CIMdata PLM Industry Summary Online Archive
3 May 2005
Financial News
Magma Design Automation Announces Repurchase of $44.5 Million Principal Amount of Convertible Notes
Magma® Design Automation Inc. announced it has repurchased, in privately negotiated transactions, $44.5 million face amount (or approximately 30 percent of the total) of the company's Zero Coupon Convertible Subordinated Notes due May 2008 at an average discount to face value of approximately 22 percent. Magma spent an aggregate of approximately $35 million on the repurchases.
The resulting net pre-tax gain of approximately $9 million from the repurchase of the convertible subordinated notes will be reported in Magma's GAAP financial statements for the first quarter of fiscal 2006. This gain will be excluded from non-GAAP results for the same period.
The repurchase leaves approximately $105.5 million aggregate principal amount of convertible subordinated notes outstanding, and will reduce Magma's fully diluted shares outstanding by approximately 1.9 million shares. In addition, a portion of a hedge and warrant transaction entered into by Magma in 2003 to limit potential dilution from conversion of the Notes will be terminated in connection with the repurchase.
On April 13, 2005, Magma announced a program to repurchase up to two million shares of its common stock, commencing May 3, 2005, but this program was delayed during the repurchase of the convertible notes. This stock repurchase program will now begin on May 6, 2005.
"During the fiscal year ended March 31, 2005, Magma strengthened its balance sheet by generating approximately $33 million in cash from operations, resulting in cash, cash equivalents, restricted cash and investments of over $138 million at year end," said Greg Walker, CFO. "This note repurchase, together with our stock repurchase program beginning on May 6, 2005 and Magma's strong operating cash flow, provides us with the opportunity to increase stockholder value through repurchases while continuing to maintain a strong balance sheet."
Become a member of the CIMdata PLM Community to receive your daily PLM news and much more.
Tell us what you think of the CIMdata Newsletter. Send your feedback.
CIMdata is committed to your privacy. Your personal information will never be sold or shared outside of CIMdata without your express permission.