Wind River Systems 8-K Wind River Reports Fourth Quarter

Exhibit 99.1

CONTACT:
Ian Halifax	Tyler Painter
Wind River	Wind River
Chief Financial Officer	Vice President, Treasury & Investor Relations
+1.510.749.2155	+1.510.749.2551
ian.halifax@windriver.com	tyler.painter@windriver.com

FOR IMMEDIATE RELEASE

Wind River Reports Fourth Quarter

and Fiscal Year 2007 Financial Results;

Company Concludes Stock Option Review

Fourth Quarter Financial Highlights:

• Reported revenue increased 8% year-over-year to $76.1 million

• Deferred revenue increased 29% year-over-year and 13% sequentially to $127.0 million

• GAAP net income per share of $0.01 and non-GAAP earnings per share of $0.10

ALAMEDA, Calif., March 8, 2007— Wind River Systems, Inc. (NASDAQ: WIND), the global leader in Device Software Optimization (DSO), announced today that fourth quarter 2007 net revenues were $76.1 million, compared with $70.2 million in the fourth quarter of 2006, an increase of 8%. Net income for the fourth quarter of 2007 was $546,000, compared with net income of $16.1 million in the fourth quarter a year ago. Net income per diluted share for the quarter was $0.01, compared to $0.18 in the fourth quarter a year ago. Non-GAAP net income was $8.8 million compared to the $9.7 million recorded in last year’s fourth quarter. Non-GAAP earnings per diluted share for the quarter was $0.10, compared with $0.11 in the fourth quarter a year ago.

For fiscal year 2007, net revenues were $285.3 million, compared with $266.3 million in fiscal year 2006, an increase of 7%. Net income per diluted share for fiscal year 2007 was $0.01, compared to $0.33 in fiscal year 2006. Non-GAAP net income was $26.8 million, 6% higher than the $25.3 million recorded in fiscal year 2006. Non-GAAP earnings per diluted share for fiscal year 2007 was $0.31, compared with $0.28 in fiscal year 2006. Net income for fiscal year 2007 was $921,000, compared with net income of $29.3 million in fiscal year 2006. The fiscal 2007 results reflect the impact of expensing stock-based compensation in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004),Share-Based Payment.

Deferred revenues as of January 31, 2007 were $127.0 million, compared with $98.3 million as of January 31, 2006, an increase of 29%. Cash and cash equivalents, short-term investments and long-term investments totaled $203.0 million as of January 31, 2007.

“We are gaining momentum in the marketplace, and are investing to accelerate this momentum,” said Ken Klein, Wind River Chairman, President and CEO. “Our continued transition to a more predictable subscription licensing model, our new product momentum, the dramatic improvements we have made to our sales force and distribution channels position us to improve the consistency of our results and accelerate growth. It is also important to note that significant non-operating challenges we faced in fiscal year 2007, primarily surrounding

the extensive historical option review, are now behind us. We have reported quarterly income statements for the second and third quarters of fiscal year 2007 today and expect to complete the 10-Q filings for these quarters as soon as practicable.”

Financial Outlook

The following statements regarding Wind River’s outlook for the first quarter of fiscal year 2008, and other statements in this press release are forward-looking and actual results may differ materially. Please consult the legal notice regarding forward-looking statements at the end of this press release and Wind River’s reports filed with the Securities and Exchange Commission for a more comprehensive description of risks that may impact actual results. Wind River plans to discuss its business outlook, based on current expectations, on its earnings conference call. Wind River does not plan to provide any further financial guidance beyond the information provided in this earnings release and earnings conference call.

“For the first quarter of fiscal 2008, we expect revenues to be between $69-$71 million, deferred revenue to exceed $134 million, non-GAAP earnings per diluted share of $0.00-$0.01 and GAAP net loss per diluted share of $0.06-$0.07,” stated Ian Halifax, Wind River CFO and Senior Vice President Finance and Administration. “We will provide full fiscal year guidance at the end of the first fiscal quarter of fiscal 2008.”

