Exhibit 99.1
News Release
| CONTACTS: | ||
Magma Design Automation Inc.: | ||
Gregory C. Walker | Milan G. Lazich | |
Chief Financial Officer | Vice President, Corporate Marketing | |
(408) 565-7500 | (408) 565-7706 | |
gwalker@magma-da.com | milan.lazich@magma-da.com | |
Magma Reports Record Revenue for First Quarter
Increases 58 percent over year-ago period
SANTA CLARA, Calif., July 28, 2004 — Magma Design Automation Inc. (Nasdaq: LAVA), a provider of chip design solutions, today announced financial results that include record revenue of $36.0 million for the quarter ended June 30, 2004, the first quarter of its 2005 fiscal year.
For the first quarter of fiscal 2005, Magma reported revenue of $36.0 million, compared to $22.8 million for the first quarter of fiscal 2004, an increase of 58 percent. Magma reported pro forma net income for the first quarter of fiscal 2005 of $7.7 million, or $0.18 per share (diluted), both of which are records for the company. This compares to a pro forma net income of $4.9 million, or $0.14 per share (diluted), for the first quarter of fiscal 2004. In accordance with generally accepted accounting principles (GAAP), Magma reported a net loss of $(2.5) million, or $(0.08) per share (diluted), for the first quarter of fiscal 2005, compared to net income of $0.1 million, or $0.00 per share (diluted), for the first quarter of fiscal 2004.
Pro forma net income for the first quarter of fiscal 2005 is GAAP net loss adjusted by excluding the effects of a $4.0 million in-process research and development charge related to Magma’s first-quarter acquisition of Mojave Inc., amortization of intangible assets, amortization of deferred compensation, restructuring charges, and charges associated with losses on equity investments. A tabular reconciliation of the pro forma to GAAP results is included in this press release.
“The quarter just concluded continued Magma’s growth trends,” said Rajeev Madhavan, Magma chairman and CEO. “It was the seventh consecutive quarter of increasing revenue as we had solid financial performance. We continue to work with designers addressing critical challenges in today’s most aggressive chip designs.”
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Business Outlook
For Magma’s fiscal 2005 second quarter, which will end September 30, 2004, the company expects total revenue in the range of $35 million to $39 million. Pro forma EPS is expected to be in the range of $0.18 to $0.22. GAAP EPS is expected to be in the range of $0.03 to $0.07. A schedule showing a reconciliation of the business outlook for pro forma to GAAP EPS is included in this release. A Financial Disclosure Supplement containing detailed financial information intended to provide guidance and further insight into our business is available online at http://investor.magma-da.com/supplement.cfm in the Investor Relations section of the Magma website.
Conference Call
Magma will discuss the financial results for the recently completed quarter and fiscal year, including guidance going forward, during a live webcast and earnings call today at 2 p.m. PDT (5 p.m. EDT). The call will be available live by both webcast and conference call. To listen live via webcast, visit the Investor Relations section of Magma’s website at http://investor.magma-da.com/home.cfm. To listen live via telephone call either of the numbers below:
U.S. & Canada: | (800) 661-8947, conference ID #8362625 | |
Elsewhere: | (706) 634-2358, conference ID #8362625 |
Following completion of the call, a webcast replay of the call will be available at http://investor.magma-da.com/home.cfm through August 4, 2004. Those without Internet access may listen to a replay of the call by telephone through August 4 by calling:
U.S. & Canada: | (800) 642-1687, conference ID #8362625 | |
Elsewhere: | (706) 645-9291, conference ID #8362625 |
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which include statements in the “Business Outlook” section, and quotations from Magma’s executives are subject to risks and uncertainties that could cause actual results to differ materially from Magma’s current expectations. Factors that could cause or contribute to such differences include, but are not limited to: increasing competition in the EDA market; Magma’s ability to successfully integrate recently acquired businesses and technologies; the impact of the economic recession; effects terrorist activities or events in the Middle East may have on Magma, its customers and industry; any delay of customer orders or failure of customers to renew licenses; weaker-than-anticipated sales of the company’s products and services; weakness in the semiconductor or electronic systems industries; the ability to successfully manage the company’s expanding operations; the ability to attract and retain the key management and technical personnel needed to operate Magma successfully; the ability to continue to deliver competitive products
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to customers to help them get their products to market; and changes in accounting rules. Further discussion of these and other potential risk factors may be found in Magma’s public filings with the Securities and Exchange Commission (www.sec.gov). Magma undertakes no additional obligation to update these forward-looking statements.
