industry in estimating the amounts that would be recharged if pd an d 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 re cognition policies in particular as discussed in detail in th e revenue recognition 
policy on page 68 estimates are made in relation to the use of the percentageofcompletion accounting method which requires that the extent 
of progress toward completion of contracts can be anticipated with reasonable certainty the use of the percentageofcompletio n 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 ex tent to which future milestone receipts represent a probable future 
economic benefit to the group in addition when allocating reve nue to various components of arrangements involving several com ponents it 
is assumed that the fair value of each element is reflected by its price when so ld 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 assu mptions 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 worldwide provision for 
income taxes there are many transactions and calculations for which the ultimate tax determination is uncertain during the ord inary 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 le gal settlements requires the directors to estimate the committed future legal and se ttlement fees 
the group is expecting to incur either where suits are filed ag ainst 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 opinio ns received from 
external counsel and then estimate the level of accrual required 
contingent consideration for an ac quisition 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 acquiree’s future financial performance typically more t han one year 
postacquisition 
  
017043armgovernancefinancials2013wordindd   64 10032014   2100 governance financial report
65
notes to the financial statements  
1 the group and a summary of its significant acco unting 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 coste ffectiveness and energyefficiency of highvolume embedded applic ations 
the group licenses and sells its technology and products to lead ing international electronics companies which in turn manufacture market and sell 
microcontrollers applicationspecific integrated circuits asics  and applicationspecific standard processors assps based on arm’s technology 
to systems companies for incorporation into a wide variety of end products 
by creating a network of partners and working with them to be st utilise arm’s technology the group is establishing its proces sor architecture 
and physical ip for use in many highvolume embedded microprocessor applications including mobile phones tablets digital tel evisions and pc 
peripherals enterprise networking and servers and smart cards and microcontrollers 
the group also licenses and sells development tools direct to sy stems companies and provides support services to its licensees systems 
companies and other systems designers 
the group’s 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 an d wales the registered office of the co mpany is 
110 fulbourn road cambridge cb1 9nj uk 
the company was formed on 16 october 1990 as a joint venture be tween apple computer uk limite d and acorn computers limited and 
operated under the name advanced risc machines holdings limite d until 10 march 1998 when its na me was changed to arm holdings plc its 
initial public offering was on 17 april 1998  
group undertakings include arm limi ted incorporated in the uk geomerics limited incorporated in the uk arm france sas in corporated 
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 fi nland 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 the se 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 comp anies 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 co nvention as 
modified by the revaluation to fair value of availableforsale financial assets financial assets and liabilities at fair val ue 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 techno logies inc’s 
portfolio of patents  £1037 mi llion has been moved from ‘prepa yments and other assets’ within working capital movements to ‘a dvance payment 
to acquire intangible asset and availablefo rsale afs financial asset’ within investing activities  the reclassification ha s been made to better reflect 
the nature of the payment fo llowing 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 an d judgements that 
affect the amounts reported in the financial statements and acco mpanying 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 reasonab le under the 
circumstances the resulting accounting estimates will by definition seldom equa l the related actual results the estimates a nd assumptions 
that have significant risk of causing a mate rial adjustment to the carrying amounts of assets and liabilities within the next f inancial 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 re quires an estimation of the va lue in use of the cash generati ng units cgus to 
which goodwill is allocated as discussed in detail in note 13 estimating the value in use requires the grou p to make an estim ate of the expected 
future cash flows from the cgus and also to choose a suitable di scount rate in order to calculat e the present values of those c ash flows the 
discount rate is based on an estimate of the group’s weighted av erage cost of capital the group uses a posttax discount rate of 10 2012 
10 pretax discount rate of approximately 11 2012 11 
the most significant balance of goodwill is that allocated to th e physical ip division pipd th e cash flows relevant to this cgu are those of both 
the division itself and also a proportion of the cash flows gene rated 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 in cremental value provided by the combination of pd and pipd produ cts although 
these pd cash flows are not cross allocated to pipd in the segmental reporting note the directors consider that it is necessar y to include them in 
the estimation of the value in use of the pipd cgu this is be cause pd products are enhanced wh en combined with certain pipd pr oducts as a 
result the directors believe that pd is able and will be able in future to achieve higher reve nues than it would have done as a standalone entity 
the amount of these revenues is estimated by considering the percen tage of revenue that is achiev ed as a result of the combinat ion for each class 
of pd product while these percentages are not derived from external sources of inform ation as no such so urces exist the directors utilise their 
considerable knowledge and experience of the semiconductor industry in estimating the amounts that would be recharged if pd an d 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 re cognition policies in particular as discussed in detail in th e revenue recognition 
policy on page 68 estimates are made in relation to the use of the percentageofcompletion accounting method which requires that the extent 
of progress toward completion of contracts can be anticipated with reasonable certainty the use of the percentageofcompletio n 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 ex tent to which future milestone receipts represent a probable future 
economic benefit to the group in addition when allocating reve nue to various components of arrangements involving several com ponents it 
is assumed that the fair value of each element is reflected by its price when so ld 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 assu mptions 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 worldwide provision for 
income taxes there are many transactions and calculations for which the ultimate tax determination is uncertain during the ord inary 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 le gal settlements requires the directors to estimate the committed future legal and se ttlement fees 
the group is expecting to incur either where suits are filed ag ainst 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 opinio ns received from 
external counsel and then estimate the level of accrual required 
contingent consideration for an ac quisition 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 acquiree’s future financial performance typically more t han one year 
postacquisition 
  
017043armgovernancefinancials2013wordindd   65 10032014   2100 arm holdings plc
governance and financial report 2013
66
notes to the financial statements  
continued 
1b summary of significant accounting policies continued 
critical accounting estimates and judgements continued 
participation in trust to acquire patent rights 
during 2013 the group has participated in a consortium via a trust to acquire certai n patent rights and has made various jud gements regarding 
these transactions  
the directors believe that the group does not control or have si gnificant influence over the trus t 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 th erefore not been 
consolidated or equity accounted in the group financial statements the group has determined that the participation in the cons ortium conferred 
on the group two separate rights an intang ible asset conferring the right to use th e assets in the group’s 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 gr oup in conjunction with the management of the trust which ha s 
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 rig hts 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 port folio was instead put up for sa le by auction 
the group acquired the patents in january 2014 for 40 million £ 24 million which will be acco unted for as an additional in tangible asset 
the auction process means that th ere are no further potential cash flows in relation to the afs financial asset and the asset h as therefore been 
impaired down to the value of the group’s share of the auction proceeds resulting in a noncash exceptional charge of 985 mi llion 
£595 million 
provision for impairment of trade receivables 
the group assesses trade receivables for impairment which requir es the directors to estimate the likelihood of payment forfeitu re by customers 
  
 
 
1b summary of significant accounting policies continued 
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 co nsolidation in ias 27 “consolidated and separate 
financial statements” and sic12 “consolidation – special purpos e 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 c ontrol is present 
power is the current ability to direct the activities that sign ificantly influence returns returns must vary and can be positi ve negative or both this 
standard has not had a material impact on the results of the gr oup the standard is effective for annual periods beginning on o r 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 pr oportionate consolidation for jointly contro lled entities has been eliminated equity accounting is 
mandatory for participants in joint ventures entities that partic ipate in joint operations will follow accounting much like th at for joint assets or joint 
operations today whereby a joint operator will recognise its in terest 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 join t venturers share in the net ass ets 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 af ter 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 ne w standard ifrs 12 requires entities to disclose 
information that helps financial statement readers to evaluate the nature risks and financial effects associated with the enti ty’s interests in 
subsidiaries associates joint arrangements and unconsolidated st ructured entities this standard has not had a material impac t on the results 
of the group the standard is effective for annual periods beginn ing on or after 1 january 2014 bu t has been early adopted by t he 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 st andards ifrs 13 aims to improve consistency and reduce compl exity 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 ‘f inancial risk management’ and no te 17 ‘financial instruments’ 
ias 28 revised “investments in associates and joint ventures” ias 28 defines “significa nt influence” and the “equ ity method” and provides 
guidance on their practical application th e revised standard incorporates the accounting for joint ventures as well as the con sensus from sic13 
“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 futu re this standard is effective for annual period s beginning on or afte r 1 january 2014 but has been early adopted by 
the group 
amendment to ias 1 “financial statement presentation” the main change resulting from this amendm ent 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 s tatement 
subsequently reclassification adjustments this standard is e ffective for accounting periods beginning on or after 1 july 201 2 and was endorsed 
by the eu in june 2012 the group has included rele vant 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 effe ctive for accounting periods begin ning on or after 
1 january 2014 but has been early adopted by the group there has b een no material impact on the group 
amendment to ias 36 “impairment of assets” this amendment relates to the recoverable amount disclosures for nonfinancial assets 
the amendment removes certain disclosures of the recoverable amount of cgus that had been included in ias 36 by the issue of if rs 13 
the amendment is effective for accounting periods beginning on or after 1 january 2014 but has b een early adopted by the group 
  
017043armgovernancefinancials2013wordindd   66 10032014   2100 governance financial report
67
notes to the financial statements  
continued 
1b summary of significant accounting policies continued 
critical accounting estimates and judgements continued 
participation in trust to acquire patent rights 
during 2013 the group has participated in a consortium via a trust to acquire certai n patent rights and has made various jud gements regarding 
these transactions  
the directors believe that the group does not control or have si gnificant influence over the trus t 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 th erefore not been 
consolidated or equity accounted in the group financial statements the group has determined that the participation in the cons ortium conferred 
on the group two separate rights an intang ible asset conferring the right to use th e assets in the group’s 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 gr oup in conjunction with the management of the trust which ha s 
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 rig hts 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 port folio was instead put up for sa le by auction 
the group acquired the patents in january 2014 for 40 million £ 24 million which will be acco unted for as an additional in tangible asset 
the auction process means that th ere are no further potential cash flows in relation to the afs financial asset and the asset h as therefore been 
impaired down to the value of the group’s share of the auction proceeds resulting in a noncash exceptional charge of 985 mi llion 
£595 million 
provision for impairment of trade receivables 
the group assesses trade receivables for impairment which requir es the directors to estimate the likelihood of payment forfeitu re by customers 
  
 
 
1b summary of significant accounting policies continued 
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 co nsolidation in ias 27 “consolidated and separate 
financial statements” and sic12 “consolidation – special purpos e 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 c ontrol is present 
power is the current ability to direct the activities that sign ificantly influence returns returns must vary and can be positi ve negative or both this 
standard has not had a material impact on the results of the gr oup the standard is effective for annual periods beginning on o r 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 pr oportionate consolidation for jointly contro lled entities has been eliminated equity accounting is 
mandatory for participants in joint ventures entities that partic ipate in joint operations will follow accounting much like th at for joint assets or joint 
operations today whereby a joint operator will recognise its in terest 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 join t venturers share in the net ass ets 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 af ter 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 ne w standard ifrs 12 requires entities to disclose 
information that helps financial statement readers to evaluate the nature risks and financial effects associated with the enti ty’s interests in 
subsidiaries associates joint arrangements and unconsolidated st ructured entities this standard has not had a material impac t on the results 
of the group the standard is effective for annual periods beginn ing on or after 1 january 2014 bu t has been early adopted by t he 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 st andards ifrs 13 aims to improve consistency and reduce compl exity 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 ‘f inancial risk management’ and no te 17 ‘financial instruments’ 
ias 28 revised “investments in associates and joint ventures” ias 28 defines “significa nt influence” and the “equ ity method” and provides 
guidance on their practical application th e revised standard incorporates the accounting for joint ventures as well as the con sensus from sic13 
“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 futu re this standard is effective for annual period s beginning on or afte r 1 january 2014 but has been early adopted by 
the group 
amendment to ias 1 “financial statement presentation” the main change resulting from this amendm ent 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 s tatement 
subsequently reclassification adjustments this standard is e ffective for accounting periods beginning on or after 1 july 201 2 and was endorsed 
by the eu in june 2012 the group has included rele vant 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 effe ctive for accounting periods begin ning on or after 
1 january 2014 but has been early adopted by the group there has b een no material impact on the group 
amendment to ias 36 “impairment of assets” this amendment relates to the recoverable amount disclosures for nonfinancial assets 
the amendment removes certain disclosures of the recoverable amount of cgus that had been included in ias 36 by the issue of if rs 13 
the amendment is effective for accounting periods beginning on or after 1 january 2014 but has b een early adopted by the group 
  
017043armgovernancefinancials2013wordindd   67 10032014   2100 arm holdings plc
governance and financial report 2013
68
notes to the financial statements  
continued 
1b summary of significant accounting policies 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 me asured at fair 
value a debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and t he cash flows represent 
principal and interest otherwise it is measured at fair value th rough the income statement this standard is not expected to h ave a material impact 
on the results of the group published by the iasb in november 2009 the effective date is currently open pending the finalisa tion of the 
impairment and classification and measurement requirem ents 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 fina ncial assets and financial liabilities on the bala nce sheet this standard is effective for acc ounting periods beginning 
on or after 1 january 2014 and was endorsed by the eu in december 2012 it is not expect ed to have a material impact on the gro up 
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 bu yer 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 ca n 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 in curred in respect of the sale can be measured reliably 
revenue associated with the rendering of services is recognised when all of the following cond itions have been satisfied 
• the amount of revenue ca n be measured reliably 
• it is probable that the economic benefits associated with the transaction will flow to the group 
• the stage of completion of the transaction at the en d 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 af ter 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 technologybased 
products revenues from support maintenance and training an d the sale of development boards and software toolkits 
licence revenues 
revenue from standard licence products that are not modified to m eet 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 lice nsed ip is relinquished at the point at which the ip is delive red to the customer 
• the amount of revenue can be measured reli ably 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 tr ansaction 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 
  
 
 
1b summary of significant accounting policies continued 
revenue recognition continued 
the majority of the group’s reve nues come from the licensing of ip and subsequent receipt of royalty revenues and there are the refore 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 group’s suppliers 
many licence agreements are for products wh ich are designed to meet the specific requ irements of each customer revenue from th e sale of 
such licences is recognised on a percentageofcompletion basis over the peri od from signing of the licence to customer accepta nce under the 
percentageofcompletion method provisions for estimated losses on uncompleted contracts are recognised in the period in which the likelihood 
of such losses is determined the percentage ofcompletion is measured by monitoring progress using records of actual time incu rred to date in 
the project compared with the to tal estimated project requirement which appr oximates to the extent of performance 
where invoicing milestones in licence arrang ements are such that the re ceipts fall due significantly outside the period over wh ich the customisation 
is expected to be performed or significantly outside its normal payment terms for standard licence arrangements the group eval uates whether it 
is probable that economic benefits associ ated with these milestones wi ll 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 ra ised in the expected timeframe particularly where the invoici ng milestone is in 
some way dependent on customer activity 
• whether it has sufficient evidence that the customer considers that the group’s contra ctual obligations have been or will be fulfilled 
• whether there is sufficient certainty that only those costs expect ed 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 cu stomers supports the conclusions reached 
where the group considers that there is insuff icient evidence that it is probable that the economic benefits associated with su ch 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 th at the economic benefits associated with the tran saction will flow to th e 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 compo nents based 
on each component’s fair value where fair value is the price that is regularly charge d for an item when sold separately where a component in a 
multiplecomponent 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 rel ative to the book 
prices of the other components in the agreement if fair value of one or more components in a multiplecomponent agreement is n ot 
determinable where such component is not considered incidental to the overall arrang ement the entire arrangement fee is defe rred 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 co mponents the revenue recognition criteria are applied to the el ements 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 straightline ba sis over the term of the arran gement 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 group’s customers of products containing arm techno logy royalty revenues are recog nised when it 
is probable that the economic benefits associated with the transa ction will flow to the group th e amount of revenue can be rel iably measured 
and when the group receives notification from the customer of pr oduct sales notification is typically received in the quarter following shipment of 
the products by the customer  
017043armgovernancefinancials2013wordindd   68 10032014   2100 governance financial report
69
notes to the financial statements  
continued 
1b summary of significant accounting policies 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 me asured at fair 
value a debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and t he cash flows represent 
principal and interest otherwise it is measured at fair value th rough the income statement this standard is not expected to h ave a material impact 
on the results of the group published by the iasb in november 2009 the effective date is currently open pending the finalisa tion of the 
impairment and classification and measurement requirem ents 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 fina ncial assets and financial liabilities on the bala nce sheet this standard is effective for acc ounting periods beginning 
on or after 1 january 2014 and was endorsed by the eu in december 2012 it is not expect ed to have a material impact on the gro up 
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 bu yer 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 ca n 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 in curred in respect of the sale can be measured reliably 
revenue associated with the rendering of services is recognised when all of the following cond itions have been satisfied 
• the amount of revenue ca n be measured reliably 
• it is probable that the economic benefits associated with the transaction will flow to the group 
• the stage of completion of the transaction at the en d 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 af ter 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 technologybased 
products revenues from support maintenance and training an d the sale of development boards and software toolkits 
licence revenues 
revenue from standard licence products that are not modified to m eet 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 lice nsed ip is relinquished at the point at which the ip is delive red to the customer 
• the amount of revenue can be measured reli ably 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 tr ansaction 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 
  
 
 
1b summary of significant accounting policies continued 
revenue recognition continued 
the majority of the group’s reve nues come from the licensing of ip and subsequent receipt of royalty revenues and there are the refore 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 group’s suppliers 
many licence agreements are for products wh ich are designed to meet the specific requ irements of each customer revenue from th e sale of 
such licences is recognised on a percentageofcompletion basis over the peri od from signing of the licence to customer accepta nce under the 
percentageofcompletion method provisions for estimated losses on uncompleted contracts are recognised in the period in which the likelihood 
of such losses is determined the percentage ofcompletion is measured by monitoring progress using records of actual time incu rred to date in 
the project compared with the to tal estimated project requirement which appr oximates to the extent of performance 
where invoicing milestones in licence arrang ements are such that the re ceipts fall due significantly outside the period over wh ich the customisation 
is expected to be performed or significantly outside its normal payment terms for standard licence arrangements the group eval uates whether it 
is probable that economic benefits associ ated with these milestones wi ll 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 ra ised in the expected timeframe particularly where the invoici ng milestone is in 
some way dependent on customer activity 
• whether it has sufficient evidence that the customer considers that the group’s contra ctual obligations have been or will be fulfilled 
• whether there is sufficient certainty that only those costs expect ed 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 cu stomers supports the conclusions reached 
where the group considers that there is insuff icient evidence that it is probable that the economic benefits associated with su ch 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 th at the economic benefits associated with the tran saction will flow to th e 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 compo nents based 
on each component’s fair value where fair value is the price that is regularly charge d for an item when sold separately where a component in a 
multiplecomponent 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 rel ative to the book 
prices of the other components in the agreement if fair value of one or more components in a multiplecomponent agreement is n ot 
determinable where such component is not considered incidental to the overall arrang ement the entire arrangement fee is defe rred 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 co mponents the revenue recognition criteria are applied to the el ements 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 straightline ba sis over the term of the arran gement 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 group’s customers of products containing arm techno logy royalty revenues are recog nised when it 
is probable that the economic benefits associated with the transa ction will flow to the group th e amount of revenue can be rel iably measured 
and when the group receives notification from the customer of pr oduct sales notification is typically received in the quarter following shipment of 
the products by the customer  
017043armgovernancefinancials2013wordindd   69 10032014   2100 arm holdings plc
governance and financial report 2013
70
notes to the financial statements  
continued 
1b summary of significant accounting policies continued 
revenue recognition continued 
other revenues 
in addition to licence fees co ntracts generally contain an agreement to provid e postdelivery service support in the form of support maintenance 
and training which consists of the right to receive services an dor unspecified product upgrades or enhancements that are offered on a when
andifavailable basis fees for postdelivery service support are generally specified in the co ntract revenue related to post delivery service support 
is recognised based on fair value which is determined with re ference to contractual renewal rates where renewal rates are spe cified revenue for 
postdelivery service support is recognised on a straightline ba sis over the period for which support and maintenance is contr actually agreed by 
the group with the licensee 
sales of software including development systems which are not specifically designed for a given licence such as offtheshel f software are 
recognised upon delivery when the signific ant risks and rewards of ownership have been transferred to the customer at that ti me the group has 
no further obligations except that where necessary the costs a ssociated with providing postdelivery service support have bee n accrued services 
such as training that the grou p provides which are not essential to the functionality of the ip are separately stated and pri ced in the contract and 
therefore accounted for separately revenue is recognised as serv ices are performed and it is probable that the economic benef its associated with 
the transaction will flow to the group 
for all types of revenue if the amount of revenue recognised exceeds the amounts invoic ed to customers the excess amount is r ecorded as 
amounts recoverable on contracts within a ccounts receivable the excess of licence fees and postdelivery service support invoi ced over revenue 
recognised is recorded as deferred revenue 
intangible assets 
a goodwill goodwill represents the excess of the fair value of the consid eration 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 co mpletion the fair value 
of share options is calculated using the blackscholes 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 cons ideration will be payable 
b other intangible assets computer software purchased patents and licences to use technology are ca pitalised at cost and amortised on 
a straightline basis over an estimate of the time that the grou p is expected to benefit from th em costs that are directly att ributable to the 
development of new business application software and that are incu rred during the period prior to the date that the software is placed into 
operational use are capitalised external costs and internal co sts are capitalised to the extent they enhance the future econo mic benefit of the 
asset 
although an independent valuation is made of any intangible asse ts purchased as part of a business combination the directors a re primarily 
responsible for determining the fair value of intangible assets  
inprocess research and development projects purchased as part of a business combinat ion 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 inprocess r esearch and 
development intangible assets such that their amortisati on 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 ad justed if appropriate 
at each balance sheet date on a straightl ine basis over the expected useful economic lives of the assets concerned the princ ipal economic lives 
used for this purpose are 
computer software three to five years 
patents and licences three to eleven years 
inprocess 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 
 
 
 
1b summary of significant accounting policies continued 
income taxes 
the current income tax charge is calculated on the basis of tax laws enacted or subs tantively enacted at the balance sheet date in the countries 
where the group’s subsidiaries operate and generate taxable inco me management periodically eval uates positions taken in tax re turns with 
respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropri ate 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 rese arch and development expenditure credit r dec on 
qualifying expenditure incurred since 1 april 2013 instead of th e existing superdeduction rules at the balance sheet date ma nagement has 
concluded that the election will be made an d therefore the rdec is recorded as income included in profit before tax netted aga inst research and 
development expenses as the rdec is of the nature of a government grant in previous periods there was a reduction in the incom e tax expense 
deferred income taxes are computed using the liability method under this method deferred tax assets and liabilities are deter mined based on 
temporary differences between the financial reporting and tax bases of assets and liab ilities and are measured using enacted ra tes 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 reco gnition of an asset or 
liability in a transaction other than a business combination that at the time of the transaction affects neither accounting n or taxable profit or loss 
deferred tax assets are recognised to the extent that it is pr obable that future taxable profits will arise against which the t emporary differences will 
be utilised 
deferred tax is provided on temporary differences arising on inve stments in subsidiaries except where the timing of the reversa l of the temporary 
difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable futu re 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 att ributable 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 201314 rising to 100 by 201718 as ‘relevant’ patent box profits are taxed a t 10 and other 
profits are taxed at uk statutory rates deferred tax assets an d liabilities are measured using the average rates expected to a pply on realisation 
or settlement 
in the uk and the us the group is entitled to a tax deduction fo r amounts treated as compensation on exercise of certain emplo yee share 
options or vest of share awards under each jurisdiction’s tax ru les as explained under “shareb ased payments” below a compens ation expense 
is recorded in the group’s 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 arisin g is calculated by 
comparing the estimated amount of tax deduction to be obtained in the future based on the company’s 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 compen sation expense at the statutory rate the ex cess is recorded directly in equity aga inst retained 
earnings 
impairment of assets 
nonfinancial assets that have an indefinite useful life for example goodwill are not subject to amortisation but are tested annually for impairment 
nonfinancial assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances i ndicate that the 
carrying amount may not be recoverable 
an impairment loss is recognised for the amount by which the no nfinancial asset’s carrying amount exceeds its recoverable amou nt the 
recoverable amount is the higher of an asset’s fair value less costs to sell and valueinuse for purposes of assessing impair ment 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 valueinuse calculation all cash inflows and outflows associated with the cgu are take n into account 
whether these are explicitly charged or not nonfinancial 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 sh owed there was no impairment with respec t to goodwill furthermore no trigger events have 
been identified that would suggest the impairment of any of the group’s 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 val ues less costs to sell 
and their values in use if th e recoverable amounts are less than the carrying amounts an impairment loss is recognised and th e assets are written 
down to their recoverable amounts 
017043armgovernancefinancials2013wordindd   70 10032014   2100 governance financial report
71
notes to the financial statements  
continued 
1b summary of significant accounting policies continued 
revenue recognition continued 
other revenues 
in addition to licence fees co ntracts generally contain an agreement to provid e postdelivery service support in the form of support maintenance 
and training which consists of the right to receive services an dor unspecified product upgrades or enhancements that are offered on a when
andifavailable basis fees for postdelivery service support are generally specified in the co ntract revenue related to post delivery service support 
is recognised based on fair value which is determined with re ference to contractual renewal rates where renewal rates are spe cified revenue for 
postdelivery service support is recognised on a straightline ba sis over the period for which support and maintenance is contr actually agreed by 
the group with the licensee 
sales of software including development systems which are not specifically designed for a given licence such as offtheshel f software are 
recognised upon delivery when the signific ant risks and rewards of ownership have been transferred to the customer at that ti me the group has 
no further obligations except that where necessary the costs a ssociated with providing postdelivery service support have bee n accrued services 
such as training that the grou p provides which are not essential to the functionality of the ip are separately stated and pri ced in the contract and 
therefore accounted for separately revenue is recognised as serv ices are performed and it is probable that the economic benef its associated with 
the transaction will flow to the group 
for all types of revenue if the amount of revenue recognised exceeds the amounts invoic ed to customers the excess amount is r ecorded as 
amounts recoverable on contracts within a ccounts receivable the excess of licence fees and postdelivery service support invoi ced over revenue 
recognised is recorded as deferred revenue 
intangible assets 
a goodwill goodwill represents the excess of the fair value of the consid eration 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 co mpletion the fair value 
of share options is calculated using the blackscholes 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 cons ideration will be payable 
b other intangible assets computer software purchased patents and licences to use technology are ca pitalised at cost and amortised on 
a straightline basis over an estimate of the time that the grou p is expected to benefit from th em costs that are directly att ributable to the 
development of new business application software and that are incu rred during the period prior to the date that the software is placed into 
operational use are capitalised external costs and internal co sts are capitalised to the extent they enhance the future econo mic benefit of the 
asset 
although an independent valuation is made of any intangible asse ts purchased as part of a business combination the directors a re primarily 
responsible for determining the fair value of intangible assets  
inprocess research and development projects purchased as part of a business combinat ion 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 inprocess r esearch and 
development intangible assets such that their amortisati on 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 ad justed if appropriate 
at each balance sheet date on a straightl ine basis over the expected useful economic lives of the assets concerned the princ ipal economic lives 
used for this purpose are 
computer software three to five years 
patents and licences three to eleven years 
inprocess 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 
 
