Synplicity Announces First Quarter 2008 Results

Synplicity®, Inc. (Nasdaq:SYNP), a leading supplier of innovative IC design and verification solutions, today announced financial results for the quarter ended March 31, 2008. Revenue for the quarter ended March 31, 2008 was $18.6 million, compared to $14.9 million for the quarter ended March 31, 2007. On a generally accepted accounting principles (GAAP) basis, net loss was $1.9 million, or $(0.07) per diluted share for the quarter ended March 31, 2008 compared to a net income of $654,000, or $0.02 per diluted share for the quarter ended March 31, 2007. For the quarter ended March 31, 2008, GAAP net loss included $1.4 million in expenses related to the pending merger of Synplicity and Synopsys, Inc., $849,000 in amortization of intangible assets and $809,000 of stock-based compensation expense. For the quarter ended March 31, 2007, GAAP net income included $248,000 in amortization of intangible assets and $879,000 of stock-based compensation expense. "We are pleased to report that revenue in the first quarter of 2008 came in ahead of our expectations,” said Gary Meyers, president and CEO of Synplicity. "Our ConfirmaTM product line for ASIC verification again showed substantial year over year revenue growth. Our unique combination of hardware, software and global support organization is driving market share gains in this important segment,” concluded Meyers. On March 20, 2008, Synplicity and Synopsys announced that the companies had signed a definitive merger agreement for Synplicity to be acquired by Synopsys. The closing of the merger is subject to the satisfaction of certain conditions, including the approval of Synplicity’s shareholders and other regulatory approvals, including HSR approval. Audio Webcast The Company’s earnings call will be webcast today at 2:00 p.m. Pacific, and may be accessed at http://investor.synplicity.com. The Company will discuss its first quarter 2008 results. Following completion of the call, a rebroadcast of the webcast will be available at http://investor.synplicity.com through June 30, 2008. For those without access to the Internet, a replay of the call will be available from 5:00 p.m. Pacific on April 22, 2008 through May 6, 2008. To listen to a replay, call (719) 457-0820, access code 1479317. Business Outlook In light of the pending acquisition of Synplicity by Synopsys, Synplicity is withdrawing its 2008 business outlook and will not be providing a business outlook for the second quarter of 2008. About Synplicity Synplicity®, Inc. (Nasdaq: SYNP) is a leading supplier of innovative software and hardware solutions for the design and verification of semiconductors that serve a wide range of communications, military/aerospace, consumer, semiconductor, computer, and other electronic systems markets. Synplicity's FPGA implementation tools provide outstanding performance, cost and time-to-market benefits by simplifying, improving and automating design planning, logic synthesis and physical synthesis for FPGA and DSP designs. The combination of the company's ASIC verification and FPGA-based prototyping software tools and HAPS ASIC prototyping hardware, provide designers with a comprehensive at-speed ASIC / ASSP verification flow known as the ConfirmaTM platform which dramatically accelerates functional verification of FPGAs and ASICs. Synplicity is the number one supplier of FPGA synthesis tools and its physical synthesis and ASIC verification technology are the recipients of several prestigious industry awards. Synplicity products support industry-standard design languages (VHDL and Verilog) and run on popular platforms. The company operates in over 20 facilities worldwide and is headquartered in Sunnyvale, California. For more information visit http://www.synplicity.com. Forward-Looking Statements This press release contains forward-looking statements that involve risks and uncertainties concerning Synopsys’ proposed acquisition of Synplicity and the acceptance of the Confirma platform. Actual events or results may differ materially from those described in this document due to a number of risks and uncertainties. The potential risks and uncertainties include, among others, the possibility that the transaction will not close, that the closing may be delayed or that the companies may be required to modify aspects of the transaction to obtain regulatory approval, as well as lack of customer acceptance of the Confirma platform. Neither Synopsys nor Synplicity undertakes any obligation to update these forward-looking statements to reflect events or circumstances after the date of this document. Additional Information On April 17, 2008, Synplicity filed