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Cadence結(jié)束財務(wù)審查，預估1到3季度收入下降

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The EDA company identifies weaknesses in internal controls over the recognition of revenue from term-license agreements, forcing it to restate revenue and loss for the March and June quarters.


Cadence Design Systems Inc has completed its previously announced investigation of the recognition of revenue related to customer contracts, finding no illegal conduct on the part of any of its directors, officers, or other employees.

The EDA company initiated the investigation in October, just days after its former CEO Mike Fister abruptly resigned.

Cadence at the time postponed the announcement of its Q3 numbers, saying it needed to review the recognition of certain contract-related revenue in Q1 and Q2. While the investigation has cleared Cadence's executives and staff from wrongdoing, the company identified a "material weakness relating to the insufficient design and ineffective operation of certain internal controls over the recognition of revenue from term-license agreements." Cadence said in a statement Wednesday that it has taken and will continue to take actions to remediate the deficiencies identified as promptly as practicable.


Indeed, Cadence immediately announced changes to its Q1 and Q2 numbers. During Q1, Cadence executed a term-license arrangement with a customer and, during Q3, the company executed a subscription license arrangement with the same customer. As part of its quarterly review process, Cadence found that the software arrangements executed with the customer both in Q1 and Q3 were negotiated in contemplation of one another.

Further, Cadence re-examined a Q2 transaction in which it concurrently cancelled a subscription arrangement and executed both a term-license arrangement and hardware arrangement with a customer. Upon review, Cadence determined revenue originally recognized in the June quarter relating to the term-license and hardware arrangement should be recognized ratably over the term of the arrangement, consistent with the way in which revenue was recognized on the cancelled subscription arrangement.

As such, Cadence has adjusted $24.8 million of Q1 product revenue and $12 million of Q2 product revenue to instead be realized over the term of the relevant arrangements.

Accordingly, Cadence has restated Q1 and Q2 revenue. Revenue for the March quarter was reduced from Cadence's previously reported $287 million to $270 million, and income was adjusted from Cadence's previously reported loss of $18.7 million to a loss of $29.2 million.

The company had previously reported Q2 sales of nearly $329.5 million; post-review, Cadence has reported $308 million. June quarter net income has also been restated. Previously, Cadence reported just less than $5 million in income for the quarter; post-review, Cadence has reported a loss of nearly $16.8 million.

The company also reported on Q3 results Wednesday, stating revenue of $232 million compared to revenue of $401 million reported for the same period in 2007. Cadence recognized a net loss of $169 million, or $0.67, compared to net income of $73 million in the same period in 2007.

Looking to Q4, the company estimated total revenue in the range of $215 million to $225 million on a loss in the range of $0.29 to $0.27.

For the full year, the company expects total revenue in the range of $1.025 billion to $1.035 billion on a loss per diluted share in the range of $1.13 to $1.11.


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