About Magma
Magma provides leading software for designing highly complex integrated circuits while maximizing Quality of Results with respect to area, timing and power, and at the same time reducing overall design cycles and costs. Magma provides a complete RTL-to-GDSII design flow that includes prototyping, synthesis, place & route, and signal and power integrity chip design capabilities in a single executable, offering “The Fastest Path from RTL to Silicon”™. Magma’s software also includes products for advanced physical synthesis and architecture development tools for programmable logic devices (PLDs); capacitance extraction; and characterization and modeling. The company’s stock trades on Nasdaq under the ticker symbol LAVA. Visit Magma Design Automation on the Web at www.magma-da.com.
Magma is a registered trademark and “The Fastest Path from RTL to Silicon” is a trademark of Magma Design Automation. All other product and company names are trademarks and registered trademarks of their respective companies.
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MAGMA DESIGN AUTOMATION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
| June 30, 2004 | March 31, 2004 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 58,056 | $ | 75,346 | ||||
Short-term investments | 196 | — | ||||||
Accounts receivable, net | 30,495 | 34,237 | ||||||
Prepaid expenses and other current assets | 9,021 | 9,588 | ||||||
Total current assets | 97,768 | 119,171 | ||||||
Property and equipment, net | 18,644 | 15,196 | ||||||
Intangibles, net | 89,466 | 62,793 | ||||||
Goodwill | 33,587 | 33,529 | ||||||
Long-term investments | 95,296 | 78,158 | ||||||
Other assets | 6,392 | 5,628 | ||||||
Total assets | $ | 341,153 | $ | 314,475 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,707 | $ | 1,658 | ||||
Accrued expenses | 19,175 | 19,132 | ||||||
Deferred revenue, current | 23,429 | 19,947 | ||||||
Total current liabilities | 44,311 | 40,737 | ||||||
Convertible subordinated notes | 150,000 | 150,000 | ||||||
Deferred tax liabilities | 15,828 | 5,102 | ||||||
Other long-term liabilities | 1,755 | 897 | ||||||
Total non-current liabilities | 167,583 | 155,999 | ||||||
Total liabilities | 211,894 | 196,736 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 3 | 3 | ||||||
Additional paid-in capital | 242,256 | 226,586 | ||||||
Deferred stock-based compensation | (1,527 | ) | (718 | ) | ||||
Accumulated deficit | (109,598 | ) | (107,063 | ) | ||||
Accumulated other comprehensive loss | (1,875 | ) | (1,069 | ) | ||||
Total stockholders’ equity | 129,259 | 117,739 | ||||||
Total liabilities and stockholders’ equity | $ | 341,153 | $ | 314,475 | ||||
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MAGMA DESIGN AUTOMATION, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
IMPACT OF PRO FORMA ADJUSTMENTS ON REPORTED NET INCOME
(in thousands, except per share data)
(Unaudited)
For the Three Months Ended June 30, 2004 | For the Three Months Ended June 30, 2003 | |||||||||||||||||||||||||||
| As Reported | Adjust- ments | As Adjusted | As Reported | Adjust- ments | As Adjusted | |||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||
Licenses | $ | 30,892 | $ | — | $ | 30,892 | $ | 20,517 | $ | — | $ | 20,517 | ||||||||||||||||
