Exhibit 99.1
News Release
CONTACTS: | ||
Magma Design Automation Inc.: | ||
Monica Marmie | Milan G. Lazich | |
Marketing Communications Manager | Vice President, Corporate Marketing | |
(408) 565-7689 | (408) 565-7706 | |
monical@magma-da.com | milan.lazich@magma-da.com |
Magma Reports Financial Results for Fourth Quarter and Fiscal Year 2005
Fiscal 2005 revenue of $145.9 million an increase of 28 percent over prior year
SANTA CLARA, Calif., April 28, 2005 — Magma Design Automation Inc. (Nasdaq: LAVA), a provider of semiconductor design software, today announced financial results for its fourth quarter and fiscal year ended March 31, 2005.
Fourth Quarter Results
For the fourth quarter, Magma reported revenue of $35.7 million, compared to $34.0 million for the year-ago fourth quarter ended March 31, 2004, an increase of 5 percent. In accordance with generally accepted accounting principles (GAAP), Magma reported a net loss of $(5.6 million), or $(0.16) per share (basic and diluted), for the quarter, compared to net income of $4.2 million, or $0.10 per share (diluted), for the fourth quarter ended March 31, 2004.
Magma reported pro forma net income for the fourth quarter of fiscal 2005 of $3.2 million, or $0.08 per share (diluted). This compares to a pro forma net income of $7.2 million, or $0.17 per share (diluted), for the fourth quarter of fiscal 2004. Pro forma net income for the fourth quarter of fiscal 2005 reflects reported net income excluding the effects of amortization of developed technology, amortization of intangibles, amortization of deferred stock-based compensation, gain in equity investments and assets write off, miscellaneous marketing and other loss contingency and tax effect of non-GAAP adjustments. Pro forma net income for the fourth quarter of fiscal 2004 excludes the effects of amortization of developed technology, amortization of intangibles, amortization of deferred stock-based compensation, consolidation of an equity investment, and charges associated with losses in equity investments. A reconciliation of our pro forma results to GAAP results is included in this press release.
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Magma Reports Financial Results for Fourth Quarter and Fiscal Year 2005 | Page 2 |
Fiscal Year 2005 Results
For the fiscal year ended March 31, 2005, Magma reported revenue of $145.9 million, compared to $113.7 million for the fiscal year ended March 31, 2004, an increase of 28 percent. In accordance with GAAP, Magma reported net loss of $(8.6) million, or $(0.25) per share (basic and diluted), for the recently completed fiscal year, compared to net income of $11.5 million, or $0.29 per share (diluted), for the fiscal year ended March 31, 2004.
Magma reported pro forma net income of $26.9 million, or $0.64 per share (diluted), for the fiscal year ended March 31, 2005. This compares to pro forma net income of $25.0 million, or $0.62 per share (diluted), for the fiscal year ended March 31, 2004. Pro forma net income for the year ended March 31, 2005 excludes the effects of amortization of developed technology, amortization of intangibles, in-process research and development, amortization of deferred stock-based compensation, miscellaneous restructuring, marketing expenses and other loss contingency, charges associated with loss in equity investments and asset write off. Pro forma net income for the year ended March 31, 2004 excludes the effects of amortization of developed technology, amortization of intangibles, in-process research and development, consolidation of an equity investment, amortization of deferred stock-based compensation and charges associated with loss in equity investments. A reconciliation of the pro forma to GAAP results is included in this press release.
“The year we just completed included many highlights for Magma,” said Rajeev Madhavan, chairman and CEO of Magma. “Our fiscal 2005 revenue was another annual record and our bookings in the most recent quarter were also the best in Magma history. With the work our product teams have put into our Cobra development project, we’re looking forward to even greater accomplishments in fiscal 2006.”