 
 
1b summary of significant accounting policies continued 
income taxes 
the current income tax charge is calculated on the basis of tax laws enacted or subs tantively enacted at the balance sheet date in the countries 
where the group’s subsidiaries operate and generate taxable inco me management periodically eval uates positions taken in tax re turns with 
respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropri ate 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 rese arch and development expenditure credit r dec on 
qualifying expenditure incurred since 1 april 2013 instead of th e existing superdeduction rules at the balance sheet date ma nagement has 
concluded that the election will be made an d therefore the rdec is recorded as income included in profit before tax netted aga inst research and 
development expenses as the rdec is of the nature of a government grant in previous periods there was a reduction in the incom e tax expense 
deferred income taxes are computed using the liability method under this method deferred tax assets and liabilities are deter mined based on 
temporary differences between the financial reporting and tax bases of assets and liab ilities and are measured using enacted ra tes 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 reco gnition of an asset or 
liability in a transaction other than a business combination that at the time of the transaction affects neither accounting n or taxable profit or loss 
deferred tax assets are recognised to the extent that it is pr obable that future taxable profits will arise against which the t emporary differences will 
be utilised 
deferred tax is provided on temporary differences arising on inve stments in subsidiaries except where the timing of the reversa l of the temporary 
difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable futu re 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 att ributable 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 201314 rising to 100 by 201718 as ‘relevant’ patent box profits are taxed a t 10 and other 
profits are taxed at uk statutory rates deferred tax assets an d liabilities are measured using the average rates expected to a pply on realisation 
or settlement 
in the uk and the us the group is entitled to a tax deduction fo r amounts treated as compensation on exercise of certain emplo yee share 
options or vest of share awards under each jurisdiction’s tax ru les as explained under “shareb ased payments” below a compens ation expense 
is recorded in the group’s 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 arisin g is calculated by 
comparing the estimated amount of tax deduction to be obtained in the future based on the company’s 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 compen sation expense at the statutory rate the ex cess is recorded directly in equity aga inst retained 
earnings 
impairment of assets 
nonfinancial assets that have an indefinite useful life for example goodwill are not subject to amortisation but are tested annually for impairment 
nonfinancial assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances i ndicate that the 
carrying amount may not be recoverable 
an impairment loss is recognised for the amount by which the no nfinancial asset’s carrying amount exceeds its recoverable amou nt the 
recoverable amount is the higher of an asset’s fair value less costs to sell and valueinuse for purposes of assessing impair ment 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 valueinuse calculation all cash inflows and outflows associated with the cgu are take n into account 
whether these are explicitly charged or not nonfinancial 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 sh owed there was no impairment with respec t to goodwill furthermore no trigger events have 
been identified that would suggest the impairment of any of the group’s 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 val ues less costs to sell 
and their values in use if th e recoverable amounts are less than the carrying amounts an impairment loss is recognised and th e assets are written 
down to their recoverable amounts 
017043armgovernancefinancials2013wordindd   71 10032014   2100 arm holdings plc
governance and financial report 2013
72
notes to the financial statements  
continued 
1b summary of significant accounting policies continued 
impairment of assets continued 
in the case of equity securities classified as afs a signific ant or prolonged decline in the fa ir value of the security below its cost is considered as an 
indicator that the securities are permanently impaired if any su ch evidence exists for afs fina ncial assets the cumulative lo ss – 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 remo ved from equity and recognised in the income statement impairment losses recognised in the in come 
statement on equity instruments are not reversed 
when securities classified as afs are sold the accumulated fair value adjustme nts 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 pr esent legal or constructive obli gation as a result of past e vents 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 re liably estimated 
exceptional items 
exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further unders tanding 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 worldwide 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 group’s internal organisation and mana gement structure 
and is the primary way in which the chief operating decision make r codm and the rest of the board are provided with financial information 
the directors believe that th e codm is the chief executive officer of the group 
segment expenses are expenses that are dire ctly 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 bas is of shared items 
corporate assets and liabilities are not in cluded in business segments and are thus unallocated at 31 december 2013 and 2012 these comprised 
cash and cash equivalents short and longterm deposits afs financial assets loans and receivables embedded derivatives an d 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 evolutio n of the business the group’s divisional struct ure was reorganised on 1 january 2014 as a res ult of this change 
the group’s business segments may change for future report ing 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 intragroup transactions 
including sales profits receivables and payables have been eliminated on consolidation all subsidiaries use uniform account ing policies  
• business combinations 
the results of subsidiaries acquired are in cluded in the income statement from the da te of acquisition assets and liabilities existing at the date 
of acquisition are recorded at their fair valu es reflecting their condition at that date 
earnouts paid as part of an acquisition are assessed on an in dividual basis and treated as either part of the acquisition cons ideration or as 
employee compensation depending on the nature of the agreement 
• subsidiaries  
subsidiaries are all entities including structured entities ov er which the group has control the group controls an entity wh en it is exposed to 
or has rights to variable returns from its involvement with th e 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 th e date that 
control ceases 
 
 
 
1b summary of significant accounting policies continued 
principles of consolidation continued  
• associates  
associates are all entities over which the group has significan t influence but not control gene rally accompanying a shareholding of between 20 
and 50 of the voting rights investments in associates are acco unted for using the equity method of accounting under the equi ty method the 
investment is initially recognised at cost and the carrying am ount is increased or decreased to recognise the group’s 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 join t ventures are accounted for usin g the equity method of accounti ng under the 
equity method the investment is initially recognised at cost an d the carrying amount is increa sed or decreased to recognise t he group’s share 
of the profit or loss of the invest ee 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 pr oduction and sale are 
intended a market exists expenditure can be measured reliably and sufficient resour ces are available to complete the project development costs 
are capitalised and amortised on a straightline basis over the estimated useful life of the respective product the group beli eves its current 
process for developing products is essentia lly completed concurrently with the establ ishment of technological feasibility whic h is evidenced by a 
working model accordingly development costs incurred after the establishment of technological feasibility have not been signi ficant and 
therefore no costs have been capitalised to date 
where no internallygenerated intangible a sset can be recognised development expenditur e is recognised as an expense in the pe riod in which it 
is incurred any collaborative agreement wh ereby a third party agrees to partially fu nd the group’s 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 rece ivable when there is reasonable assurance that they will be 
received and the conditions to obtain them have been complied wi th they are credited to the inco me statement in the same perio d as the 
related research and development costs for which the grant is comp ensating the grant income is presented as a deduction from t he related 
expense 
sharebased payments 
the group issues equitysettled sharebased pa yments to certain employees in accordance with ifrs 2 “sharebased payments” e quitysettled 
sharebased payments are measured at fair value at the date of grant fair valu e is measured by use of the blackscholes pricin g model the fair 
value determined at the grant date of the equitysettled sharebased payments is expe nsed on a straightline basis over the ves ting period based 
on the group’s 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 purc hase 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 t he 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 respec t of the saye plans and espps the charges fo r these are calculated as detailed above 
the group also has an ltip on which it is also required to reco gnise a compensation charge under ifrs 2 calculated as detailed above 
the sharebased payments charge is allocated to cost of sales research and development expens es sales and marketing expenses and general 
and administrative expenses on the basis of headcount 
employer’s taxes on share options 
employer’s national insurance in the uk and equivalent taxes in other jurisd ictions are payable on the exercise of certain share options and vesting 
of share awards in accordance with ifrs 2 this is treated as a cashsettled transaction a provision is made calculated usin g the intrinsic value of 
the relevant options and awards at the balance sheet date and prorated over the vesting period of the options and awards 
017043armgovernancefinancials2013wordindd   72 10032014   2100 governance financial report
73
notes to the financial statements  
continued 
1b summary of significant accounting policies continued 
impairment of assets continued 
in the case of equity securities classified as afs a signific ant or prolonged decline in the fa ir value of the security below its cost is considered as an 
indicator that the securities are permanently impaired if any su ch evidence exists for afs fina ncial assets the cumulative lo ss – 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 remo ved from equity and recognised in the income statement impairment losses recognised in the in come 
statement on equity instruments are not reversed 
when securities classified as afs are sold the accumulated fair value adjustme nts 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 pr esent legal or constructive obli gation as a result of past e vents 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 re liably estimated 
exceptional items 
exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further unders tanding 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 worldwide 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 group’s internal organisation and mana gement structure 
and is the primary way in which the chief operating decision make r codm and the rest of the board are provided with financial information 
the directors believe that th e codm is the chief executive officer of the group 
segment expenses are expenses that are dire ctly 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 bas is of shared items 
corporate assets and liabilities are not in cluded in business segments and are thus unallocated at 31 december 2013 and 2012 these comprised 
cash and cash equivalents short and longterm deposits afs financial assets loans and receivables embedded derivatives an d 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 evolutio n of the business the group’s divisional struct ure was reorganised on 1 january 2014 as a res ult of this change 
the group’s business segments may change for future report ing 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 intragroup transactions 
including sales profits receivables and payables have been eliminated on consolidation all subsidiaries use uniform account ing policies  
• business combinations 
the results of subsidiaries acquired are in cluded in the income statement from the da te of acquisition assets and liabilities existing at the date 
of acquisition are recorded at their fair valu es reflecting their condition at that date 
earnouts paid as part of an acquisition are assessed on an in dividual basis and treated as either part of the acquisition cons ideration or as 
employee compensation depending on the nature of the agreement 
• subsidiaries  
subsidiaries are all entities including structured entities ov er which the group has control the group controls an entity wh en it is exposed to 
or has rights to variable returns from its involvement with th e 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 th e date that 
control ceases 
 
 
 
1b summary of significant accounting policies continued 
principles of consolidation continued  
• associates  
associates are all entities over which the group has significan t influence but not control gene rally accompanying a shareholding of between 20 
and 50 of the voting rights investments in associates are acco unted for using the equity method of accounting under the equi ty method the 
investment is initially recognised at cost and the carrying am ount is increased or decreased to recognise the group’s 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 join t ventures are accounted for usin g the equity method of accounti ng under the 
equity method the investment is initially recognised at cost an d the carrying amount is increa sed or decreased to recognise t he group’s share 
of the profit or loss of the invest ee 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 pr oduction and sale are 
intended a market exists expenditure can be measured reliably and sufficient resour ces are available to complete the project development costs 
are capitalised and amortised on a straightline basis over the estimated useful life of the respective product the group beli eves its current 
process for developing products is essentia lly completed concurrently with the establ ishment of technological feasibility whic h is evidenced by a 
working model accordingly development costs incurred after the establishment of technological feasibility have not been signi ficant and 
therefore no costs have been capitalised to date 
where no internallygenerated intangible a sset can be recognised development expenditur e is recognised as an expense in the pe riod in which it 
is incurred any collaborative agreement wh ereby a third party agrees to partially fu nd the group’s 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 rece ivable when there is reasonable assurance that they will be 
received and the conditions to obtain them have been complied wi th they are credited to the inco me statement in the same perio d as the 
related research and development costs for which the grant is comp ensating the grant income is presented as a deduction from t he related 
expense 
sharebased payments 
the group issues equitysettled sharebased pa yments to certain employees in accordance with ifrs 2 “sharebased payments” e quitysettled 
sharebased payments are measured at fair value at the date of grant fair valu e is measured by use of the blackscholes pricin g model the fair 
value determined at the grant date of the equitysettled sharebased payments is expe nsed on a straightline basis over the ves ting period based 
on the group’s 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 purc hase 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 t he 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 respec t of the saye plans and espps the charges fo r these are calculated as detailed above 
the group also has an ltip on which it is also required to reco gnise a compensation charge under ifrs 2 calculated as detailed above 
the sharebased payments charge is allocated to cost of sales research and development expens es sales and marketing expenses and general 
and administrative expenses on the basis of headcount 
employer’s taxes on share options 
employer’s 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 cashsettled transaction a provision is made calculated usin g the intrinsic value of 
the relevant options and awards at the balance sheet date and prorated over the vesting period of the options and awards 
017043armgovernancefinancials2013wordindd   73 10032014   2100 arm holdings plc
governance and financial report 2013
74
notes to the financial statements  
continued 
1b summary of significant accounting policies 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 upo n various fixed 
percentages of employee compensation and su ch contributions are expensed as incurred 
operating leases 
leases in which a significant portion of th e risks and rewards of ownership are retained by the lessor are classified as operat ing leases costs net 
of any lease incentives in respect of operating leases are char ged on a straightline basis over the lease term even if paymen ts are not made on 
such a basis 
finance leases 
leases in which substantially all of the risks and rewards of ow nership are transferred to the lessee are classified as finance leases assets held 
under finance leases are recognised as asse ts of the group at their fair value or if lower at the present value of the minimu m lease payments each 
determined at the inception of the lease the corresponding liabil ity to the lessor is included in the balance sheet as a finan ce lease liability lease 
payments are apportioned between finance char ges and reduction of the lease obligation so as to achieve a constant rate of inte rest on the 
remaining balance of the liability finance charge s 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 consolid ated financial statements are presented in sterling which is the presentation curre ncy 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 balanc e sheet date exchange differences have been included in general and administrative e xpenses 
c group companies the results and financial positions of all group entities none of which has the currency of a hyperinflationary 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 shee t date 
ii income and expenses for each income statement presented are translated at th e rates of exchange at the time of each transa ction during the 
period 
iii all resulting exchange differences are recognised as a se parate component of equity being taken through other comprehens ive income via the 
cumulative translation adjustment 
when a foreign operation is partially dispos ed of or sold exchange differences that were recognised through other comprehensiv e 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 contra cts to manage the exchange risk on actual transactions related to accounts receivabl e denominated 
in a currency other than the functional cu rrency of the business the group’s currency exchange contracts do not subject the gr oup to risk from 
exchange rate movements because the gains and losses on such contracts offset losses and gains respectively on the transactio ns 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 exch ange contracts is determined using quoted forward exchange rates at the balance sheet date the fair 
value of foreign currency options is based upon valuations perfor med 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 ente r into currency exchange contracts for the purpose of hedging anticipated transactions  
embedded derivatives 
in accordance with ias 39 “finan cial instruments recognition and measurement” the group has reviewed all its contracts for e mbedded 
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 neit her the functional currency of the group entity nor 
the functional currency of the customer or the collaborative pa rtner where there are uninvoiced amounts on such contracts the group carries 
such derivatives at fair value the result ing gain or loss is recognised in the income statement under general and administrati ve expenses 
 
 
1b summary of significant accounting policies continued 
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 b asis by reference 
to the principal outstanding and at the effective interest rate applicable 
dividends 
distributions to owners of the company are not recognised in th e income statement under ifrs but are disclosed as a component of the 
movement in shareholders’ equity a liabilit y is recorded for a dividend when the divi dend is approved by the company’s shareho lders interim 
dividends are recognised as a distribution when paid 
earnings per share 
basic earnings per share is calculated by di viding the earnings attributable to ordina ry shareholders by the weighted average n umber 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 ordi nary 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 option s granted to 
employees and directors where the exercise pr ice is less than the averag e market price of the compan y’s ordinary shares during the year and the 
awards made under the company’s rsu dab plan and ltip schemes for 2013 and 2012 no shares that were allocated for awards un der the 
ltip were included in the diluted eps calculation as the performa nce 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 calc ulations are shown on the face of the con solidated income 
statement 
cash and cash equivalents 
cash and cash equivalents includes cash in hand deposits held with banks and other shortterm highly liquid investments with original maturities 
of three months or less the carr ying amount approximates to fair value because of the shortterm maturity of these instruments  
short and longterm deposits  
the group considers all highlyliquid investments with original matu rity dates of greater than three months and maturing in les s than one year 
to be shortterm deposits deposits with a maturity date of gr eater than one year from the balance sheet date are classified as longterm 
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 amo unts due according to the original terms of the receivables 
accounts receivable are first assessed individually for impairme nt significant financial difficulties of the debtor probabili ty that the debtor will enter 
bankruptcy or financial reorganisation and default or delinquency in payments mor e than 90 days overdue are considered indic ators that the 
trade receivable may be impaired where there is no objective evid ence of impairment for an individual receivable it is includ ed 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 administra tive expenses when a trade receivable is uncollectible it is written off against 
the allowance account for trade receivables subsequent recoveries of am ounts previously written off are credited against gener al and 
administrative expenses in the income statement 
property plant and equipment 
property plant and equipment is stated at historic cost less accumulated deprec iation 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 a sset  
assets in the course of construction are carried at cost less any recognised impairment loss depreciation of these assets comm ences when the 
assets are ready for their intended use  
  
017043armgovernancefinancials2013wordindd   74 10032014   2100 governance financial report
75
notes to the financial statements  
continued 
1b summary of significant accounting policies 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 upo n various fixed 
percentages of employee compensation and su ch contributions are expensed as incurred 
operating leases 
leases in which a significant portion of th e risks and rewards of ownership are retained by the lessor are classified as operat ing leases costs net 
of any lease incentives in respect of operating leases are char ged on a straightline basis over the lease term even if paymen ts are not made on 
such a basis 
finance leases 
leases in which substantially all of the risks and rewards of ow nership are transferred to the lessee are classified as finance leases assets held 
under finance leases are recognised as asse ts of the group at their fair value or if lower at the present value of the minimu m lease payments each 
determined at the inception of the lease the corresponding liabil ity to the lessor is included in the balance sheet as a finan ce lease liability lease 
payments are apportioned between finance char ges and reduction of the lease obligation so as to achieve a constant rate of inte rest on the 
remaining balance of the liability finance charge s 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 consolid ated financial statements are presented in sterling which is the presentation curre ncy 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 balanc e sheet date exchange differences have been included in general and administrative e xpenses 
c group companies the results and financial positions of all group entities none of which has the currency of a hyperinflationary 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 shee t date 
ii income and expenses for each income statement presented are translated at th e rates of exchange at the time of each transa ction during the 
period 
iii all resulting exchange differences are recognised as a se parate component of equity being taken through other comprehens ive income via the 
cumulative translation adjustment 
when a foreign operation is partially dispos ed of or sold exchange differences that were recognised through other comprehensiv e 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 contra cts to manage the exchange risk on actual transactions related to accounts receivabl e denominated 
in a currency other than the functional cu rrency of the business the group’s currency exchange contracts do not subject the gr oup to risk from 
exchange rate movements because the gains and losses on such contracts offset losses and gains respectively on the transactio ns 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 exch ange contracts is determined using quoted forward exchange rates at the balance sheet date the fair 
value of foreign currency options is based upon valuations perfor med 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 ente r into currency exchange contracts for the purpose of hedging anticipated transactions  
embedded derivatives 
in accordance with ias 39 “finan cial instruments recognition and measurement” the group has reviewed all its contracts for e mbedded 
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 neit her the functional currency of the group entity nor 
the functional currency of the customer or the collaborative pa rtner where there are uninvoiced amounts on such contracts the group carries 
such derivatives at fair value the result ing gain or loss is recognised in the income statement under general and administrati ve expenses 
 
 
1b summary of significant accounting policies continued 
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 b asis by reference 
to the principal outstanding and at the effective interest rate applicable 
dividends 
distributions to owners of the company are not recognised in th e income statement under ifrs but are disclosed as a component of the 
movement in shareholders’ equity a liabilit y is recorded for a dividend when the divi dend is approved by the company’s shareho lders interim 
dividends are recognised as a distribution when paid 
earnings per share 
basic earnings per share is calculated by di viding the earnings attributable to ordina ry shareholders by the weighted average n umber 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 ordi nary 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 option s granted to 
employees and directors where the exercise pr ice is less than the averag e market price of the compan y’s ordinary shares during the year and the 
awards made under the company’s rsu dab plan and ltip schemes for 2013 and 2012 no shares that were allocated for awards un der the 
ltip were included in the diluted eps calculation as the performa nce 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 calc ulations are shown on the face of the con solidated income 
statement 
cash and cash equivalents 
cash and cash equivalents includes cash in hand deposits held with banks and other shortterm highly liquid investments with original maturities 
of three months or less the carr ying amount approximates to fair value because of the shortterm maturity of these instruments  
short and longterm deposits  
the group considers all highlyliquid investments with original matu rity dates of greater than three months and maturing in les s than one year 
to be shortterm deposits deposits with a maturity date of gr eater than one year from the balance sheet date are classified as longterm 
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 amo unts due according to the original terms of the receivables 
accounts receivable are first assessed individually for impairme nt significant financial difficulties of the debtor probabili ty that the debtor will enter 
bankruptcy or financial reorganisation and default or delinquency in payments mor e than 90 days overdue are considered indic ators that the 
trade receivable may be impaired where there is no objective evid ence of impairment for an individual receivable it is includ ed 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 administra tive expenses when a trade receivable is uncollectible it is written off against 
the allowance account for trade receivables subsequent recoveries of am ounts previously written off are credited against gener al and 
administrative expenses in the income statement 
property plant and equipment 
property plant and equipment is stated at historic cost less accumulated deprec iation 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 a sset  
assets in the course of construction are carried at cost less any recognised impairment loss depreciation of these assets comm ences when the 
assets are ready for their intended use  
  
017043armgovernancefinancials2013wordindd   75 10032014   2100 arm holdings plc
governance and financial report 2013
76
notes to the financial statements  
continued 
1b summary of significant accounting policies 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 straightline basis over the expected useful economic lives of the assets conc erned 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 oc curred asset 
lives and residual va lues are reviewed on an annual basis 
gains and losses on disposals are determined by comparing the pr oceeds with the carrying amount and are recognised within gener al and 
administrative expenses in the income statement 
financial assets 
the group classifies its financial assets in the following categories at fair value through the income statement loans and re ceivables and available
forsale the classification depends on the purpose for which the financial assets were acquired management determines the cla ssification of 
financial assets at initial recognition 
a financial assets at fair value through the income statement financial assets at fair value through the income stat ement are financial assets 
held for trading – that is assets that have been acquired prin cipally 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 wi th transaction costs being expensed in the income statement s pecifically the group’s 
currency exchange contracts and embedded deri vatives fall within this category gains or losses arising from changes in the fai r value of “financial 
assets at fair value through the income st atement” are presented in the income statem ent within general and administrative expe nses in the period 
in which they arise 
b loans and receivables loans and receivables are nonderivative 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 noncurrent assets “accounts receivable” “cash an d cash equivalents” and “short  and longterm deposits” are c lassified as “loans 
and receivables” see note 17 
loans and receivables are measured init ially at fair value and then subsequently measured at amortised cost 
c availableforsale financial assets afs financial assets are nonderivatives that are either designated in this category or not classified in any of 
the other categories they are included in noncurrent assets unless management intends to dispose of the assets within 12 mont hs of the balance 
sheet date 
equity investments that are not publicly traded are also classifi ed 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 val ue of these investments 
approximated to cost less any permanent diminution in value based on estimates determined by management except where indepen dent 
valuation information is obtained unrealised holding gains or lo sses on such securities are re cognised net of related taxes through other 
comprehensive income via a revaluation reserve except where ther e is evidence of permanent impa irment in which case the loss is recognised 
through the income statement within general and administra tive expenses or exceptional items where appropriate 
current investments have been valued base d on the amount that is recoverable 
accounts payable 
accounts payable are recognised at face valu e 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 compet itive semiconductor industry which has been characterised by price erosion rapid te chnological 
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 group’s operations expose it to a vari ety of financial risks that include currency risk interest rate risk securities pri ce risk credit risk and 
liquidity risk 
given the size of the group the directors have not delegated th e responsibility for monitoring financial risk management to a subcommittee of 
the board the policies set by the directors are implemented by th e group’s finance and treasury departments the group has a t reasury policy 
that sets out specific guidelines to manage currency risk intere st rate risk credit risk and liquidity risk and also sets out circumstances where it 
would be appropriate to use financ ial instruments to manage these 
currency risk 
the group’s earnings and liquidity are affect ed by fluctuations in foreign currency exchange rates principally in respect of t he 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 co ntracts and currency options to manage the us dollarsterling risk as appropriate b y monitoring 
the timing and value of anticipated us doll ar receipts which tend to arise from lowvolume hi ghvalue licence deals and royal ty receipts 
in comparison with its requirement to settle certain expenses in us dollars the group reviews the resulting exposure on a regu lar basis and 
hedges this exposure using curre ncy exchange contracts and currency options for the sale of us dollars as appropriate such con tracts are entered 
into with the objective of matching their matu rity with projected us dollar cash receipts 
the group is also exposed to cu rrency risk in respect of the foreign currency de nominated assets and liabilities of its oversea s subsidiaries at 
present the group does not consider this to be a significant ri sk since the group does not intend to move assets between group companies  
the group has elected not to apply hedge acco unting and all movements in the fair valu e of derivative foreign exchange instrum ents are recorded 
in the income statement offsetting the fo reign exchange movements on the accounts re ceivable and cash and cash equivalents ba lances being 
hedged 
in addition certain customers remit royalties and licence fees in other currencies primarily the euro and japanese yen the g roup is also required 
to settle certain expenses in these currencies primarily in it s french german and japanese subsidiaries and as the net amoun ts involved are not 
considered significant the group does not take out forwar dsettling currency exchange contracts in these currencies 
interest rate risk 
floating rate cash earns interest based on relevant national li bid 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 u nder “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 intere st rate fluctuations in place at the year end since the level of financing was not 
considered significant and as such no hedge accounting is appl ied the group’s cash flow is carefully monitored on a daily bas is excess cash 
considering expected future cash flows is placed on either short or longt erm deposits to maximise the interest income thereo n daily surpluses 
are swept into higherinterest earning accounts overnight 
securities price risk 
the group is exposed to equity securities price risk on afs fina ncial 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 in vestment or that the value of such investments will rise the directors evaluate 
each investment opportunity on it s merits before committing the group’s funds the directors review holdings in such companies on a regular 
basis to determine whether continued investment is in the best in terests of the group funds for such ventures are limited in o rder that the 
financial effect of any potential decline of the value of invest ments will not be substantial in the context of the group’s fin ancial results 
credit risk 
credit risk is managed on a group basis credit risk arises fr om cash and cash equivalents derivative financial instruments an d deposits with banks 
and financial institutions as well as credit exposures to cust omers including outstanding receivables and committed transacti ons 
at 31 december 2013 and 2012 the group had no significant concentrations of credit ri sk the amount of expo sure to any individ ual 
counterparty is subject to a limit which is reassessed periodically by the directors 
  
