##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2010

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number: 0-27188





ACCELRYS, INC.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 33-0557266                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|10188 Telesis Court, Suite 100, San Diego, California          |  | 92121-4779                          
|(Address of principal executive offices)                       |  | (Zip Code)                          

(858) 799-5000

(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                           |  |                      |  |  |  |                                                                      |  |                             
|-------------------------- |  | -------------------- |  |  |  | -------------------------------------------------------------------- |  | ----------------------------
|Large accelerated filer   ̈ |  | Accelerated filer  x |  |  |  | Non-accelerated filer   ̈
(Do not check if smaller reporting company) |  | Smaller reporting company   ̈
|                           |  |                      |  |  |  |                                                                      | 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes   ̈    No  x

The number of outstanding shares of the registrants common stock, par value $0.0001 per share, as of July 21, 2010, was 55,350,718 net of
treasury shares.









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##### Table of Contents

ACCELRYS, INC.

FORM 10-Q  QUARTERLY REPORT

For The Quarterly Period Ended June 30, 2010

Table of Contents



|                               |  |                                                                                                                       |  |   
|------------------------------ |  | --------------------------------------------------------------------------------------------------------------------- |  | --
|PART I  FINANCIAL INFORMATION |  |                                                                                                                      
|                               |  |                                                                                                                      
|Item 1.                        |  | Condensed Consolidated Financial Statements                                                                           |  | 3 
|                               |  |                                                                                                                      
|                               |  | Condensed consolidated balance sheets as of June 30, 2010 (unaudited) and March 31,
2010                              |  | 3 
|                               |  |                                                                                                                      
|                               |  | Condensed consolidated statements of operations (unaudited) for the three-month periods ended June 30, 2010
 and 2009 |  | 4 
|                               |  |                                                                                                                      
|                               |  | Condensed consolidated statements of cash flows (unaudited) for the three-month periods ended June 30, 2010
 and 2009 |  | 5 
|                               |  |                                                                                                                      
|                               |  | Notes to condensed consolidated financial statements (unaudited)                                                      |  | 6 
|                               |  |                                                                                                                      
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                                 |  | 15
|                               |  |                                                                                                                      
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                            |  | 21
|                               |  |                                                                                                                      
|Item 4.                        |  | Controls and Procedures                                                                                               |  | 21
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                                                      
|                               |  |                                                                                                                      
|Item 1.                        |  | Legal Proceedings                                                                                                     |  | 21
|                               |  |                                                                                                                      
|Item 1A.                       |  | Risk Factors                                                                                                          |  | 22
|                               |  |                                                                                                                      
|Item 6.                        |  | Exhibits                                                                                                              |  | 33
|                               | 
|Signature                      |  | 34                                                                                                                   



2



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##### Table of Contents

PART I  FINANCIAL INFORMATION



|Item 1. | Condensed Consolidated Financial Statements
|------- | -------------------------------------------

Accelrys, Inc.

Condensed Consolidated Balance Sheets

(In thousands)



|                                                                                                                                             |  |              |          |   |               |   |          |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | - | ------------- | - | -------- | -
|                                                                                                                                             |  | June 30,2010 |          |   | March 31,2010 |  
|                                                                                                                                             |  | (Unaudited)  |          |   |               |  
|Assets                                                                                                                                       |  |              |          |   |               |   |          |  
|Current assets:                                                                                                                              |  |              |          |   |               |   |          |  
|Cash and cash equivalents                                                                                                                    |  | $            | 82,473   |   |               | $ | 77,121   |  
|Marketable securities                                                                                                                        |  |              | 4,955    |   |               |   | 10,461   |  
|Trade receivables, net of allowance for doubtful accounts of $163 as of June 30, 2010 and March 31,
2010                                     |  |              | 8,604    |   |               |   | 22,745   |  
|Prepaid expenses, deferred tax assets and other current assets                                                                               |  |              | 4,534    |   |               |   | 5,201    |  
|                                                                                                                                             |  |              |          |   |               |   |          |  
|Total current assets                                                                                                                         |  |              | 100,566  |   |               |   | 115,528  |  
|Restricted cash                                                                                                                              |  |              | 5,500    |   |               |   | 5,500    |  
|Property and equipment, net                                                                                                                  |  |              | 2,639    |   |               |   | 2,324    |  
|Goodwill                                                                                                                                     |  |              | 42,663   |   |               |   | 42,663   |  
|Purchased intangible assets, net                                                                                                             |  |              | 4,370    |   |               |   | 4,515    |  
|Other assets                                                                                                                                 |  |              | 1,413    |   |               |   | 675      |  
|                                                                                                                                             |  |              |          |   |               |   |          |  
|Total assets                                                                                                                                 |  | $            | 157,151  |   |               | $ | 171,205  |  
|                                                                                                                                             |  |              |          |   |               |   |          |  
|Liabilities and stockholders equity                                                                                                         |  |              |          |   |               |   |          |  
|Current liabilities:                                                                                                                         |  |              |          |   |               |   |          |  
|Accounts payable                                                                                                                             |  | $            | 1,750    |   |               | $ | 1,823    |  
|Accrued liabilities                                                                                                                          |  |              | 3,995    |   |               |   | 4,684    |  
|Accrued compensation and benefits                                                                                                            |  |              | 5,115    |   |               |   | 10,207   |  
|Current portion of accrued restructuring charges                                                                                             |  |              | 109      |   |               |   | 109      |  
|Current portion of deferred revenue                                                                                                          |  |              | 50,170   |   |               |   | 58,403   |  
|                                                                                                                                             |  |              |          |   |               |   |          |  
|Total current liabilities                                                                                                                    |  |              | 61,139   |   |               |   | 75,226   |  
|Deferred revenue, net of current portion                                                                                                     |  |              | 2,781    |   |               |   | 2,922    |  
|Deferred tax liability                                                                                                                       |  |              | 2,450    |   |               |   | 2,309    |  
|Accrued restructuring charges, net of current portion                                                                                        |  |              | 508      |   |               |   | 531      |  
|Lease-related liabilities, net of current portion                                                                                            |  |              | 3,914    |   |               |   | 4,113    |  
|Stockholders equity:                                                                                                                        |  |              |          |   |               |   |          |  
|Preferred stock, $.0001 par value; 2,000 shares authorized; no shares issued and outstanding                                                 |  |              |         |   |               |   |         |  
|Common stock, $.0001 par value; 100,000 shares authorized; 28,601 and 28,409 shares issued at June 30, 2010 and
March 31, 2010, respectively |  |              | 3        |   |               |   | 3        |  
|Additional paid-in capital                                                                                                                   |  |              | 274,259  |   |               |   | 272,726  |  
|Lease guarantee                                                                                                                              |  |              | (367     | ) |               |   | (383     | )
|Treasury stock; 644 shares at each of June 30, 2010 and March 31, 2010                                                                       |  |              | (8,340   | ) |               |   | (8,340   | )
|Accumulated deficit                                                                                                                          |  |              | (180,948 | ) |               |   | (179,365 | )
|Accumulated other comprehensive income                                                                                                       |  |              | 1,752    |   |               |   | 1,463    |  
|                                                                                                                                             |  |              |          |   |               |   |          |  
|Total stockholders equity                                                                                                                   |  |              | 86,359   |   |               |   | 86,104   |  
|                                                                                                                                             |  |              |          |   |               |   |          |  
|Total liabilities and stockholders equity                                                                                                   |  | $            | 157,151  |   |               | $ | 171,205  |  
|                                                                                                                                             |  |              |          |   |               |   |          |  

See accompanying notes to these condensed consolidated financial statements.