Business Outlook
For Magma’s fiscal 2006 first quarter, ending July 3, 2005, 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 $0.06 to $0.10, and GAAP net loss is expected to be in the range of $(0.13) to $(.09). A schedule showing a reconciliation of the projected pro forma EPS to GAAP projections is included in this release. A Financial Data 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
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Magma Reports Financial Results for Fourth Quarter and Fiscal Year 2005 | Page 3 |
webcast and telephone. 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 #5386655 | |
Elsewhere: | (706) 634-2358, conference ID #5386655 |
Following completion of the call, a webcast replay of the call will be available at http://investor.magma-da.com/home.cfm through May 5, 2005. Those without Internet access may listen to a replay of the call by telephone through May 5 by calling:
U.S. & Canada: | (800) 642-1687, conference ID #5386655 | |
Elsewhere: | (706) 645-9291, conference ID #5386655 |
Pro Forma Information
Magma provides pro forma data to assist investors seeking to understand the Magma’s financial performance and prospects. Magma believes that this pro forma information provides useful information to investors by excluding the effect of expenses that are required to be recorded under GAAP that Magma does not believe are indicative of Magma’s core operating results. In addition, because Magma has historically provided pro forma results to the investment community, Magma believes that including this information provides consistency in its financial reporting. Magma’s pro forma data is not prepared in accordance with, or as an alternative to, GAAP information, and it may be materially different from pro forma measures that are used by other companies. These pro forma results should be considered supplemental to, and not a substitute for or superior to, Magma’s results prepared in accordance with GAAP, which are included in its press release,
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 include statements in the “Business Outlook” section, and statements regarding our Cobra development project and expectations for 2005. These forward-looking statements 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: competition in the EDA market; Magma’s ability to integrate acquired businesses and technologies; potentially higher-than-anticipated costs of litigation; potentially higher-than-anticipated costs of compliance with regulatory requirements, including those relating to internal control over financial reporting; any delay of customer orders or failure of customers to renew licenses; weaker-than-anticipated sales of Magma’s products and services; weakness in the semiconductor or electronic systems industries; the ability to manage 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 to customers; 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.
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Magma Reports Financial Results for Fourth Quarter and Fiscal Year 2005 | Page 4 |
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, capacitance extraction, design For test (DFT), physical verification (DRC/LVS), static and statistical timing analysis and characterization and modeling in a single executable, offering “The Fastest Path from RTL to Silicon”™. Magma’s software also includes products for advanced logical, physical synthesis and architecture development tools for programmable logic devices (PLDs), FPGAs and Structured ASICs; 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 Reports Financial Results for Fourth Quarter and Fiscal Year 2005 | Page 5 |
MAGMA DESIGN AUTOMATION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 31, 2005 | March 31, 2004 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 20,622 | $ | 72,684 | ||||
Restricted cash | 2,950 | 2,662 | ||||||
Short-term investments | 114,896 | — | ||||||
Accounts receivable, net | 33,851 | 34,237 | ||||||
Prepaid expenses and other current assets | 7,087 | 9,588 | ||||||
Total current assets | 179,406 | 119,171 | ||||||
Property and equipment, net | 21,310 | 15,196 | ||||||
Long term marketable investments | — | 78,158 | ||||||
Intangibles, net | 69,573 | 62,793 | ||||||
Goodwill | 43,194 | 33,529 | ||||||