017043armgovernancefinancials2013wordindd   76 10032014   2100 governance financial report
77
notes to the financial statements  
continued 
1b summary of significant accounting policies 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 straightline basis over the expected useful economic lives of the assets conc erned 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 oc curred asset 
lives and residual va lues are reviewed on an annual basis 
gains and losses on disposals are determined by comparing the pr oceeds with the carrying amount and are recognised within gener al and 
administrative expenses in the income statement 
financial assets 
the group classifies its financial assets in the following categories at fair value through the income statement loans and re ceivables and available
forsale the classification depends on the purpose for which the financial assets were acquired management determines the cla ssification of 
financial assets at initial recognition 
a financial assets at fair value through the income statement financial assets at fair value through the income stat ement are financial assets 
held for trading – that is assets that have been acquired prin cipally 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 wi th transaction costs being expensed in the income statement s pecifically the group’s 
currency exchange contracts and embedded deri vatives fall within this category gains or losses arising from changes in the fai r value of “financial 
assets at fair value through the income st atement” are presented in the income statem ent within general and administrative expe nses in the period 
in which they arise 
b loans and receivables loans and receivables are nonderivative 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 noncurrent assets “accounts receivable” “cash an d cash equivalents” and “short  and longterm deposits” are c lassified as “loans 
and receivables” see note 17 
loans and receivables are measured init ially at fair value and then subsequently measured at amortised cost 
c availableforsale financial assets afs financial assets are nonderivatives that are either designated in this category or not classified in any of 
the other categories they are included in noncurrent assets unless management intends to dispose of the assets within 12 mont hs of the balance 
sheet date 
equity investments that are not publicly traded are also classifi ed 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 val ue of these investments 
approximated to cost less any permanent diminution in value based on estimates determined by management except where indepen dent 
valuation information is obtained unrealised holding gains or lo sses on such securities are re cognised net of related taxes through other 
comprehensive income via a revaluation reserve except where ther e is evidence of permanent impa irment in which case the loss is recognised 
through the income statement within general and administra tive expenses or exceptional items where appropriate 
current investments have been valued base d on the amount that is recoverable 
accounts payable 
accounts payable are recognised at face valu e 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 compet itive semiconductor industry which has been characterised by price erosion rapid te chnological 
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 group’s operations expose it to a vari ety of financial risks that include currency risk interest rate risk securities pri ce risk credit risk and 
liquidity risk 
given the size of the group the directors have not delegated th e responsibility for monitoring financial risk management to a subcommittee of 
the board the policies set by the directors are implemented by th e group’s finance and treasury departments the group has a t reasury policy 
that sets out specific guidelines to manage currency risk intere st rate risk credit risk and liquidity risk and also sets out circumstances where it 
would be appropriate to use financ ial instruments to manage these 
currency risk 
the group’s earnings and liquidity are affect ed by fluctuations in foreign currency exchange rates principally in respect of t he 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 co ntracts and currency options to manage the us dollarsterling risk as appropriate b y monitoring 
the timing and value of anticipated us doll ar receipts which tend to arise from lowvolume hi ghvalue licence deals and royal ty receipts 
in comparison with its requirement to settle certain expenses in us dollars the group reviews the resulting exposure on a regu lar basis and 
hedges this exposure using curre ncy exchange contracts and currency options for the sale of us dollars as appropriate such con tracts are entered 
into with the objective of matching their matu rity with projected us dollar cash receipts 
the group is also exposed to cu rrency risk in respect of the foreign currency de nominated assets and liabilities of its oversea s subsidiaries at 
present the group does not consider this to be a significant ri sk since the group does not intend to move assets between group companies  
the group has elected not to apply hedge acco unting and all movements in the fair valu e of derivative foreign exchange instrum ents are recorded 
in the income statement offsetting the fo reign exchange movements on the accounts re ceivable and cash and cash equivalents ba lances being 
hedged 
in addition certain customers remit royalties and licence fees in other currencies primarily the euro and japanese yen the g roup is also required 
to settle certain expenses in these currencies primarily in it s french german and japanese subsidiaries and as the net amoun ts involved are not 
considered significant the group does not take out forwar dsettling currency exchange contracts in these currencies 
interest rate risk 
floating rate cash earns interest based on relevant national li bid 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 u nder “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 intere st rate fluctuations in place at the year end since the level of financing was not 
considered significant and as such no hedge accounting is appl ied the group’s cash flow is carefully monitored on a daily bas is excess cash 
considering expected future cash flows is placed on either short or longt erm deposits to maximise the interest income thereo n daily surpluses 
are swept into higherinterest earning accounts overnight 
securities price risk 
the group is exposed to equity securities price risk on afs fina ncial 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 in vestment or that the value of such investments will rise the directors evaluate 
each investment opportunity on it s merits before committing the group’s funds the directors review holdings in such companies on a regular 
basis to determine whether continued investment is in the best in terests of the group funds for such ventures are limited in o rder that the 
financial effect of any potential decline of the value of invest ments will not be substantial in the context of the group’s fin ancial results 
credit risk 
credit risk is managed on a group basis credit risk arises fr om cash and cash equivalents derivative financial instruments an d deposits with banks 
and financial institutions as well as credit exposures to cust omers including outstanding receivables and committed transacti ons 
at 31 december 2013 and 2012 the group had no significant concentrations of credit ri sk the amount of expo sure to any individ ual 
counterparty is subject to a limit which is reassessed periodically by the directors 
  
017043armgovernancefinancials2013wordindd   77 10032014   2100 arm holdings plc
governance and financial report 2013
78
notes to the financial statements  
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 gro up generally 
does not require collateral on accounts receivable as many of its customers are large wellestablished companies the group h as not 
experienced any significant losses related to individual customers or groups of customers in any particular industry or geograp hic area 
the group markets and sells to a relatively small number of cust omers with individually large value transactions the group per forms credit 
checks on all customers other than those paying in advance in order to assess their creditworthiness and ability to pay its i nvoices 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 l ow risk of default 
due to the nature of the checks performed on them and accordin gly a relatively small allowance against these receivables is in place to cover this 
low risk of default 
no credit limits were exceeded during th e reporting period and the directors do not expect any significant losses from nonperf ormance by these 
counterparties other than those already provided for 
liquidity risk 
the group’s policy is to maintain balances of cash and cash eq uivalents and short and longterm deposits such that highly li quid resources 
exceed the group’s projected cash outflows at all times surplus funds are placed on fixed or floatingrate deposits depending on the prevailing 
economic climate at the time wit h reference to forward interest rates and also on the required maturity of the deposit as dr iven by the 
expected timing of the group’s cash receipts and payments over the short to mediumterm 
management monitors rolling forecasts of the group’s short and mediumterm ex pected 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 group’s objectives when managing capital are to safeguard th e group’s ability to co ntinue as a going concern in order to pr ovide returns for 
shareholders and benefits for other stakeholders and to maintain an appropriate capital structur e the capital structure of the group consists of 
cash and cash equivalents short and longterm deposits and capi tal and reserves attributable to owners of the company as dis closed 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 group’s strategy is to have a capital structure that takes into account opportunities to invest in longterm profitable gro wth prevailing trading 
conditions and the desire to improve balanc e sheet efficiency over time the group in troduced a dividend in 2004 which has grow n each year 
since between 2005 and 2008 an ongoing sh are buyback programme was in place whereby 16 of the issued share capital was bough t back at 
an average price of £122 in 2013 the interim dividend was in creased by 26 and the directors are proposing a 27 increase in the final dividend 
reflecting the board’s longterm confidence in the business as well as continuing to grow the dividend the board intends to u ndertake a limited 
share buyback programme to maintain a flat sharecount 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 sign ificantly 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 valu ations of financial assets required for financial reporting purposes including leve l 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 fi nancial assets cash and cash equivalents short and longte rm deposits and 
accounts and other payables approximate to their carrying amount 
  
 
 
2 segmental reporting 
at 31 december 2013 the group was organised on a wo rldwide 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 tr anslation of a circuit design into actual silicon 
system design division sdd focused on the tools and models used to create an d debug software and system onchip soc designs 
this is based upon the group’s internal organisation and manageme nt structure and is the primary way in which the codm is provi ded 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 divi sions further the information provided to the 
codm is based on normalised profit before tax a nongaap measure and therefore this information is provided as well as the eq uivalent profit 
stated under ifrs 
the reconciling items intangible amortisation acquisitionrela ted charges sharebased payment costs including payroll taxes disposalimpairment 
of investments exceptional items share of results in joint venture and linarorelated charges are analysed below also analy sed are revenues 
operating costs investment income net of interest payable and similar charges profitloss before tax tax profitloss a fter tax depreciation 
total assets and liabilities net assets and good will 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  5962 820 364 – 7146
operating costs  4266 907 426 12 5611
investment income net of interest payable and similar charges  – – – 131 131
share of results in joint venture – – – 40 40
profitloss before tax  1696 87 62 79 1626
tax  – – – 578 578
profitloss for the year  1696 87 62 499 1048
reconciliation to normalised profit before tax  
amortisation on acquired intangibles and other acquisitionrelated charges 96 20 – – 116
sharebased payment costs including payroll taxes 545 121 74 – 740
impairment of investments net of profit on disposal  35 – – – 35
exceptional items 1013 – – – 1013
share of results in joint venture and linarorelated charges 70 – – 40 110
normalised profit before tax  3455 54 12 119 3640
segmental balance sheet  
total assets  3894 4001 316 8173 16384
total liabilities  2432 460 120 258 3270
net assets  1462 3541 196 7915 13114
other segmental items  
depreciation  96 28 20 – 144
goodwill  1515 3602 142 – 5259
revenues usd millions  9315 1291 571 – 11177
 
017043armgovernancefinancials2013wordindd   78 10032014   2100 governance financial report
79
notes to the financial statements  
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 gro up generally 
does not require collateral on accounts receivable as many of its customers are large wellestablished companies the group h as not 
experienced any significant losses related to individual customers or groups of customers in any particular industry or geograp hic area 
the group markets and sells to a relatively small number of cust omers with individually large value transactions the group per forms credit 
checks on all customers other than those paying in advance in order to assess their creditworthiness and ability to pay its i nvoices 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 l ow risk of default 
due to the nature of the checks performed on them and accordin gly a relatively small allowance against these receivables is in place to cover this 
low risk of default 
no credit limits were exceeded during th e reporting period and the directors do not expect any significant losses from nonperf ormance by these 
counterparties other than those already provided for 
liquidity risk 
the group’s policy is to maintain balances of cash and cash eq uivalents and short and longterm deposits such that highly li quid resources 
exceed the group’s projected cash outflows at all times surplus funds are placed on fixed or floatingrate deposits depending on the prevailing 
economic climate at the time wit h reference to forward interest rates and also on the required maturity of the deposit as dr iven by the 
expected timing of the group’s cash receipts and payments over the short to mediumterm 
management monitors rolling forecasts of the group’s short and mediumterm ex pected 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 group’s objectives when managing capital are to safeguard th e group’s ability to co ntinue as a going concern in order to pr ovide returns for 
shareholders and benefits for other stakeholders and to maintain an appropriate capital structur e the capital structure of the group consists of 
cash and cash equivalents short and longterm deposits and capi tal and reserves attributable to owners of the company as dis closed 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 group’s strategy is to have a capital structure that takes into account opportunities to invest in longterm profitable gro wth prevailing trading 
conditions and the desire to improve balanc e sheet efficiency over time the group in troduced a dividend in 2004 which has grow n each year 
since between 2005 and 2008 an ongoing sh are buyback programme was in place whereby 16 of the issued share capital was bough t back at 
an average price of £122 in 2013 the interim dividend was in creased by 26 and the directors are proposing a 27 increase in the final dividend 
reflecting the board’s longterm confidence in the business as well as continuing to grow the dividend the board intends to u ndertake a limited 
share buyback programme to maintain a flat sharecount 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 sign ificantly 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 valu ations of financial assets required for financial reporting purposes including leve l 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 fi nancial assets cash and cash equivalents short and longte rm deposits and 
accounts and other payables approximate to their carrying amount 
  
 
 
2 segmental reporting 
at 31 december 2013 the group was organised on a wo rldwide 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 tr anslation of a circuit design into actual silicon 
system design division sdd focused on the tools and models used to create an d debug software and system onchip soc designs 
this is based upon the group’s internal organisation and manageme nt structure and is the primary way in which the codm is provi ded 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 divi sions further the information provided to the 
codm is based on normalised profit before tax a nongaap measure and therefore this information is provided as well as the eq uivalent profit 
stated under ifrs 
the reconciling items intangible amortisation acquisitionrela ted charges sharebased payment costs including payroll taxes disposalimpairment 
of investments exceptional items share of results in joint venture and linarorelated charges are analysed below also analy sed are revenues 
operating costs investment income net of interest payable and similar charges profitloss before tax tax profitloss a fter tax depreciation 
total assets and liabilities net assets and good will 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  5962 820 364 – 7146
operating costs  4266 907 426 12 5611
investment income net of interest payable and similar charges  – – – 131 131
share of results in joint venture – – – 40 40
profitloss before tax  1696 87 62 79 1626
tax  – – – 578 578
profitloss for the year  1696 87 62 499 1048
reconciliation to normalised profit before tax  
amortisation on acquired intangibles and other acquisitionrelated charges 96 20 – – 116
sharebased payment costs including payroll taxes 545 121 74 – 740
impairment of investments net of profit on disposal  35 – – – 35
exceptional items 1013 – – – 1013
share of results in joint venture and linarorelated charges 70 – – 40 110
normalised profit before tax  3455 54 12 119 3640
segmental balance sheet  
total assets  3894 4001 316 8173 16384
total liabilities  2432 460 120 258 3270
net assets  1462 3541 196 7915 13114
other segmental items  
depreciation  96 28 20 – 144
goodwill  1515 3602 142 – 5259
revenues usd millions  9315 1291 571 – 11177
 
017043armgovernancefinancials2013wordindd   79 10032014   2100 arm holdings plc
governance and financial report 2013
80
notes to the financial statements  
continued 
2 segmental reporting continued 
for the year ended 31 december 2012 
processor 
division 
£m 
physical ip 
division 
£m 
system design 
division  
£m 
unallocated 
£m 
group 
£m 
segmental income statement  
revenues  4739 683 347 – 5769
operating costs  2433 828 401 26 3688
investment income net of interest pa yable and similar charges  – – – 136 136
share of results in joint venture – – – 07 07
profitloss before tax  2306 145 54 103 2210
tax  – – – 603 603
profitloss for the year  2306 145 54 500 1607
reconciliation to normalised profitloss before tax 
amortisation on acquired intangibles and other acquisitionrelated charges 55 25 – 08 88
sharebased payment costs including payroll taxes  300 86 68 – 454
profit on sale of investments net of impairment 06 – – – 06
share of results in joint venture – – – 07 07
normalised profitloss before tax  2667 34 14 118 2765
segmental balance sheet  
total assets  2846 4092 325 7405 14668
total liabilities  1826 439 151 191 2607
net assets  1020 3653 174 7214 12061
other segmental items  
depreciation  67 25 16 – 108
goodwill  1380 3670 144 – 5194
revenues usd millions  7498 1084 549 – 9131
there are no intersegment revenues unallo cated operating costs consist of foreign ex change gains and losses unallocated asse ts and liabilities 
include cash and cash equivalents short and longterm deposits afs financial assets loans and receivables embedded deriva tives fair value of 
currency exchange contracts deferred tax balances current tax and vat  
during the year ended 31 december 2013 on e customer within all three business segmen ts accounted for 12 of the group’s total revenues 
amounting to £876 million 2012 one customer accounted for 15 
the results of each segment have been prepared using account ing policies consistent with those of the group as a whole 
  
 
 
2  segmental reporting continued 
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  2803 2159
south korea  1017 950
taiwan  994 692
china  900 712
japan  476 466
switzerland  248 140
singapore 246 92
germany  134 154
netherlands  85 158
rest of europe  197 190
rest of asia pacific  36 44
rest of north america  10 12
 7146 5769
 destination is defined as the location of the group’s customers’ operations 
the group’s revenue within the home country of the parent company amounted to £49 mi llion and £55 million for the years ended 
31 december 2013 and 2012 respectively the group’s exports from the uk were £6992 million and £5603 million for the years en ded 
31 december 2013 and 2012 respectively 
analysis of revenue by origin 
 
2013 
£m 
2012 
£m 
europe  7053 5678
united states  93 91
 7146 5769
 includes the uk which had total revenues of £7041 million in 2013 2012 £5658 million 
analysis of revenue by revenue stream 
 
2013 
£m 
2012 
£m 
royalties  3583 2998
licensing 2856 2140
software and tools 364 347
services 343 284
 7146 5769
  
017043armgovernancefinancials2013wordindd   80 10032014   2100 governance financial report
81
notes to the financial statements  
continued 
2 segmental reporting continued 
for the year ended 31 december 2012 
processor 
division 
£m 
physical ip 
division 
£m 
system design 
division  
£m 
unallocated 
£m 
group 
£m 
segmental income statement  
revenues  4739 683 347 – 5769
operating costs  2433 828 401 26 3688
investment income net of interest pa yable and similar charges  – – – 136 136
share of results in joint venture – – – 07 07
profitloss before tax  2306 145 54 103 2210
tax  – – – 603 603
profitloss for the year  2306 145 54 500 1607
reconciliation to normalised profitloss before tax 
amortisation on acquired intangibles and other acquisitionrelated charges 55 25 – 08 88
sharebased payment costs including payroll taxes  300 86 68 – 454
profit on sale of investments net of impairment 06 – – – 06
share of results in joint venture – – – 07 07
normalised profitloss before tax  2667 34 14 118 2765
segmental balance sheet  
total assets  2846 4092 325 7405 14668
total liabilities  1826 439 151 191 2607
net assets  1020 3653 174 7214 12061
other segmental items  
depreciation  67 25 16 – 108
goodwill  1380 3670 144 – 5194
revenues usd millions  7498 1084 549 – 9131
there are no intersegment revenues unallo cated operating costs consist of foreign ex change gains and losses unallocated asse ts and liabilities 
include cash and cash equivalents short and longterm deposits afs financial assets loans and receivables embedded deriva tives fair value of 
currency exchange contracts deferred tax balances current tax and vat  
during the year ended 31 december 2013 on e customer within all three business segmen ts accounted for 12 of the group’s total revenues 
amounting to £876 million 2012 one customer accounted for 15 
the results of each segment have been prepared using account ing policies consistent with those of the group as a whole 
  
 
 
2  segmental reporting continued 
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  2803 2159
south korea  1017 950
taiwan  994 692
china  900 712
japan  476 466
switzerland  248 140
singapore 246 92
germany  134 154
netherlands  85 158
rest of europe  197 190
rest of asia pacific  36 44
rest of north america  10 12
 7146 5769
 destination is defined as the location of the group’s customers’ operations 
the group’s revenue within the home country of the parent company amounted to £49 mi llion and £55 million for the years ended 
31 december 2013 and 2012 respectively the group’s exports from the uk were £6992 million and £5603 million for the years en ded 
31 december 2013 and 2012 respectively 
analysis of revenue by origin 
 
2013 
£m 
2012 
£m 
europe  7053 5678
united states  93 91
 7146 5769
 includes the uk which had total revenues of £7041 million in 2013 2012 £5658 million 
analysis of revenue by revenue stream 
 
2013 
£m 
2012 
£m 
royalties  3583 2998
licensing 2856 2140
software and tools 364 347
services 343 284
 7146 5769
  
017043armgovernancefinancials2013wordindd   81 10032014   2100 arm holdings plc
governance and financial report 2013
82
notes to the financial statements  
continued 
2  segmental reporting continued 
geographical information continued 
analysis of noncurrent assets excluding deferred tax assets goodwill and other intangible assets 
 
2013 
£m 
2012
£m 
europe  1720 1938
united states  72 52
asia pacific  50 31
 1842 2021
 includes the uk which had noncurrent assets excluding deferred tax assets goodwill and other intangible assets of £1710 million in 2013 2012 £1928 million of which longterm deposits accounted 
for £1256 million 2012 £1413 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 nonexecutive directors of arm holdings 
plc together with the executive committee comprising all directors of arm limited and certain senior management these person s have 
authority and responsibility for planning directing and controllin g the activities of the entity directly or indirectly at 3 1 december 2013 key 
management comprised 21 people 2012 19 
the aggregate amounts of key manageme nt compensation are set out below 
 
2013
£m 
2012 
£m 
salaries and shortterm employee benefits  95 89
sharebased payments  61 34
postemployment benefits  02 02
 158 125
directors’ emoluments 
the aggregate emoluments of the direct ors of the company are set out below 
 
2013 
£m 
2012 
£m 
aggregate emoluments in respect of qualifying services  38 49
aggregate payments for pensionrelated benefits  02 02
aggregate gains on exercise of share options  39 18
aggregate amounts receivable in shares under the dab plan 129 115
aggregate amounts receivable under the ltip  172 212
 380 396
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  1667 1398
physical ip division  615 557
system design division  316 306
 2598 2261
 
 
2013 
number 
2012 
number 
by activity 
research and development  1803 1581
sales and marketing  425 367
general and administrative  370 313
 2598 2261
 
 
2013 
£m 
2012 
£m 
staff costs for the above persons
wages and salaries  1854 1615
medical care costs 55 50
sharebased payments note 20  592 371
social security costs  351 302
movement on provision for social security costs on share awards 14 61
other pension costs  87 80
 2925 2357
  
017043armgovernancefinancials2013wordindd   82 10032014   2100 governance financial report
83
notes to the financial statements  
continued 
2  segmental reporting continued 
geographical information continued 
analysis of noncurrent assets excluding deferred tax assets goodwill and other intangible assets 
 
2013 
£m 
2012
£m 
europe  1720 1938
united states  72 52
asia pacific  50 31
 1842 2021
 includes the uk which had noncurrent assets excluding deferred tax assets goodwill and other intangible assets of £1710 million in 2013 2012 £1928 million of which longterm deposits accounted 
for £1256 million 2012 £1413 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 nonexecutive directors of arm holdings 
plc together with the executive committee comprising all directors of arm limited and certain senior management these person s have 
authority and responsibility for planning directing and controllin g the activities of the entity directly or indirectly at 3 1 december 2013 key 
management comprised 21 people 2012 19 
the aggregate amounts of key manageme nt compensation are set out below 
 
2013
£m 
2012 
£m 
salaries and shortterm employee benefits  95 89
sharebased payments  61 34
postemployment benefits  02 02
 158 125
directors’ emoluments 
the aggregate emoluments of the direct ors of the company are set out below 
 
2013 
£m 
2012 
£m 
aggregate emoluments in respect of qualifying services  38 49
aggregate payments for pensionrelated benefits  02 02
aggregate gains on exercise of share options  39 18
aggregate amounts receivable in shares under the dab plan 129 115
aggregate amounts receivable under the ltip  172 212
 380 396
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  1667 1398
physical ip division  615 557
system design division  316 306
 2598 2261
 
 
2013 
number 
2012 
number 
by activity 
research and development  1803 1581
sales and marketing  425 367
general and administrative  370 313
 2598 2261
 
 
2013 
£m 
2012 
£m 
staff costs for the above persons
wages and salaries  1854 1615
medical care costs 55 50
sharebased payments note 20  592 371
social security costs  351 302
movement on provision for social security costs on share awards 14 61
other pension costs  87 80
 2925 2357
  
017043armgovernancefinancials2013wordindd   83 10032014   2100 arm holdings plc
governance and financial report 2013
84
notes to the financial statements  
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 sharebased payments note 4  2925 2357
cost of inventories recognised as an expense  28 32
depreciation of property plant and equipment – owned assets note 12 116 95
depreciation of property plant and equi pment – under finance leases note 12 28 13
amortisation of other intangible assets note 14 
– cost of revenues 03 03
– research and development expenses 69 23
– sales and marketing expenses 06 09
– general and administrative expenses 58 31
government grants – research and development expenditure credit 58 –
exceptional items note 6 
– impairment of current afs financial asset 595 –
– ip indemnity and similar charges 418 –
impairment of noncurrent afs financial assets note 11 68 14
profit on disposal of afs financial assets  33 08
other operating lease rentals payable 
– plant and machinery  262 240
– property  87 76
accounts receivables impairment including movement in provision  40 04
fair value movement on embedded derivatives 45 37
other foreign exchange gains 33 19
services provided by the grou p’s auditor and its associates 
during the year the group including its ov erseas subsidiaries obtained the following services from the group’s auditor and it s associates 
 
2013 
£m 
2012 
£m 
fees payable to the group’s auditor and it s associates for the audit of the company 
and consolidated financial statements  03 03
fees payable to the group’s auditor and its associates for other services 
– the audit of the group’s subsidiaries  02 02
– auditrelated assurance services services pursua nt to section 404 of the sarbanesoxley act 03 03
– other assurance services  01 01
statutory audit financial reporting and other related services  09 09
– tax advisory services 01 02
– tax compliance services  – 01
– all other nonaudit services  01 01
 11 13
 all other nonaudit 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 di scussions with a licensee to renegotiate the terms upon which the group would 
indemnify that licensee during 2013 terms were executed and th e group incurred indemnification costs amounting to 180 milli on further in 
relation to legal proceedings regarding the same patent portfolio for a consideration of 454 million arm entered into a lic ence agreement with 
a third party covering patents being asserted against arm tec hnology in litigation between th e patentee and a number of license es of arm 
technology the licence was entered into in full and final settle ment of any indemnity claims with respect to the asserted pate nts and will prevent 
any future assertion of the patents against arm technology tota l indemnification settlement and licence costs of 634 millio n £418 million 
were expensed as an exceptional item in 2013 resultin g in a tax deduction in current tax of £97 million 
impairment of availableforsale financial assets current 
during the year the group participated in a consortium via a trust to acquire certain patent rights these rights were not s ubject to actual or 
threatened legal proceedings of the grou p’s total contribution to the consortium 1005 million was classified within current afs financial assets 
£607 million after translation at 31 december 2013 exchange rate s and 67 million the residual was classified within other intangible assets 
£374 million after amortisation to 31 de cember 2013 the availableforsale financial asset represented arm’s right to recei ve cash from the 
groups financial interest in the consortium as it was anticipa ted 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 pe riod 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 au ction the group 
acquired the patents in january 2014 for 40 million £24 million which will be accounted for as an additional intangible as set 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 h as been impaired down 
to the value of the group’s share of the auction proceeds giving rise to a noncash exceptiona l charge of 985 million £595 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 £183 
million 
7 tax 
analysis of charge in the year 
 
