Magma Design Automation (LAVA)

Fiscal Year 2006 Outlook

For fiscal year 2006 Magma expects total orders booked to increase between 15 percent and 20 percent over orders booked in fiscal 2005. This is unchanged from orders guidance provided during Magma’s Jan. 27 earnings call. “Although we are making no change to the level of new orders we expect to book in fiscal 2006, we are reducing the revenue we expect those orders to contribute in the quarter they are booked – what is typically referred to as ‘turns’ revenue,” Walker said. “The result of this change is that by mid-year fiscal 2006, the company expects 90 percent of revenue within the quarter to come from backlog and 10 percent from turns revenue. We believe this is consistent with current trends within the industry, which we consider a healthy practice.

“This revised revenue assumption will result in a revision to fiscal 2006 guidance that more realistically addresses the risks in our revenue model – the resulting changes are not a reassessment of our market

prospects. We are reducing our pro-forma operating margin and pro-forma EPS targets to incorporate, among other factors, approximately $0.25 per share of expenses principally associated with litigation and Sarbanes-Oxley compliance anticipated in fiscal 2006,” Walker said.

Magma is revising its fiscal 2006 projections for revenue, operating margin and pro forma EPS as follows:

“We continue to be confident in the fundamental value our customers enjoy from using Magma products, so our expectations with regard to new orders in fiscal 2006 have not changed,” said Rajeev Madhavan, Magma chairman and chief executive officer. “We believe these adjustments to our revenue and profitability guidance are prudent steps as we continue managing the company to provide quality products to our customers and sound financial return for our stockholders.”

A Financial Data Supplement, containing detailed financial information intended to provide guidance and further insight into Magma’s business, will be made available online at http://investor.magma-da.com/supplement.cfm, in the Investor Relations section of the Magma website, when the company announces final financial results for the fourth quarter and fiscal 2005 on April 28.