Non-Cash Charges for Historical Stock Option Grants

In May 2006, the Audit Committee of the Board of Directors commenced a voluntary review of the company’s historical stock option granting practices and the related accounting. Subsequently, in September 2006, the Board of Directors appointed a Special Committee, comprised of a subset of the Audit Committee, which engaged independent legal counsel and accounting consultants to assist the Special Committee in its review. The review covered the timing and pricing of all stock option grants made under the company’s stock option plans since its initial public offering in 1993. Based on the results of its review, the Special Committee concluded that the company did not engage in intentional or fraudulent misconduct in the granting of stock options. However, due to unintentional errors, the accounting measurement dates for certain historical stock option grants differed from the actual grant dates.

As a result of revising the accounting measurement dates for these stock option grants, the company identified errors totaling approximately $6.8 million, net of tax benefits of $1.2 million, related to stock-based compensation expenses incurred primarily in fiscal year 1995 through fiscal year 2004. While these errors were not material to any previously filed financial statements, the company concluded that correcting the aggregate error of approximately $6.8 million would be material to its consolidated statement of operations for the six months ended July 31, 2006. Accordingly, prior period financial statements will be adjusted in the Form 10-Q for the quarter ended July 31, 2006, when filed, and in subsequent filings. Additional paid-in-capital and retained earnings will be adjusted as of January 31, 2006 as follows:

	January 31, 2006
	As Reported			Adjusted
Additional paid-in-capital	$	791,709		$	798,501
Accumulated deficit	$	(447,205	)	$	(453,997	)

The company’s independent registered public accounting firm has not completed its review of the findings of the Special Committee. The company’s financial results for the second, third and fourth quarters of fiscal year 2007 are not audited and may change as a result of the finalization of the review. The historical stock option practices under review and related matters could also lead to potential claims and proceedings relating to such matters, including litigation or action by the Securities and Exchange Commission and/or other regulatory agencies.

Use of Non-GAAP Financial Information

All references to earnings per share are calculated on a fully-diluted basis. Wind River provides non-GAAP net income, net income per share and other non-GAAP numbers as an alternative for understanding the company’s operating results. Non-GAAP data are not in accordance with, or a substitute for, GAAP and may be materially different from non-GAAP measures used by other companies. The non-GAAP earnings per share forecast for the three-month period ending April 30, 2007 was computed by adjusting GAAP net loss per share to exclude stock-based compensation, amortization of restricted stock compensation, amortization of purchased and other intangibles, costs incurred for historical stock option review and the tax effects of these non-GAAP adjustments. Wind River provides a reconciliation of its GAAP and non-GAAP net income and net income per share for the three-month periods ended July 31, 2006 and 2005, October 31, 2006 and 2005, January 31, 2007 and 2006, and for the twelve-month periods ended January 31, 2007 and 2006 within this release. Wind River’s management refers to these non-GAAP measures in making operating decisions because they believe they provide meaningful information regarding Wind River’s operational performance. For example, the non-GAAP results are an indication of Wind River’s baseline performance before gains, losses or other charges that are considered by management to be outside of the company’s business operational results. In addition, these non-GAAP financial measures facilitate management’s internal comparisons to Wind River’s historical operating results and comparisons to competitors’ operating results. Wind River includes these non-GAAP financial measures in its earnings announcement because the company believes they are useful to investors in allowing for greater transparency to the supplemental information used by management in its financial and operational decision-making.

Wind River has not completed its 10-Q or 10-K review process for the quarters ended July 31, 2006, October 31, 2006 or January 31, 2007 and accordingly, the operating results for these quarters may be adjusted upon completion of its review. Actual operating results for this period could be different based on factors such as settlement of accruals and certain other adjustments.