Services | 5,137 | — | 5,137 | 2,296 | — | 2,296 | ||||||||||||||||||||||
Total revenue | 36,029 | — | 36,029 | 22,813 | — | 22,813 | ||||||||||||||||||||||
Cost of revenue | 5,042 | (1,303 | ) | A,E | 3,739 | 3,246 | (135 | ) | A,E | 3,111 | ||||||||||||||||||
Gross profit | 30,987 | 1,303 | 32,290 | 19,567 | 135 | 19,702 | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Research and development | 9,569 | (674 | ) | D,E | 8,895 | 5,008 | — | 5,008 | ||||||||||||||||||||
In-process research and development | 4,009 | (4,009 | ) | C | — | — | — | — | ||||||||||||||||||||
Sales and marketing | 11,267 | — | 11,267 | 7,089 | — | 7,089 | ||||||||||||||||||||||
General and administrative | 3,625 | — | 3,625 | 2,438 | — | 2,438 | ||||||||||||||||||||||
Amortization of intangible assets | 4,475 | (4,475 | ) | D | — | — | — | — | ||||||||||||||||||||
Amortization of stock-based compensation | 458 | (458 | ) | E | — | 3,978 | (3,978 | ) | E | — | ||||||||||||||||||
Restructuring charge | 502 | (502 | ) | B | — | — | — | — | ||||||||||||||||||||
Total operating expenses | 33,905 | (10,118 | ) | 23,787 | 18,513 | (3,978 | ) | 14,535 | ||||||||||||||||||||
Operating income (loss) | (2,918 | ) | 11,421 | 8,503 | 1,054 | 4,113 | 5,167 | |||||||||||||||||||||
Interest and other income (expense): | ||||||||||||||||||||||||||||
Interest income | 553 | — | 553 | 608 | — | 608 | ||||||||||||||||||||||
Interest expense | (246 | ) | — | (246 | ) | (111 | ) | — | (111 | ) | ||||||||||||||||||
Other income (expense), net | (562 | ) | 331 | F | (231 | ) | (753 | ) | 753 | F | — | |||||||||||||||||
Interest and other income (expense), net | (255 | ) | 331 | 76 | (256 | ) | 753 | 497 | ||||||||||||||||||||
Income (loss) before income taxes | (3,173 | ) | 11,752 | 8,579 | 798 | 4,866 | 5,664 | |||||||||||||||||||||
Income tax benefit (provision) | 638 | (1,526 | ) | G | (888 | ) | (725 | ) | — | (725 | ) | |||||||||||||||||
Net income | $ | (2,535 | ) | $ | 10,226 | $ | 7,691 | $ | 73 | $ | 4,866 | $ | 4,939 | |||||||||||||||
Earnings per share – basic | $ | (0.08 | ) | $ | 0.23 | $ | 0.00 | $ | 0.16 | |||||||||||||||||||
Earnings per share – diluted | $ | (0.08 | ) | $ | 0.18 | $ | 0.00 | $ | 0.14 | |||||||||||||||||||
Shares used in calculation: | ||||||||||||||||||||||||||||
Basic | 33,671 | 33,671 | 30,764 | 30,764 | ||||||||||||||||||||||||
Diluted | 33,671 | 43,286 | 36,152 | 36,152 | ||||||||||||||||||||||||
A | Amortization of developed technology | |
B | Restructuring charges | |
C | In-process research and development | |
D | Amortization of intangibles | |
E | Amortization of deferred stock-based compensation | |
F | Loss on equity investments | |
G | Tax effect of pro forma adjustments |
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MAGMA DESIGN AUTOMATION, INC.
AS OF JUNE 30, 2004
IMPACT OF PRO FORMA ADJUSTMENTS ON FORWARD-LOOKING DILUTED NET INCOME PER SHARE
(Unaudited)
Quarter Ending September 30, 2004 | ||
GAAP diluted net income per share | $ 0.03 to $ 0.07 | |
Amortization of intangibles | $0.02 | |
Amortization of capitalized developed technology | $0.13 | |
Amortization of deferred stock-based compensation | $0.01 | |
Loss on equity investments | $0.01 | |
Tax effects of pro forma adjustments | $(0.02) | |
Pro forma diluted net income per share | $0.18 to $0.22 | |