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Accelrys, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)



|                                                                     |  |                             |        |   |      |   |        |  
|-------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                                     |  | Three Months Ended June 30, |       
|                                                                     |  | 2010                        |        |   | 2009 |  
|Revenue                                                              |  | $                           | 19,761 |   |      | $ | 20,141 |  
|Cost of revenue                                                      |  |                             | 3,839  |   |      |   | 3,450  |  
|                                                                     |  |                             |        |   |      |   |        |  
|Gross margin                                                         |  |                             | 15,922 |   |      |   | 16,691 |  
|Operating expenses:                                                  |  |                             |        |   |      |   |        |  
|Product development                                                  |  |                             | 3,748  |   |      |   | 3,903  |  
|Sales and marketing                                                  |  |                             | 8,392  |   |      |   | 8,143  |  
|General and administrative                                           |  |                             | 3,319  |   |      |   | 3,658  |  
|Business consolidation costs (recoveries)                            |  |                             | 1,686  |   |      |   | (91    | )
|                                                                     |  |                             |        |   |      |   |        |  
|Total operating expenses                                             |  |                             | 17,145 |   |      |   | 15,613 |  
|                                                                     |  |                             |        |   |      |   |        |  
|Operating income (loss)                                              |  |                             | (1,223 | ) |      |   | 1,078  |  
|Interest and other income (expense), net                             |  |                             | (134   | ) |      |   | (5     | )
|                                                                     |  |                             |        |   |      |   |        |  
|Income (loss) before taxes                                           |  |                             | (1,357 | ) |      |   | 1,073  |  
|Income tax expense                                                   |  |                             | 225    |   |      |   | 329    |  
|                                                                     |  |                             |        |   |      |   |        |  
|Net income (loss)                                                    |  | $                           | (1,582 | ) |      | $ | 744    |  
|                                                                     |  |                             |        |   |      |   |        |  
|Basic and diluted net income (loss) per share                        |  | $                           | (0.06  | ) |      | $ | 0.03   |  
|                                                                     |  |                             |        |   |      |   |        |  
|Weighted average shares used to compute net income (loss) per share: |  |                             |        |   |      |   |        |  
|Basic                                                                |  |                             | 27,821 |   |      |   | 27,290 |  
|Diluted                                                              |  |                             | 27,821 |   |      |   | 27,409 |  

See accompanying notes
to these condensed consolidated financial statements.



4



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Accelrys, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



|                                                                                                   |  |                             |        |   |      |   |         |  
|-------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                                                                                                   |  | Three Months Ended June 30, |       
|                                                                                                   |  | 2010                        |        |   | 2009 |  
|Cash flows from operating activities:                                                              |  |                             |        |   |      |   |         |  
|Net (loss) income                                                                                  |  | $                           | (1,582 | ) |      | $ | 744     |  
|Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |  |                             |        |   |      |   |         |  
|Depreciation and amortization                                                                      |  |                             | 477    |   |      |   | 886     |  
|Share-based compensation                                                                           |  |                             | 1,136  |   |      |   | 788     |  
|Other                                                                                              |  |                             | (64    | ) |      |   | (272    | )
|Changes in operating assets and liabilities:                                                       |  |                             |        |   |      |   |         |  
|Trade receivables                                                                                  |  |                             | 14,182 |   |      |   | 12,075  |  
|Prepaid expenses and other current assets                                                          |  |                             | (18    | ) |      |   | (532    | )
|Other assets                                                                                       |  |                             | (711   | ) |      |   | (74     | )
|Accounts payable                                                                                   |  |                             | (75    | ) |      |   | (747    | )
|Accrued liabilities and compensation                                                               |  |                             | (5,774 | ) |      |   | (3,522  | )
|Deferred revenue                                                                                   |  |                             | (8,446 | ) |      |   | (9,053  | )
|                                                                                                   |  |                             |        |   |      |   |         |  
|Net cash (used in) provided by operating activities                                                |  |                             | (875   | ) |      |   | 293     |  
|Cash flows from investing activities:                                                              |  |                             |        |   |      |   |         |  
|Purchases of property and equipment, net                                                           |  |                             | (643   | ) |      |   | (59     | )
|Purchases of marketable securities                                                                 |  |                             |       |   |      |   | (19,192 | )
|Proceeds from maturities of marketable securities                                                  |  |                             | 6,200  |   |      |   | 15,904  |  
|                                                                                                   |  |                             |        |   |      |   |         |  
|Net cash provided by (used in) investing activities                                                |  |                             | 5,557  |   |      |   | (3,347  | )
|Cash flows from financing activities:                                                              |  |                             |        |   |      |   |         |  
|Proceeds from issuance of common stock                                                             |  |                             | 582    |   |      |   | 361     |  
|Common stock tendered for payment of withholding taxes                                             |  |                             | (184   | ) |      |   | (199    | )
|                                                                                                   |  |                             |        |   |      |   |         |  
|Net cash provided by financing activities                                                          |  |                             | 398    |   |      |   | 162     |  
|Effect of changes in exchange rates on cash and cash equivalents                                   |  |                             | 272    |   |      |   | 1,037   |  
|                                                                                                   |  |                             |        |   |      |   |         |  
|Increase (decrease) in cash and cash equivalents                                                   |  |                             | 5,352  |   |      |   | (1,855  | )
|Cash and cash equivalents at beginning of period                                                   |  |                             | 77,121 |   |      |   | 40,595  |  
|                                                                                                   |  |                             |        |   |      |   |         |  
|Cash and cash equivalents at end of period                                                         |  | $                           | 82,473 |   |      | $ | 38,740  |  
|                                                                                                   |  |                             |        |   |      |   |         |  

See accompanying notes to these condensed consolidated financial statements.



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Accelrys, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)



|1. | Basis of Presentation and Significant Accounting Policies
|-- | ---------------------------------------------------------

Financial Statement Preparation

The condensed consolidated financial statements of Accelrys, Inc. (Accelrys, we, our or
us) as of June 30, 2010, and for the three months ended June 30, 2010 and 2009 are unaudited. We have condensed or omitted certain information and disclosures normally included in financial statements presented in accordance
with accounting principles generally accepted in the United States (GAAP). We believe the disclosures made are adequate to make the information presented not misleading. However, you should read these condensed consolidated financial
statements in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2010, filed with the Securities and Exchange Commission (the SEC)
on May 28, 2010 (the Form 10-K).

In the opinion of management, these condensed consolidated financial
statements include all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of results for the interim periods presented.

Our business is subject to seasonal variations. Historically, we have received approximately two-thirds of our annual customer orders in
the second half of our fiscal year. In accordance with our revenue recognition policies, the revenue associated with these orders is generally recognized over the contractual license term. Therefore, because our policy is to accrue and expense sales
commissions and royalties upon the invoicing of customer orders, we have historically experienced an increase in operating costs and expenses and a decrease in income during the second half of our fiscal year. Additionally, our cash flows from
operations have historically been positive in the fiscal quarter ended March 31 as we collect the accounts receivable generated from customer orders received in the second half of our fiscal year, while we have historically experienced negative
cash flows from operations in the other three fiscal quarters. As a result of these and other seasonal variations, we believe that sequential quarter-to-quarter comparisons of our operating results are not a good indication of our future performance
and that the interim financial results for the periods presented in this quarterly report are not necessarily indicative of results for a full year or for any subsequent interim period.

Principles of Consolidation

These consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to share-based compensation, income taxes and the
valuation of goodwill, intangibles and other long-lived assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual future results could differ from those
estimates.

Revenue Recognition

We generate revenue from the following primary sources:



| |  |  | software licenses,
| | - |  | ------------------



| |  |  | post-contract customer support and maintenance services on licensed software, collectively referred to as PCS, and
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | professional services.
| | - |  | ----------------------

Customer billings generated in connection with our revenue-generating activities are initially recorded as deferred revenue. We then
recognize the revenue from these customer billings as set forth below and when all of the following criteria are met:



| |  |  | a fully executed written contract and/or purchase order has been obtained from the customer (i.e., persuasive evidence of an arrangement exists),
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the contractual price of the product or services has been defined and agreed to in the contract (i.e., price is fixed or determinable),
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | delivery of the product or service has occurred and no material uncertainties regarding customer acceptance of the delivered product or service exist,
and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | collection of the purchase price from the customer is considered probable.
| | - |  | --------------------------------------------------------------------------



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Software Licenses.We license software predominantly on a term basis. When sold
perpetually, our standard perpetual software licensing arrangements generally include twelve months of bundled PCS, while our standard term-based software licensing arrangements typically include PCS for the full duration of the term license.
Because we do not have vendor specific objective evidence of the fair value of these elements, we recognize as revenue the entire fee for such perpetual and term-based licenses ratably over the term of the bundled PCS.

Renewal of PCS under Perpetual Software Licenses.Our PCS includes the right to receive unspecified upgrades or enhancements and
technical support. Fees from customer renewals of PCS related to previously purchased perpetual licenses are recognized ratably over the term of the PCS.

Professional Services.We provide certain services to our customers, including non-complex product training, installation,
implementation and other professional services which are non-essential to the operation of the software. We also perform professional services for our customers designed to enhance the value of our software products by creating extensions to
functionality to address a clients specific business needs. When sold separately, revenue from these services is recorded under the proportional performance or completed performance method.

Multi-Element Arrangements.For multi-element arrangements which include software licenses, PCS and non-complex training,
installation and implementation services which are non-essential to the operation of the software, the entire fee for such arrangements is recognized as revenue ratably over the term of the PCS or delivery of the services, whichever is longer. For
multi-element arrangements which also include services that are essential to the operation of the software, the fee for such arrangements is generally deferred until the services essential to the operation of the software have been performed, at
which point the entire fee for such arrangements is recognized as revenue ratably over the remaining term of the PCS or the delivery of the non-essential services, whichever is longer.

