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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 10-Q
 

 
(Mark One)
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2002
 
OR
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from              to              .
 
Commission File No.: 0-33213
 
MAGMA DESIGN AUTOMATION, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
77-0454924
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
 
2 Results Way
Cupertino, California 95014
(Address of principal executive offices)
 
Telephone: (408) 864-2000
(Registrant’s telephone number, including area code)
 

 
Indicate by check mark whether the registrant (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.    Yes x    No ¨
 
On November 12, 2002, 30,668,171 shares of Registrant’s Common Stock, $.0001 par value were outstanding.


Table of Contents
 
MAGMA DESIGN AUTOMATION, INC.
 
FORM 10-Q
 
QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
 
INDEX
 
    
Page

  
1
  
1
  
1
  
2
  
3
  
4
  
11
  
27
  
27
  
28
  
28
  
28
  
29
  
30
  
31
  
31
  
32
  
33
 

i


Table of Contents
 
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
 
MAGMA DESIGN AUTOMATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
    
September 30, 2002

    
March 31, 2002

 
    
(unaudited)
        
ASSETS
                 
Current assets:
                 
Cash and cash equivalents
  
$
91,503
 
  
$
78,478
 
Short-term investments
  
 
—  
 
  
 
13,468
 
Accounts receivable, net
  
 
16,254
 
  
 
17,601
 
Prepaid expenses and other current assets
  
 
1,258
 
  
 
1,327
 
    


  


Total current assets
  
 
109,015
 
  
 
110,874
 
Property and equipment, net
  
 
6,826
 
  
 
7,252
 
Other assets
  
 
2,055
 
  
 
1,583
 
    


  


Total assets
  
$
117,896
 
  
$
119,709
 
    


  


LIABILITIES AND STOCKHOLDERS’ EQUITY
                 
Current liabilities:
                 
Accounts payable
  
$
2,035
 
  
$
1,777
 
Accrued expenses
  
 
5,140
 
  
 
9,441
 
Deferred revenue
  
 
11,916
 
  
 
15,617
 
    


  


Total current liabilities
  
 
19,091
 
  
 
26,835
 
Other long-term liabilities
  
 
110
 
  
 
130
 
    


  


Total liabilities
  
 
19,201
 
  
 
26,965
 
    


  


Commitments and contingency
                 
Stockholders’ equity:
                 
Preferred Stock, $.0001 par value; 5,000,000 shares authorized and no shares issued and outstanding
  
 
—  
 
  
 
—  
 
Common stock, $.0001 par value; 150,000,000 shares authorized and 30,534,034 and 30,239,786 shares issued and outstanding at September 30, 2002 and March 31, 2002, respectively
  
 
3
 
  
 
3
 
Additional paid-in capital
  
 
224,668
 
  
 
223,450
 
Deferred stock-based compensation
  
 
(3,049
)
  
 
(7,161
)
Notes receivable from stockholders
  
 
(1,997
)
  
 
(1,936
)
Accumulated other comprehensive loss
  
 
(75
)
  
 
—  
 
Accumulated deficit
  
 
(120,855
)
  
 
(121,612
)
    


  


Total stockholders’ equity
  
 
98,695
 
  
 
92,744
 
    


  


Total liabilities and stockholders’ equity
  
$
117,896
 
  
$
119,709
 
    


  


 
See accompanying notes to unaudited condensed consolidated financial statements.

1


Table of Contents
 
MAGMA DESIGN AUTOMATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
    
For the Three Months Ended September 30,

    
For the Six Months Ended September 30,

 
    
2002

    
2001

    
2002

    
2001

 
Revenue:
                                   
Licenses
  
$
14,690
 
  
$
8,205
 
  
$
28,067
 
  
$
13,574
 
Services
  
 
3,081
 
  
 
1,426
 
  
 
7,827
 
  
 
2,663
 
    


  


  


  


Total revenue
  
 
17,771
 
  
 
9,631
 
  
 
35,894
 
  
 
16,237
 
Cost of revenue
  
 
3,379
 
  
 
1,878
 
  
 
6,172
 
  
 
3,657
 
    


  


  


  


Gross profit
  
 
14,392
 
  
 
7,753
 
  
 
29,722
 
  
 
12,580
 
    


  


  


  


Operating expenses:
                                   
Research and development
  
 
4,441
 
  
 
4,308
 
  
 
9,778
 
  
 
8,937
 
Sales and marketing
  
 
6,878
 
  
 
5,574
 
  
 
12,915
 
  
 
10,922
 
General and administrative
  
 
2,105
 
  
 
1,178
 
  
 
4,330
 
  
 
2,705
 
Amortization of stock-based compensation*
  
 
730
 
  
 
1,206
 
  
 
2,631
 
  
 
2,305
 
    


  


  


  


Total operating expenses
  
 
14,154
 
  
 
12,266
 
  
 
29,654
 
  
 
24,869
 
    


  


  


  


Operating income (loss)
  
 
238
 
  
 
(4,513
)
  
 
68
 
  
 
(12,289
)
    


  


  


  


Interest income (expense):
                                   
Interest income
  
 
590
 
  
 
177
 
  
 
1,023
 
  
 
220
 
Interest expense
  
 
(1
)
  
 
(42
)
  
 
(3
)
  
 
(86
)
Interest expense—subordinated convertible promissory notes
  
 
—  
 
  
 
(526
)
  
 
—  
 
  
 
(526
)
    


  


  


  


Interest income (expense), net
  
 
589
 
  
 
(391
)
  
 
1,020
 
  
 
(392
)
    


  


  


  


Net income (loss) before income taxes
  
 
827
 
  
 
(4,904
)
  
 
1,088
 
  
 
(12,681
)
Income taxes
  
 
(128
)
  
 
(70
)
  
 
(331
)
  
 
(90
)
    


  


  


  


Net income (loss)
  
 
699
 
  
 
(4,974
)
  
 
757
 
  
 
(12,771
)
Less: preferred stock dividend
  
 
—  
 
  
 
(5,814
)
  
 
—  
 
  
 
(5,814
)
    


  


  


  


Net income (loss) attributed to common shareholders
  
$
699
 
  
$
(10,788
)
  
$
757
 
  
$
(18,585
)
    


  


  


  


Net income (loss) per common share—basic
  
$
0.02
 
  
$
(1.03
)
  
$
0.03
 
  
$
(1.79
)
    


  


  


  


Net income (loss) per common share—diluted
  
$
0.02
 
  
$
(1.03
)
  
$
0.02
 
  
$
(1.79
)
    


  


  


  


Pro forma shares outstanding:
                                   
Basic
  
 
30,182
 
  
 
10,507
 
  
 
30,006
 
  
 
10,380
 
    


  


  


  


Diluted
  
 
31,900
 
  
 
10,507
 
  
 
32,434
 
  
 
10,380
 
    


  


  


  


*    Amortization of stock-based compensation included in expense component:
                                   
Cost of revenue
  
$
19
 
  
$
5
 
  
$
39
 
  
$
15
 
Research and development
  
 
203
 
  
 
290
 
  
 
602
 
  
 
530
 
Sales and marketing