a definitive proxy statement filed with the Securities and Exchange Commission (the "SEC”) regarding the proposed acquisition of Synplicity by Synopsys. Investors and security holders of Synplicity are urged to read the definitive proxy statement and any other relevant materials filed by Synopsys or Synplicity with the SEC because they contain, or will contain, important information about Synopsys, Synplicity and the proposed acquisition. The definitive proxy statement has been mailed to the security holders of Synplicity. The definitive proxy statement and other relevant materials (when they become available), and any other documents filed by Synopsys or Synplicity with the SEC, may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by Synopsys by contacting Synopsys Investor Relations, 700 East Middlefield Road, Mountain View, California, 94043, (650) 584-5000. Investors and security holders may obtain free copies of the documents filed with the SEC by Synplicity by contacting Synplicity Investor Relations, 600 W. California Avenue, Sunnyvale, California, 94086, (408) 215-6000. Synplicity and its officers and directors may be deemed to be participants in the solicitation of proxies from Synplicity’s shareholders with respect to the merger. A description of any interests that these officers and directors have in the merger will be available in the proxy statement. Additional, information concerning Synplicity’s directors and executive officers is set forth Synplicity’s Amendment No.1 to Annual Report on Form 10-K, which was filed with the SEC on April 4, 2008. These documents are available free of charge at the SEC’s web site at www.sec.gov or by going to Synplicity’s Investor Relations page on its corporate website at www.synplicity.com. Synplicity is a registered trademark of Synplicity, Inc. All other brands or products are the trademarks or registered trademarks of their owners. SYNPLICITY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)     March 31,   December 31,   2008   2007(1)   Assets: (unaudited) Current assets: Cash and cash equivalents and short-term investments $ 47,269 $ 42,991 Restricted cash 2,700 2,700 Accounts receivable, net 12,037 15,513 Inventories 3,354 1,308 Prepaid expenses 2,471 1,807 Other current assets 823 724 Short-term deferred tax assets   3,872   2,701   Total current assets 72,526 67,744 Restricted cash 2,700 2,700 Property and equipment, net 3,652 3,206 Goodwill 9,098 9,098 Intangible assets, net 9,340 10,189 Other assets 1,370 1,340 Long-term deferred tax assets   7,136   7,073   Total assets $ 105,822 $ 101,350     Liabilities and Shareholders’ Equity: Current liabilities: Accounts payable $ 5,225 $ 2,067 Accrued liabilities 2,732 1,715 Accrued compensation 4,926 5,258 Deferred revenue 19,061 18,616 Short-term other liabilities 99 36 Short-term deferred income taxes   1,614   922   Total current liabilities 33,657 28,614 Long-term other liabilities 279 427 Long-term deferred income taxes 1,558 2,317 Shareholders' equity: Common stock 63,011 61,320 Retained earnings 6,981 8,837 Accumulated other comprehensive loss   336   (165 ) Total shareholders’ equity   70,328   69,992   Total liabilities and shareholders’ equity   105,822 $ 101,350     (1) Derived from audited financial statements. SYNPLICITY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)     Three Months Ended March 31,   2008       2007 Revenue: License and systems $ 8,115 $ 3,884 Maintenance 7,159 6,617 Bundled license and services   3,316     4,398 Total revenue 18,590 14,899 Cost of revenue:(2) Cost of license and systems 1,310 30 Cost of maintenance 501 382 Cost of bundled license and services 46 95 Amortization of intangible assets   550     248 Total cost of revenue   2,407     755 Gross profit 16,183 14,144 Operating expenses:(2) Research and development 6,899 5,795 Sales and marketing 7,434 6,213 General and administrative 2,332 2,059 Amortization of intangible assets 299 - Costs related to pending acquisition   1,419     - Total operating expenses   18,383     14,067 Income (loss) from operations (2,200 ) 77 Other income, net   122     885 Income (loss) before income taxes (2,078 ) 962 Income tax provision (benefit)   (222 )   308 Net income (loss) $ (1,856 ) $ 654 Net income (loss) per share: Basic and diluted net income (loss) per share $ (0.07 ) $ 0.02 Shares used in basic per share calculation   26,442     26,720 Shares used in diluted per share calculation   26,442     27,719   (2) Amortization of stock-based compensation expense relates to the following: Three Months Ended March 31, Cost of maintenance $ 28 $ 23 Research and development 344 394 Sales and marketing 224 233 General and administrative 213 229