Software Development Costs for Computer Software to be Sold

Costs incurred internally in the research and development of new software products and significant enhancements to existing software
products for computer software to be sold are expensed as incurred until the technological feasibility of the product has been established. Technological feasibility occurs shortly before our internally developed software products are available for
general release. We have determined that the internal costs eligible for capitalization are not material. Costs paid to third parties for products in which technological feasibility has been established are capitalized upon purchase of the software.

At June 30, 2010 and March 31, 2010, we had $2.0 million of capitalized software purchased from third parties. This
amount is included in purchased intangible assets, net, in the accompanying condensed consolidated balance sheets. These costs are being amortized to cost of revenue on a straight-line basis over their estimated useful life of five years.
Amortization expense was $0.1 million for each of the quarters ended June 30, 2010 and 2009.

Share Based Compensation

We estimate the fair value of our share-based awards on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes
option-pricing model requires the use of certain input variables, as follows:

Expected Volatility. Volatility is a
measure of the amount the stock price will fluctuate during the expected life of an award. We determine volatility based on our historical stock price volatility over the most recent period equivalent to the expected life of the award, giving
consideration to company-specific events impacting historical volatility that are unlikely to occur in the future, as well as anticipated future events that may impact volatility. We also consider the historical stock price volatilities of
comparable publicly traded companies.

Risk-Free Interest Rate.Our assumption of the risk-free interest rate is based
on the interest rates on U.S. constant rate treasury securities with contractual terms approximately equal to the expected life of the award.

Expected Dividend Yield.Because we have not paid any cash dividends since our inception and do not anticipate paying dividends in
the foreseeable future, we assume a dividend yield of zero.

Expected Award Life.We determine the expected life of an
award by considering various relevant factors, including the vesting period and contractual term of the award, our employees historical exercise patterns and length of service, the expected future volatility of our stock price and employee
characteristics. We also consider the expected terms of comparable publicly traded companies. For the 2005 Employee Stock Purchase Plan (the ESPP) purchase rights, the expected life is equal to the current offering period under the ESPP.



7



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We also estimate at grant the likelihood that the award will ultimately vest (the
pre-vesting forfeiture rate) and revise the estimate, if necessary, in future periods if the actual forfeiture rate differs. We determine the pre-vesting forfeiture rate of an award based on our historical pre-vesting award forfeiture
experience, giving consideration to company-specific events impacting our historical pre-vesting award forfeiture experience that are unlikely to occur in the future as well as anticipated future events that may impact forfeiture rates.

Income Taxes

Deferred
tax assets and liabilities are recognized for the tax consequences of temporary differences between the financial carrying amounts and the tax basis of existing assets and liabilities by applying enacted statutory tax rates applicable to future
years. The provision for income taxes is based on our estimates for taxable income of the various legal entities and jurisdictions in which we operate. As such, income tax expense may vary from the customary relationship between income tax expense
and pre-tax income. We establish a valuation allowance against our net deferred tax assets to reduce deferred tax assets to the amount expected to be realized.

We assess the recoverability of our deferred tax assets on an ongoing basis. In making this assessment we are required to consider all
available positive and negative evidence to determine whether, based on such evidence, it is more likely than not that some portion or all of our net deferred assets will be realized in future periods. This assessment requires significant judgment.
We do not recognize current and future tax benefits until it is more likely than not that our tax positions will be sustained. We have provided a full valuation allowance on all of our U.S. and UK deferred tax assets. In general, any realization of
our net deferred tax assets will reduce our effective rate in future periods. However, the realization of deferred tax assets that are related to net operating losses (NOLs) that were generated by tax deductions resulting from the
exercise of non-qualified stock options will be a direct increase to stockholders equity.

We determine whether the
benefits of our tax positions are more-likely-than-not of being sustained upon audit based on the technical merits of the tax position. We recognize the impact of an uncertain income tax position taken on our income tax return at the largest amount
that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained. We have an unrecognized tax benefit of $10.8
million related to pre-acquisition NOLs from acquisitions outside of the U.S. Upon realization of these pre-acquisition NOLs, we will recognize the benefit as a credit to income. As of June 30, 2010, we have not realized the benefit of any of
these pre-acquisition NOLs.

As previously noted, we have provided for a full valuation allowance against our U.S. and UK
NOLs. As of June 30, 2010, evidence does not support release of this valuation allowance. However, as we continue to evaluate our deferred tax assets, it is possible that a portion of our deferred tax assets may be realized during the year and
accordingly, a portion or all of the valuation allowance recorded against those deferred tax assets may be released.

Interest
and penalties related to income tax matters are recognized in income tax expense. During the three months ended June 30, 2010 we did not incur any expense related to interest or penalties for income tax matters, and no such amounts were accrued
as of June 30, 2010.



|2. | Net Income (loss) Per Share
|-- | ---------------------------

Basic net income (loss) per share and diluted net loss per share is computed by dividing the net income (loss) for the period by the
weighted average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common
stock and common stock equivalents outstanding during the period. Potentially dilutive common stock equivalents consist of common stock options and unvested restricted stock units (RSUs).



|                                                             |  |                                          |        |   |      |   |       
|------------------------------------------------------------ |  | ---------------------------------------- | ------ | - | ---- | - | ------
|                                                             |  | Three Months Ended June 30,             
|                                                             |  | 2010                                     |        |   | 2009
|                                                             |  | (In thousands, except per share amounts)
|Net income (loss)                                            |  | $                                        | (1,582 | ) |      | $ | 744   
|Denominator:                                                 |  |                                          |        |   |      |   |       
|Weighted average common shares outstanding                   |  |                                          | 27,821 |   |      |   | 27,290
|Dilutive potential common stock equivalents                  |  |                                          |       |   |      |   | 119   
|                                                             |  |                                          |        |   |      |   |       
|Weighted average shares and dilutive potential common shares |  |                                          | 27,821 |   |      |   | 27,409
|                                                             |  |                                          |        |   |      |   |       
|Basic and diluted net income (loss) per share                |  | $                                        | (0.06  | ) |      | $ | 0.03  
|                                                             |  |                                          |        |   |      |   |       

Potentially dilutive common stock equivalents that
were excluded from the diluted net income per share calculations as their effect would be anti-dilutive totaled 4.5 million shares and 2.5 million shares for the three months ended June 30, 2010 and 2009, respectively.



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|3. | Share-Based Payments
|-- | --------------------

Share-Based
Compensation Plans

On August 2, 2005, our stockholders approved the Amended and Restated 2004 Stock Incentive Plan
(the 2004 Plan). The 2004 Plan authorizes the grant of equity awards to purchase up to that number of shares of our common stock equal to the sum of (i) 1,900,000 shares and (ii) the number of shares of common stock underlying
any stock awards granted under certain prior share-based compensation plans that expire or are cancelled or forfeited without having been exercised in full or that are repurchased by us. The types of equity awards that may be granted under the 2004
Plan to our officers, directors, employees and consultants include stock options, RSUs, restricted stock awards, common stock awards, stock appreciation rights, performance awards and deferred stock units. Pursuant to the 2004 Plan, any shares of
common stock that are awarded under the 2004 Plan as RSUs, restricted stock awards, common stock awards, performance awards or deferred stock units (but not as stock options or stock appreciation rights) are counted against the maximum number of
shares of common stock available for issuance under the 2004 Plan based on a 1.15-to-1 ratio. The terms and conditions of specific awards are set at the discretion of our board of directors although generally awards vest over not more than four
years, expire no later than ten years from the date of grant and do not have exercise prices less than the fair market value of the underlying common stock on the date of grant. At June 30, 2010, approximately 1,065,000 shares of our common
stock remained available for issuance pursuant to awards granted under the 2004 Plan.

On August 2, 2005, our
stockholders also approved the ESPP, under which we have reserved 1,000,000 shares of our common stock for issuance. Under the ESPP, employees may defer up to 10% of their base salary to purchase shares of our common stock, up to a maximum of
1,000 shares per offering period. The purchase price of the common stock is equal to 85% of the lower of the fair market value per share of our common stock on the commencement date of the applicable offering period or the applicable
purchase date. To date, we have issued approximately 580,000 shares under the ESPP and approximately 420,000 shares remained available for future issuance under the ESPP as of June 30, 2010.

We also maintain certain other share-based compensation plans, pursuant to which we have not granted awards during fiscal year 2011 and
do not intend to grant any further awards in the future.