Conference Call

The company will host a conference call at 2:00 p.m. Pacific Time on March 8, 2007 to discuss these results. You may listen to the conference call by calling +1.800.399.5927 in the U.S. and +1.706.643.3427 internationally. You may also listen in live via our webcast at

http://ir.windriver.com/phoenix.zhtml?c=91814&p=irol-EventDetails&EventId=1210173.

A telephone replay of the conference call will be available after 5:00 p.m. Pacific Time on March 8, 2007 until 11:59 p.m. Pacific Time on March 15, 2007. You may listen to the replay of the conference call by calling +1.800.642.1687 in the U.S. and +1.706.645.9291 internationally and enter the conference i.d. 9324823. The audio webcast will be archived on the Investor Relations section of Wind River’s website located at

http://ir.windriver.com/phoenix.zhtml?c=91814&p=irol-irhome.

About Wind River

Wind River is the global leader in Device Software Optimization (DSO). The company’s solutions enable customers to develop and run device software better, faster, at a lower cost and more reliably. Wind River’s Workbench, General Purpose Platform and Market-Specific Platforms reduce effort, cost and risk, and optimize quality and reliability at all phases of the device software development process from concept to deployed product.

Founded in 1981, Wind River is headquartered in Alameda, California, with operations worldwide. To learn more, visit Wind River athttp://www.windriver.com.

Wind River Systems and the Wind River Systems logo are trademarks of Wind River Systems, Inc., and VxWorks and WIND RIVER are registered trademarks of Wind River Systems, Inc. Third party marks and brands are the property of their respective holders.

Forward-Looking Statements

This press release contains forward-looking statements, including those relating to expected revenue and deferred revenue and GAAP and non-GAAP earnings per share for the first quarter ending April 30, 2007, the extent and the amount of the adjustments relating to certain of our historical stock option grants, the expected completion of the stock option review and related activities of our independent registered public accounting firm, and the expected timing of our quarterly and annual filings with the Securities and Exchange Commission, as well as general statements about our business and its direction. Words such as “expects,” “anticipates,” “projects,” “intends,” “plans,” “believes” and “estimates,” variations of such words and similar expressions are also intended to identify forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated herein. Factors that could cause or contribute to such differences include but are not limited to accounting changes required by our independent registered accounting firm following completion of their review, delays in their review, other unexpected accounting adjustments,, the potential release of all or a portion of Wind River’s valuation allowance associated with its deferred tax assets, the success of Wind River’s implementation of its new and current products, business models and market strategies, the ability to address rapidly changing technology and markets and to deliver our products on a timely basis, the ability of our customers to sell products that include the company’s software, the impact of competitive products and pricing, weakness in the economy generally or in the technology sector specifically, the success of the company’s strategic relationships, the impact of other costs and risk factors detailed in Wind River’s Annual Report on Form 10-K for the fiscal year ended January 31, 2006, its Quarterly Reports on Form 10-Q and other periodic filings with the Securities and Exchange Commission. Wind River undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