2013 
£m 
2012 
£m 
current tax 
current tax on profits for the year  565 475
adjustments in respect of prior years  02 05
total current tax  563 470
deferred tax 
origination and reversal of temporary differences 41 118
impact of change in the uk statutory tax rate 01 15
impact of change due to the uk patent box regime 55 –
total deferred tax  15 133
income tax expense  578 603
analysis of tax on items charged to equity 
 
2013 
£m 
2012 
£m 
deferred tax charge on outstanding share options and awards  48 97
current tax benefit on share options and awards  270 274
deferred tax credit on afs financial assets  – 01
 
  
017043armgovernancefinancials2013wordindd   84 10032014   2100 governance financial report
85
notes to the financial statements  
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 sharebased payments note 4  2925 2357
cost of inventories recognised as an expense  28 32
depreciation of property plant and equipment – owned assets note 12 116 95
depreciation of property plant and equi pment – under finance leases note 12 28 13
amortisation of other intangible assets note 14 
– cost of revenues 03 03
– research and development expenses 69 23
– sales and marketing expenses 06 09
– general and administrative expenses 58 31
government grants – research and development expenditure credit 58 –
exceptional items note 6 
– impairment of current afs financial asset 595 –
– ip indemnity and similar charges 418 –
impairment of noncurrent afs financial assets note 11 68 14
profit on disposal of afs financial assets  33 08
other operating lease rentals payable 
– plant and machinery  262 240
– property  87 76
accounts receivables impairment including movement in provision  40 04
fair value movement on embedded derivatives 45 37
other foreign exchange gains 33 19
services provided by the grou p’s auditor and its associates 
during the year the group including its ov erseas subsidiaries obtained the following services from the group’s auditor and it s associates 
 
2013 
£m 
2012 
£m 
fees payable to the group’s auditor and it s associates for the audit of the company 
and consolidated financial statements  03 03
fees payable to the group’s auditor and its associates for other services 
– the audit of the group’s subsidiaries  02 02
– auditrelated assurance services services pursua nt to section 404 of the sarbanesoxley act 03 03
– other assurance services  01 01
statutory audit financial reporting and other related services  09 09
– tax advisory services 01 02
– tax compliance services  – 01
– all other nonaudit services  01 01
 11 13
 all other nonaudit 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 di scussions with a licensee to renegotiate the terms upon which the group would 
indemnify that licensee during 2013 terms were executed and th e group incurred indemnification costs amounting to 180 milli on further in 
relation to legal proceedings regarding the same patent portfolio for a consideration of 454 million arm entered into a lic ence agreement with 
a third party covering patents being asserted against arm tec hnology in litigation between th e patentee and a number of license es of arm 
technology the licence was entered into in full and final settle ment of any indemnity claims with respect to the asserted pate nts and will prevent 
any future assertion of the patents against arm technology tota l indemnification settlement and licence costs of 634 millio n £418 million 
were expensed as an exceptional item in 2013 resultin g in a tax deduction in current tax of £97 million 
impairment of availableforsale financial assets current 
during the year the group participated in a consortium via a trust to acquire certain patent rights these rights were not s ubject to actual or 
threatened legal proceedings of the grou p’s total contribution to the consortium 1005 million was classified within current afs financial assets 
£607 million after translation at 31 december 2013 exchange rate s and 67 million the residual was classified within other intangible assets 
£374 million after amortisation to 31 de cember 2013 the availableforsale financial asset represented arm’s right to recei ve cash from the 
groups financial interest in the consortium as it was anticipa ted 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 pe riod 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 au ction the group 
acquired the patents in january 2014 for 40 million £24 million which will be accounted for as an additional intangible as set 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 h as been impaired down 
to the value of the group’s share of the auction proceeds giving rise to a noncash exceptiona l charge of 985 million £595 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 £183 
million 
7 tax 
analysis of charge in the year 
 
2013 
£m 
2012 
£m 
current tax 
current tax on profits for the year  565 475
adjustments in respect of prior years  02 05
total current tax  563 470
deferred tax 
origination and reversal of temporary differences 41 118
impact of change in the uk statutory tax rate 01 15
impact of change due to the uk patent box regime 55 –
total deferred tax  15 133
income tax expense  578 603
analysis of tax on items charged to equity 
 
2013 
£m 
2012 
£m 
deferred tax charge on outstanding share options and awards  48 97
current tax benefit on share options and awards  270 274
deferred tax credit on afs financial assets  – 01
 
  
017043armgovernancefinancials2013wordindd   85 10032014   2100 arm holdings plc
governance and financial report 2013
86
notes to the financial statements  
continued 
7 tax continued 
the tax charge for the year was differen t from the standard rate of corporation tax in the uk as explained below 
 
2013 
£m 
2012 
£m 
profit before tax  1626 2210
profit before tax at the corporation tax rate of 2325 2012 245  378 542
effects of 
adjustments in respect of prior years  02 05
adjustments in respect of foreign tax rates  41 50
research and development tax credits  66 55
current impact of the uk patent box regime 48 –
remeasurement of deferred tax assets due to reduction in uk statutory tax rate  01 15
remeasurement of deferred tax assets due to the uk patent box regime 55 –
us deferred tax assets not recognised  175 34
foreign withholding tax  30 10
impact of sharebased payments 15 03
other   29 09
total taxation  578 603
 the provisions extending the us federal rd tax credits into 2012 were signed on 2 january 2013 as a result of the provision s being enacted in 2013 2012 rd tax credits of £21 million have been 
accounted for in 2013 
 includes the tax impact of the exceptional charge of £595 million for the impairment of an afs financial asset which gave r ise 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 te mporary 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  701 1059
amount acquired with subsidiary undertaking 12 –
income statement charge  15 133
adjustment in respect of sharebased payments  48 97
prior year movement fromto current tax assets 30 116
exchange differences  04 13
revaluation of afs financial asset  – 01
at 31 december  652 701
deferred tax assets have been partially recognised in respect of tax losses and other temporary differences giving rise to defe rred tax assets 
because it is not probab le that the unrecognised portion of these assets will be recovered  
the amount of deferred tax assets unrecognised at 31 december 20 13 was £232 million 2012 £44 million the unrecognised def erred tax 
assets relate to historic losses of acquired subsidiaries and th e 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 £ 332 million 2012 £350 million of unremitted earnings of overs eas subsidiaries 
because the group is in a position to control the timing of the reversal of these differences and either it is possible that su ch 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 redu ction in the main rate of uk corporation tax from 23 to 21 f rom 
1 april 2014 and a further 1 reduction to 20 from 1 april 2015 the uk government ha s also introduced the new patent box regi me 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 de duction in financial year 201314 rising to 100 by 201718 th e impact of these 
changes on the deferred tax balances of th e group is included in the tax charge 
the movements in deferred tax assets and liabilities prior to of fsetting of balances within the same tax jurisdiction as permitted by ias 12 during 
the year are shown below deferred tax assets and liabilities ar e only offset where there is a legally enforceable right of off set and there is an 
intention to settle the balances net 
deferred tax assets 
 
amounts 
relating to 
sharebased 
payments 
£m 
temporary 
differences 
relating to 
fixed assets 
£m 
tax losses 
and rd tax 
credits carried 
forward 
£m 
temporary 
differences 
relating to  
reserves  
£m 
other
£m 
total 
£m 
at 1 january 2013 435 26 151 95 06 713
amount acquired with subsidiary undertaking – – 05 – – 05
prior year movement from current tax assets – – 30 – – 30
income statement creditcharge 08 13 28 15 03 19
movement on deferred ta x arising on outstanding share options and 
awards 
48 – – – – 48
unutilised current year share option deductions  67 – 67 – – –
exchange differences  – – 04 – – 04
at 31 december 2013 prior to offsetting  328 39 221 80 09 677
offsetting of deferred tax liabilities   24
at 31 december 2013 after offsetting   653
at 1 january 2012  595 46 309 127 – 1077
prior year movement to current tax assets – – 116 – – 116
income statement chargecredit 01 20 91 32 06 138
movement on deferred ta x arising on outstanding share options and 
awards  
97 – – – – 97
unutilised current year share option deductions  62 – 62 – – –
exchange differences  – – 13 – – 13
at 31 december 2012 prior to offsetting  435 26 151 95 06 713
offsetting of deferred tax liabilities   12
at 31 december 2012 after offsetting   701
the deferred tax asset to be recovered after more than one year is £352 million 2012 £296 million 
  
017043armgovernancefinancials2013wordindd   86 10032014   2100 governance financial report
87
notes to the financial statements  
continued 
7 tax continued 
the tax charge for the year was differen t from the standard rate of corporation tax in the uk as explained below 
 
2013 
£m 
2012 
£m 
profit before tax  1626 2210
profit before tax at the corporation tax rate of 2325 2012 245  378 542
effects of 
adjustments in respect of prior years  02 05
adjustments in respect of foreign tax rates  41 50
research and development tax credits  66 55
current impact of the uk patent box regime 48 –
remeasurement of deferred tax assets due to reduction in uk statutory tax rate  01 15
remeasurement of deferred tax assets due to the uk patent box regime 55 –
us deferred tax assets not recognised  175 34
foreign withholding tax  30 10
impact of sharebased payments 15 03
other   29 09
total taxation  578 603
 the provisions extending the us federal rd tax credits into 2012 were signed on 2 january 2013 as a result of the provision s being enacted in 2013 2012 rd tax credits of £21 million have been 
accounted for in 2013 
 includes the tax impact of the exceptional charge of £595 million for the impairment of an afs financial asset which gave r ise 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 te mporary 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  701 1059
amount acquired with subsidiary undertaking 12 –
income statement charge  15 133
adjustment in respect of sharebased payments  48 97
prior year movement fromto current tax assets 30 116
exchange differences  04 13
revaluation of afs financial asset  – 01
at 31 december  652 701
deferred tax assets have been partially recognised in respect of tax losses and other temporary differences giving rise to defe rred tax assets 
because it is not probab le that the unrecognised portion of these assets will be recovered  
the amount of deferred tax assets unrecognised at 31 december 20 13 was £232 million 2012 £44 million the unrecognised def erred tax 
assets relate to historic losses of acquired subsidiaries and th e 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 £ 332 million 2012 £350 million of unremitted earnings of overs eas subsidiaries 
because the group is in a position to control the timing of the reversal of these differences and either it is possible that su ch 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 redu ction in the main rate of uk corporation tax from 23 to 21 f rom 
1 april 2014 and a further 1 reduction to 20 from 1 april 2015 the uk government ha s also introduced the new patent box regi me 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 de duction in financial year 201314 rising to 100 by 201718 th e impact of these 
changes on the deferred tax balances of th e group is included in the tax charge 
the movements in deferred tax assets and liabilities prior to of fsetting of balances within the same tax jurisdiction as permitted by ias 12 during 
the year are shown below deferred tax assets and liabilities ar e only offset where there is a legally enforceable right of off set and there is an 
intention to settle the balances net 
deferred tax assets 
 
amounts 
relating to 
sharebased 
payments 
£m 
temporary 
differences 
relating to 
fixed assets 
£m 
tax losses 
and rd tax 
credits carried 
forward 
£m 
temporary 
differences 
relating to  
reserves  
£m 
other
£m 
total 
£m 
at 1 january 2013 435 26 151 95 06 713
amount acquired with subsidiary undertaking – – 05 – – 05
prior year movement from current tax assets – – 30 – – 30
income statement creditcharge 08 13 28 15 03 19
movement on deferred ta x arising on outstanding share options and 
awards 
48 – – – – 48
unutilised current year share option deductions  67 – 67 – – –
exchange differences  – – 04 – – 04
at 31 december 2013 prior to offsetting  328 39 221 80 09 677
offsetting of deferred tax liabilities   24
at 31 december 2013 after offsetting   653
at 1 january 2012  595 46 309 127 – 1077
prior year movement to current tax assets – – 116 – – 116
income statement chargecredit 01 20 91 32 06 138
movement on deferred ta x arising on outstanding share options and 
awards  
97 – – – – 97
unutilised current year share option deductions  62 – 62 – – –
exchange differences  – – 13 – – 13
at 31 december 2012 prior to offsetting  435 26 151 95 06 713
offsetting of deferred tax liabilities   12
at 31 december 2012 after offsetting   701
the deferred tax asset to be recovered after more than one year is £352 million 2012 £296 million 
  
017043armgovernancefinancials2013wordindd   87 10032014   2100 arm holdings plc
governance and financial report 2013
88
notes to the financial statements  
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  11 – 01 12
amount acquired with subsidiary undertaking 17 – – 17
movement in respect of amortisa tion of intangible assets  02 – – 02
other shortterm differences  01 – 01 02
at 31 december 2013 prior to offsetting  25 – – 25
offsetting of deferred tax assets   24
at 31 december 2013 after offsetting   01
at 1 january 2012  13 01 04 18
movement in respect of amortisation of intangible assets  02 – – 02
movement through reserves – 01 – 01
other shortterm differences  – – 03 03
at 31 december 2012 prior to offsetting  11 – 01 12
offsetting of deferred tax assets   12
at 31 december 2012 after offsetting   –
the deferred tax liability due after more than one year prior to offsetting is £12 million 2012 £08 million 
8 dividends 
 
2013 
£m 
2012 
£m 
final 2011 paid at 209 pence per share  – 288
interim 2012 paid at 167 pence per share  – 230
final 2012 paid at 283 pence per share  395 –
interim 2013 paid at 210 pence per share  294 –
 689 518
in addition the directors are proposing a final dividend in resp ect of the financial year ended 31 december 2013 of 36 pence per share which will 
absorb an estimated £51 million of sharehol ders’ funds subject to approval at the 20 14 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  1403 1191
less provision for impairment of trade debtors  97 24
trade debtors net  1306 1167
amounts recoverable on contracts  56 78
current accounts receivable  1362 1245
movements in the group’s provision for impa irment of trade debtors are as follows 
 
2013 
£m 
2012 
£m 
at 1 january  24 17
charge to income statement  40 04
reclassification from deferred income 35 04
foreign exchange  02 01
at 31 december  97 24
see also note 17 for further disclosure regarding the credit quality of the group’s gross trade debtors 
10  prepaid expenses and other assets 
 
2013 
£m 
2012 
£m 
other receivables  181 104
prepayments and accrued income  217 1252
current prepaid expenses and other assets  398 1356
plus noncurrent prepayments and accrued income  16 20
total prepaid expenses and other assets  414 1376
included within prepayments and accrued in come at 31 december 2012 was a prepayment am ounting to £1037 million being the grou p’s 
advance contribution to acquire rights to mips technologies inc ’s portfolio of patents the group has determined that the par ticipation in the 
consortium conferred on the group two separate rights an intangible asset conferring the right to use the assets in the group ’s own business of 
£419 million see note 14 and an afs fi nancial asset of £634 million see note 11  conferring the right to certain potenti al future revenue 
streams arising from the licensing activities of the trust 
  
017043armgovernancefinancials2013wordindd   88 10032014   2100 governance financial report
89
notes to the financial statements  
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  11 – 01 12
amount acquired with subsidiary undertaking 17 – – 17
movement in respect of amortisa tion of intangible assets  02 – – 02
other shortterm differences  01 – 01 02
at 31 december 2013 prior to offsetting  25 – – 25
offsetting of deferred tax assets   24
at 31 december 2013 after offsetting   01
at 1 january 2012  13 01 04 18
movement in respect of amortisation of intangible assets  02 – – 02
movement through reserves – 01 – 01
other shortterm differences  – – 03 03
at 31 december 2012 prior to offsetting  11 – 01 12
offsetting of deferred tax assets   12
at 31 december 2012 after offsetting   –
the deferred tax liability due after more than one year prior to offsetting is £12 million 2012 £08 million 
8 dividends 
 
2013 
£m 
2012 
£m 
final 2011 paid at 209 pence per share  – 288
interim 2012 paid at 167 pence per share  – 230
final 2012 paid at 283 pence per share  395 –
interim 2013 paid at 210 pence per share  294 –
 689 518
in addition the directors are proposing a final dividend in resp ect of the financial year ended 31 december 2013 of 36 pence per share which will 
absorb an estimated £51 million of sharehol ders’ funds subject to approval at the 20 14 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  1403 1191
less provision for impairment of trade debtors  97 24
trade debtors net  1306 1167
amounts recoverable on contracts  56 78
current accounts receivable  1362 1245
movements in the group’s provision for impa irment of trade debtors are as follows 
 
2013 
£m 
2012 
£m 
at 1 january  24 17
charge to income statement  40 04
reclassification from deferred income 35 04
foreign exchange  02 01
at 31 december  97 24
see also note 17 for further disclosure regarding the credit quality of the group’s gross trade debtors 
10  prepaid expenses and other assets 
 
2013 
£m 
2012 
£m 
other receivables  181 104
prepayments and accrued income  217 1252
current prepaid expenses and other assets  398 1356
plus noncurrent prepayments and accrued income  16 20
total prepaid expenses and other assets  414 1376
included within prepayments and accrued in come at 31 december 2012 was a prepayment am ounting to £1037 million being the grou p’s 
advance contribution to acquire rights to mips technologies inc ’s portfolio of patents the group has determined that the par ticipation in the 
consortium conferred on the group two separate rights an intangible asset conferring the right to use the assets in the group ’s own business of 
£419 million see note 14 and an afs fi nancial asset of £634 million see note 11  conferring the right to certain potenti al future revenue 
streams arising from the licensing activities of the trust 
  
017043armgovernancefinancials2013wordindd   89 10032014   2100 arm holdings plc
governance and financial report 2013
90
notes to the financial statements  
continued 
11 availableforsale financial assets 
noncurrent investments 
2013
£m 
2012
£m 
net book value 
at 1 january  138 273
additions including capitalised in terest of £02 million in 2012  89 32
revaluation recognised through other comprehensive income – 04
disposals 17 149
foreign exchange translation 03 –
impairment recognised through income statem ent general and admi nistrative expenses 68 14
at 31 december  139 138
 
current investments 
2013
£m 
2012
£m 
net book value 
at 1 january  – –
additions  634 –
foreign exchange translation 27 –
impairment recognised through income statement as an exceptional item see note 6 595 –
at 31 december  12 –
all investments noted above are considered to be level 3 financial assets see note 17 
  
 
 
11 availableforsale financial assets continued 
noncurrent investments 
those unlisted companies in which the group has invested are ge nerally earlystage development enterprises which are generatin g value for 
shareholders through research and development activities and most do not currently report profit s the fair value of these inv estments is 
considered to approximate to cost or is determined us ing independent valuation information where available  
the group’s 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 invest ments in arteris holdings inc and esol co ltd 
at 31 december 2013 and 2012 the group had no listed investments 
availableforsale financial assets include the following 
 
2013
£m 
2012 
£m 
unlisted equity securities – uk  62 37
unlisted equity securities – china  19 20
unlisted equity securities – japan  – 09
unlisted equity securities – us  14 59
convertible loan notes – uk  13 13
convertible loan notes – us  31 –
total noncurrent financial assets 139 138
availableforsale financial assets are denominated in the following currencies 
 
2013 
£m 
2012 
£m 
sterling  95 125
us dollars  44 13
total financial assets  139 138
a permanent 10 fall in the under lying value of those unlis ted companies in which the group ha s invested as at 31 december 2013 would have 
reduced the group’s posttax profit by £11 million 2012 £10 million and resulted in a £nil 2012 £nil reduction in other components of equity 
  
017043armgovernancefinancials2013wordindd   90 10032014   2100 governance financial report
91
notes to the financial statements  
continued 
11 availableforsale financial assets 
noncurrent investments 
2013
£m 
2012
£m 
net book value 
at 1 january  138 273
additions including capitalised in terest of £02 million in 2012  89 32
revaluation recognised through other comprehensive income – 04
disposals 17 149
foreign exchange translation 03 –
impairment recognised through income statem ent general and admi nistrative expenses 68 14
at 31 december  139 138
 
current investments 
2013
£m 
2012
£m 
net book value 
at 1 january  – –
additions  634 –
foreign exchange translation 27 –
impairment recognised through income statement as an exceptional item see note 6 595 –
at 31 december  12 –
all investments noted above are considered to be level 3 financial assets see note 17 
  
 
 
11 availableforsale financial assets continued 
noncurrent investments 
those unlisted companies in which the group has invested are ge nerally earlystage development enterprises which are generatin g value for 
shareholders through research and development activities and most do not currently report profit s the fair value of these inv estments is 
considered to approximate to cost or is determined us ing independent valuation information where available  
the group’s 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 invest ments in arteris holdings inc and esol co ltd 
at 31 december 2013 and 2012 the group had no listed investments 
availableforsale financial assets include the following 
 
2013
£m 
2012 
£m 
unlisted equity securities – uk  62 37
unlisted equity securities – china  19 20
unlisted equity securities – japan  – 09
unlisted equity securities – us  14 59
convertible loan notes – uk  13 13
convertible loan notes – us  31 –
total noncurrent financial assets 139 138
availableforsale financial assets are denominated in the following currencies 
 
2013 
£m 
2012 
£m 
sterling  95 125
us dollars  44 13
total financial assets  139 138
a permanent 10 fall in the under lying value of those unlis ted companies in which the group ha s invested as at 31 december 2013 would have 
reduced the group’s posttax profit by £11 million 2012 £10 million and resulted in a £nil 2012 £nil reduction in other components of equity 
  
017043armgovernancefinancials2013wordindd   91 10032014   2100 arm holdings plc
governance and financial report 2013
92
notes to the financial statements  
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 02 231 488 64 35 820
additions  – 25 81 18 26 150
acquisitions  – – 01 01 – 02
transfers  – 09 23 – 32 –
reclassification – – 32 – 17 49
disposals  – 17 57 10 04 88
exchange differences  – 06 10 03 01 20
at 31 december 2013  02 242 494 70 07 815
accumulated depreciation  
at 1 january 2013  01 139 275 44 – 459
charge for the year  – 23 110 11 – 144
acquisitions – – 01 – – 01
reclassification – – 32 – – 32
disposals  – 15 57 10 – 82
exchange differences  – 02 08 01 – 11
at 31 december 2013  01 145 289 44 – 479
net book value  
at 31 december 2013  01 97 205 26 07 336
 
 
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  02 180 325 57 09 573
additions  – 17 140 11 124 292
transfers  – 49 49 – 98 –
disposals  – 11 18 02 – 31
exchange differences  – 04 08 02 – 14
at 31 december 2012  02 231 488 64 35 820
accumulated depreciation  
at 1 january 2012  01 135 218 38 – 392
charge for the year  – 18 81 09 – 108
disposals  – 11 18 02 – 31
exchange differences  – 03 06 01 – 10
at 31 december 2012  01 139 275 44 – 459
net book value  
at 31 december 2012  01 92 213 20 35 361
net book value at 1 january 2012 01 45 107 19 09 181
included within computer equipment are asse ts with net book value of £66 million 2 012 £77 million held under finance lease s 
 reclassification from property plant and equipment to intangible assets software 
  
 
 
13  goodwill 
 £m 
at 1 january 2012 5425
exchange differences 231
at 31 december 2012 5194
exchange differences  99
acquisition – sensinode note 19 64
acquisition – geomerics note 19 100
at 31 december 2013 5259
during the fourth quarter of 2013 the directors tested the group’ s balance of goodwill for impair ment in accordance with ias 3 6“impairment of 
assets” no impairment charge was recorded as a result of this annual impairment test 
goodwill is allocated to the group’s 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  1190 3571 – 4761
goodwill relating to geomerics 100 – – 100
goodwill relating to falanx  94 – – 94
goodwill relating to axys  – – 73 73
goodwill relating to keg and ksi  – – 69 69
goodwill relating to sensinode 58 – – 58
goodwill relating to prolific – 31 – 31
goodwill relating to obsidian 30 – – 30
goodwill relating to logipard 22 – – 22
goodwill relating to other acquisitions  21 – – 21
goodwill at 31 december 2013 1515 3602 142 5259
goodwill at 31 december 2012 1380 3670 144 5194
the recoverable amount for each cgu has been me asured based on a valueinuse calculation 
allocation of goodwill relating to artisan 
the directors believed that in addition to forming the basis of the physical ip division pipd the group’s acquisition of ar tisan in 2004 would 
provide a benefit to the processor divi sion pd for the following reasons 
• the development of faster and more powerefficient 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 ph ysical ip in
house 
the goodwill relating to artisan was allocated between the two divisions accordingly 
processor division  
pd encompasses those resources that are cent red around microprocessor cores including specific functions such as graphics ip system ip 
embedded software ip and configurable dsp ip 
the key assumptions in the valueinuse calculations were 
period of projected cash flows the directors have used a tenyear forecast period with an assumed terminal growth rate after 2023 of 3 per 
annum given the longterm nature of the arm licensing and royalty business model it is considered appropriate to use a tenye ar 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 ma nagement taking into account 
typical semiconductor industry growth rates and arm’s historical experience in the context of wider industry and economic condi tions  
017043armgovernancefinancials2013wordindd   92 10032014   2100 governance financial report
93
notes to the financial statements  
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 02 231 488 64 35 820
additions  – 25 81 18 26 150
acquisitions  – – 01 01 – 02
transfers  – 09 23 – 32 –
reclassification – – 32 – 17 49
disposals  – 17 57 10 04 88
exchange differences  – 06 10 03 01 20
at 31 december 2013  02 242 494 70 07 815
accumulated depreciation  
at 1 january 2013  01 139 275 44 – 459
charge for the year  – 23 110 11 – 144
acquisitions – – 01 – – 01
reclassification – – 32 – – 32
disposals  – 15 57 10 – 82
exchange differences  – 02 08 01 – 11
at 31 december 2013  01 145 289 44 – 479
net book value  
at 31 december 2013  01 97 205 26 07 336
 