Share-Based Award Activity

Our stock options generally vest over four years and have a contractual term of 10 years. A summary of stock option activity under our
share-based compensation plans is as follows:



|                             |  |                                          |   |  |                              |      |                         |       |                                         |     
|---------------------------- |  | ---------------------------------------- | - |  | ---------------------------- | ---- | ----------------------- | ----- | --------------------------------------- | ----
|                             |  | Number ofShares                          |   |  | WeightedAverageExercisePrice |      | AggregateIntrinsicValue |       | WeightedAverageRemainingContractualLife
|                             |  | (In thousands, except per share amounts)
|Outstanding at April 1, 2010 |  | 3,544                                    |   |  | $                            | 6.39 |                         |       |                                         |     
|Granted                      |  | 185                                      |   |  |                              | 7.13 |                         |       |                                         |     
|Exercised                    |  | (64                                      | ) |  |                              | 5.02 |                         |       |                                         |     
|Expired/Forfeited            |  | (161                                     | ) |  |                              | 6.28 |                         |       |                                         |     
|                             |  |                                          |   |  |                              |      |                         |       |                                         |     
|Outstanding at June 30, 2010 |  | 3,504                                    |   |  |                              | 6.46 |                         | 1,932 |                                         | 6.76
|                             |  |                                          |   |  |                              |      |                         |       |                                         |     
|Exercisable at June 30, 2010 |  | 1,721                                    |   |  |                              | 7.06 |                         | 754   |                                         | 4.87
|                             |  |                                          |   |  |                              |      |                         |       |                                         |     



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RSUs granted under the 2004 Plan generally vest annually over three years and, once vested,
do not expire. Upon vesting of an RSU, employees are generally issued an equivalent number of shares of our common stock. A summary of RSU activity under our share-based compensation plans is as follows:



|                          |  |                                          |   |  |                                               |     
|------------------------- |  | ---------------------------------------- | - |  | --------------------------------------------- | ----
|                          |  | Number ofShares                          |   |  | WeightedAverageGrant DateFair Value Per Share
|                          |  | (In thousands, except per share amounts)
|Unvested at April 1, 2010 |  | 950                                      |   |  | $                                             | 5.60
|Granted                   |  | 120                                      |   |  |                                               | 7.12
|Vested                    |  | (80                                      | ) |  |                                               | 6.88
|Forfeited                 |  | (38                                      | ) |  |                                               | 5.07
|                          |  |                                          |   |  |                                               |     
|Unvested at June 30, 2010 |  | 952                                      |   |  | $                                             | 5.55
|                          |  |                                          |   |  |                                               |     

Included in the vested shares for the period are
approximately 27,000 shares tendered to us by employees for payment of minimum income tax obligations upon vesting of RSUs.

Share-Based
Compensation Expense

The estimated fair value of our share-based awards is recognized as a charge against income on a
straight-line basis over the requisite service period, which is generally the vesting period of the award. Total share-based compensation expense recognized in our condensed consolidated statements of operations for the three months ended
June 30, 2010 and 2009 was as follows:



|                                       |  |                             |       |      |   |    
|-------------------------------------- |  | --------------------------- | ----- | ---- | - | ---
|                                       |  | Three Months Ended June 30,
|                                       |  | 2010                        |       | 2009
|                                       |  | (in thousands)             
|Cost of revenue                        |  | $                           | 52    |      | $ | 63 
|Product development                    |  |                             | 237   |      |   | 222
|Sales and marketing                    |  |                             | 346   |      |   | 166
|General and administrative             |  |                             | 501   |      |   | 337
|                                       |  |                             |       |      |   |    
|Total share-based compensation expense |  | $                           | 1,136 |      | $ | 788
|                                       |  |                             |       |      |   |    

No share-based compensation expense was capitalized in
the periods presented. At June 30, 2010, the gross amount of unrecognized share-based compensation expense relating to unvested share-based awards was approximately $7.8 million, which we anticipate recognizing as a charge against income over a
weighted average period of 2.5 years.



|4. | Comprehensive Income (Loss)
|-- | ---------------------------

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events
and circumstances from non-owner sources. It includes all changes in equity during a period, except those changes resulting from investments by stockholders (changes in paid in capital) and distributions to stockholders (i.e., dividends). For the
three months ended June 30, 2010 and 2009, comprehensive income (loss) consists of the following:



|                                         |  |                             |        |   |      |   |      |  
|---------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ---- | -
|                                         |  | Three Months Ended June 30, |       
|                                         |  | 2010                        |        |   | 2009 |  
|                                         |  | (in thousands)              |       
|Net income (loss)                        |  | $                           | (1,582 | ) |      | $ | 744  |  
|Foreign currency translation adjustment  |  |                             | 289    |   |      |   | (658 | )
|Unrealized gain on marketable securities |  |                             |       |   |      |   | 4    |  
|                                         |  |                             |        |   |      |   |      |  
|Total comprehensive income (loss)        |  | $                           | (1,293 | ) |      | $ | 90   |  
|                                         |  |                             |        |   |      |   |      |  



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|5. | Marketable Securities
|-- | ---------------------

Our marketable securities consist of auction rate securities (ARS) with original maturities of greater than three months.
During the third quarter of fiscal year 2009, we reclassified our ARS from available-for-sale to trading securities. Trading securities are reported at fair value, with gains and losses resulting from changes in fair value recognized in the
Other income and expense, net line in our condensed consolidated statements of operations. As of June 30, 2010 all unrealized losses on our ARS have been recorded as a charge against income. The cost of marketable securities sold is
determined based on the specific identification method.

Marketable securities consist of the following:



|                        |  |                |        |                      |   |                       |  |            |   |  |   |       
|----------------------- |  | -------------- | ------ | -------------------- | - | --------------------- |  | ---------- | - |  | - | ------
|                        |  | AmortizedCost  |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Fair Value
|                        |  | (In thousands)
|June 30, 2010:          |  |                |        |                      |   |                       |  |            |   |  |   |       
|Auction rate securities |  | $              | 4,955  |                      |   |                      |  |            |  |  | $ | 4,955 
|                        |  |                |        |                      |   |                       |  |            |   |  |   |       
|                        |  | $              | 4,955  |                      | $ |                      |  | $          |  |  | $ | 4,955 
|                        |  |                |        |                      |   |                       |  |            |   |  |   |       
|                        |  |                |        |                     
|                        |  | AmortizedCost  |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Fair Value
|                        |  | (In thousands)
|March 31, 2010:         |  |                |        |                      |   |                       |  |            |   |  |   |       
|Auction rate securities |  |                | 10,461 |                      |   |                      |  |            |  |  |   | 10,461
|                        |  |                |        |                      |   |                       |  |            |   |  |   |       
|                        |  | $              | 10,461 |                      | $ |                      |  | $          |  |  | $ | 10,461
|                        |  |                |        |                      |   |                       |  |            |   |  |   |       

The contractual maturities of our marketable
securities at June 30, 2010 are as follows (in thousands):



|                         |  |   |      
|------------------------ |  | - | -----
|Due within one year      |  | $ |     
|Due in one to five years |  |   |     
|Due in five to ten years |  |   |     
|Due after ten years      |  |   | 4,955
|                         |  |   |      
|                         |  | $ | 4,955
|                         |  |   |      

ARS have been included in the above contractual
maturities table based on the stated maturity date of the bond.

We review the fair value of our marketable securities at
least quarterly to determine if declines in the fair value of individual securities are other-than-temporary in nature. If we believe the decline in the fair value of an individual security is other-than-temporary, we write-down the carrying value
of the security to its estimated fair value, with a corresponding charge against income. To determine if a decline in the fair value of an investment is other-than-temporary, we consider several factors including, among others, the period of time
and extent to which the estimated fair value has been less than cost, overall market conditions, the historical and projected future financial condition of the issuer of the security and our ability and intent to hold the security for a period of
time sufficient to allow for a recovery of the market value.

As of June 30, 2010, we held $5.6 million in ARS at par
value, which are collateralized by student loans, most of which were originated under the Federal Family Education Loan Program and are guaranteed by the United States Federal Department of Education. All of our ARS are AAA rated (or equivalent) by
one or more of the major credit rating agencies. During the quarter, ARS with a par value of $6.2 million were called by the issuer at par value.