WIND RIVER SYSTEMS, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended January 31, 2007								Three Months Ended January 31, 2006
	Reported			Non-GAAP Items (1)			Non-GAAP		Reported			Non-GAAP Items (1)			Non-GAAP
Revenues, net:
Product	$	29,152		$	—		$	29,152	$	32,664		$	—		$	32,664
Subscription		27,818			—			27,818		21,178			—			21,178
Service		19,097			—			19,097		16,368			—			16,368
Total revenues, net		76,067			—			76,067		70,210			—			70,210
Cost of revenues:
Product		559			(13	)		546		927			(1	)		926
Subscription		4,615			(311	)		4,304		2,728			—			2,728
Service		11,523			(210	)		11,313		10,815			(11	)		10,804
Amortization of purchased intangibles		325			(325	)		—		130			(130	)		—
Total cost of revenues		17,022			(859	)		16,163		14,600			(142	)		14,458
Gross profit		59,045			859			59,904		55,610			142			55,752
Operating expenses:
Selling and marketing		28,772			(1,638	)		27,134		23,713			(73	)		23,640
Product development and engineering		18,870			(1,413	)		17,457		15,688			(41	)		15,647
General and administrative (2)		12,976			(5,572	)		7,404		5,952			(118	)		5,834
Amortization of other intangibles		86			(86	)		—		23			(23	)		—
Total operating expenses		60,704			(8,709	)		51,995		45,376			(255	)		45,121
Income (loss) from operations		(1,659	)		9,568			7,909		10,234			397			10,631
Other income, net		1,776			—			1,776		647			—			647
Income before income taxes		117			9,568			9,685		10,881			397			11,278
Provision for (benefit from) income taxes		(429	)		1,336			907		(5,210	)		6,830			1,620
Net income	$	546		$	8,232		$	8,778	$	16,091		$	(6,433	)	$	9,658
Net income per share:
Basic	$	0.01					$	0.10	$	0.19					$	0.11
Diluted	$	0.01					$	0.10	$	0.18					$	0.11
Shares used in per share calculation:
Basic		85,191						85,191		85,023						85,023
Diluted		86,538						86,676		89,918						89,918
(1)    Non-GAAP adjustments consist of:
Stock-based compensation				$	5,001							$	—
Amortization of restricted stock compensation					605								—
Amortization of purchased and other intangibles					411								153
Costs incurred for historical stock option review					3,140								—
Restructuring charges					—								84
Executive severance costs					411								—
Employer payroll taxes on stock option exercises					—								160
Release of tax valuation allowance					—								(6,830	)
Income tax related to non-GAAP adjustments					(1,336	)							—
Total non-GAAP adjustments				$	8,232							$	(6,433	)

(2) Includes restructuring and other charges of $84,000 for the three months ended January 31, 2006.

WIND RIVER SYSTEMS, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Twelve Months Ended January 31, 2007								Twelve Months Ended January 31, 2006
	Reported			Non-GAAP Items (1)			Non-GAAP		Reported			Non-GAAP Items (1)			Non-GAAP
Revenues, net:
Product	$	115,105		$	—		$	115,105	$	126,971		$	—		$	126,971
Subscription		99,360			—			99,360		73,976			—			73,976
Service		70,833			—			70,833		65,376			—			65,376
Total revenues, net		285,298			—			285,298		266,323			—			266,323
Cost of revenues:
Product		2,812			(70	)		2,742		4,656			(10	)		4,646
Subscription		16,510			(1,280	)		15,230		13,721			(12	)		13,709
Service		44,384			(928	)		43,456		38,495			(88	)		38,407
Amortization of purchased intangibles		1,154			(1,154	)		—		525			(525	)		—
Total cost of revenues		64,860			(3,432	)		61,428		57,397			(635	)		56,762
Gross profit		220,438			3,432			223,870		208,926			635			209,561
Operating expenses:
Selling and marketing		112,188			(5,827	)		106,361		95,301			(228	)		95,073
Product development and engineering		73,334			(5,337	)		67,997		65,550			(197	)		65,353
General and administrative (2)		39,663			(13,747	)		25,916		24,097			(1,644	)		22,453
Amortization of other intangibles		298			(298	)		—		93			(93	)		—
Total operating expenses		225,483			(25,209	)		200,274		185,041			(2,162	)		182,879
Income (loss) from operations		(5,045	)		28,641			23,596		23,885			2,797			26,682
Other income, net		6,230			—			6,230		2,178			45			2,223
Income before income taxes		1,185			28,641			29,826		26,063			2,842			28,905
Provision for (benefit from) income taxes		264			2,789			3,053		(3,232	)		6,830			3,598
Net income	$	921		$	25,852		$	26,773	$	29,295		$	(3,988	)	$	25,307
Net income per share:
Basic	$	0.01					$	0.31	$	0.35					$	0.30
Diluted	$	0.01					$	0.31	$	0.33					$	0.28
Shares used in per share calculation:
Basic		85,409						85,409		84,594						84,594
Diluted		86,713						86,946		89,939						89,939
(1)    Non-GAAP adjustments consist of:
Stock-based compensation				$	20,074							$	—
Amortization of restricted stock compensation					2,091								—
Amortization of purchased and other intangibles					1,452								618
Costs incurred for historical stock option review					4,600								—
Restructuring charges (reversals)					(98	)							1,584
Executive severance costs					411								—
Employer payroll taxes on stock option exercises					111								595
Gain on investments					—								(355	)
Realized loss on repurchase of bonds					—								400
Release of tax valuation allowance					—								(6,830	)
Income tax related to non-GAAP adjustments					(2,789	)							—
Total non-GAAP adjustments				$	25,852							$	(3,988	)

