Cadence Design Systems Inc (CDNS)

[ScovilleUnits]

New 8-K re: restatement of last two Qtrs

Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
(a) On October 22, 2008, Cadence Design Systems, Inc. (“Cadence”) issued a press release announcing that it had preliminarily determined that approximately $24 million of revenue relating to customer contracts signed during the first quarter of 2008 was recognized during the first quarter of 2008, but should have been recognized ratably over the duration of the contracts. Cadence’s audit committee, with its independent counsel, has initiated an investigation of this matter after Cadence became aware of the issue during its regular review of its third quarter results.

On October 22, 2008, the audit committee of the Board of Directors of Cadence and the Interim Office of the Chief Executive of Cadence concluded that Cadence expects to restate its quarterly financial statements for the periods ending March 29, 2008 and June 28, 2008 to correct the revenue recognition with respect to these contracts and have therefore concluded that Cadence’s financial statements included in the quarterly reports on Form 10-Q for the periods ending March 29, 2008 and June 28, 2008 should no longer be relied upon.

The audit committee of the Board of Directors of Cadence and the Interim Office of the Chief Executive of Cadence have discussed the matters disclosed in this filing with Cadence’s independent registered public accounting firm.

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Reaffirmation of Expected Third Quarter Results
Cadence reaffirms the expected third quarter 2008 results provided in its press release of October 15, 2008. For the third quarter of 2008, the company expects results to be in line with the business outlook previously announced on July 23, 2008. Total revenue is estimated to be in the range of $235 to $245 million. Third quarter GAAP net loss per share is estimated to be in the range of $(0.27) to $(0.25). Net loss per share using the non-GAAP measure defined below is estimated to be in the range of $(0.11) to $(0.09). These results are preliminary and subject to the company’s management completing its quarterly close. In addition to using GAAP results in evaluating Cadence’s business, management believes it is useful to measure results using a non-GAAP measure of net income, which excludes, as applicable, amortization of intangible assets, stock-based compensation expense, in-process research and development charges, certain termination and legal costs, integration and acquisition-related costs, gains or losses and expenses or credits related to non-qualified deferred compensation plan assets, executive severance payments, restructuring charges and credits, losses on extinguishment of debt and equity in losses (income) from investments. Non-GAAP net income is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company’s tax liability. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial results with their most direct comparable GAAP financial results, including the reconciliation of non-GAAP financial results with GAAP financial results for the quarter ended June 28, 2008 set forth in our press release of July 23, 2008, which can be found in the investor relations portion of our website at www.cadence.com/cadence/investor_relations.

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