Through February 2008, the par value of our ARS approximated fair value due to the frequent auction periods, generally every 7 to 28
days, which provided liquidity to these investments. However, since February 2008, all auctions for the ARS we hold have failed as the amount of ARS submitted for sale has exceeded the amount of purchase orders. The result of a failed auction is
that these ARS continue to pay interest at contractually stated rates at each respective auction date; however, the liquidity of the ARS is limited until there is a successful auction, the issuer redeems the ARS, the ARS mature or until such time as
other markets for these ARS develop. We have concluded that the estimated fair value of the ARS no longer approximates the par value due to the lack of liquidity. The ARS have been classified within Level 3 in accordance with fair value accounting
guidance. Their valuation requires substantial judgment and estimation of factors that are not currently observable in the market due to the lack of trading in the ARS.



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We estimated the fair value of our ARS as of June 30, 2010 utilizing a discounted cash
flow analysis. The analysis considered, among other items, the collateralization underlying the security investments, the creditworthiness of the issuer, expected future cash flows, and the estimated weighted average life of the contractual maturity
of the underlying assets. Due to entering into an agreement whereby one of our investment firms will repurchase our ARS at par value, as discussed further below, we intend to sell the impaired securities prior to maturity and have determined that
the decline in value of our ARS as of June 30, 2010 is other-than-temporary. Accordingly, in fiscal year 2009 we reversed prior unrealized losses on our ARS from accumulated other comprehensive income and recorded the losses as a charge to
income during the same period.

On November 11, 2008 (the Acceptance Date), we entered into an agreement (the
ARS Agreement) with one of our investment securities firms (the Investment Firm) pursuant to which the Investment Firm has agreed to repurchase all of our ARS at par value. By accepting the ARS Agreement, we (1) received
the right to sell our ARS at par value to the Investment Firm between June 30, 2010 and July 2, 2012 (the Put Option) and (2) gave the Investment Firm the right to purchase the ARS from us any time after the Acceptance
Date as long as we receive par value.

The ARS Agreement covers ARS with a par value of $5.6 million and a fair value of $5.0
million as of June 30, 2010. We have accounted for the Put Option as a freestanding financial instrument and have elected to record the Put Option at fair value, which was $0.6 million as of June 30, 2010.

During the quarter ended June 30, 2010, changes in fair value of the Put Option and the ARS offset each other, resulting in no gain
or loss recorded. During the quarter ended June 30, 2009, we recorded a gain resulting from changes in fair value of the ARS and put option of $0.2 million, which is recorded in the Interest and other income (expense), net line of
our condensed consolidated statement of operations for that period. The right to put our ARS to the Investment Firm began on June 30, 2010 and we intend to exercise such right from time to time. Accordingly, the ARS and the Put Option are
classified as current assets on our condensed consolidated balance sheet as of June 30, 2010.

In July 2010, ARS with a
par value of $2.9 million were called by the respective issuers. Additionally, in July 2010, we exercised the Put Option on ARS with an aggregate par value of $2.5 million. We continue to monitor and evaluate our ARS to determine whether we will
continue to hold our remaining ARS with an aggregate par value of $0.3 million or exercise our Put Option.



|6. | Fair Value
|-- | ----------

We carry our
cash equivalents and marketable securities at market value. The carrying amount of accounts receivable, accounts payable and accrued liabilities are considered to be representative of their respective fair values due to their short-term nature.

We adopted fair value accounting guidance as of April 1, 2008 as required for financial assets and liabilities. Fair
value accounting provides a definition of fair value, establishes acceptable methods of measuring fair value and expands disclosures for fair value measurements. The principles apply under accounting pronouncements which require measurement of fair
value and do not require any new fair value measurements in accounting pronouncements where fair value is the relevant measurement attribute. Fair value accounting also specifies a fair value hierarchy based upon the observability of inputs used in
valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions.

In accordance with fair value accounting, fair value measurements are classified under the following hierarchy:

Level 1  Quoted prices for identical instruments in active markets.

Level 2  Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets
that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.

Level 3  Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.



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##### Table of Contents

Fair value measurements are classified according to the lowest level input or value-driver
that is significant to the valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable. The following table summarizes our assets and liabilities that require fair value
measurements on a recurring basis and their respective input levels based on the fair value hierarchy:



|                                   |  |                               |       |                                                   |   |                                             |   |                                        |   |      
|---------------------------------- |  | ----------------------------- | ----- | ------------------------------------------------- | - | ------------------------------------------- | - | -------------------------------------- | - | -----
|                                   |  | Carrying Value atJune 30,2010 |       | Quoted Market Pricesfor Identical Assets(Level 1) |   | Significant OtherObservable Inputs(Level 2) |   | SignificantUnobservableInputs(Level 3)
|                                   |  | (In thousands)               
|June 30, 2010:                     |  |                               |       |                                                   |   |                                             |   |                                        |   |      
|Auction rate securities            |  | $                             | 4,955 |                                                   |  |                                             |  |                                        | $ | 4,955
|Auction rate securities put option |  | $                             | 595   |                                                   |  |                                             |  |                                        | $ | 595  
|                                   |  |                               |       |                                                   |   |                                             |   |                                        |   |      
|Total                              |  | $                             | 5,550 |                                                   |  |                                             |  |                                        | $ | 5,550

The following table
summarizes the assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):



|                                                                |  |                                                                                           |        |  
|--------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------- | ------ | -
|                                                                |  | Fair Value MeasurementsUsing SignificantUnobservable Level
3InputsAuction Rate Securities |       
|                                                                |  | (In thousands)                                                                            |       
|Balance at April 1, 2010                                        |  | $                                                                                         | 11,750 |  
|Redemption of auction rate securities                           |  |                                                                                           | (6,200 | )
|Change in fair value of auction rate securities put option      |  |                                                                                           |       |  
|Realized gain on auction rate securities included in net income |  |                                                                                           |       |  
|                                                                |  |                                                                                           |        |  
|Balance at June 30, 2010                                        |  |                                                                                           | 5,550  |  
|                                                                |  |                                                                                           |        |  



|7. | Guarantees
|-- | ----------

Guarantee of Lease
Obligation of Others

On April 30, 2004, we spun-off our drug discovery subsidiary, Pharmacopeia Drug
Discovery, Inc. (PDD), into an independent, separately traded, publicly held company through the distribution to our stockholders of a dividend of one share of PDD common stock for every two shares of our common stock. The landlords
of our New Jersey facilities, which were used by our PDD operations, consented to the assignment of the leases to PDD. Despite the assignment, the landlords required us to guarantee the remaining lease obligations, which totaled approximately $14.3
million as of June 30, 2010. In the event that PDD defaults on their lease commitment, we are permitted under the guarantee to sublease the facility in order to mitigate our lease obligation. In fiscal year 2005, we recognized a liability and
corresponding charge to stockholders equity for the probability-weighted fair market value of the guarantee. Changes to the fair market value of the liability are recognized in stockholders equity. The liability for our guarantee of the
lease obligation was $0.4 million at June 30, 2010.

Other Guarantees and Indemnifications

We provide indemnifications of varying scope and size to certain customers against claims of intellectual property infringement made by
third parties arising from the use of our products. We have also entered into indemnification agreements with our officers and directors. Although the maximum potential amount of future payments we could be required to make under these
indemnifications is unlimited, to date we have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. Additionally, we have insurance policies that, in most cases, would limit our exposure and
enable us to recover a portion of any amounts paid. Therefore, we believe the estimated fair value of these agreements is minimal and likelihood of incurring an obligation is remote. Accordingly, we have not accrued any liabilities in connection
with these indemnification obligations as of June 30, 2010.



|8. | Restructuring Activities
|-- | ------------------------

The following summarizes the changes in our accrued restructuring charges liability:



|                                                   |  |                            |     |   |                                               |   |      |       |  |   |      |  
|-------------------------------------------------- |  | -------------------------- | --- | - | --------------------------------------------- | - | ---- | ----- |  | - | ---- | -
|                                                   |  | Severance andRelated Costs |     |   | LeaseObligation Exitand FacilityClosure Costs |   |      | Total | 
|                                                   |  | (In thousands)             |    
|Balance at March 31, 2009                          |  | $                          | 175 |   |                                               |   | 817  |       |  |   | 992  |  
|Additional severance and lease abandonment charges |  |                            | (74 | ) |                                               |   | (12  | )     |  |   | (86  | )
|Adjustments to liability                           |  |                            | (61 | ) |                                               |   | 142  |       |  |   | 81   |  
|Cash payments                                      |  |                            | (43 | ) |                                               |   | (370 | )     |  |   | (413 | )
|Effect of foreign exchange                         |  |                            | 3   |   |                                               |   | 63   |       |  |   | 66   |  
|                                                   |  |                            |     |   |                                               |   |      |       |  |   |      |  
|Balance at March 31, 2010                          |  |                            |    |   |                                               |   | 640  |       |  |   | 640  |  
|Adjustments to liability                           |  |                            |    |   |                                               |   | 13   |       |  |   | 13   |  
|Cash payments                                      |  |                            |    |   |                                               |   | (36  | )     |  |   | (36  | )
|Effect of foreign exchange                         |  |                            |    |   |                                               |   |     |       |  |   |     |  
|                                                   |  |                            |     |   |                                               |   |      |       |  |   |      |  
|Balance at June 30, 2010                           |  | $                          |    |   |                                               | $ | 617  |       |  | $ | 617  |  
|                                                   |  |                            |     |   |                                               |   |      |       |  |   |      |  