 
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  02 180 325 57 09 573
additions  – 17 140 11 124 292
transfers  – 49 49 – 98 –
disposals  – 11 18 02 – 31
exchange differences  – 04 08 02 – 14
at 31 december 2012  02 231 488 64 35 820
accumulated depreciation  
at 1 january 2012  01 135 218 38 – 392
charge for the year  – 18 81 09 – 108
disposals  – 11 18 02 – 31
exchange differences  – 03 06 01 – 10
at 31 december 2012  01 139 275 44 – 459
net book value  
at 31 december 2012  01 92 213 20 35 361
net book value at 1 january 2012 01 45 107 19 09 181
included within computer equipment are asse ts with net book value of £66 million 2 012 £77 million held under finance lease s 
 reclassification from property plant and equipment to intangible assets software 
  
 
 
13  goodwill 
 £m 
at 1 january 2012 5425
exchange differences 231
at 31 december 2012 5194
exchange differences  99
acquisition – sensinode note 19 64
acquisition – geomerics note 19 100
at 31 december 2013 5259
during the fourth quarter of 2013 the directors tested the group’ s balance of goodwill for impair ment in accordance with ias 3 6“impairment of 
assets” no impairment charge was recorded as a result of this annual impairment test 
goodwill is allocated to the group’s 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  1190 3571 – 4761
goodwill relating to geomerics 100 – – 100
goodwill relating to falanx  94 – – 94
goodwill relating to axys  – – 73 73
goodwill relating to keg and ksi  – – 69 69
goodwill relating to sensinode 58 – – 58
goodwill relating to prolific – 31 – 31
goodwill relating to obsidian 30 – – 30
goodwill relating to logipard 22 – – 22
goodwill relating to other acquisitions  21 – – 21
goodwill at 31 december 2013 1515 3602 142 5259
goodwill at 31 december 2012 1380 3670 144 5194
the recoverable amount for each cgu has been me asured based on a valueinuse calculation 
allocation of goodwill relating to artisan 
the directors believed that in addition to forming the basis of the physical ip division pipd the group’s acquisition of ar tisan in 2004 would 
provide a benefit to the processor divi sion pd for the following reasons 
• the development of faster and more powerefficient 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 ph ysical ip in
house 
the goodwill relating to artisan was allocated between the two divisions accordingly 
processor division  
pd encompasses those resources that are cent red around microprocessor cores including specific functions such as graphics ip system ip 
embedded software ip and configurable dsp ip 
the key assumptions in the valueinuse calculations were 
period of projected cash flows the directors have used a tenyear forecast period with an assumed terminal growth rate after 2023 of 3 per 
annum given the longterm nature of the arm licensing and royalty business model it is considered appropriate to use a tenye ar 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 ma nagement taking into account 
typical semiconductor industry growth rates and arm’s historical experience in the context of wider industry and economic condi tions  
017043armgovernancefinancials2013wordindd   93 10032014   2100 arm holdings plc
governance and financial report 2013
94
notes to the financial statements  
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 estima ting 
its fair value are appropriate whilst it is conceivable that a key assumption in the calculation could change the directors b elieve that no reasonably 
foreseeable changes to key assumptions would result in an impairme nt of goodwill such is the margin by which the estimated fai r value exceeds 
the carrying value 
physical ip division 
pipd is concerned with the building bl ocks necessary for translation of a circuit design into actual silicon 
the key assumptions in the valueinuse calculations were 
period of projected cash flows the directors have used a tenyear forecast period with an assumed terminal growth rate after 2023 of 3 per 
annum given the longterm nature of the arm licensing and royalty business model it is considered appropriate to use a tenye ar forecast period 
to assess the expected future cash flows to be generated from the assets under review  
this timescale is consistent with arm’s experience in developi ng the processor licensing and royalty model arm has signed more than 1000 
processor licences with around 35 0 customers since the formation of the group with less than half of these paying royalties thu s far as royalty 
revenues are a function of cumulative licens ing royalty growth gathers momentum as the licensing base grows – arm processor ro yalties have 
increased from 72 million in 2003 to 495 million in 2013 
revenue growth revenue growth assumptions are based on financial budgets and forecasts approved by senior ma nagement taking into account 
typical semiconductor industry growth rates and arm’s historical experience in the context of wider industry and economic condi tions since the 
acquisition of artisan at the en d of 2004 pipd has accelerated the development of leadingedge physical ip technology as semi conductor process 
geometries shrink pipd is expected to have more licensing opportunities across a broader range of foundries and other semicond uctor 
companies  
us dollar licence revenues increa sed by 25 yearonyear in 2013 and royalty reve nues increased by 13 the increase in revenue s was due 
mainly to the successful delivery of new products licensed in the previous year further licensi ng of new technology was achieved in the year and as 
a result backlog at the end of 2013 was at a similar level to th e beginning of the year this co ntinuing 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 i n recent years will not 
only generate growth in physical ip revenue in future years but also contribute sign ificantly 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 valueinuse 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 par tners taking 
licences alongside pd processors pops enable an enhanced and deterministic outcome fo r licensees when implementing arm process ors 
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 firs t time this was mostly as a r esult of increased 
revenues offset by continued investment in the development of le adingedge technology margins are expected to improve signific antly in future 
years as licence revenues from le adingedge products gather pace growth in highmargin royalty revenues will further improve p rofitability 
costs are expected to grow relatively slowly in real terms 
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 pipd and the assumptions used in estimating its fair valu e are 
appropriate whilst it is conceivable that a key assumption in the calculation could change th e directors believe that no reas onably foreseeable 
changes to key assumptions would result in an impairment of good will such is the margin by which the estimated fair value exce eds the carrying 
value the overall assessment is most sensitive to changes in the assumed revenues and benefits provided to the processor divis ion see note 1 
critical estimates and judgements the dire ctors have considered the impact of a number of scenarios on the overall valuation of the pipd 
business including a considerable reduction in the benefits assu med to be provided to the processor division the results of t his sensitivity analysis 
showed that applying a range of reasonable variations to the ke y assumptions would not change the conclusion that no impairment in the carrying 
value of the goodwill is required at 31 december 2013 
  
 
 
13  goodwill continued 
system design division  
sdd develops and sells the tools and models used to create and debug software and soc designs 
the key assumptions in the valueinuse calculations were 
period of projected cash flows the directors have used a fiveyear forecast period with an assumed terminal growth rate after 2018 of 3 per 
annum it is considered ap propriate to use a fiveyear forecast period to properly reflect the weighted average period over whi ch the benefits of 
the acquisitions of axys keg an d ksi are expected to accrue 
revenue growth revenue growth assumptions are based on financial budgets and forecasts approved by senior ma nagement taking into account 
typical semiconductor industry growth rates and arm’s historical experience in the context of wider industry and economic condi tions 
operating margins operating margins are assumed to grow gradually during the period 
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 sdd and the assumptions used in estimating its fair value 
are appropriate whilst it is conceivable th at a key assumption in the calculation co uld change the directors believe that no reasonably 
foreseeable changes to key assumptions would result in an impairme nt of goodwill such is the margin by which the estimated fai r value 
exceeds the carrying value 
14  other intangible assets 
 
computer 
software  
£m 
patents and 
licences 
£m 
inprocess 
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 141 268 59 396 533 168 45 20 1630
additions  20 741 – 75 03 – – – 839
reclassification  49 – – – – – – – 49
disposals and derecognitions 15 – – – – – – 20 35
exchange differences  01 – 01 04 08 03 01 – 18
at 31 december 2013 194 1009 58 467 528 165 44 – 2465
accumulated amortisation    
at 1 january 2013 103 231 59 377 528 155 45 20 1518
charge for the year  23 83 – 15 06 09 – – 136
reclassification  32 – – – – – – – 32
disposals and derecognitions 15 – – – – – – 20 35
exchange differences  – – 01 02 08 03 01 – 15
at 31 december 2013 143 314 58 390 526 161 44 – 1636
net book value  
at 31 december 2013 51 695 – 77 02 04 – – 829
 reclassification from property plant and equipment to intangible assets software 
the net book value of patents and licences includes a patent licence agreement for interconnect technology used in socs with a carrying value of 
£160 million at 31 december 2013 2012 £nil and a remaining useful life of 9 years and ip righ ts acquired from bridge cross ing llc see note 6 
with a carrying value of £ 374 million at 31 december 2013 2012 £nil and a remaining useful life of 8 years 
  
017043armgovernancefinancials2013wordindd   94 10032014   2100 governance financial report
95
notes to the financial statements  
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 estima ting 
its fair value are appropriate whilst it is conceivable that a key assumption in the calculation could change the directors b elieve that no reasonably 
foreseeable changes to key assumptions would result in an impairme nt of goodwill such is the margin by which the estimated fai r value exceeds 
the carrying value 
physical ip division 
pipd is concerned with the building bl ocks necessary for translation of a circuit design into actual silicon 
the key assumptions in the valueinuse calculations were 
period of projected cash flows the directors have used a tenyear forecast period with an assumed terminal growth rate after 2023 of 3 per 
annum given the longterm nature of the arm licensing and royalty business model it is considered appropriate to use a tenye ar forecast period 
to assess the expected future cash flows to be generated from the assets under review  
this timescale is consistent with arm’s experience in developi ng the processor licensing and royalty model arm has signed more than 1000 
processor licences with around 35 0 customers since the formation of the group with less than half of these paying royalties thu s far as royalty 
revenues are a function of cumulative licens ing royalty growth gathers momentum as the licensing base grows – arm processor ro yalties have 
increased from 72 million in 2003 to 495 million in 2013 
revenue growth revenue growth assumptions are based on financial budgets and forecasts approved by senior ma nagement taking into account 
typical semiconductor industry growth rates and arm’s historical experience in the context of wider industry and economic condi tions since the 
acquisition of artisan at the en d of 2004 pipd has accelerated the development of leadingedge physical ip technology as semi conductor process 
geometries shrink pipd is expected to have more licensing opportunities across a broader range of foundries and other semicond uctor 
companies  
us dollar licence revenues increa sed by 25 yearonyear in 2013 and royalty reve nues increased by 13 the increase in revenue s was due 
mainly to the successful delivery of new products licensed in the previous year further licensi ng of new technology was achieved in the year and as 
a result backlog at the end of 2013 was at a similar level to th e beginning of the year this co ntinuing 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 i n recent years will not 
only generate growth in physical ip revenue in future years but also contribute sign ificantly 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 valueinuse 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 par tners taking 
licences alongside pd processors pops enable an enhanced and deterministic outcome fo r licensees when implementing arm process ors 
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 firs t time this was mostly as a r esult of increased 
revenues offset by continued investment in the development of le adingedge technology margins are expected to improve signific antly in future 
years as licence revenues from le adingedge products gather pace growth in highmargin royalty revenues will further improve p rofitability 
costs are expected to grow relatively slowly in real terms 
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 pipd and the assumptions used in estimating its fair valu e are 
appropriate whilst it is conceivable that a key assumption in the calculation could change th e directors believe that no reas onably foreseeable 
changes to key assumptions would result in an impairment of good will such is the margin by which the estimated fair value exce eds the carrying 
value the overall assessment is most sensitive to changes in the assumed revenues and benefits provided to the processor divis ion see note 1 
critical estimates and judgements the dire ctors have considered the impact of a number of scenarios on the overall valuation of the pipd 
business including a considerable reduction in the benefits assu med to be provided to the processor division the results of t his sensitivity analysis 
showed that applying a range of reasonable variations to the ke y assumptions would not change the conclusion that no impairment in the carrying 
value of the goodwill is required at 31 december 2013 
  
 
 
13  goodwill continued 
system design division  
sdd develops and sells the tools and models used to create and debug software and soc designs 
the key assumptions in the valueinuse calculations were 
period of projected cash flows the directors have used a fiveyear forecast period with an assumed terminal growth rate after 2018 of 3 per 
annum it is considered ap propriate to use a fiveyear forecast period to properly reflect the weighted average period over whi ch the benefits of 
the acquisitions of axys keg an d ksi are expected to accrue 
revenue growth revenue growth assumptions are based on financial budgets and forecasts approved by senior ma nagement taking into account 
typical semiconductor industry growth rates and arm’s historical experience in the context of wider industry and economic condi tions 
operating margins operating margins are assumed to grow gradually during the period 
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 sdd and the assumptions used in estimating its fair value 
are appropriate whilst it is conceivable th at a key assumption in the calculation co uld change the directors believe that no reasonably 
foreseeable changes to key assumptions would result in an impairme nt of goodwill such is the margin by which the estimated fai r value 
exceeds the carrying value 
14  other intangible assets 
 
computer 
software  
£m 
patents and 
licences 
£m 
inprocess 
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 141 268 59 396 533 168 45 20 1630
additions  20 741 – 75 03 – – – 839
reclassification  49 – – – – – – – 49
disposals and derecognitions 15 – – – – – – 20 35
exchange differences  01 – 01 04 08 03 01 – 18
at 31 december 2013 194 1009 58 467 528 165 44 – 2465
accumulated amortisation    
at 1 january 2013 103 231 59 377 528 155 45 20 1518
charge for the year  23 83 – 15 06 09 – – 136
reclassification  32 – – – – – – – 32
disposals and derecognitions 15 – – – – – – 20 35
exchange differences  – – 01 02 08 03 01 – 15
at 31 december 2013 143 314 58 390 526 161 44 – 1636
net book value  
at 31 december 2013 51 695 – 77 02 04 – – 829
 reclassification from property plant and equipment to intangible assets software 
the net book value of patents and licences includes a patent licence agreement for interconnect technology used in socs with a carrying value of 
£160 million at 31 december 2013 2012 £nil and a remaining useful life of 9 years and ip righ ts acquired from bridge cross ing llc see note 6 
with a carrying value of £ 374 million at 31 december 2013 2012 £nil and a remaining useful life of 8 years 
  
017043armgovernancefinancials2013wordindd   95 10032014   2100 arm holdings plc
governance and financial report 2013
96
notes to the financial statements  
continued 
14  other intangible assets continued 
 
computer 
software  
£m 
patents and 
licences 
£m 
inprocess 
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 104 254 62 410 555 176 47 21 1629
additions  40 14 – – – –  –  – 54
disposals  02 – – – – –  –  – 02
exchange differences  01 – 03 14 22 08 02 01 51
at 31 december 2012 141 268 59 396 533 168 45 20 1630
accumulated amortisation    
at 1 january 2012 90 208 62 377 546 153 47 21 1504
charge for the year  16 23 – 14 04 09 – – 66
disposals  02 – – – – –  –  – 02
exchange differences  01 – 03 14 22 07 02 01 50
at 31 december 2012 103 231 59 377 528 155 45 20 1518
net book value  
at 31 december 2012 38 37 – 19 05 13 – – 112
15  accrued and other liabilities 
 
2013 
£m 
2012 
£m 
accruals 
 provision for payroll taxes on share awards  151 165
 employee bonus and sales commissions  265 238
 other accruals including £26 million noncurrent 2012 £nil 400 310
total accruals  816 713
 
other taxation and social security  44 34
other payables  47 46
total accrued and other liabilities 907 793
16 finance lease liabilities 
 
2013 
£m 
2012 
£m 
gross finance lease liabilities – minimum lease payments 
 within one year  29 31
 in the second to fifth years inclusive  15 30
 less future finance charges  02 03
present value of lease obligations  42 58
 
amounts due for settlement within 12 months  27 29
amounts due for settlement after 12 months  15 29
present value of lease obligations 42 58
the group has entered into a three and a fouryear 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
forsale 
£m 
total 
£m 
at 31 december 2013  
cash and cash equivalents  438 – – 438
shortterm deposits  5441 – – 5441
currency exchange contracts  – 51 – 51
accounts receivable gross of impairment provision 1459 – – 1459
availableforsale financial assets – unlisted – – 12 12
total current financial assets  7338 51 12 7401
longterm deposits  1256 – – 1256
loans and receivables 30 – – 30
availableforsale financial assets  unlisted  – – 139 139
total noncurrent financial assets  1286 – 139 1425
total financial assets  8624 51 151 8826
at 31 december 2012  
cash and cash equivalents  463 – – 463
shortterm deposits  3400 – – 3400
currency exchange contracts  – 14 – 14
accounts receivable gross of impa irment provision  1269 – – 1269
total current financial assets  5132 14 – 5146
longterm deposits  1413 – – 1413
loans and receivables 21 – – 21
availableforsale financial assets  unlisted  – – 138 138
total noncurrent financial assets  1434 – 138 1572
total financial assets  6566 14 138 6718
financial liabilities 
 
2013
£m 
2012 
£m 
liabilities at amortised cost at 31 december 
accounts payable  70 59
accrued and other liabilities 563 468
finance lease liabilities  42 58
 675 585
liabilities at fair value through th e income statement at 31 december
embedded derivatives 70 25
total financial liabilities  745 610
 nonfinancial liabilities are excluded from the accrued and other liabilities balance as this analysis is required only for financial instruments 
  
017043armgovernancefinancials2013wordindd   96 10032014   2100 governance financial report
97
notes to the financial statements  
continued 
14  other intangible assets continued 
 
computer 
software  
£m 
patents and 
licences 
£m 
inprocess 
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 104 254 62 410 555 176 47 21 1629
additions  40 14 – – – –  –  – 54
disposals  02 – – – – –  –  – 02
exchange differences  01 – 03 14 22 08 02 01 51
at 31 december 2012 141 268 59 396 533 168 45 20 1630
accumulated amortisation    
at 1 january 2012 90 208 62 377 546 153 47 21 1504
charge for the year  16 23 – 14 04 09 – – 66
disposals  02 – – – – –  –  – 02
exchange differences  01 – 03 14 22 07 02 01 50
at 31 december 2012 103 231 59 377 528 155 45 20 1518
net book value  
at 31 december 2012 38 37 – 19 05 13 – – 112
15  accrued and other liabilities 
 
2013 
£m 
2012 
£m 
accruals 
 provision for payroll taxes on share awards  151 165
 employee bonus and sales commissions  265 238
 other accruals including £26 million noncurrent 2012 £nil 400 310
total accruals  816 713
 
other taxation and social security  44 34
other payables  47 46
total accrued and other liabilities 907 793
16 finance lease liabilities 
 
2013 
£m 
2012 
£m 
gross finance lease liabilities – minimum lease payments 
 within one year  29 31
 in the second to fifth years inclusive  15 30
 less future finance charges  02 03
present value of lease obligations  42 58
 
amounts due for settlement within 12 months  27 29
amounts due for settlement after 12 months  15 29
present value of lease obligations 42 58
the group has entered into a three and a fouryear 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
forsale 
£m 
total 
£m 
at 31 december 2013  
cash and cash equivalents  438 – – 438
shortterm deposits  5441 – – 5441
currency exchange contracts  – 51 – 51
accounts receivable gross of impairment provision 1459 – – 1459
availableforsale financial assets – unlisted – – 12 12
total current financial assets  7338 51 12 7401
longterm deposits  1256 – – 1256
loans and receivables 30 – – 30
availableforsale financial assets  unlisted  – – 139 139
total noncurrent financial assets  1286 – 139 1425
total financial assets  8624 51 151 8826
at 31 december 2012  
cash and cash equivalents  463 – – 463
shortterm deposits  3400 – – 3400
currency exchange contracts  – 14 – 14
accounts receivable gross of impa irment provision  1269 – – 1269
total current financial assets  5132 14 – 5146
longterm deposits  1413 – – 1413
loans and receivables 21 – – 21
availableforsale financial assets  unlisted  – – 138 138
total noncurrent financial assets  1434 – 138 1572
total financial assets  6566 14 138 6718
financial liabilities 
 
2013
£m 
2012 
£m 
liabilities at amortised cost at 31 december 
accounts payable  70 59
accrued and other liabilities 563 468
finance lease liabilities  42 58
 675 585
liabilities at fair value through th e income statement at 31 december
embedded derivatives 70 25
total financial liabilities  745 610
 nonfinancial liabilities are excluded from the accrued and other liabilities balance as this analysis is required only for financial instruments 
  
017043armgovernancefinancials2013wordindd   97 10032014   2100 arm holdings plc
governance and financial report 2013
98
notes to the financial statements  
continued 
17 financial instruments continued 
a financial instruments by category continued 
valuation hierarchy 
as at 31 december 2013 the group’s financial instrument assets consisted of currency exchange contracts at fair value through the income 
statement level 2 of £51 million 2012 £14 million and afs financial assets lev el 3 of £12 million current and £139 million noncurrent 
2012 £138 million noncurrent  
as at 31 december 2013 the group’s financia l instrument liabilities consisted of embe dded derivatives level 2 of £70 million 2012 
£25 million the group had no level 1 financial instruments as at 31 december 2013 2012 £nil 
level 2 currency exchange contra cts comprise forward exch ange contracts and foreign currency op tions the fair value of the for ward 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 respec tive 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 cons ist of unlisted equity investment s and other current investments the estimated fair value of the unlisted equity 
investments approximates to cost less any permanent diminution in value based on management’s es timate of forecast profitabili ty and 
achievement of set objectives by the relevant entity except where independent valuation information is obtained eg through the occurrence 
of funding or other transactions in the relevant entitys equity instruments 
the current investment was initially held at the value of the ex pected licensing programme related to the mips patent portfolio  this was estimated 
by reference to the amounts that it was ex pected certain potential licensees would be prepared to pay for a licence at 31 dece mber 2013 the 
value of the current investment has been ba sed on the amount that is recoverable from an auction process which was held in janu ary 2014 
whilst it is conceivable that a key assumption in the level 3 ca lculation could change the directors believe that no reasonabl y foreseeable changes 
to key assumptions would result in a significant change in fair value 
maturity of financial liabilities 
the table below analyses the group’s financial liabilities into re levant 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 impa ct 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  70 – – –
accrued and other liabilities  528 09 26 –
finance lease liabilities 10 17 12 03
embedded derivatives  24 16 22 08
  
at 31 december 2012  
accounts payable  59 – – –
accrued and other liabilities  468 – – –
finance lease liabilities 08 21 22 07
embedded derivatives  08 07 06 04
during 2012 the group entered in to a threemonth fixedrate debt facility for 160 million £998 million to facilitate the c ontribution to acquire 
rights to mips technologies in c’s portfolio of patents see note 6 this faci lity was fully settled by 31 december 2012 the group had no 
borrowings during 2013 
  
 
 
17 financial instruments continued 
a financial instruments by category continued 
loans and receivables 
during 2010 the group invested £25 million in an interestfree charitable bond with future business this was recognised in lo ans and receivables 
at its initial fair value of £19 million measured using the e ffective interest method which resulted in a charge of £06 mil lion being recognised as 
interest payable and similar charges during 2010 in addition during 2013 the group in vested a further £07 million with futur e business the 
carrying value of the total loan amounted to £30 million at 31 december 2013  2012 £21 million with £01 million being rec ognised as interest 
receivable during 2013 2012 £01 million 
shortterm deposits the effective interest rate on shortte rm deposits outstanding at the year end was 185 2012 270 and these deposits 
have an average maturity of 178 days 2012 190 days 
longterm deposits the effective interest rate on longterm deposits outstandin g at the year end was 165 2012 332 and these deposits 
have an average maturity of 531 days 2012 489 days 
derivative financial instruments 
this table analyses the group’s derivative financial instruments into relevant maturity groupings based on the remaining period from the balance 
sheet date to the contractual maturity date the amounts disclo sed in the table are the contractual undiscounted cash flows am ounts 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 – heldfortrading at 31 december 2013  
outflow  980 130 230 90
inflow  £609 £80 £147 £60
foreign exchange options – heldf ortrading at 31 december 2013  
outflow maximum  410 293 262 –
inflow maximum  £268 £194 £176 –
foreign exchange forward contracts – heldfortrading at 31 december 2012  
outflow  510 80 120 –
inflow  £319 £50 £75 –
foreign exchange options – heldfor trading at 31 december 2012  
outflow maximum  389 373 135 –
inflow maximum  £253 £243 £86 –
fair value of currency exchange contracts 
the fair value of currency exchange contract s 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 £14 mi llion the resulting gains and losses on the mo vement of the 
fair value of currency exchange contracts are recognised in the income statement under general and administrative expenses amo unting to a gain 
of £34 million 2012 £83 million  
  
017043armgovernancefinancials2013wordindd   98 10032014   2100 governance financial report
99
notes to the financial statements  
continued 
17 financial instruments continued 
a financial instruments by category continued 
valuation hierarchy 
as at 31 december 2013 the group’s financial instrument assets consisted of currency exchange contracts at fair value through the income 
statement level 2 of £51 million 2012 £14 million and afs financial assets lev el 3 of £12 million current and £139 million noncurrent 
2012 £138 million noncurrent  
as at 31 december 2013 the group’s financia l instrument liabilities consisted of embe dded derivatives level 2 of £70 million 2012 
£25 million the group had no level 1 financial instruments as at 31 december 2013 2012 £nil 
level 2 currency exchange contra cts comprise forward exch ange contracts and foreign currency op tions the fair value of the for ward 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 respec tive 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 cons ist of unlisted equity investment s and other current investments the estimated fair value of the unlisted equity 
investments approximates to cost less any permanent diminution in value based on management’s es timate of forecast profitabili ty and 
achievement of set objectives by the relevant entity except where independent valuation information is obtained eg through the occurrence 
of funding or other transactions in the relevant entitys equity instruments 
the current investment was initially held at the value of the ex pected licensing programme related to the mips patent portfolio  this was estimated 
by reference to the amounts that it was ex pected certain potential licensees would be prepared to pay for a licence at 31 dece mber 2013 the 
value of the current investment has been ba sed on the amount that is recoverable from an auction process which was held in janu ary 2014 
whilst it is conceivable that a key assumption in the level 3 ca lculation could change the directors believe that no reasonabl y foreseeable changes 
to key assumptions would result in a significant change in fair value 
maturity of financial liabilities 
the table below analyses the group’s financial liabilities into re levant 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 impa ct 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  70 – – –
accrued and other liabilities  528 09 26 –
finance lease liabilities 10 17 12 03
embedded derivatives  24 16 22 08
  
at 31 december 2012  
accounts payable  59 – – –
accrued and other liabilities  468 – – –
finance lease liabilities 08 21 22 07
embedded derivatives  08 07 06 04
during 2012 the group entered in to a threemonth fixedrate debt facility for 160 million £998 million to facilitate the c ontribution to acquire 
rights to mips technologies in c’s portfolio of patents see note 6 this faci lity was fully settled by 31 december 2012 the group had no 
borrowings during 2013 
  