(2) Includes restructuring and other charges of $1.6 million for the twelve months ended January 31, 2006.

WIND RIVER SYSTEMS, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended July 31, 2006							Three Months Ended July 31, 2005
	Reported		Non-GAAP Items (1)			Non-GAAP		Reported		Non-GAAP Items (1)			Non-GAAP
Revenues, net:
Product	$	32,101	$	—		$	32,101	$	32,818	$	—		$	32,818
Subscription		24,184		—			24,184		17,982		—			17,982
Service		17,425		—			17,425		15,945		—			15,945
Total revenues, net		73,710		—			73,710		66,745		—			66,745
Cost of revenues:
Product		713		(28	)		685		1,609		(3	)		1,606
Subscription		3,825		(328	)		3,497		2,922		—			2,922
Service		11,422		(268	)		11,154		9,675		(46	)		9,629
Amortization of purchased intangibles		379		(379	)		—		131		(131	)		—
Total cost of revenues		16,339		(1,003	)		15,336		14,337		(180	)		14,157
Gross profit		57,371		1,003			58,374		52,408		180			52,588
Operating expenses:
Selling and marketing		28,399		(1,387	)		27,012		23,973		(64	)		23,909
Product development and engineering		18,319		(1,397	)		16,922		16,895		(72	)		16,823
General and administrative (2)		8,434		(2,501	)		5,933		5,685		(252	)		5,433
Amortization of other intangibles		33		(33	)		—		24		(24	)		—
Total operating expenses		55,185		(5,318	)		49,867		46,577		(412	)		46,165
Income from operations		2,186		6,321			8,507		5,831		592			6,423
Other income, net		1,508		—			1,508		359		88			447
Income before income taxes		3,694		6,321			10,015		6,190		680			6,870
Provision for income taxes		566		281			847		521		—			521
Net income	$	3,128	$	6,040		$	9,168	$	5,669	$	680		$	6,349
Net income per share:
Basic	$	0.04				$	0.11	$	0.07				$	0.08
Diluted	$	0.04				$	0.11	$	0.06				$	0.07
Shares used in per share calculation:
Basic		85,548					85,548		84,426					84,426
Diluted		86,503					86,774		90,119					90,119
(1)    Non-GAAP adjustments consist of:
Stock-based compensation			$	5,065						$	—
Amortization of restricted stock compensation				605							—
Amortization of purchased and other intangibles				412							155
Costs incurred for historical stock option review				223							—
Restructuring charges				—							237
Employer payroll taxes on stock option exercises				16							200
Realized loss on repurchase of bonds				—							88
Income tax related to non-GAAP adjustments				(281	)						—
Total non-GAAP adjustments			$	6,040						$	680

(2) Includes restructuring and other charges of $237,000 for the three months ended July 31, 2005.