Other assets | 5,741 | 5,628 | ||||||
Total assets | $ | 319,224 | $ | 314,475 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,010 | $ | 1,658 | ||||
Accrued expenses | 22,321 | 19,132 | ||||||
Deferred revenue, current | 20,745 | 19,947 | ||||||
Total current liabilities | 46,076 | 40,737 | ||||||
Convertible subordinated notes | 150,000 | 150,000 | ||||||
Deferred tax | — | 5,102 | ||||||
Other long-term liabilities | 1,749 | 897 | ||||||
Total non-current liabilities | 151,749 | 155,999 | ||||||
Total liabilities | 197,825 | 196,736 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 4 | 3 | ||||||
Additional paid-in capital | 261,627 | 226,586 | ||||||
Deferred stock-based compensation | (5,749 | ) | (718 | ) | ||||
Accumulated deficit | (115,643 | ) | (107,063 | ) | ||||
Treasury stock at cost | (16,606 | ) | — | |||||
Accumulated other comprehensive loss | (2,234 | ) | (1,069 | ) | ||||
Total stockholders’ equity | 121,399 | 117,739 | ||||||
Total liabilities and stockholders’ equity | $ | 319,224 | $ | 314,475 | ||||
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Magma Reports Financial Results for Fourth Quarter and Fiscal Year 2005 | Page 6 |
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 March 31, 2005 | For the Three Months Ended March 31, 2004 | |||||||||||||||||||||||
As Reported | Adjustments | As Adjusted | As Reported | Adjustments | As Adjusted | |||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
Licenses | $ | 30,165 | $ | — | $ | 30,165 | $ | 29,560 | $ | — | $ | 29,560 | ||||||||||||
Services | 5,512 | 5,512 | 4,487 | — | 4,487 | |||||||||||||||||||
Total revenue | 35,677 | 35,677 | 34,047 | — | 34,047 | |||||||||||||||||||
Cost of revenue | 6,084 | (2,007 | )A,D | 4,077 | 4,768 | (1,124 | )A,D | 3,644 | ||||||||||||||||
Gross profit | 29,593 | 2,007 | 31,600 | 29,279 | 1,124 | 30,403 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Research and development | 11,399 | (739 | )C,D | 10,660 | 7,560 | (85 | )H | 7,475 | ||||||||||||||||
Sales and marketing | 10,665 | 155 | B | 10,820 | 11,532 | — | 11,532 | |||||||||||||||||
General and administrative | 6,127 | (125 | )B | 6,002 | 3,551 | — | 3,551 | |||||||||||||||||
Amortization of intangible assets | 4,763 | (4,763 | )C | — | 1,161 | (1,161 | )C | — | ||||||||||||||||
Amortization of stock-based compensation | 944 | (944 | )D | — | 429 | (429 | )D | — | ||||||||||||||||
Total operating expenses | 33,898 | (6,416 | ) | 27,482 | 24,233 | (1,675 | ) | 22,558 | ||||||||||||||||
Operating income (loss) | (4,305 | ) | 8,423 | 4,118 | 5,046 | 2,799 | 7,845 | |||||||||||||||||
Interest and other income (expense): | ||||||||||||||||||||||||
Interest income | 627 | — | 627 | 650 | — | 650 | ||||||||||||||||||
Interest expense | (250 | ) | — | (250 | ) | (339 | ) | — | (339 | ) | ||||||||||||||
Other income (expense), net | (624 | ) | 102 | E | (522 | ) | (145 | ) | 127 | E | (18 | ) | ||||||||||||
Total interest and other income (expense), net | (247 | ) | 102 | (145 | ) | 166 | 127 | 293 | ||||||||||||||||
Net income (loss) before income taxes | (4,552 | ) | 8,525 | 3,973 | 5,212 | 2,926 | 8,138 | |||||||||||||||||
Provision for income taxes | (1,061 | ) | 246 | G | (815 | ) | (986 | ) | — | (986 | ) | |||||||||||||
Net income (loss) | $ | (5,613 | ) | $ | 8,771 | $ | 3,158 | $ | 4,226 | $ | 2,926 | $ | 7,152 | |||||||||||
Net income (loss) per share – basic | $ | (0.16 | ) | $ | 0.09 | $ | 0.13 | $ | 0.22 | |||||||||||||||
Net income (loss) per share – diluted* | $ | (0.16 | ) | $ | 0.08 | $ | 0.10 | $ | 0.17 | |||||||||||||||
Shares used in calculation: | ||||||||||||||||||||||||
Basic | 34,329 | 34,329 | 32,910 | 32,910 | ||||||||||||||||||||
Diluted* | 34,329 | 41,767 | 42,664 | 42,664 | ||||||||||||||||||||
A Amortization of developed technology | E Gain/Loss on equity investments and assets write off | |
B Miscellaneous marketing and other loss contingency | G Tax effect of non-GAAP adjustments | |
C Amortization of intangibles | H Consolidation of equity investments | |
D Amortization of deferred stock-based compensation |
* | Gives effect to the potential issuance of common stock upon conversion of convertible subordinated notes and to the effect of all dilutive potential common shares outstanding during the period, including stock options, using the treasury stock method. |