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All amounts incurred in connection with the above activities are recorded in the
Business consolidation costs (recoveries) line in the accompanying condensed consolidated statements of operations.



|9. | Legal Proceedings
|-- | -----------------

Prior
to the completion of the previously announced merger (the Merger) of Alto Merger Sub, Inc., a wholly-owned subsidiary of Accelrys (Merger Sub), with and into Symyx Technologies, Inc. (Symyx), whereby Symyx became
a wholly-owned subsidiary of Accelrys, several lawsuits were filed against Symyx, the members of the Symyx board of directors, certain executive officers of Symyx, Accelrys and Merger Sub in purported class action lawsuits brought by individual
Symyx stockholders challenging the Merger. The first of such lawsuits was a class action lawsuit filed in the Superior Court of the State of California, County of Santa Clara, purportedly on behalf of the stockholders of Symyx, against Symyx and its
directors and chief financial officer, as well as Accelrys and Merger Sub, alleging, among other things, that Symyxs directors breached their fiduciary duties to the stockholders of Symyx in connection with the proposed Merger. Subsequent to
the filing of such lawsuit, several additional suits were filed, also in Santa Clara County, each of which was substantially similar to the first lawsuit. The lawsuits were ultimately consolidated into a single action and on May 20, 2010, the
plaintiffs filed a single consolidated complaint (the Complaint). The Complaint serves as the only complaint in the combined litigation going forward (the Consolidated Action), which is pending in the Superior Court for the
County of Santa Clara (the Court). The Complaint, like the previously filed complaints, alleges, among other things, that Symyxs directors breached their fiduciary duties to the stockholders of Symyx in connection with the Merger,
and was seeking, among other things, to enjoin the defendants from completing the Merger pursuant to the terms of the Agreement and Plan of Merger and Reorganization, dated April 5, 2010, by and among Accelrys, Merger Sub and Symyx (the Merger
Agreement).

On June 22, 2010, the defendants entered into a memorandum of understanding (the MOU) with
the plaintiffs, pursuant to which the defendants and the plaintiffs agreed to settle the Consolidated Action. Subject to court approval and further definitive documentation the MOU resolves the allegations by the plaintiffs against the defendants
made in connection with the Merger and the Merger Agreement, and provides a release and settlement by the purported class of Symyx stockholders with prejudice of all asserted claims against the defendants without costs to any defendant (other than
as expressly provided in the MOU), in exchange for Symyxs agreement to provide additional supplemental disclosures to the joint proxy statement/prospectus issued by Accelrys and Symyx in connection with the Merger. Accelrys and Symyx made the
appropriate supplemental disclosures and the parties have agreed to present to the Court a stipulation of settlement and any other documentation as may be required in order to obtain approval by the Court of a settlement on behalf of the class of
stockholders and the dismissal of the actions in the Complaint. We will be obligated to pay any attorneys fees and expenses awarded to the plaintiffs, if any. If the settlement is not approved or the conditions of the MOU are not satisfied, we
intend to take all appropriate actions to defend against the allegations made in the Complaint.



|10. | Recent Accounting Pronouncements
|--- | --------------------------------

In September 2009, the Financial Accounting Standards Board (FASB) issued new accounting guidance related to the revenue
recognition of multiple element arrangements. The new guidance states that if vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, companies will be required to develop a best estimate
of the selling price to separate deliverables and allocate arrangement consideration using the relative selling price method. The new guidance is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or
after June 15, 2010. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our results of operations, financial position and cash flows.

In September 2009, the FASB issued new accounting guidance related to certain revenue arrangements that include software elements.
Previously, companies that sold tangible products with more than incidental software were required to apply software revenue recognition guidance. This guidance often delayed revenue recognition for the delivery of the tangible product.
Under the new guidance, tangible products that have software components that are essential to the functionality of the tangible product will be excluded from the software revenue recognition guidance. The new guidance will include
factors to help companies determine what is essential to the functionality. Software-enabled products will now be subject to other revenue guidance and will likely follow the guidance for multiple deliverable arrangements issued by the
FASB in September 2009. The new guidance is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. We do not expect the adoption of this guidance
to have a material impact on our results of operations, financial position and cash flows.



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|11. | Subsequent Events
|--- | -----------------

On
July 1, 2010, following the approval of our respective stockholders, we completed the previously announced Merger of Merger Sub with and into Symyx, whereby Symyx became our wholly-owned subsidiary. The Merger was completed pursuant to the
Agreement and Plan of Merger and Reorganization, dated April 5, 2010, by and among Accelrys, Merger Sub and Symyx. Under the terms of the Merger Agreement, Symyx stockholders received 0.7802 shares of our common stock (the Exchange
Ratio) for each share of Symyx common stock held as of the completion of the Merger. As a result, we issued an aggregate of approximately 27.4 million shares of our common stock to Symyx stockholders upon completion of the Merger. In
addition, 2,441,274 outstanding options to purchase Symyx common stock were assumed by us and converted into options to purchase our common stock, in each case appropriately adjusted based on the Exchange Ratio.

As a result of the Merger, our U.S. federal and state deferred tax assets related to NOL carryforwards of $117.1 million and $30.6
million, respectively, as of March 31, 2010 may be subject to further limitations under Section 382 of the Internal Revenue Code of 1986, as amended (the Code).

On August 3, 2010, our board of directors approved the assumption of Symyxs 2007 Stock Incentive Plan, as amended (the
Symyx Plan), in accordance with NASDAQ Rule 5635 (Rule 5635), which provides that shares available under certain plans acquired in mergers and other acquisitions may be used for certain post transaction grants without further
stockholder approval. Pursuant to Rule 5635, such shares may be used for post-transaction grants of options and other equity awards by the Company (after appropriate adjustment for the Exchange Ratio), under the Symyx Plan, without further
shareholder approval, provided: (i) the time during which those shares are available for grants is not extended beyond the period when they would have been available under the Symyx Plan absent the Merger, and (ii) such options and other
awards are not granted to individuals who were employed by the Company or its subsidiaries at the time the Merger was completed. Under the Symyx Plan, the number of shares available for grant of awards will initially be 5,081,555, which represents
the number of shares available for grant under such plan as of the completion of the Merger, as adjusted based on the Exchange Ratio.

Since the Merger was completed after the quarter ended June 30, 2010, we are not required to include in this Quarterly Report on
Form 10-Q pro forma financial statements giving effect to the Merger. However, we will file pro forma financial statements, including our preliminary acquisition-date fair value of the identifiable assets acquired and liabilities assumed, by an
amendment to our Current Report on Form 8-K previously filed with the SEC on July 12, 2010 (the Form 8-K/A). In accordance with SEC requirements, the Form 8-K/A will be filed not later than 71 calendar days after the date on which the
initial Current Report on Form 8-K reporting the Merger was required to have been filed. Certain disclosures required by Accounting Standards Codification Topic 805, Business Combinations, are included below.

The unaudited pro forma consolidated results of operations, assuming the Merger had occurred on April 1, 2010 and as April 1,
2009, respectively, are as follows:



|                                          |  |                                     |         |   |      |   |        |  
|----------------------------------------- |  | ----------------------------------- | ------- | - | ---- | - | ------ | -
|                                          |  | For the Three 
MonthsEnded June 30, |        
|                                          |  | 2010                                |         |   | 2009 |  
|                                          |  | (In thousands)                      |        
|Unaudited pro forma consolidated results: |  |                                     |         |   |      |   |        |  
|Revenue                                   |  | $                                   | 39,443  |   |      | $ | 40,917 |  
|Net loss from continuing operations       |  | $                                   | (15,058 | ) |      | $ | (948   | )

We have incurred a total
of $2.4 million of acquisition transaction expenses to date relating to the Merger, of which $1.7 million is included in the Business consolidation costs (recoveries) line in our condensed consolidated statement of operations for the
three months ended June 30, 2010. In addition, we recorded approximately $0.7 million of equity issuance costs which are currently recorded in the Other assets line in our condensed consolidated balance sheet as of June 30,
2010. On July 1, 2010, these costs were reclassified to additional paid-in capital in connection with the issuance of our common stock to Symyx stockholders.