WIND RIVER SYSTEMS, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended October 31, 2006								Three Months Ended October 31, 2005
	Reported			Non-GAAP Items (1)			Non-GAAP		Reported		Non-GAAP Items (1)			Non-GAAP
Revenues, net:
Product	$	27,009		$	—		$	27,009	$	31,445	$	—		$	31,445
Subscription		25,698			—			25,698		18,450		—			18,450
Service		17,838			—			17,838		17,712		—			17,712
Total revenues, net		70,545			—			70,545		67,607		—			67,607
Cost of revenues:
Product		761			(12	)		749		1,957		(1	)		1,956
Subscription		4,068			(296	)		3,772		2,939		—			2,939
Service		10,850			(224	)		10,626		10,119		(7	)		10,112
Amortization of purchased intangibles		317			(317	)		—		133		(133	)		—
Total cost of revenues		15,996			(849	)		15,147		15,148		(141	)		15,007
Gross profit		54,549			849			55,398		52,459		141			52,600
Operating expenses:
Selling and marketing		27,398			(1,332	)		26,066		23,418		(9	)		23,409
Product development and engineering		18,596			(1,389	)		17,207		16,193		(8	)		16,185
General and administrative (2)		10,140			(3,516	)		6,624		6,691		(1,080	)		5,611
Amortization of other intangibles		84			(84	)		—		23		(23	)		—
Total operating expenses		56,218			(6,321	)		49,897		46,325		(1,120	)		45,205
Income (loss) from operations		(1,669	)		7,170			5,501		6,134		1,261			7,395
Other income, net		1,695			—			1,695		668		(45	)		623
Income before income taxes		26			7,170			7,196		6,802		1,216			8,018
Provision for income taxes		659			464			1,123		1,071		—			1,071
Net income (loss)	$	(633	)	$	6,706		$	6,073	$	5,731	$	1,216		$	6,947
Net income (loss) per share:
Basic	$	(0.01	)				$	0.07	$	0.07				$	0.08
Diluted	$	(0.01	)				$	0.07	$	0.06				$	0.08
Shares used in per share calculation:
Basic		85,138						85,138		85,016					85,016
Diluted		85,138						86,531		89,408					89,408
(1)    Non-GAAP adjustments consist of:
Stock-based compensation				$	4,916						$	—
Amortization of restricted stock compensation					605							—
Amortization of purchased and other intangibles					401							156
Costs incurred for historical stock option review					1,237							—
Restructuring charges					—							1,078
Employer payroll taxes on stock option exercises					11							27
Gain on investments					—							(45	)
Income tax related to non-GAAP adjustments					(464	)						—
Total non-GAAP adjustments				$	6,706						$	1,216

(2) Includes restructuring and other charges of $1.1 million for the three months ended October 31, 2005.

WIND RIVER SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	January 31,
	2007			2006 (1)
ASSETS
Current assets:
Cash and cash equivalents	$	71,316		$	59,279
Short-term investments		38,959			44,013
Accounts receivable, net		74,763			65,803
Prepaid and other current assets		16,626			13,224
Total current assets		201,664			182,319
Investments		92,704			115,584
Property and equipment, net		74,997			78,514
Intangibles, net		112,075			93,723
Other assets		16,109			13,104
Total assets	$	497,549		$	483,244
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,858		$	5,674
Accrued and other current liabilities		15,222			12,260
Accrued compensation		20,093			16,190
Income taxes payable		1,313			2,249
Deferred revenues		112,161			84,505
Convertible subordinated notes		—			42,151
Total current liabilities		155,647			163,029
Long-term deferred revenues		14,868			13,760
Other long-term liabilities		2,910			3,008
Total liabilities		173,425			179,797
Stockholders’ equity:
Common stock		88			88
Additional paid-in-capital		825,236			798,501
Treasury stock, at cost		(46,233	)		(35,466	)
Accumulated other comprehensive loss		(1,891	)		(5,679	)
Accumulated deficit		(453,076	)		(453,997	)
Total stockholders’ equity		324,124			303,447
Total liabilities and stockholders’ equity	$	497,549		$	483,244

(1) Stockholders’ equity has been adjusted as of January 31, 2006 as a result of the company’s stock option review.