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Magma Reports Financial Results for Fourth Quarter and Fiscal Year 2005 | Page 7 |
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 Year Ended March 31, 2005 | For the Year Ended March 31, 2004 | |||||||||||||||||||||||
As Reported | Adjustments | As Adjusted | As Reported | Adjustments | As Adjusted | |||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
Licenses | $ | 123,995 | $ | — | $ | 123,995 | $ | 100,387 | $ | — | $ | 100,387 | ||||||||||||
Services | 21,945 | — | 21,945 | 13,342 | — | 13,342 | ||||||||||||||||||
Total revenue | 145,940 | 145,940 | 113,729 | — | 113,729 | |||||||||||||||||||
Cost of revenue | 22,215 | (6,374 | )A,D | 15,841 | 16,647 | (2,824 | )A,D | 13,823 | ||||||||||||||||
Gross profit | 123,725 | 6,374 | 130,099 | 97,082 | 2,824 | 99,906 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Research and development | 41,715 | (3,582 | )C,D | 38,133 | 26,097 | (444 | )H | 25,653 | ||||||||||||||||
Sales and marketing | 44,654 | 47 | B | 44,701 | 36,973 | — | 36,973 | |||||||||||||||||
General and administrative | 17,783 | (125 | )B | 17,658 | 11,348 | — | 11,348 | |||||||||||||||||
Restructuring costs | 698 | (698 | )B | — | — | — | — | |||||||||||||||||
In-process research and development | 4,364 | (4,364 | )F | — | 200 | (200 | )F | — | ||||||||||||||||
Amortization of intangible assets | 18,011 | (18,011 | )C | — | 1,745 | (1,745 | )C | — | ||||||||||||||||
Amortization of stock-based compensation | 1,880 | (1,880 | )D | — | 7,086 | (7,086 | )D | — | ||||||||||||||||
Total operating expenses | 129,105 | (28,613 | ) | 100,492 | 83,449 | (9,475 | ) | 73,974 | ||||||||||||||||
Operating income (loss) | (5,380 | ) | 34,987 | 29,607 | 13,633 | 12,299 | 25,932 | |||||||||||||||||
Interest and other income (expense): | ||||||||||||||||||||||||
Interest income | 2,287 | — | 2,287 | 2,584 | — | 2,584 | ||||||||||||||||||
Interest expense | (996 | ) | — | (996 | ) | (1,066 | ) | — | (1,066 | ) | ||||||||||||||
Other income (expense), net | (1,355 | ) | 1,118 | E | (237 | ) | (100 | ) | 1,228E | 1,128 | ||||||||||||||
Total interest and other income (expense), net | (64 | ) | 1,118 | 1,054 | 1,418 | 1,228 | 2,646 | |||||||||||||||||
Net income (loss) before income taxes | (5,444 | ) | 36,105 | 30,661 | 15,051 | 13,527 | 28,578 | |||||||||||||||||
Provision for income taxes | (3,136 | ) | (622 | )G | (3,758 | ) | (3,576 | ) | — | (3,576 | ) | |||||||||||||
Net income (loss) | $ | (8,580 | ) | $ | 35,483 | $ | 26,903 | $ | 11,475 | $ | 13,527 | $ | 25,002 | |||||||||||
Net income (loss) per share – basic | $ | (0.25 | ) | $ | 0.79 | $ | 0.36 | $ | 0.79 | |||||||||||||||
Net income (loss) per share – diluted* | $ | (0.25 | ) | $ | 0.64 | $ | 0.29 | $ | 0.62 | |||||||||||||||
Shares used in calculation: | ||||||||||||||||||||||||
Basic | 33,861 | 33,861 | 31,648 | 31,648 | ||||||||||||||||||||
Diluted* | 33,861 | 42,156 | 40,245 | 40,245 | ||||||||||||||||||||
A | Amortization of developed technology | E | Gain/Loss on equity investments and assets write off | |||
B | Miscellaneous restructuring, marketing and other loss contingency | F | In-process research and development | |||
C | Amortization of intangibles | G | Tax effect of non-GAAP adjustments | |||
D | Amortization of deferred stock-based compensation | H | Consolidation of equity investments |
* | Gives effect to the potential issuance of common stock upon conversion of convertible subordinated notes and to the effect of all dilutive potential common shares outstanding during the period, including stock options, using the treasury stock method. |
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Magma Reports Financial Results for Fourth Quarter and Fiscal Year 2005 | Page 8 |
MAGMA DESIGN AUTOMATION, INC.
AS OF MARCH 31, 2005
IMPACT OF KNOWN PRO FORMA ADJUSTMENTS ON FORWARD-LOOKING DILUTED NET
INCOME PER SHARE
(Unaudited)
Quarter Ending July 3, 2005 | ||
GAAP diluted net loss per share | $(0.13) to $ (0.09) | |
Amortization of developed technology and intangibles | $0.17 | |
Amortization of deferred stock-based compensation | $0.02 | |
Pro forma diluted net income per share | $0.06 to $0.10 |
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