 
 
17 financial instruments continued 
a financial instruments by category continued 
loans and receivables 
during 2010 the group invested £25 million in an interestfree charitable bond with future business this was recognised in lo ans and receivables 
at its initial fair value of £19 million measured using the e ffective interest method which resulted in a charge of £06 mil lion being recognised as 
interest payable and similar charges during 2010 in addition during 2013 the group in vested a further £07 million with futur e business the 
carrying value of the total loan amounted to £30 million at 31 december 2013  2012 £21 million with £01 million being rec ognised as interest 
receivable during 2013 2012 £01 million 
shortterm deposits the effective interest rate on shortte rm deposits outstanding at the year end was 185 2012 270 and these deposits 
have an average maturity of 178 days 2012 190 days 
longterm deposits the effective interest rate on longterm deposits outstandin g at the year end was 165 2012 332 and these deposits 
have an average maturity of 531 days 2012 489 days 
derivative financial instruments 
this table analyses the group’s derivative financial instruments into relevant maturity groupings based on the remaining period from the balance 
sheet date to the contractual maturity date the amounts disclo sed in the table are the contractual undiscounted cash flows am ounts 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 – heldfortrading at 31 december 2013  
outflow  980 130 230 90
inflow  £609 £80 £147 £60
foreign exchange options – heldf ortrading at 31 december 2013  
outflow maximum  410 293 262 –
inflow maximum  £268 £194 £176 –
foreign exchange forward contracts – heldfortrading at 31 december 2012  
outflow  510 80 120 –
inflow  £319 £50 £75 –
foreign exchange options – heldfor trading at 31 december 2012  
outflow maximum  389 373 135 –
inflow maximum  £253 £243 £86 –
fair value of currency exchange contracts 
the fair value of currency exchange contract s 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 £14 mi llion the resulting gains and losses on the mo vement of the 
fair value of currency exchange contracts are recognised in the income statement under general and administrative expenses amo unting to a gain 
of £34 million 2012 £83 million  
  
017043armgovernancefinancials2013wordindd   99 10032014   2100 arm holdings plc
governance and financial report 2013
100
notes to the financial statements  
continued 
17 financial instruments 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 linebyline basis e ither a provision 
is made or the lack thereof is justified with re view by senior members of the group’s finance team 
 
2013 
£m 
2012 
£m 
trade debtors gross of impairment provision 
not yet due  761 801
under 90 days overdue  412 273
over 90 days overdue but not provided for  132 93
fully provided for  98 24
total  1403 1191
as shown above at 31 december 2013 trade debtors less than 90 da ys overdue amounted to £412 million of those outstanding at 
31 december 2013 £228 million had been collected by 3 march 20 14 and £153 million were owed by large established customers similarly 
debtors more than 90 days overdu e and not provided for amounted to £132 million of which £50 million had been collected by 3 march 2014 
and £42 million was owed by la rge established customers for the remainder discussions re garding repayment are ongoing and r epayment 
schedules have been agreed with the custom ers concerned these will be monitored on a quarterly basis in accordance with the co ntrol 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 group’s future 
results 
as shown above at 31 december 2013 trade debtors fully provided for amounted to £98 million 2012 £24 million of those p rovided for at 
31 december 2013 £40 million relates to tr ade debtors that are up to six months over due 2012 £06 million and £58 million relates to trade 
debtors that are over six months overdue 2012 £18 million 
at 31 december 2013 no individual  customer account ed for over 10 of account s receivable 2012 one  
credit risk 
financial instrument counterparties are subject to preapproval by the directors and such approval is limited to financial inst itutions with a moody’s 
rating of at least a2p1 a fitch rating of at least af1 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 group’s cash and cash equivalents short and long
term deposits were deposited with major clearing banks and buildin g societies in the uk and us in the form of money market depo sits and 
corporate bonds for varying periods of up to three years at 31 december 2013 98 2012 93 of the group’s cash and cash equ ivalents and 
short and longterm deposits were deposited with major cleari ng banks and building societies fulfilling these criteria the ma jority of the group’s 
cash currently falling outside of the counterparty criteria is he ld with building societies that were within criteria when the deposits were placed 
interest rate risk 
at 31 december 2013 the group had £7137 million 2012 £5236 mill ion of interestbearing assets at 31 december 2013 93  2012 91 
of interestbearing assets comprising cash and cash equivalent s short and longterm deposits loans and receivables and the group’s convertible 
loan notes are at fixed rates and are therefore exposed to fair value interest rate risk had interest rates been 1 100 basi s points lower 
throughout the year interest receivable would have reduced by approximately £58 million 2012 £53 million and profit after tax by £46 million 
2012 £40 million 
  
 
 
17 financial instruments continued 
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 sterlin g in addition 
the group utilises option instruments which have various provisions that depending on the spot rate at maturity give either t he 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 2 012 90 million for sterling a common scenario with options o f this type is that the 
spot price at expiry is such that neither the group nor the co unterparty chooses to exercise th e option at 31 december 2013 t he group had 
230 million 2012 190 million of account s receivable denominated in us dollars at that date and us doll ar cash and cash eq uivalents and 
shortterm deposits of 14 mill ion 2012 22 million thus the group’s us dollar assets exceeded its currency exchange contra cts and currency 
options at the year end management assesses the volume and timing of currency exchange contract s taking into consideration bot h the current 
and expected future level of us dollar assets based on the pred ictable nature of the group’s cash flows the group typically h as a greater value of 
currency exchange contracts outstanding than us dollar assets held as such after the balance sheet date the group has entere d into additional 
currency exchange contracts returning the group to its usua l position in this regard at the date of this report 
at 31 december 2013 if sterling had strength ened by 10 against foreign currencies with all other va riables held constant posttax profit for the 
year would have been £95 million lower 2 012 £121 million lower mainly as a resu lt of the mix of financial instruments at respective year ends  
18  share capital 
 
2013 
£m 
2012 
£m 
authorised 
2200000000 ordinary shares of 0 05 pence each 2012 2200000000  11 11
 
  2013  2012 
 
number of 
shares 
m 
value  
£m 
number of 
shares 
m 
value 
£m 
issued and fully paid  
at 1 january  13808 07 13513 07
allotted under employee incentive schemes 195 – 295 –
at 31 december  14003 07 13808 07
during 2013 the aggregate consideration received on issue of new share capital allotted under employee incentive schemes was £ 59 million 
2012 £56 million 
19  acquisitions 
there were two acquisitions made in 2013 sensinode oy acquired on 19 july 2013 for 117 million £77 mi llion and geomerics limited 
acquired on 12 december 2013 for £134 mill ion the group acquired the entire share ca pital of both entities which have been a ccounted for 
as acquisitions  
sensinode a company based in oulu finland is a provider of so ftware technology for the internet of things iot sensinode i s a pioneer in 
software for lowcost lowpower internetconnected devices and ha s been a key contributor to open standards for iot this acqu isition enables 
sensinode’s expertise and technology to be accessible to the ar m partnership and through the arm mbed project it will enable ra pid 
deployment of new and innovative iot applications 
geomerics a company based in cambridge united kingdom is a leader in lighting technology fo r the gaming and entertainment in dustries 
the acquisition expands arms position at the forefront of the visual computing and graphics industries additionally the agre ement 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 wo rkforce of both sensinode and geomerics including the founders and the 
management team the group paid a premium for both companies givi ng rise to goodwill all intangible assets were recognised at their fair values 
with the residual excess over net asse ts being recognised as goodwill  
017043armgovernancefinancials2013wordindd   100 10032014   2100 governance financial report
101
notes to the financial statements  
continued 
17 financial instruments 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 linebyline basis e ither a provision 
is made or the lack thereof is justified with re view by senior members of the group’s finance team 
 
2013 
£m 
2012 
£m 
trade debtors gross of impairment provision 
not yet due  761 801
under 90 days overdue  412 273
over 90 days overdue but not provided for  132 93
fully provided for  98 24
total  1403 1191
as shown above at 31 december 2013 trade debtors less than 90 da ys overdue amounted to £412 million of those outstanding at 
31 december 2013 £228 million had been collected by 3 march 20 14 and £153 million were owed by large established customers similarly 
debtors more than 90 days overdu e and not provided for amounted to £132 million of which £50 million had been collected by 3 march 2014 
and £42 million was owed by la rge established customers for the remainder discussions re garding repayment are ongoing and r epayment 
schedules have been agreed with the custom ers concerned these will be monitored on a quarterly basis in accordance with the co ntrol 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 group’s future 
results 
as shown above at 31 december 2013 trade debtors fully provided for amounted to £98 million 2012 £24 million of those p rovided for at 
31 december 2013 £40 million relates to tr ade debtors that are up to six months over due 2012 £06 million and £58 million relates to trade 
debtors that are over six months overdue 2012 £18 million 
at 31 december 2013 no individual  customer account ed for over 10 of account s receivable 2012 one  
credit risk 
financial instrument counterparties are subject to preapproval by the directors and such approval is limited to financial inst itutions with a moody’s 
rating of at least a2p1 a fitch rating of at least af1 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 group’s cash and cash equivalents short and long
term deposits were deposited with major clearing banks and buildin g societies in the uk and us in the form of money market depo sits and 
corporate bonds for varying periods of up to three years at 31 december 2013 98 2012 93 of the group’s cash and cash equ ivalents and 
short and longterm deposits were deposited with major cleari ng banks and building societies fulfilling these criteria the ma jority of the group’s 
cash currently falling outside of the counterparty criteria is he ld with building societies that were within criteria when the deposits were placed 
interest rate risk 
at 31 december 2013 the group had £7137 million 2012 £5236 mill ion of interestbearing assets at 31 december 2013 93  2012 91 
of interestbearing assets comprising cash and cash equivalent s short and longterm deposits loans and receivables and the group’s convertible 
loan notes are at fixed rates and are therefore exposed to fair value interest rate risk had interest rates been 1 100 basi s points lower 
throughout the year interest receivable would have reduced by approximately £58 million 2012 £53 million and profit after tax by £46 million 
2012 £40 million 
  
 
 
17 financial instruments continued 
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 sterlin g in addition 
the group utilises option instruments which have various provisions that depending on the spot rate at maturity give either t he 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 2 012 90 million for sterling a common scenario with options o f this type is that the 
spot price at expiry is such that neither the group nor the co unterparty chooses to exercise th e option at 31 december 2013 t he group had 
230 million 2012 190 million of account s receivable denominated in us dollars at that date and us doll ar cash and cash eq uivalents and 
shortterm deposits of 14 mill ion 2012 22 million thus the group’s us dollar assets exceeded its currency exchange contra cts and currency 
options at the year end management assesses the volume and timing of currency exchange contract s taking into consideration bot h the current 
and expected future level of us dollar assets based on the pred ictable nature of the group’s cash flows the group typically h as a greater value of 
currency exchange contracts outstanding than us dollar assets held as such after the balance sheet date the group has entere d into additional 
currency exchange contracts returning the group to its usua l position in this regard at the date of this report 
at 31 december 2013 if sterling had strength ened by 10 against foreign currencies with all other va riables held constant posttax profit for the 
year would have been £95 million lower 2 012 £121 million lower mainly as a resu lt of the mix of financial instruments at respective year ends  
18  share capital 
 
2013 
£m 
2012 
£m 
authorised 
2200000000 ordinary shares of 0 05 pence each 2012 2200000000  11 11
 
  2013  2012 
 
number of 
shares 
m 
value  
£m 
number of 
shares 
m 
value 
£m 
issued and fully paid  
at 1 january  13808 07 13513 07
allotted under employee incentive schemes 195 – 295 –
at 31 december  14003 07 13808 07
during 2013 the aggregate consideration received on issue of new share capital allotted under employee incentive schemes was £ 59 million 
2012 £56 million 
19  acquisitions 
there were two acquisitions made in 2013 sensinode oy acquired on 19 july 2013 for 117 million £77 million and geomerics limited 
acquired on 12 december 2013 for £134 mill ion the group acquired the entire share ca pital of both entities which have been a ccounted for 
as acquisitions  
sensinode a company based in oulu finland is a provider of so ftware technology for the internet of things iot sensinode i s a pioneer in 
software for lowcost lowpower internetconnected devices and ha s been a key contributor to open standards for iot this acqu isition enables 
sensinode’s expertise and technology to be accessible to the ar m partnership and through the arm mbed project it will enable ra pid 
deployment of new and innovative iot applications 
geomerics a company based in cambridge united kingdom is a leader in lighting technology fo r the gaming and entertainment in dustries 
the acquisition expands arms position at the forefront of the visual computing and graphics industries additionally the agre ement 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 wo rkforce of both sensinode and geomerics including the founders and the 
management team the group paid a premium for both companies givi ng rise to goodwill all intangible assets were recognised at their fair values 
with the residual excess over net asse ts being recognised as goodwill  
017043armgovernancefinancials2013wordindd   101 10032014   2100 arm holdings plc
governance and financial report 2013
102
notes to the financial statements  
continued 
19  acquisitions continued 
from 19 july 2013 to 31 december 2013 the ac quisition of sensinode contributed £01 mi llion in revenue and incurred a loss of £nil if sensinode 
had been consolidated from 1 january 2013 th e consolidated income statement would have included £02 million of revenue and £0 9 million of 
pretax loss 
from 12 december 2013 to 31 december 2013 the acquisition of geomer ics contributed £nil in revenue and incurred a loss of £01 million 
if geomerics had been consolidated from 1 january 2013 the consol idated income statement would ha ve included £07 million of r evenue and 
£11 million of pretax 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 03 05 02
intangible assets  28 43 50
accrued and other liabilities 05 08 08
loans payable 11 16 –
deferred tax liabilities net 02 03 10
net assets acquired 13 21 34
goodwill 64 96 100
consideration  77 117 134
the consideration for both acquisitions was paid in cash all tr ansaction expenses incurred by the group have been charged to t he income 
statement within general and administrative expenses 
other 
during 2013 the group made a payment of £20 million 2012 £22 million in respect of timebased and performance bonuses due as a result of 
the acquisition of obsidian software inc in 2011 the group also made paym ents of £06 million 2012 £08 million in respect of timebased and 
performance bonuses due as a result of the acquisition of prolific inc in 2011 
20  sharebased payments 
since 2006 the company has issued rsus to employees which are actu al share awards on vesting rather than options to buy share s at a fixed 
exercise price  
the main rsu awards to employees in all jurisdictions other than france vest 25 on each annive rsary over four years rsu awards to our 
french employees vest 50 after two years and th en a further 25 after three and four years 
additionally the company operates a dab pl an 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 thes e shares will be defe rred for three 
years and then a matching award will be made depending on the achievement of an ep s performance condition over that time this scheme will 
be replaced after the february 2014 grant and replaced with a cashonly bonus for details of th e new scheme see the remunerat ion report on 
page 41 
the company also operates the ltip also for directors and select ed senior management whereby sh are awards are made and vest d epending 
on the company’s tsr performance compared to two comparator groups over the threeyear performance period grants were made for the 
last time under this scheme in february 2013 and it will be replace by a new ltip fo r 2014 grants onwards for details of the n ew 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 relat ed to the 
value of savings made by the employee the pe riod of savings is three or five years the option price for gr ants 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 sixmonth period once the sa vings have been 
completed the company also operates a savingsrelated option sc heme for employees in the us india japan south korea and tai wan 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 m onths with the 
option price being at 85 of the lower of the market share price at the beginning and end of the scheme 
 
 
 
20  sharebased payments continued 
the group has in the past issued share options under several addi tional schemes whereby shares in the company can be granted t o employees 
and directors options are granted with a fixed exercise price equa l to the market price of the sh ares under option at the date of grant these 
schemes are the uk inland revenue executive approved share option plan the “executive scheme” the unap proved scheme the 
“unapproved scheme” the french scheme and various schemes that the company assumed on the acquisition of artisan in 2004 sha res 
options in these schemes are no longer granted although the co mpany reserves the right to award options to employees going for ward shares 
relating to these schemes have all vested in prior years and therefore there is no sh arebased payment charge associated with t hem for 2012 
or 2013 
as disclosed in note 4 staff expenses ar ising from these sharebased compensation sc hemes of £592 million 2012 £371 millio n were charged 
to the income statement in the year this is in line with the group’s 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 blackscholes option pricing model except for t he 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  £925 £7725 £996 £994 £5905 £506 £574
exercise price  £4964 £79616 £56525 £8449 £442 £39616 £4876
number of employees  391 350 151 605 373 490 372
shares under option  330676 210605 35386 228335 333464 720922 306497
vesting period years  – 35 – – – 35 –
expected volatility  – 3740 – – – 3843 –
expected life years  – 35 – – – 35 –
riskfree rate  – 05 – – – 05 –
dividend yield  – 058 – – – 069 –
fair value per option  £4286 £1828£2510 £43075 £1491 £1485 £1728£2175 £0864
 
  
017043armgovernancefinancials2013wordindd   102 10032014   2100 governance financial report
103
notes to the financial statements  
continued 
19  acquisitions continued 
from 19 july 2013 to 31 december 2013 the ac quisition of sensinode contributed £01 mi llion in revenue and incurred a loss of £nil if sensinode 
had been consolidated from 1 january 2013 th e consolidated income statement would have included £02 million of revenue and £0 9 million of 
pretax loss 
from 12 december 2013 to 31 december 2013 the acquisition of geomer ics contributed £nil in revenue and incurred a loss of £01 million 
if geomerics had been consolidated from 1 january 2013 the consol idated income statement would ha ve included £07 million of r evenue and 
£11 million of pretax 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 03 05 02
intangible assets  28 43 50
accrued and other liabilities 05 08 08
loans payable 11 16 –
deferred tax liabilities net 02 03 10
net assets acquired 13 21 34
goodwill 64 96 100
consideration  77 117 134
the consideration for both acquisitions was paid in cash all tr ansaction expenses incurred by the group have been charged to t he income 
statement within general and administrative expenses 
other 
during 2013 the group made a payment of £20 million 2012 £22 million in respect of timebased and performance bonuses due as a result of 
the acquisition of obsidian software inc in 2011 the group also made paym ents of £06 million 2012 £08 million in respect of timebased and 
performance bonuses due as a result of the acquisition of prolific inc in 2011 
20  sharebased payments 
since 2006 the company has issued rsus to employees which are actu al share awards on vesting rather than options to buy share s at a fixed 
exercise price  
the main rsu awards to employees in all jurisdictions other than france vest 25 on each annive rsary over four years rsu awards to our 
french employees vest 50 after two years and th en a further 25 after three and four years 
additionally the company operates a dab pl an 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 thes e shares will be defe rred for three 
years and then a matching award will be made depending on the achievement of an ep s performance condition over that time this scheme will 
be replaced after the february 2014 grant and replaced with a cashonly bonus for details of th e new scheme see the remunerat ion report on 
page 41 
the company also operates the ltip also for directors and select ed senior management whereby sh are awards are made and vest d epending 
on the company’s tsr performance compared to two comparator groups over the threeyear performance period grants were made for the 
last time under this scheme in february 2013 and it will be replace by a new ltip fo r 2014 grants onwards for details of the n ew 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 relat ed to the 
value of savings made by the employee the pe riod of savings is three or five years the option price for gr ants 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 sixmonth period once the sa vings have been 
completed the company also operates a savingsrelated option sc heme for employees in the us india japan south korea and tai wan 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 m onths with the 
option price being at 85 of the lower of the market share price at the beginning and end of the scheme 
 
 
 
20  sharebased payments continued 
the group has in the past issued share options under several addi tional schemes whereby shares in the company can be granted t o employees 
and directors options are granted with a fixed exercise price equa l to the market price of the sh ares under option at the date of grant these 
schemes are the uk inland revenue executive approved share option plan the “executi ve scheme” the unapproved scheme the 
“unapproved scheme” the french scheme and various schemes that the company assumed on the acquisition of artisan in 2004 sha res 
options in these schemes are no longer granted although the co mpany reserves the right to award options to employees going for ward shares 
relating to these schemes have all vested in prior years and therefore there is no sh arebased payment charge associated with t hem for 2012 
or 2013 
as disclosed in note 4 staff expenses ar ising from these sharebased compensation sc hemes of £592 million 2012 £371 millio n were charged 
to the income statement in the year this is in line with the group’s 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 blackscholes option pricing model except for t he 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  £925 £7725 £996 £994 £5905 £506 £574
exercise price  £4964 £79616 £56525 £8449 £442 £39616 £4876
number of employees  391 350 151 605 373 490 372
shares under option  330676 210605 35386 228335 333464 720922 306497
vesting period years  – 35 – – – 35 –
expected volatility  – 3740 – – – 3843 –
expected life years  – 35 – – – 35 –
riskfree rate  – 05 – – – 05 –
dividend yield  – 058 – – – 069 –
fair value per option  £4286 £1828£2510 £43075 £1491 £1485 £1728£2175 £0864
 
  
017043armgovernancefinancials2013wordindd   103 10032014   2100 arm holdings plc
governance and financial report 2013
104
notes to the financial statements  
continued 
20  sharebased payments continued 
the fair value of rsus ltip and dab awards granted was estimate d on the date of grant using th e blackscholes option pricing m odel as all are 
share awards with no exercise price all awards have been deemed to have an exerci se price of £00000001 in the blackscholes m odel 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  £9245 £9245 £9245 £9245 £1046 £1046
number of employees  53 2207 93 55 102 3
shares awarded  466174 7686539 286900 742469 258224 6645
vesting period years  3 14 24 3 14 24
expected volatility  37 3037 3537 37 3038 3438
expected life years  3 14 24 3 14 24
riskfree rate  05 05 05 05 05 05
dividend yield  049 049 049 049 043 043
fair value per share £9111 £9067£9200 £9067£9155 £9111 £10282£10415 £10282£1037
   
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   £889 £889 £889 £9495 £9495
number of employees   134 4 1 252 9
shares awarded   318934 6347 11280 494746 16478
vesting period years   14 24 3 14 24
expected volatility   3136 3236 36 3136 3136
expected life years   14 24 3 14 24
riskfree rate   05 05 05 05 05
dividend yield   055 055 055 052 052
fair value per share   £869£8836 £869£8787 £8738 £930£9446 £930£9397
 
  
 
 
20  sharebased payments continued 
grant date  8 feb 2012 8 feb 2012 8 feb 2012 8 feb 2012 8 may 2012
scheme  dab rsu french rsu  ltip  rsu
share price at grant date  £568 £568 £568 £568 £507
number of employees  50 1918 91 54 108
shares awarded  850741 3012604 128067 1102625 159720
vesting period years  – 14 24 3 14
expected volatility  39 3445 3945 39 3742
expected life years  3 14 24 3 14
riskfree rate  05 05 05 05 05
dividend yield  061 061 061 061 069
fair value per share £5577 £5542£5671 £5542 £5611 £5577 £4933£5035
   
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
share price at grant date  £507 £574 £574 £7125 £7125
number of employees  4 126 1 159 3
shares awarded  4230 213201 960 275270 2490
vesting period years  24 14 24 14 24
expected volatility  3842 3541 3841 3140 3840
expected life years  24 14 24 14 24
riskfree rate  05 05 05 05 05
dividend yield  069 066 066 053 053
fair value per share  £4933£5001 £5592£5703 £5592£5665 £6976£7087 £6976£705
the expected volatility was primarily based upon historical volatility adjusted for past onetime events that are not expected to reoccur 
the expected life is the expe cted period to exercise 
a reconciliation of option and share award movements over the ye ar 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 co rresponding weighted average e xercise prices 
  2013   2012  
 options number 
weighted average 
exercise price 
rsusltipdab 
number options number 
weighted average 
exercise price 
rsusltipdab 
number 
outstanding at 1 january  3738922 £1994 23255834 6581438 £1221 35215062
granted  805002 £6765 14972806 1360883 £4280 14448979
forfeited  57969 £4257 974255 234196 £3570 914068
lapsed  47313 £0575 – 10589 £0910 –
exercised  2468723 £2414 17026729 3958614 £1404 25494139
outstanding at 31 december  1969919 £3385 20227656 3738922 £1994 23255834
exercisable at 31 december  392451 £0723 – 985557 £0685 –
  
017043armgovernancefinancials2013wordindd   104 10032014   2100 governance financial report
105
notes to the financial statements  
continued 
20  sharebased payments continued 
the fair value of rsus ltip and dab awards granted was estimate d on the date of grant using th e blackscholes option pricing m odel as all are 
share awards with no exercise price all awards have been deemed to have an exerci se price of £00000001 in the blackscholes m odel 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  £9245 £9245 £9245 £9245 £1046 £1046
number of employees  53 2207 93 55 102 3
shares awarded  466174 7686539 286900 742469 258224 6645
vesting period years  3 14 24 3 14 24
expected volatility  37 3037 3537 37 3038 3438
expected life years  3 14 24 3 14 24
riskfree rate  05 05 05 05 05 05
dividend yield  049 049 049 049 043 043
fair value per share £9111 £9067£9200 £9067£9155 £9111 £10282£10415 £10282£1037
   
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   £889 £889 £889 £9495 £9495
number of employees   134 4 1 252 9
shares awarded   318934 6347 11280 494746 16478
vesting period years   14 24 3 14 24
expected volatility   3136 3236 36 3136 3136
expected life years   14 24 3 14 24
riskfree rate   05 05 05 05 05
dividend yield   055 055 055 052 052
fair value per share   £869£8836 £869£8787 £8738 £930£9446 £930£9397
 
  
 
 
20  sharebased payments continued 
grant date  8 feb 2012 8 feb 2012 8 feb 2012 8 feb 2012 8 may 2012
scheme  dab rsu french rsu  ltip  rsu
share price at grant date  £568 £568 £568 £568 £507
number of employees  50 1918 91 54 108
shares awarded  850741 3012604 128067 1102625 159720
vesting period years  – 14 24 3 14
expected volatility  39 3445 3945 39 3742
expected life years  3 14 24 3 14
riskfree rate  05 05 05 05 05
dividend yield  061 061 061 061 069
fair value per share £5577 £5542£5671 £5542 £5611 £5577 £4933£5035
   
