8-KFinancial EventsExhibits & Filings

CADENCE DESIGN SYSTEMS INC 8-K Report, Financial Restatement (Oct 27, 2008)

Filed October 27, 2008For Securities:CDNS

Summary

Cadence Design Systems, Inc. (CDNS) has filed an 8-K report on October 27, 2008, to announce that its previously issued financial statements for the quarters ending March 29, 2008, and June 28, 2008, should no longer be relied upon. This is due to a preliminary determination that approximately $24 million in revenue recognized in the first quarter of 2008, related to customer contracts, should have been recognized ratably over the contract duration. The company's audit committee, with independent counsel, has launched an investigation into this revenue recognition issue, which was identified during a regular review of third-quarter results. Cadence expects to restate these quarterly financial statements to correct the accounting treatment. Investors should be aware that the reliability of the reported financial performance for these past periods is now in question.

Key Highlights

  • 1Cadence Design Systems is restating its Q1 and Q2 2008 financial statements due to improper revenue recognition.
  • 2Approximately $24 million in revenue from Q1 2008 contracts was recognized upfront instead of being spread over the contract term.
  • 3The company's Audit Committee has initiated an investigation into the matter.
  • 4The independent registered public accounting firm has been informed of these findings.
  • 5The press release announcing these findings was issued on October 22, 2008.
  • 6This filing indicates a material weakness or significant accounting issue that impacts previously reported results.

Frequently Asked Questions

Cadence is restating its financial statements for the quarters ending March 29, 2008, and June 28, 2008, because approximately $24 million of revenue recognized in the first quarter of 2008 was identified as having been improperly recognized. This revenue should have been recognized ratably over the duration of the customer contracts rather than all at once.

The preliminary determination involves about $24 million of revenue. The precise impact on net income and earnings per share for the affected periods will be detailed in the restated financial statements once the investigation is complete.

Cadence's Audit Committee, with the assistance of independent counsel, has initiated an investigation. The company expects to restate its quarterly financial statements for the periods ending March 29, 2008, and June 28, 2008, to correct the revenue recognition treatment.

This statement signifies that the financial results and figures previously reported for the specified periods (Q1 and Q2 2008) are inaccurate due to the accounting error. Investors and stakeholders should not use these prior financial statements for decision-making until the corrected statements are issued.