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.