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
share price at grant date  £507 £574 £574 £7125 £7125
number of employees  4 126 1 159 3
shares awarded  4230 213201 960 275270 2490
vesting period years  24 14 24 14 24
expected volatility  3842 3541 3841 3140 3840
expected life years  24 14 24 14 24
riskfree rate  05 05 05 05 05
dividend yield  069 066 066 053 053
fair value per share  £4933£5001 £5592£5703 £5592£5665 £6976£7087 £6976£705
the expected volatility was primarily based upon historical volatility adjusted for past onetime events that are not expected to reoccur 
the expected life is the expe cted period to exercise 
a reconciliation of option and share award movements over the ye ar 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 co rresponding weighted average e xercise prices 
  2013   2012  
 options number 
weighted average 
exercise price 
rsusltipdab 
number options number 
weighted average 
exercise price 
rsusltipdab 
number 
outstanding at 1 january  3738922 £1994 23255834 6581438 £1221 35215062
granted  805002 £6765 14972806 1360883 £4280 14448979
forfeited  57969 £4257 974255 234196 £3570 914068
lapsed  47313 £0575 – 10589 £0910 –
exercised  2468723 £2414 17026729 3958614 £1404 25494139
outstanding at 31 december  1969919 £3385 20227656 3738922 £1994 23255834
exercisable at 31 december  392451 £0723 – 985557 £0685 –
  
017043armgovernancefinancials2013wordindd   105 10032014   2100 arm holdings plc
governance and financial report 2013
106
notes to the financial statements  
continued 
20  sharebased payments continued 
the weighted average share price at the date of exercise or vest of the above share options and awards was £929 2012 £572 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  
07 – 0854 571846 076 049 078
101 – 1055  19166 104 052 105
125  1360 125 004 008
1948 – 796 1377547 451 200 225
total  1969919 338 155 181
  
outstanding rsultipdab awards  
000 rsus  16792567 – 120 120
000 ltip  2054203 – 112 112
000 dab  1380886 – 106 106
total  20227656 – 118 118
2012 
exercise price £ 
number 
outstanding 
weighted  
average  
exercise price  
£ 
weighted 
average 
remaining life 
expected
years 
weighted 
average 
remaining life 
contractual
years 
outstanding options  
047 – 0854 1514873 072 087 137
1005 – 1055  46114 104 103 205
125  32813 125 054 108
1325 – 4464 2145122 293 177 197
total  3738922 199 138 172
  
outstanding rsultipdab awards  
000 rsus  16750069 – 093 093
000 ltip  4189314 – 082 082
000 dab  2316451 – 106 106
total  23255834 – 092 092
21  capital and other financial commitments 
 
2013 
£m 
2012 
£m 
contracts placed for future capital expenditure not provided for in the financial statements 98 06
included in the amount for 2013 is £91 mi llion of equipment relating to the expansio n of the us highperformance computing clu ster 
  
 
 
22  operating lease commitmen ts – minimum lease payments 
at 31 december 2013 the group had commitments under noncancellable 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  85 183 268 68 204 272
later than one year and less than five years  231 53 284 169 215 384
after five years  90 – 90 67 – 67
at 31 december  406 236 642 304 419 723
the group leases office buildings and eda tools software under noncancellable operating lease agreements the remaining lease terms are 
between two and ten years and the majority of lease agreements are rene wable at the end of the leas e 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 licen see 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 indemni fication to its 
licensees the obligation for the group to indemnify its licensees is subject to certain provisos and is usually contingent upo n a third party bringing 
an action against the licensee alleging that the technology lice nsed by the group to the licensee infringes such third party’s ip rights the 
indemnification obligations typically survive any terminat ion of the licence and will continue in perpetuity 
the group does not provide for any such inde mnities unless it has received notification from the other party that they are like ly to invoke the 
indemnity a provision is made if both of the following conditio ns 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 o f the liability can be 
reasonably estimated any such provision is based upon the direct ors’ 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 resol ution of such 
proceedings will result in a material liability for the group currently there are legal proceedin gs against some of the group ’s licensees in which it 
is asserted that certain of the group’s technology infringes th irdparty patents but in each of those proceedings the group ei ther presently has no 
obligation to indemnify because certain preconditions to indemnif ication have not been satisfied by such licensees or to the extent that there is 
any present obligation to indemnify the grou p does not believe that it is probable th at the resolution of such proceedings wil l result in a material 
liability for the group if preconditions to indemnification are satisfied then an indemnification obligation may arise which c ould result in a material 
liability for the group  
24  related party transactions 
during the year ended 31 december 2013 the group incurred subscrip tion costs of £70 million from linaro limited an associated company 
of the group representing arm’s committed aggregate contributions to linaro for a period of two years in respect of the subsc ription fees 
the group was invoiced £43 million during the year to 31 december 2013 2012 £42 million as at 31 december 2013 £10 mill ion 2012 
£10 million was owing to linaro 
in addition the group provided consulting and other services to linaro amounting to £16 million 2012 £17 million all fees have been charged 
in accordance with the terms of the agreement as at 31 december 2013 £03 mill ion 2012 £10 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 transact ions during 2013 which require disclosure 
25  postbalance sheet events 
after the year end the directors proposed payment of a final di vidend in respect of 2013 of 36 pence per share subject to sh areholder 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 bee n recognised as a 
distribution during the year ended 31 december 2013 
  
017043armgovernancefinancials2013wordindd   106 10032014   2100 governance financial report
107
notes to the financial statements  
continued 
20  sharebased payments continued 
the weighted average share price at the date of exercise or vest of the above share options and awards was £929 2012 £572 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  
07 – 0854 571846 076 049 078
101 – 1055  19166 104 052 105
125  1360 125 004 008
1948 – 796 1377547 451 200 225
total  1969919 338 155 181
  
outstanding rsultipdab awards  
000 rsus  16792567 – 120 120
000 ltip  2054203 – 112 112
000 dab  1380886 – 106 106
total  20227656 – 118 118
2012 
exercise price £ 
number 
outstanding 
weighted  
average  
exercise price  
£ 
weighted 
average 
remaining life 
expected
years 
weighted 
average 
remaining life 
contractual
years 
outstanding options  
047 – 0854 1514873 072 087 137
1005 – 1055  46114 104 103 205
125  32813 125 054 108
1325 – 4464 2145122 293 177 197
total  3738922 199 138 172
  
outstanding rsultipdab awards  
000 rsus  16750069 – 093 093
000 ltip  4189314 – 082 082
000 dab  2316451 – 106 106
total  23255834 – 092 092
21  capital and other financial commitments 
 
2013 
£m 
2012 
£m 
contracts placed for future capital expenditure not provided for in the financial statements 98 06
included in the amount for 2013 is £91 mi llion of equipment relating to the expansio n of the us highperformance computing clu ster 
  
 
 
22  operating lease commitmen ts – minimum lease payments 
at 31 december 2013 the group had commitments under noncancellable 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  85 183 268 68 204 272
later than one year and less than five years  231 53 284 169 215 384
after five years  90 – 90 67 – 67
at 31 december  406 236 642 304 419 723
the group leases office buildings and eda tools software under noncancellable operating lease agreements the remaining lease terms are 
between two and ten years and the majority of lease agreements are rene wable at the end of the leas e 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 licen see 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 indemni fication to its 
licensees the obligation for the group to indemnify its licensees is subject to certain provisos and is usually contingent upo n a third party bringing 
an action against the licensee alleging that the technology lice nsed by the group to the licensee infringes such third party’s ip rights the 
indemnification obligations typically survive any terminat ion of the licence and will continue in perpetuity 
the group does not provide for any such inde mnities unless it has received notification from the other party that they are like ly to invoke the 
indemnity a provision is made if both of the following conditio ns 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 o f the liability can be 
reasonably estimated any such provision is based upon the direct ors’ 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 resol ution of such 
proceedings will result in a material liability for the group currently there are legal proceedin gs against some of the group ’s licensees in which it 
is asserted that certain of the group’s technology infringes th irdparty patents but in each of those proceedings the group ei ther presently has no 
obligation to indemnify because certain preconditions to indemnif ication have not been satisfied by such licensees or to the extent that there is 
any present obligation to indemnify the grou p does not believe that it is probable th at the resolution of such proceedings wil l result in a material 
liability for the group if preconditions to indemnification are satisfied then an indemnification obligation may arise which c ould result in a material 
liability for the group  
24  related party transactions 
during the year ended 31 december 2013 the group incurred subscrip tion costs of £70 million from linaro limited an associated company 
of the group representing arm’s committed aggregate contributions to linaro for a period of two years in respect of the subsc ription fees 
the group was invoiced £43 million during the year to 31 december 2013 2012 £42 mill ion as at 31 december 2013 £10 mill ion 2012 
£10 million was owing to linaro 
in addition the group provided consulting and other services to linaro amounting to £16 million 2012 £17 million all fees have been charged 
in accordance with the terms of the agreement as at 31 december 2013 £03 mill ion 2012 £10 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 transact ions during 2013 which require disclosure 
25  postbalance sheet events 
after the year end the directors proposed payment of a final di vidend in respect of 2013 of 36 pence per share subject to sh areholder 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 bee n recognised as a 
distribution during the year ended 31 december 2013 
  
017043armgovernancefinancials2013wordindd   107 10032014   2100 arm holdings plc
governance and financial report 2013
108
notes to the financial statements  
continued 
26  principal subsidiaries as sociates 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 group’s annual return all investment s 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 riscbased 
microprocessors and graphics ip  
100
arm inc  us  marketing research and development of riscbased 
microprocessors and physical ip  
100 
arm france sas  france  marketing research and development of riscbased 
microprocessors and physical ip  
100 
arm norway as  norway  research and development of graphics ip  100 
arm embedded technologies pvt limited india  marketing research and de velopment of riscbased 
microprocessors and physical ip  
100 
arm consulting shanghai co limited pr china  marketing research and develo pment 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 ar m 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 notfo rprofit engineering company created to foster innovation in t he linux 
community linaro a company incorporated in the uk is a compan y limited by guarantee and as su ch has no shareholders the gro up controls 
only 25 of the board and therefore consider s 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 notforprofit  
joint venture 
in 2012 the group invested £75 million 120 million in a jo int 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 device s during 2013 the group invested a further £37 million €44 mi llion into the joi nt venture 
maintaining the 40 shareholding  
investment in joint venture 
2013 
£m 
2012
£m 
at 1 january 68 –
investment 37 75
share of results for the period  40 07
at 31 december 65 68
the group’s share of the results of the joint venture an d its aggregated assets and liabilities are as follows 
trustonic limited 
current assets
£m 
noncurrent 
assets
£m 
current 
liabilities
£m 
income  
£m 
expenses  
£m 
tax 
£m 
loss for the 
year
£m 
at 31 december 2013 39 65 39 25 67 02 40
at 31 december 2012 37 46 15 – 07 – 07
the group’s share of joint venture capita l commitments amount to £0 1 million at 31 december 2013 2012 £06 million 
company balance sheetuk gaap 
 
at 31 december note 
2013
£m 
2012 
£m 
fixed assets  
investments  4 6533 6161
current assets  
debtors  5 15 08
cash at bank and in hand   07 09
  22 17
creditors amounts falling due within one year  6 460 30
net current liabilities   438 13
total assets less current liabilities  6095 6148
net assets   6095 6148
capital and reserves  
calledup share capital  7 07 07
share premium account 8 181 122
share option reserve  8 614 614
profit and loss reserve  8 5293 5405
total shareholders’ funds  9 6095 6148
the financial statements on pages 109 to 114 were approved by the board of directors on 5 march 2014 and were signed on its beh alf by 
 
 
 
simon segars      tim score 
chief executive officer     chief financial officer 
 
017043armgovernancefinancials2013wordindd   108 10032014   2100 governance financial report
109
notes to the financial statements  
continued 
26  principal subsidiaries as sociates 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 group’s annual return all investment s 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 riscbased 
microprocessors and graphics ip  
100
arm inc  us  marketing research and development of riscbased 
microprocessors and physical ip  
100 
arm france sas  france  marketing research and development of riscbased 
microprocessors and physical ip  
100 
arm norway as  norway  research and development of graphics ip  100 
arm embedded technologies pvt limited india  marketing research and de velopment of riscbased 
microprocessors and physical ip  
100 
arm consulting shanghai co limited pr china  marketing research and develo pment 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 ar m 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 notfo rprofit engineering company created to foster innovation in t he linux 
community linaro a company incorporated in the uk is a compan y limited by guarantee and as su ch has no shareholders the gro up controls 
only 25 of the board and therefore consider s 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 notforprofit  
joint venture 
in 2012 the group invested £75 million 120 million in a jo int 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 device s during 2013 the group invested a further £37 million €44 mi llion into the joi nt venture 
maintaining the 40 shareholding  
investment in joint venture 
2013 
£m 
2012
£m 
at 1 january 68 –
investment 37 75
share of results for the period  40 07
at 31 december 65 68
the group’s share of the results of the joint venture an d its aggregated assets and liabilities are as follows 
trustonic limited 
current assets
£m 
noncurrent 
assets
£m 
current 
liabilities
£m 
income  
£m 
expenses  
£m 
tax 
£m 
loss for the 
year
£m 
at 31 december 2013 39 65 39 25 67 02 40
at 31 december 2012 37 46 15 – 07 – 07
the group’s share of joint venture capita l commitments amount to £0 1 million at 31 december 2013 2012 £06 million 
company balance sheetuk gaap 
 
at 31 december note 
2013
£m 
2012 
£m 
fixed assets  
investments  4 6533 6161
current assets  
debtors  5 15 08
cash at bank and in hand   07 09
  22 17
creditors amounts falling due within one year  6 460 30
net current liabilities   438 13
total assets less current liabilities  6095 6148
net assets   6095 6148
capital and reserves  
calledup share capital  7 07 07
share premium account 8 181 122
share option reserve  8 614 614
profit and loss reserve  8 5293 5405
total shareholders’ funds  9 6095 6148
the financial statements on pages 109 to 114 were approved by the board of directors on 5 march 2014 and were signed on its beh alf by 
 
 
 
simon segars      tim score 
chief executive officer     chief financial officer 
 
017043armgovernancefinancials2013wordindd   109 10032014   2100 arm holdings plc
governance and financial report 2013
110
notes to the financial statementsuk gaap 
1 principal accounting policies 
the financial statements have been prepared in accordance with the companies act 2006 and applicable accounting standards in th e uk a 
summary of the more important accounting policies which have been consistently applied and review ed 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 satisfie s the provisions of section 612 
of the companies act 2006 for merger relief the investment is stated at the nominal va lue of shares issued plus the fair value of any other 
consideration 
cash flow statement the company has not presented a separate cash flow statemen t the cash flows for the company are included within the 
consolidated financial statements 
foreign currency transactions denominated in foreign currenci es have been translated into sterling at actual rates of exchange at the date of t he 
transaction monetary assets and liabilities denominated in fore ign currencies have been translat ed at the closing rates of exc hange 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 en acted 
by the balance sheet date 
financial instruments the company does not have any financia l instruments other than intercompany creditors and debtors and cash due to 
the shortterm nature of these balances the company considers th e fair value of these items to equal the carrying value becau se the company is 
included in the consolidated fi nancial 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 financ ial statements no disclosure has been presented in these financial statements 
share schemes the company issues equitysettled share based payments including an ltip to cert ain employees of subsidiary undertakings 
in accordance with frs 20 equitysettled sharebased payments are measured at fair value at the date of grant fair value is m easured by use of 
the blackscholes pricing model the fair value determined at th e grant date of the equitysettled sharebased payments is expe nsed in the 
accounts of the subsidiary companies on a straightline basis over the vesting period based on the company’s estimate of the n umber 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 anno uncement of the scheme the uk saye schemes are 
approved by the inland revenue whic h stipulates that the saving period must be at least 36 months 
the company has taken advantage of the exem ption available and has applied the provis ions of frs 20 only to those options gran ted after 
7 november 2002 and which were outstanding at 31 december 2004 th e company does not have any employees and as such in accorda nce 
with uitf 44 all sharebased payments have been recorded as capital contributions to all subsidiaries the company recharges t he relevant 
amount of the sharebased payments to its us subsidiary consequently the amount recharged is offset against the carrying valu e of its 
investments 
share capital ordinary shares issued by the company are recorded at the proceeds received ne t of direct issue costs 
dividends a liability is recorded for a dividend when the dividend is approved by the company’s shareh olders interim dividends are reco gnised 
as a distribution when paid 
deferred tax deferred tax is recognised in respect of all timing differences that have originated but not re versed at the balance sheet dat e  
deferred tax is measured at the average ra tes that are expected to apply in the period in which the timing difference is expect ed to reverse 
based on tax rates and laws that have been enacted or substantia lly 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 company’s profit and loss accoun t has not been included in these financial 
statements the parent company’s loss after taxation including dividends receivable and before dividends payable was £15 mill ion 2012 
£19 million the company has no employees all three executive directors as at 31 december 2013 have contracts of service w ith arm 
limited a subsidiary of the company the emoluments of two of these directors are paid by arm limited and one of the director s is paid 
by arm inc the details of which are disclo sed in the remuneration report within this annual report audit fees are disclosed i n note 5 to the 
consolidated financial statements on page 84 
3 dividends paid and proposed 
 
2013
£m 
2012
£m 
final dividend paid of 283 pence per ordinary share in respect of 2012 2012 209 pence in respect of 2011  395 288
interim dividend paid of 210 pence 2012 167 pence per ordinary share  294 230
 689 518
in addition the directors are proposing a final dividend in resp ect of the financial year ended 31 december 2013 of 36 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 £6533 million at 31 december 2013 and 
£6161 million at 31 december 2012 the company took advantage of merger relief in 2004 and did not record the premium on the i ssue of 
shares for the acquisition of artisan compon ents inc now arm inc and thus did not record the premium within the value of t he investment 
in the company balance sheet at that time 
 
investments in 
subsidiary 
undertakings 
£m 
cost and net book value 
at 1 january 2013  6161
additions 01
capital contributions arising from sharebased payments 592
recharge to subsidiary of sharebased payments 221
at 31 december 2013  6533
where options and awards over the company’s shares have been issued to the employees of subsidiary undertakings the fair value of employee 
services performed equal to the sharebase d payments has been recorded as a capita l contribution the company recharges the r elevant 
amount of the sharebased payments to its us subsidiary consequently the amount recharged is offset against the carrying valu e 
of its investments 
the directors believe that th e 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 ordina ry £1 shares  less than 001
arm ip limited england and wales ordinary £1 shares 100
arm finance uk limited  england and wales ordinary 1 shares  100
 the company itself owns less than 1 of the share capital of arm limited the remaining shares are held indirectly through ar m 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 
 
017043armgovernancefinancials2013wordindd   110 10032014   2100 governance financial report
111
notes to the financial statementsuk gaap 
1 principal accounting policies 
the financial statements have been prepared in accordance with the companies act 2006 and applicable accounting standards in th e uk a 
summary of the more important accounting policies which have been consistently applied and review ed 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 satisfie s the provisions of section 612 
of the companies act 2006 for merger relief the investment is stated at the nominal va lue of shares issued plus the fair value of any other 
consideration 
cash flow statement the company has not presented a separate cash flow statemen t the cash flows for the company are included within the 
consolidated financial statements 
foreign currency transactions denominated in foreign currenci es have been translated into sterling at actual rates of exchange at the date of t he 
transaction monetary assets and liabilities denominated in fore ign currencies have been translat ed at the closing rates of exc hange 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 en acted 
by the balance sheet date 
financial instruments the company does not have any financia l instruments other than intercompany creditors and debtors and cash due to 
the shortterm nature of these balances the company considers th e fair value of these items to equal the carrying value becau se the company is 
included in the consolidated fi nancial 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 financ ial statements no disclosure has been presented in these financial statements 
share schemes the company issues equitysettled share based payments including an ltip to cert ain employees of subsidiary undertakings 
in accordance with frs 20 equitysettled sharebased payments are measured at fair value at the date of grant fair value is m easured by use of 
the blackscholes pricing model the fair value determined at th e grant date of the equitysettled sharebased payments is expe nsed in the 
accounts of the subsidiary companies on a straightline basis over the vesting period based on the company’s estimate of the n umber 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 anno uncement of the scheme the uk saye schemes are 
approved by the inland revenue whic h stipulates that the saving period must be at least 36 months 
the company has taken advantage of the exem ption available and has applied the provis ions of frs 20 only to those options gran ted after 
7 november 2002 and which were outstanding at 31 december 2004 th e company does not have any employees and as such in accorda nce 
with uitf 44 all sharebased payments have been recorded as capital contributions to all subsidiaries the company recharges t he relevant 
amount of the sharebased payments to its us subsidiary consequently the amount recharged is offset against the carrying valu e of its 
investments 
share capital ordinary shares issued by the company are recorded at the proceeds received ne t of direct issue costs 
dividends a liability is recorded for a dividend when the dividend is approved by the company’s shareh olders interim dividends are reco gnised 
as a distribution when paid 
deferred tax deferred tax is recognised in respect of all timing differences that have originated but not re versed at the balance sheet dat e  
deferred tax is measured at the average ra tes that are expected to apply in the period in which the timing difference is expect ed to reverse 
based on tax rates and laws that have been enacted or substantia lly 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 company’s profit and loss accoun t has not been included in these financial 
statements the parent company’s loss after taxation including dividends receivable and before dividends payable was £15 mill ion 2012 
£19 million the company has no employees all three executive directors as at 31 december 2013 have contracts of service w ith arm 
limited a subsidiary of the company the emoluments of two of these directors are paid by arm limited and one of the director s is paid 
by arm inc the details of which are disclo sed in the remuneration report within this annual report audit fees are disclosed i n note 5 to the 
consolidated financial statements on page 84 
3 dividends paid and proposed 
 
2013
£m 
2012
£m 
final dividend paid of 283 pence per ordinary share in respect of 2012 2012 209 pence in respect of 2011  395 288
interim dividend paid of 210 pence 2012 167 pence per ordinary share  294 230
 689 518
in addition the directors are proposing a final dividend in resp ect of the financial year ended 31 december 2013 of 36 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 £6533 million at 31 december 2013 and 
£6161 million at 31 december 2012 the company took advantage of merger relief in 2004 and did not record the premium on the i ssue of 
shares for the acquisition of artisan compon ents inc now arm inc and thus did not record the premium within the value of t he investment 
in the company balance sheet at that time 
 
investments in 
subsidiary 
undertakings 
£m 
cost and net book value 
at 1 january 2013  6161
additions 01
capital contributions arising from sharebased payments 592
recharge to subsidiary of sharebased payments 221
at 31 december 2013  6533
where options and awards over the company’s shares have been issued to the employees of subsidiary undertakings the fair value of employee 
services performed equal to the sharebase d payments has been recorded as a capita l contribution the company recharges the r elevant 
amount of the sharebased payments to its us subsidiary consequently the amount recharged is offset against the carrying valu e 
of its investments 
the directors believe that th e 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 ordina ry £1 shares  less than 001
arm ip limited england and wales ordinary £1 shares 100
arm finance uk limited  england and wales ordinary 1 shares  100
 the company itself owns less than 1 of the share capital of arm limited the remaining shares are held indirectly through ar m 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 
 
017043armgovernancefinancials2013wordindd   111 10032014   2100 arm holdings plc
governance and financial report 2013
112
notes to the financial statementsuk gaap  
continued 
4 investments continued 
the principal activity of arm limited is the marketing research and development of riscbased 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 afl 3 with 
afl3 itself being an indirect wholly owned subsidiary of afl the principal activities of both afl and afl3 are as intermediat e holding companies 
5 debtors 
 
2013 
£m 
2012 
£m 
prepayments and accrued income 12 05
deferred tax assets  03 03
 15 08
 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 457 27
accruals  03 03
 460 30
7 calledup share capital 
 
2013 
£m 
2012 
£m 
authorised 
2200000000 ordinary shares of 0 05 pence each 2012 2200000000  11 11
allotted calledup and fully paid
1400263804 ordinary shares of 0 05 pence each 2012 1380768350  07 07
19495454 ordinary shares of 005 pence each were issued in the year for cash consid eration of £59 million 2012 £56 millio n 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 005 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 1360 125 125 29 january 2014
 2005 14166 1055 1055 3 february 2015
 15526 1072 
2003 plan  2004 376925 07101 07086 29 november 2014
saye  2009 199921 0854 0854 31 january 2015
 2010 126730 1948 1948 31 january 2016
 2011 363300 4464 4464 31 january 2017
 2012 680302 39616 39616 31 january 2018
 2013 207215 796 796 31 january 2019
 1577468 40469 
total options  1969919 33847 
 
  
 
 
7 calledup share capital continued 
   year of grant 
number  
of share awards  latest vest date 
rsu  2010 2417436 12 november 2014
 2011 2833120 12 november 2015
 2012 2410868 12 november 2016
 2013 8404823 12 november 2017
 16066247 
french rsu  2010 128769 12 november 2014
 2011 153375 12 november 2015
 2012 130087 12 november 2016
 2013 314089 12 november 2017
 726320 
ltip  2011 621132 8 february 2014
 2012 782375 8 february 2015
 2013 650696 8 february 2016
 2054203 
dab  2011 430102 8 february 2014
 2012 586666 8 february 2015
 2013 364118 8 february 2016
 1380886 
total awards  20227656 
total options and awards  22197575 
since 2006 the company has issued rsus to employees which are actu al share awards on vesting rather than options to buy share s at a fixed 
exercise price the main rsu awards to em ployees in all jurisdictions other than fran ce vest 25 on each anniversary over fou r 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 pl an 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 thes e shares will be defe rred for three 
years and then a matching award will be made depending on the achievement of an ep s performance condition over that time this scheme will 
be replaced after the february 2014 grant and replaced with a cashonly bonus for details of th e new scheme see the remunerat ion report on 
page 41 
the company also operates the ltip also for directors and select ed senior management whereby sh are awards are made and vest d epending 
on the company’s tsr performance compared to two comparator groups over the threeyear performance period grants were made for the 
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 em ployees and executive directors of the group the number of options granted is relate d to the 
value of savings made by the employee the pe riod of savings is three or five years the option price for gr ants 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 sixmonth period once the sa vings have been 
completed the company also operates a savingsrelated option sc heme for employees in the us india japan south korea and tai wan 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 m onths with the 
option price being at 85 of the lower of the market share price at the beginning and end of the scheme 
the group has in the past issued share options under several addi tional schemes whereby shares in the company can be granted t o employees 
and directors options are granted with a fixed exercise price equa l to the market price of the sh ares under option at the date of grant these 
schemes are the uk inland revenue executive approved share option plan the “executive scheme” the unap proved scheme the 
“unapproved scheme” the french scheme and various schemes that the company assumed on the acquisition of artisan in 2004 sha res in 
these schemes are no longer granted althou gh the company reserves the right to award options to employees going forward share s relating 
to these schemes have all vested in prior years and therefore there is no sharebased payment charge associated with them for 2 012 or 2013 
017043armgovernancefinancials2013wordindd   112 10032014   2100 governance financial report
113
notes to the financial statementsuk gaap  
continued 
4 investments continued 
the principal activity of arm limited is the marketing research and development of riscbased 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 afl 3 with 
afl3 itself being an indirect wholly owned subsidiary of afl the principal activities of both afl and afl3 are as intermediat e holding companies 
5 debtors 
 
