1027362--3/17/2008--SYNPLICITY

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Factors Affecting Future Operating Results We have relied and expect to continue to rely on sales of our Synplify Pro and Synplify Premier products for a substantial portion of our revenue and a decline in sales of these products could cause our revenue to decline. Our revenue could decline substantially if our existing customers do not continue to purchase additional licenses or renew their term licenses, time-based licenses and maintenance contracts with us, or if existing resale agreements with FPGA manufacturers are canceled. We have been experiencing and may continue to experience increased competition as a result of FPGA manufacturers competing in the design software market or investing in emerging software companies. We depend on our marketing, product development and sales relationships with leading FPGA manufacturers, and if these relationships suffer, we may have difficulty introducing and selling our FPGA synthesis products and our revenue could decline. Our systems business is dependent on the continued demand for ASIC design opportunities. We depend on contract manufacturing of our HAPS systems which affects our capacity and inventory. If we fail to effectively manage the procurement of components for our HAPS systems it could have a material adverse impact on our systems business. We may not be able to realize the anticipated benefits from our acquisition of HARDI. The HARDI acquisition may impair our existing relationships. We may not succeed in developing, marketing, and selling new or enhanced commercially acceptable FPGA implementation, ASIC verification and ESL products, and our operating results may decline as a result. Our sales and operating results have in the past been, and may in the future be, negatively impacted by deteriorating economic conditions in the United States and other major countries in which we operate. Our revenue may decline if other vendors' products are no longer compatible with ours or other vendors bundle their products with those of our competitors and sell them at lower prices. Our revenue could be reduced if larger semiconductor design software companies make acquisitions in order to merge their extensive distribution capabilities with our competitors' products. If we fail to compete successfully with existing competitors or new competitors in the FPGA prototyping board market, our business could be harmed. Significant errors in our products or the failure of our products to conform to specifications could result in our customers demanding refunds from us or asserting claims for damages against us. We may not be able to preserve the value of our products' intellectual property rights and other vendors could challenge our intellectual property rights. We are subject to export control regulations that could restrict our ability to increase our revenue and may adversely affect our business. We may not be successful in integrating the businesses or technologies that we may acquire, or the expected benefits may not be realized as projected. We rely on the services of key personnel, particularly those in our engineering and sales organizations whose knowledge of our business and technical expertise would be difficult to replace, and turnover or other personnel issues in those organizations could negatively impact our revenue. Our operating results would suffer if we were subject to a protracted infringement claim or a significant damage award. As we continue to expand our international operations, including our acquired operations in Sweden, we are subject to additional risks and exposures, including economic conditions in foreign locations, foreign exchange rate fluctuations, political and regulatory conditions and other risks. Modifications to our effective tax rates or government reviews of our tax returns could affect our results of operations. Corporate governance regulations have recently increased our costs and may further increase our costs. Our quarterly operating results and stock price may fluctuate because our ability to accurately forecast our quarterly sales is limited, our costs are relatively fixed in the short term. In the past, we experienced losses and may experience losses in the future, which could result in a decline in the market price of our common stock. If we experience an increase in the length of our sales cycle, our quarterly operating results could become more unpredictable and our stock price may decline as a result. Our officers and persons affiliated with our directors hold a substantial portion of our stock and could reject mergers or other business combinations that shareholders may believe to be desirable. Our common stock may be subject to substantial price and volume fluctuations due to a number of factors, many of which will be beyond our control, which may prevent our shareholders from reselling our common stock at a profit.

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1027362--3/17/2008--SYNPLICITY_INC