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

When used anywhere in this Quarterly Report on Form 10-Q (this Report), the words expect, believe,
anticipate, estimate, intend, plan and similar expressions are intended to identify forward-looking statements. These forward-looking statements may include statements addressing our future financial
and operating results. We have based these forward-looking statements on our current expectations about future events. Such statements are subject to certain risks and uncertainties including those related to execution upon our strategic plans, the
successful release and acceptance of new products, the demand for new and existing products, additional competition, changes in economic conditions and those described in documents we have filed with the SEC, including this Report in the sections
titled Managements Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors, and in our subsequent reports on Form 10-Q and Form 10-K. All forward-looking statements in this Report are
qualified entirely by the cautionary statements included in this Report and such other filings. These risks and uncertainties could cause actual results to differ materially from results expressed or implied by forward-looking statements contained
in this Report. These forward-looking statements speak only as of the date of this Report. We disclaim any undertaking to publicly update or revise any forward-looking statements contained herein to reflect any change in our expectations with regard
thereto or any change in events, conditions or circumstances on which any such statement is based.



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The following discussion and analysis of our financial condition and results of operations
should be read in conjunction with our condensed consolidated financial statements and related notes thereto included elsewhere in this Report.

Overview

On
July 1, 2010, pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub merged with and into Symyx with Symyx surviving as our wholly-owned subsidiary. Except as expressly set forth herein, the
information presented in this Report does not give effect to the Merger.

Our Business

We develop and commercialize scientific informatics software and solutions that enable our customers to accelerate the discovery and
development of new drugs and materials. Our customers include pharmaceutical, biotechnology and other life science companies, as well as companies that are in the energy, chemicals, aerospace and consumer packaged goods markets. Our software and
service solutions are used by our customers scientists, biologists, chemists and information technology professionals in order to aggregate, mine, integrate, analyze, simulate, manage and interactively report scientific data. Our customers
include leading commercial, government and academic organizations. Many of the largest pharmaceutical, biotechnology, chemicals, energy, aerospace and consumer packaged goods companies worldwide use our software. We market our products and services
worldwide, principally through our direct sales force, augmented by the use of third-party distributors.

Following the
completion of the Merger, we began providing a suite of scientific software, content and technology, as well as associated professional services, to support R&D information lifecycle management across the enterprise, improving scientists
ability to search, develop, manage, manipulate and store research data and to manage intellectual property.

Our Marketplace

A primary market for our solutions is the pharmaceutical and biotechnology industries. This market has been challenging due to
industry consolidation, the maturity of the market, industry consolidation, reduction in the level of discovery research activity, and increased competition, including competition from open source software. We also sell our products to the energy,
aerospace, chemicals, and consumer packaged goods industries. We believe these industries are in the early stages of adoption of these technologies. These industries to varying degrees are under pressure due to the broader economic environment of
the past two years.

Following the completion of the Merger, we added to our software offering products from the Symyx product
line, including their electronic lab notebook, content and lab execution products. These Symyx product offerings, together with associated professional services are marketed and sold primarily to life science, chemicals and energy companies, as well
as consumer and industrial products companies. There is currently limited competition with this technology in our targeted industries, and we believe there is growth opportunity associated with the integration of the Symyx solutions and the Accelrys
scientific informatics platform.

Our Strategy

We believe the combination of our scientific informatics platform, our computer aided design modeling and simulation software and service
solutions, and the Symyx products, enables our customers to better utilize their scientific data in order to solve critical business issues throughout their organizations. Through the merger with Symyx, our strategy is to offer an open,
enterprise-scale informatics system for global scientific R&D, leveraging our deep domain expertise in chemistry, biology and materials science. We also are investing in a dedicated professional services organization to support these efforts and
growing our partner ecosystem to increase the use of our scientific informatics system so that it remains the de facto standard in the industries we serve. In order to increase the use of our platform we will be bringing the Acclerys and Symyx
solutions together, as well as continuing to develop advanced analysis and reporting component collections which operate with our scientific informatics platform in order to extend its capabilities and value to our customers. Our scientific
informatics platform is also the basis of many of our service offerings, including offerings which integrate and enhance our customers software, thereby further increasing the use and value of our platform. Because our scientific informatics
platform is the underlying informatics platform for many products in our broad portfolio of computer aided design modeling and simulation software and service solutions, we expect the usage of these products to increase as the usage of our
scientific informatics platform increases, thus further increasing our sales and value to our customers.



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Following the completion of the Merger, our strategy was further developed to include
developing a combined marketing and selling approach that will enable us to take advantage of key strategic customer and partner relationships, which will allow us to gain further insight into the changing needs of our customers and deliver more
agile, flexible and open scientific R&D environments through adaptive end-to-end workflow solutions.

We intend to
continue to market and distribute our solutions to a broader group of users, including scientists, engineers and information technology professionals within our existing customer base, as well as to new customers in other industries. We also intend
to continue to partner with other companies who provide scientific software and services in order to ensure that their software and service solutions operate with our scientific informatics platform, further proliferating its use and value to our
customers.

Critical Accounting Policies

The critical accounting policies and estimates used in the preparation of our condensed consolidated financial statements are described in
Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations, of the Form 10-K. There have been no significant changes in our critical accounting policies and estimates since March 31,
2010.

Results of Operations

Historically, we have received approximately two-thirds of our annual customer orders in the second half of our fiscal year. In accordance
with our revenue recognition policies, the revenue associated with these orders is generally recognized over the contractual license term. Therefore, because our policy is to accrue and expense sales commissions and royalties upon the invoicing of
customer orders, we have historically experienced an increase in operating costs and expenses and a decrease in income during the second half of our fiscal year. As a result of these and other seasonal variations, we believe that sequential
quarter-to-quarter comparisons of our operating results are not a good indication of our future performance and that the interim financial results for the periods presented in this Report are not necessarily indicative of results for a full year or
for any subsequent interim period.



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Comparison of the Three Months Ended June 30, 2010 and 2009

The following table summarizes our results of operations as a percentage of revenue for the respective periods:



|                                           |  |                            |    |  |      |  
|------------------------------------------ |  | -------------------------- | -- |  | ---- | -
|                                           |  | Three Months EndedJune 30, |   
|                                           |  | 2010                       |    |  | 2009 |  
|Revenue                                    |  | 100                        | %  |  | 100  | %
|Cost of revenue                            |  | 19                         | %  |  | 17   | %
|                                           |  |                            |    |  |      |  
|Gross profit                               |  | 81                         | %  |  | 83   | %
|Operating expenses:                        |  |                            |    |  |      |  
|Product development                        |  | 19                         | %  |  | 19   | %
|Sales and marketing                        |  | 42                         | %  |  | 40   | %
|General and administrative                 |  | 17                         | %  |  | 19   | %
|Business consolidation costs (recoveries)  |  | 9                          | %  |  | *    | %
|                                           |  |                            |    |  |      |  
|Total operating expenses                   |  | 87                         | %  |  | 78   | %
|                                           |  |                            |    |  |      |  
|Operating income (loss)                    |  | (6                         | )% |  | 5    | %
|Interest and other income and expense, net |  | (1                         | )% |  | *    | %
|                                           |  |                            |    |  |      |  
|Income (loss) before income taxes          |  | (7                         | )% |  | 5    | %
|Income tax expense                         |  | 1                          | %  |  | 1    | %
|                                           |  |                            |    |  |      |  
|Net income (loss)                          |  | (8                         | )% |  | 4    | %
|                                           |  |                            |    |  |      |  



|* | Less than 1%.
|- | -------------

Revenue

Revenue decreased 2% to $19.8 million for the three months ended June 30, 2010, as compared to $20.1 million for the three months
ended June 30, 2009. The decrease in revenue during the quarter ended June 30, 2010 was primarily attributable to a decrease in software revenues of $0.5 million and maintenance and other revenues of $0.3 million, partially offset by an
increase in service revenues of $0.4 million.

Cost of Revenue

Cost of revenue increased 11% to $3.8 million for the three months ended June 30, 2010, as compared to $3.5 million for the three
months ended June 30, 2009. As a percentage of revenue, cost of revenue increased to 19% for the three months ended June 30, 2010 as compared to 17% for the three months ended June 30, 2009. The increase in cost of revenue was
primarily due to an increase in personnel and related costs of approximately $0.4 million, consulting costs of approximately $0.3 million, and software royalty costs of approximately $0.1 million, partially offset by a decrease in purchased
intangible asset amortization of $0.3 million.