2013 
£m 
2012 
£m 
prepayments and accrued income 12 05
deferred tax assets  03 03
 15 08
 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 457 27
accruals  03 03
 460 30
7 calledup share capital 
 
2013 
£m 
2012 
£m 
authorised 
2200000000 ordinary shares of 0 05 pence each 2012 2200000000  11 11
allotted calledup and fully paid
1400263804 ordinary shares of 0 05 pence each 2012 1380768350  07 07
19495454 ordinary shares of 005 pence each were issued in the year for cash consid eration of £59 million 2012 £56 millio n 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 005 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 1360 125 125 29 january 2014
 2005 14166 1055 1055 3 february 2015
 15526 1072 
2003 plan  2004 376925 07101 07086 29 november 2014
saye  2009 199921 0854 0854 31 january 2015
 2010 126730 1948 1948 31 january 2016
 2011 363300 4464 4464 31 january 2017
 2012 680302 39616 39616 31 january 2018
 2013 207215 796 796 31 january 2019
 1577468 40469 
total options  1969919 33847 
 
  
 
 
7 calledup share capital continued 
   year of grant 
number  
of share awards  latest vest date 
rsu  2010 2417436 12 november 2014
 2011 2833120 12 november 2015
 2012 2410868 12 november 2016
 2013 8404823 12 november 2017
 16066247 
french rsu  2010 128769 12 november 2014
 2011 153375 12 november 2015
 2012 130087 12 november 2016
 2013 314089 12 november 2017
 726320 
ltip  2011 621132 8 february 2014
 2012 782375 8 february 2015
 2013 650696 8 february 2016
 2054203 
dab  2011 430102 8 february 2014
 2012 586666 8 february 2015
 2013 364118 8 february 2016
 1380886 
total awards  20227656 
total options and awards  22197575 
since 2006 the company has issued rsus to employees which are actu al share awards on vesting rather than options to buy share s at a fixed 
exercise price the main rsu awards to em ployees in all jurisdictions other than fran ce vest 25 on each anniversary over fou r 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 pl an 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 thes e shares will be defe rred for three 
years and then a matching award will be made depending on the achievement of an ep s performance condition over that time this scheme will 
be replaced after the february 2014 grant and replaced with a cashonly bonus for details of th e new scheme see the remunerat ion report on 
page 41 
the company also operates the ltip also for directors and select ed senior management whereby sh are awards are made and vest d epending 
on the company’s tsr performance compared to two comparator groups over the threeyear performance period grants were made for the 
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 em ployees and executive directors of the group the number of options granted is relate d to the 
value of savings made by the employee the pe riod of savings is three or five years the option price for gr ants 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 sixmonth period once the sa vings have been 
completed the company also operates a savingsrelated option sc heme for employees in the us india japan south korea and tai wan 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 m onths with the 
option price being at 85 of the lower of the market share price at the beginning and end of the scheme 
the group has in the past issued share options under several addi tional schemes whereby shares in the company can be granted t o employees 
and directors options are granted with a fixed exercise price equa l to the market price of the sh ares 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 sha res in 
these schemes are no longer granted althou gh the company reserves the right to award options to employees going forward share s relating 
to these schemes have all vested in prior years and therefore there is no sharebased payment charge associated with them for 2 012 or 2013 
017043armgovernancefinancials2013wordindd   113 10032014   2100 arm holdings plc
governance and financial report 2013
114
notes to the financial statementsuk gaap  
continued 
7 calledup share capital continued 
for disclosures relating to the grants in the year and fair valu e assumptions reconciliations of opening to closing option bal ances 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  122 614 5405
premium on issue of share options 59 – –
credit in respect of capital contributi ons arising from sharebased payments – – 592
loss attributable to shareholders  – – 15
equity dividends payable  – – 689
at 31 december 2013  181 614 5293
the share option reserve represents the fair value of options gr anted on the acquisition of arti san components inc in 2004  
the company considers the share option reserv e and share premium account as nondistributable within the profit and loss reserve are credits 
in respect of frs 20 employee sharebased payments in respect of services performed by employees of subsidiary undertakings and recorded as 
a capital contribution the company also considers these credit s as nondistributable as such approximately £324 million of t he profit and loss 
reserve is deemed distributable 
the company did not undertake any share buy backs during 2013 the quantum and frequenc y of share repurchases is not predetermi ned and 
will take into account prevailing market conditions the short to mediumterm cash needs of the business and the level of empl oyee sharebased 
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  15 19
equity dividends payable  689 518
 704 537
new share capital issued 59 56
credit in respect of capital contributi ons arising from sharebased payments 592 371
net reduction to shareholders’ funds  53 110
opening shareholders’ funds  6148 6258
closing shareholders’ funds  6095 6148
10 capital commitments 
the company had no capital commitme nts at 31 december 2013 and 2012 
11 financial commitments and contingencies 
at 31 december 2013 and 2012 the company had no annual commitment s under noncancellable operating leases and no contingencies 
12 related party transactions 
the company has taken advantage of the exempt ion from disclosure available to parent companies under frs 8 “related party disc losures” 
where transactions and balances between wholly owned group entities have been eliminated on consolidation 
13  postbalance sheet events 
after the year end the directors proposed payment of a final divi dend in respect of 2013 of 3 6 pence per share subject to sh areholder 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 bee n recognised as a 
distribution during the year ended 31 december 2013 
 
independent auditors’ report to the members of arm holdings plc 
 
report on the parent company financial statements 
our opinion 
in our opinion the parent company fi nancial statements defined below 
• give a true and fair view of the state of the company’s 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 
this opinion is to be read in the context of what we say in the remainder of this report 
what we have audited 
the parent company financial st atements 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 in clude a summary of significant accounting policies and other 
explanatory information 
the financial reporting framework that has been applied in their preparation comprise s applicable law and uk accounting standar ds 
uk generally accepted accounting practice 
in applying the financial reporting framework the directors have made a number of subjective judgements for example in respec t of significant 
accounting estimates in making such estimates they have made assumptions and considered future events 
what an audit of financia l statements involves  
we conducted our audit in accordance with international standard s on auditing uk  ireland “ isas uk  ireland” an audit involves 
obtaining evidence about the amounts and disclosures in the financ ial statements sufficient to give reasonable assurance that t he financial 
statements are free from materi al misstatement whether caused by fraud or error this includes an assessment of 
• whether the accounting policies are appropriate to the parent co mpany’s 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 an d nonfinancial information in the annual report and accoun ts the “annual report” to identify material 
inconsistencies with the audited parent comp any financial statements and to identify any information that is apparently materia lly 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 fin ancial statements 
are prepared is consistent with the parent company financial statements 
• the part of the directors’ remuneration report to be audited ha s been properly prepared in acco rdance with the companies act 20 06 
  
017043armgovernancefinancials2013wordindd   114 10032014   2100 governance financial report
115
notes to the financial statementsuk gaap  
continued 
7 calledup share capital continued 
for disclosures relating to the grants in the year and fair valu e assumptions reconciliations of opening to closing option bal ances 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  122 614 5405
premium on issue of share options 59 – –
credit in respect of capital contributi ons arising from sharebased payments – – 592
loss attributable to shareholders  – – 15
equity dividends payable  – – 689
at 31 december 2013  181 614 5293
the share option reserve represents the fair value of options gr anted on the acquisition of arti san components inc in 2004  
the company considers the share option reserv e and share premium account as nondistributable within the profit and loss reserve are credits 
in respect of frs 20 employee sharebased payments in respect of services performed by employees of subsidiary undertakings and recorded as 
a capital contribution the company also considers these credit s as nondistributable as such approximately £324 million of t he profit and loss 
reserve is deemed distributable 
the company did not undertake any share buy backs during 2013 the quantum and frequenc y of share repurchases is not predetermi ned and 
will take into account prevailing market conditions the short to mediumterm cash needs of the business and the level of empl oyee sharebased 
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  15 19
equity dividends payable  689 518
 704 537
new share capital issued 59 56
credit in respect of capital contributi ons arising from sharebased payments 592 371
net reduction to shareholders’ funds  53 110
opening shareholders’ funds  6148 6258
closing shareholders’ funds  6095 6148
10 capital commitments 
the company had no capital commitme nts at 31 december 2013 and 2012 
11 financial commitments and contingencies 
at 31 december 2013 and 2012 the company had no annual commitment s under noncancellable operating leases and no contingencies 
12 related party transactions 
the company has taken advantage of the exempt ion from disclosure available to parent companies under frs 8 “related party disc losures” 
where transactions and balances between wholly owned group entities have been eliminated on consolidation 
13  postbalance sheet events 
after the year end the directors proposed payment of a final divi dend in respect of 2013 of 3 6 pence per share subject to sh areholder 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 bee n recognised as a 
distribution during the year ended 31 december 2013 
 
independent auditors’ report to the members of arm holdings plc 
 
report on the parent company financial statements 
our opinion 
in our opinion the parent company fi nancial statements defined below 
• give a true and fair view of the state of the company’s 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 
this opinion is to be read in the context of what we say in the remainder of this report 
what we have audited 
the parent company financial st atements 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 in clude a summary of significant accounting policies and other 
explanatory information 
the financial reporting framework that has been applied in their preparation comprise s applicable law and uk accounting standar ds 
uk generally accepted accounting practice 
in applying the financial reporting framework the directors have made a number of subjective judgements for example in respec t of significant 
accounting estimates in making such estimates they have made assumptions and considered future events 
what an audit of financia l statements involves  
we conducted our audit in accordance with international standard s on auditing uk  ireland “ isas uk  ireland” an audit involves 
obtaining evidence about the amounts and disclosures in the financ ial statements sufficient to give reasonable assurance that t he financial 
statements are free from materi al misstatement whether caused by fraud or error this includes an assessment of 
• whether the accounting policies are appropriate to the parent co mpany’s 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 an d nonfinancial information in the annual report and accoun ts the “annual report” to identify material 
inconsistencies with the audited parent comp any financial statements and to identify any information that is apparently materia lly 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 fin ancial statements 
are prepared is consistent with the parent company financial statements 
• the part of the directors’ remuneration report to be audited ha s been properly prepared in acco rdance with the companies act 20 06 
  
017043armgovernancefinancials2013wordindd   115 10032014   2100 arm holdings plc
governance and financial report 2013
116
independent auditors’ report to the members of arm holdings plc 
continued  
 
other matters on which we are required to report by exception 
adequacy of accounting records and in formation 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 ke pt by the parent company or returns adeq uate 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 re port to be audited are not in agreement w ith the 
accounting records and returns 
we have no exceptions to report arising from this responsibility 
directors’ remuneration 
under the companies act 2006 we are required to report if in ou r opinion certain disclosures of directors’ remuneration speci fied 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 th e audited parent company financial statements or 
• apparently materially incorrect based on or materially inconsis tent with our knowledge of the parent company acquired in the course 
of performing our audit or 
• is otherwise misleading 
we have no exceptions to report arising from this responsibility 
responsibilities for the financial 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 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 pare nt company financial statements in accordance with applicable law and isas 
uk  ireland those standards require us to comply with th e auditing practices board’s ethical standards for auditors  
this report including the opinions has been prepared for and on ly for the company’s members as a body in accordance with chap ter 3 of 
part 16 of the companies act 2006 and for no other purpose we do not in giving these opinions accept or assume responsibilit y 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  
senior statutory auditor 
for and on behalf of pricewaterhousecoopers llp 
chartered accountants and statutory auditors 
london 
5 march 2014 
glossary 
 
 
apps application software that runs within the chip 
arm7911 arm7 processor was one of arm’s first commer cial products arm9 and arm11 processors 
followed later 
armv8 latest family of arm processor designs 
biglittle combination of two different arm proc essors on a single chip one big that delivers highperformance 
when needed with the other l ittle running most of the time enabling long batterylife 
cagr compound annual growth rate 
cortex arm’s latest family of processors 
dtv digital tv 
ecosystem community of companies that work with arm in cluding 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 th at 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 te rm 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 connec ted 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 partne rs 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 arm’s family of 3d graphics processors 
microcontroller mcu a microcontroller is a generalpurpose computer chip which has beencan 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 
partner a partner is a licensee of arm’s 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 
processor optimisation pack 
pop 
physical ip components that have been selected an d optimised to implement a processor on a specific 
foundry’s 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 settop box 
systemonchip 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 
017043armgovernancefinancials2013wordindd   116 10032014   2100 governance financial report
117
independent auditors’ report to the members of arm holdings plc 
continued  
 
other matters on which we are required to report by exception 
adequacy of accounting records and in formation 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 ke pt by the parent company or returns adeq uate 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 re port to be audited are not in agreement w ith the 
accounting records and returns 
we have no exceptions to report arising from this responsibility 
directors’ remuneration 
under the companies act 2006 we are required to report if in ou r opinion certain disclosures of directors’ remuneration speci fied 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 th e audited parent company financial statements or 
• apparently materially incorrect based on or materially inconsis tent with our knowledge of the parent company acquired in the course 
of performing our audit or 
• is otherwise misleading 
we have no exceptions to report arising from this responsibility 
responsibilities for the financial 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 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 pare nt company financial statements in accordance with applicable law and isas 
uk  ireland those standards require us to comply with th e auditing practices board’s ethical standards for auditors  
this report including the opinions has been prepared for and on ly for the company’s members as a body in accordance with chap ter 3 of 
part 16 of the companies act 2006 and for no other purpose we do not in giving these opinions accept or assume responsibilit y 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  
senior statutory auditor 
for and on behalf of pricewaterhousecoopers llp 
chartered accountants and statutory auditors 
london 
5 march 2014 
glossary 
 
 
apps application software that runs within the chip 
arm7911 arm7 processor was one of arm’s first commer cial products arm9 and arm11 processors 
followed later 
armv8 latest family of arm processor designs 
biglittle combination of two different arm proc essors on a single chip one big that delivers highperformance 
when needed with the other l ittle running most of the time enabling long batterylife 
cagr compound annual growth rate 
cortex arm’s latest family of processors 
dtv digital tv 
ecosystem community of companies that work with arm in cluding 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 th at 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 te rm 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 connec ted 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 partne rs 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 arm’s family of 3d graphics processors 
microcontroller mcu a microcontroller is a generalpurpose computer chip which has beencan 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 
partner a partner is a licensee of arm’s 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 
processor optimisation pack 
pop 
physical ip components that have been selected an d optimised to implement a processor on a specific 
foundry’s 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 settop box 
systemonchip 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 
017043armgovernancefinancials2013wordindd   117 10032014   2100 arm holdings plc
governance and financial report 2013
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 prés 
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 allée 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 
d85630 grasbrunn 
germany 
tel 49 89 456 0400 
fax 49 89 456 04019 
obrtna cesta 18 
sl8310 
sentjernej 
slovenia 
arm israel 
3 hagavish street 
44424 kfar saba 
israel 
tel 97297644888 
fax 97297644884 
arm norway as 
olav tryggvassons gt 3941 
7011 trondheim 
norway 
tel 47 7318 7500 
fax 47 7351 3181 
arm sweden ab 
lilla fiskaregatan 12 
se222 22 lund 
sweden 
tel 46 46 540 11 04 
fax 46 46 14 48 08 
arm finland oy 
konekuja 2 
fl90620 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 951341358 
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 985021119 
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 
2312 shinyokohama 
kohokuku yokohamashi 
kanagawa 2220033 
japan 
tel 81 45 477 5260 
fax 81 45 477 5261 
arm korea limited 
8th floor kyungdong building 
44 sunaedong 
bundanggu seongnamsi 
gyeonggido 463020 
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 
sb towers plot no iai 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 
no4018 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 
neihu district 
taipei city 
11494 
taiwan roc 
tel 886 2 8752 1700 
fax 886 2 2627 1682 
7f no 2 lihsin 
6
th
 road hsinchu science park 
hsinchu city 
30078 
taiwan roc 
tel 886 3 565 7100 
fax 886 3 567 7128 
  
017043armgovernancefinancials2013wordindd   118 10032014   2100 governance financial report
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 prés 
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 allée 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 
d85630 grasbrunn 
germany 
tel 49 89 456 0400 
fax 49 89 456 04019 
obrtna cesta 18 
sl8310 
sentjernej 
slovenia 
arm israel 
3 hagavish street 
44424 kfar saba 
israel 
tel 97297644888 
fax 97297644884 
arm norway as 
olav tryggvassons gt 3941 
7011 trondheim 
norway 
tel 47 7318 7500 
fax 47 7351 3181 
arm sweden ab 
lilla fiskaregatan 12 
se222 22 lund 
sweden 
tel 46 46 540 11 04 
fax 46 46 14 48 08 
arm finland oy 
konekuja 2 
fl90620 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 951341358 
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 985021119 
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 
2312 shinyokohama 
kohokuku yokohamashi 
kanagawa 2220033 
japan 
tel 81 45 477 5260 
fax 81 45 477 5261 
arm korea limited 
8th floor kyungdong building 
44 sunaedong 
bundanggu seongnamsi 
gyeonggido 463020 
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 
sb towers plot no iai 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 
no4018 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 
neihu district 
taipei city 
11494 
taiwan roc 
tel 886 2 8752 1700 
fax 886 2 2627 1682 
7f no 2 lihsin 
6
th
 road hsinchu science park 
hsinchu city 
30078 
taiwan roc 
tel 886 3 565 7100 
fax 886 3 567 7128 
  
017043armgovernancefinancials2013wordindd   119 10032014   2100 arm holdings plc
governance and financial report 2013
120
key shareholder information  
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 
investorrelationsarmcom  
our website contains information 
for shareholders including regular strategic 
business and financial updates 
wwwarmcomir 
017043armgovernancefinancials2013wordindd   120 10032014   2100 g overnance 
  chairman’s introduction 1
  board of directors 4
  corporate governance 6
  directors’ report 23
  directors’ remuneration report 29
f inancial 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 flow statement 62
  consolidated statement of changes  
in shareholders’ equity 63
  notes to the financial statements 64
  company balance sheetuk gaap 109
  notes to the financial statements 
uk gaap 110
  independent auditors’ report to the 
members of arm holdings plc 115
g lossary and g roup directory
 glossary 117
  group directory 118
  key shareholder information 120
o ur vision
  operational highlights 
  financial highlights 
  chairman’s review 
  chief executive’s statement 
 o ur performance
  our marketplace 
  our business model 
  our global reach 
  strategy and key  
performance indicators 
  mobile computing 
  enterprise infrastructure 
  embedded computing 
o ur c ommitment
  governance 
  sustainability 
  risk management and principal risks
o ur f inancial review
  chief financial officer’s review 
  summary accounts 
 glossary  
f ront 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 afford to buy a smart device 
an entrylevel mobile computer may have 
up to four arm
®
based chips
d ownloads
more information about arm and our 
end market opportunities are available 
on our website
reports available online
  strategic report
  governance and financial report
  corporate responsibility report
arm’s 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 to governance 
sustainability and risk management and a summary of our 
financial management
the governance and financial report contains the details about 
how we run the business and remunerate management and how 
we organise ourselves financially
online you can find 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
g ove rnance and  
f inanci al repo rt
  
s tra tegic r epo rt
  
o nline repo rting
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and financial repor t
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arm holdings plc 
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arm holdings plc annual report 2013 governance  financial report
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arm holdings plc annual report 2013 governance  financial report


Summary:
 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 arm’s 
chief executive officer and lead the group 
through its next stage of development in his 
12 years in charge warren oversaw
  arm’s strategy to transform mobile 
phones into smartphones and evolving 
into tablet computers
  arm technology being chosen for 
use beyond mobile devices with our 
customers deploying armbased chips 
in everything from sensors to servers
  more than 45 billion armbased chips 
shipped by 150 companies during 
his tenure
  arm broadening its technology offering to 
include a range of processors for different 
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 arm’s original handful of engineers 
embarking upon a new business designing 
processors that small business has now 
grown into a global technology leader 
with 2833 employees arm’s 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 arm’s employees 
has also been significant 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
ch ief executive’ s statement
vision for the future
arm holdings plc
strategic report 2013 7
from mobile phones to the internet 
of things
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 
next five 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 goods in the 
home industrial equipment and even light 
bulbs t ogether these factors are leading to 
the creation of a massive “internet of things”
internet of thin gs
t o better understand the business drivers for 
the internet of things we commissioned a 
report from the economist intelligence unit 
go to wwwarmcomiot to download 
the report
go to wwwarmcomiot  
to download the report
arm is well positioned to take advantage 
of the growth in the mobile devices market 
to benefit 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 
today’s 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 things about being 
ceo of arm is seeing our 
technology used in many of the most 
innovative products available today 
simon segars
chief executive officer
our vision our performance our commitment our financial report arm holdings plc
strategic report 2013
8
for more information on technology in health and wellness 
daniel kraft md presenting the “future of t echnology in 
health  medicine” at arm’s t echcon 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  hp’s moonshot” at arm’s t echcon 2013
for more information on how the internet of things can make 
the world a better and more efficient place nandini ramani 
vp java platform at oracle presenting “enabling compelling 
services for iot” at arm’s t echcon 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 we’ve 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 fitness 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 office 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 efficiency 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 hyperconnectivity  it is forecast that there 
will be a fivefold 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 t o 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 world’s population grows and the 
standard of living increases therefore it is 
important that we maximise the benefit 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 cloudbased computing these 
sensors can be linked together across very 
large areas to maximise the productivity of 
farms and regions
ch ief executive’ s statement continued
armbased 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 benefits 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 fields and orchards 
with the innovation taking place around 
armbased sensors and the emergence of 
lowcost and longrange wireless technologies 
we see lowercost devices being deployed in 
vast numbers to provide granular data to the 
agricultural industry 9
our vision our performance our commitment our financial report
for more information on how streetline is making parking 
smarter near you download the streetline’s parker app
for more information on how the scope tablet is being used 
in thai schools arm technology is addressing many of the 
world’s 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 arm’s 
t echcon 2013
smart parking with streetline networks
smart parking reduces traffic and pollution 
making happier citizens and more cost 
efficient cities dust networks’ wireless 
mesh network solution featuring the arm 
cortex
®
m3 processor  enables streetline 
networks to reliably gather the realtime 
status of municipal metered parking spots 
and use that data to reduce traffic congestion
improving education in thailand with tablets
the “one t ablet per child” otpc policy 
was launched by prime minister yingluck’s 
government in 2012 in an attempt to improve 
thai education in 2013 otpc tablets were 
provided to the ministry of education by firms 
including shenzhen scope featuring rockchip 
rk3066 with dualcore arm cortexa9 
processor and quadcore arm mali400 mp4 
graphics processing unit gpu with an 
average cost of around 80 per tablet
t ransport 
in 2008 for the first time in history over 
half of the world’s 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 
efficient 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 haven’t 
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 
effectively engage with them through the 
use of 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 armbased 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 cel’s 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 cortexm3 processor arm holdings plc
strategic report 2013
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 t ogether 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 selflessness constructive 
proactivity partner and customer focus and 
responsiveness in addition we encourage all 
employees to take pride in innovation and in 
their own selfdevelopment 
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 arm’s broad and 
diverse ecosystem
more than twothirds of arm’s employees 
are engineers specifying and inventing 
new technology to be licensed arm’s 
nonengineering 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 finance teams manage 
financial 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 t oday we 
have 31 offices in 15 countries with rd 
development sites in uk us china france 
germany t aiwan 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 
offices in the major regions where our 
customers develop armbased 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 
us today and i am confident that they will help 
the arm team to continue to develop create 
and license technology for years to come
  delivery of results
  t eamwork and selflessness
  constructive proactivity
  partner and customer focus
  responsiveness
  innovation
  personal development
we are  
supp orte d by 
  families
  communities
  local government
  suppliers
  investors
we supp ort 
  100s customers
  1000s 
ecosystem partners
  1000000 developers
  listen and understand 
customer and partner needs
  partner and customer focus
  responsiveness
  being a good neighbour to 
local communities
  increasing shareholder value
external
arm ’s share d principle s an d behavi our s
2833  
empl oyees
internal
multidiscipline teams work 
together to determine strategy
manage across diverse companies 
and ecosystem
ch ief executive’ s statement continued 11
our vision our performance our commitment our financial report
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 benefit both from increasing 
sales of computer chips and also increasing 
our market share with our smart power 
efficient technologies 
mobile communications and mobile 
computers were just the first markets to 
need smart electronics and almost all mobile 
devices sold today contain at least one 
armbased chip the smartphone market 
grew by about half in 2013 with many 
consumers upgrading from voiceonly 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 efficiency 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 first arm
based server chips sold we expect these 
markets to become increasingly significant 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 cortexm 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 offer our customers a more 
joinedup 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 arm’s 
business lines in addition he will manage two 
crossfunctional 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 
officer  t ogether antonio and ian will 
develop the ecosystem of companies that is 
so important to arm’s longterm success
well positioned for the future
arm’s 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 arm’s employees so 
that they can develop the next generation of 
technology that will enable our customers 
to create 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 arm’s own internal 
culture and is something we carefully 
manage as we grow in size both in terms of 
increased headcount and market influence 
and responsibility
as the new ceo of arm i am excited by 
this opportunity i am confident that arm’s 
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
chief executive officer
  architecture
  cpu
  physical design
  media processing
  systems  software
  development solutions
  partner enablement
commercial operation s
t ec hnical operation s arm holdings plc
strategic report 2013
12
“wearable” technology is helping to keep us fit and healthy many people 
use armbased 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 armbased devices can be found 
on pages 32–37 and also online
wwwarmcomreporting2013
helping
people perfo rm 13
our vision our performance our commitment our financial report