Magma Design Automation(Knights Technology in India) cuts 17% of workforce; cuts salaries

Magma Design Automation Inc, a provider of chip design software, today announced a series of actions designed to reduce operating costs, including a 17 percent cut in worldwide employment, salary reductions and consolidation of some facilities.

These measures, initiated in the third and fourth quarters of Magma's fiscal year 2009, are expected to reduce total annual costs by approximately $20 million in fiscal year 2010. In connection with these measures, Magma expects to record restructuring charges ranging from $2.75 million to $3.75 million in its fiscal 2009 third quarter, ended Feb. 1, 2009.

"We are taking steps necessary to align our expenses with the revised business outlook we announced in December, reflecting the state of the global economy," said Roy E. Jewell, Magma president and chief operating officer. "These actions affect company operations in all geographies and in all departments but will focus our resources to maintain Magma's competitive advantages in our key business segments."

In addition to reducing employment levels, Magma instituted a 20 percent salary reduction for senior management during the third quarter, followed by a smaller salary reduction for most other employees. Magma closed two sales and support offices in North America and one in Europe, and plans to consolidate its Beijing, China, operations into a single facility and its Shanghai, China, operations into a single facility. With these closures and expected consolidations, Magma will continue to operate in 11 countries with facilities in 19 cities.

"Our cost-cutting actions are intended to enable us to remain competitive and deliver the financial results we've targeted regardless of when the economy recovers," Jewell said.

"Discussions with major customers during the last several quarters confirmed that the actions we're taking now are in the best interest of our company's stakeholders for both the near and long terms."

Magma will provide details on the cost-cutting actions when it announces third quarter financial results. In a separate announcement, Magma today said it will issue third quarter results and conduct its quarterly earnings conference call and webcast on Feb. 26, 2009.