ARC International has acquired Alarity Corporation. Alarity is a privately held U.S. multimedia company that has a team of close to 40 personnel based in St. Petersburg, Russia specializing in codec software, firmware, and advanced multimedia architectures. The acquisition includes all of Alarity's employees and its vast library of optimized solutions for standard definition (SD) and HD video, hi-fidelity audio, imaging, DSP, and information security applications. Alarity's development team already plays a key role in select engagements with "Tier 1" customers creating multimedia solutions based upon ARC's configurable processors and subsystems.

As part of the acquisition ARC has established a multimedia development center in St. Petersburg, which complements ARC's existing centers in Cambridge and St. Albans, England, and Silicon Valley. The consideration will be £2 million in cash.  An additional consideration of £900,000 will be paid over two and half years based upon completion of certain performance targets.  The acquisition may have a cost impact of up to £450,000 on ARC's financial year 2007 operations.