Operating Expenses

Product Development Expenses.Product development expenses decreased 4% to $3.7 million for the three months ended June 30,
2010, as compared to $3.9 million for the three months ended June 30, 2009. As a percentage of revenue, product development expenses remained consistent at 19% for each of the three months ended June 30, 2010 and 2009. The slight
decrease in product development expenses was attributable to a decrease in personnel costs of $0.2 million.

Sales and
Marketing Expenses.Sales and marketing expenses increased 3% to $8.4 million for the three months ended June 30, 2010, as compared to $8.1 million for the three months ended June 30, 2009. As a percentage of revenue, sales and
marketing expenses increased to 42% for the three months ended June 30, 2010 as compared to 40% for the three months ended June 30, 2009. The increase in sales and marketing expenses is primarily attributable to an increase in consulting
and personnel related costs of $0.2 million.

General and Administrative Expenses.General and administrative expenses
decreased 9% to $3.3 million for the three months ended June 30, 2010, as compared to $3.7 million for the three months ended June 30, 2009. As a percentage of revenue, general and administrative expenses decreased to 17% for the
three months ended June 30, 2010, as compared to 18% for the three months ended June 30, 2009. The decrease in general and administrative expenses was primarily attributable to a decrease in personnel costs of approximately $0.3 million.



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Business consolidation costs (Recoveries). Business consolidation costs (recoveries)
increased to $1.7 million for the three months ended June 30, 2010, as compared to recoveries of ($0.1) million for the three months ended June 30, 2009. Business consolidation costs for the quarter ended June 30, 2010 are related to
the Merger, which we completed on July 1, 2010.

Net Interest and Other Income (Expense)

Net interest and other income (expense) was ($0.1) million for the three months ended June 30, 2010, as compared to ($5,000) for the
three months ended June 30, 2009. Components of net interest and other income (expense) are primarily interest income and gain (loss) on foreign currency transactions.

Income Tax Expense

Income tax expense was $0.2 million for the three months ended June 30, 2010 as compared to $0.3 million for the three months ended
June 30, 2009. The decrease in income tax expense was primarily attributable to fluctuations in taxable income in our foreign subsidiaries. Our tax provision for the quarter ended June 30, 2010 is principally attributable to foreign
earnings, minimum state taxes on domestic earnings and deferred tax expense related to our indefinite lived intangible assets.

Liquidity
and Capital Resources

We had cash, cash equivalents, marketable securities, and restricted cash of $92.9 million as of
June 30, 2010, as compared to $93.1 million as of March 31, 2010, a decrease of $0.2 million. The slight decrease in cash, cash equivalents, marketable securities and restricted cash during the three months ended June 30, 2010 was
primarily attributable to an increase in cash used in operations of $1.2 million, partially offset by proceeds from the sale of common stock of $0.4 million, net of shares tendered for payment of withholding tax, as well as an increase in the fair
value of our ARS of $0.7 million. Our quarterly operating cash flows are significantly impacted by changes in accounts receivable balances. Due to the seasonality of our business, accounts receivable balances have historically increased
significantly in the third quarter of each fiscal year as a result of higher order intake. The collection of these accounts receivable balances has generally resulted in positive cash flows from operations in the fourth quarter of each fiscal year,
while we have historically experienced negative cash flows from operations in the other three fiscal quarters.

Net cash used
in operating activities was $0.9 million for the three months ended June 30, 2010, as compared to net cash provided by operating activities of $0.3 million for the three months ended June 30, 2009. The increase in cash used in operating
activities was primarily attributable to our net loss, partially offset by an increase in cash collections against our accounts receivable balance for the three months ended June 30, 2010.

Net cash provided by investing activities was $5.6 million for the three months ended June 30, 2010, as compared to net cash used in
investing activities of $3.3 million for the three months ended June 30, 2009. Significant components of cash flows from investing activities for the three months ended June 30, 2010 included redemptions of marketable securities of $6.2
million, and net purchases of property and equipment of $0.6 million. Significant components of cash flows from investing activities for the three months ended June 30, 2009 included net purchases of property and equipment of $0.1 million, and
a net increase in our marketable securities portfolio of $3.3 million.



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Net cash provided by financing activities was $0.4 million for the three months ended
June 30, 2010 as compared to $0.2 million for the three months ended June 30, 2009. Cash flows from financing activities for both periods consisted solely of proceeds from the issuance of our common stock under employee stock plans,
reduced by payments made to taxing authorities on behalf of our employees when tendering stock to us for settlement of minimum income tax liability upon vesting of RSUs.

As of June 30, 2010, we held $5.6 million in ARS at par value, which are collateralized by student loans, most of which were
originated under the Federal Family Education Loan Program and are guaranteed by the United States Federal Department of Education. All of our ARS are AAA rated (or equivalent) by one or more of the major credit rating agencies. During the quarter,
ARS with a par value of $6.2 million were called by the issuer at par value.

Through February 2008, the par value of our ARS
approximated fair value due to the frequent auction periods, generally every 7 to 28 days, which provided liquidity to these investments. However, since February 2008, all auctions for the ARS we hold have failed as the amount of ARS submitted for
sale has exceeded the amount of purchase orders. The result of a failed auction is that these ARS continue to pay interest at contractually stated rates at each respective auction date; however, the liquidity of the ARS will be limited until there
is a successful auction, the issuer redeems the ARS, the ARS mature or until such time as other markets for these ARS develop. We have concluded that the estimated fair value of the ARS no longer approximates the par value due to the lack of
liquidity. The ARS have been classified within Level 3 in accordance with fair value accounting guidance. Their valuation requires substantial judgment and estimation of factors that are not currently observable in the market due to the lack of
trading in the ARS.

We estimated the fair value of our ARS as of June 30, 2010 utilizing a discounted cash flow
analysis. The analysis considered, among other items, the collateralization underlying the security investments, the creditworthiness of the issuer, expected future cash flows, and the estimated weighted average life of the contractual maturity of
the underlying assets. Due to entering into an agreement whereby one of our investment firms will repurchase our ARS at par value, as discussed further below, we intend to sell the impaired securities prior to maturity and have determined that the
decline in value of our ARS as of June 30, 2010 is other-than-temporary. Accordingly, in fiscal year 2009 we reversed prior unrealized losses on our ARS from accumulated other comprehensive income and recorded the losses as a charge to income
during the same period.

On November 11, 2008 (the Acceptance Date), we entered into an agreement (the
ARS Agreement) with one of our investment securities firms (the Investment Firm) pursuant to which the Investment Firm has agreed to repurchase all of our ARS at par value. By accepting the ARS Agreement, we (1) received
the right to sell our ARS at par value to the Investment Firm between June 30, 2010 and July 2, 2012 (the Put Option) and (2) gave the Investment Firm the right to purchase the ARS from us any time after the Acceptance
Date as long as we receive par value.

The ARS Agreement covers ARS with a par value of $5.6 million and a fair value of $5.0
million as of June 30, 2010. We have accounted for the Put Option as a freestanding financial instrument and have elected to record the Put Option at fair value, which was $0.6 million as of June 30, 2010.

During the quarter ended June 30, 2010, changes in fair value of the Put Option and the ARS offset each other, resulting in no gain
or loss recorded. During the quarter ended June 30, 2009, we recorded a gain resulting from changes in fair value of the ARS and Put Option of $0.2 million, which is recorded in the Interest and other income (expense), net line of
our condensed consolidated statement of operations for that period. The right to put our ARS to the Investment Firm began on June 30, 2010 and we intend to exercise such right from time to time. Accordingly, the ARS and the Put Option are
classified as current assets on our condensed consolidated balance sheet as of June 30, 2010.

In July 2010, ARS with a
par value of $2.9 million were called by the respective issuers. Additionally, in July 2010, we exercised the Put Option on ARS with an aggregate par value of $2.5 million. We continue to monitor and evaluate our ARS to determine whether we will
continue to hold our remaining of ARS with an aggregate par value of $0.3 million or exercise our Put Option.

We have funded
our activities to date primarily through the sales of software licenses and related services and the issuance of equity securities.

We anticipate that our capital requirements may increase in future periods as a result of seasonal sales trends, additional product
development activities and the acquisition of additional equipment. Our capital requirements may also increase in future periods as we seek to expand our technology platform through investments, licensing arrangements, technology alliances or
acquisitions.

We anticipate that our existing capital resources will be adequate to fund our operations for at least the next
twelve months. However, there can be no assurance that changes will not occur that would consume available capital resources before then. Our capital requirements depend on numerous factors, including our ability to continue to generate software
sales, the purchase of additional capital equipment and acquisitions of other businesses or technologies. There can be no assurance that additional funding, if necessary, will be available to us on favorable terms, if at all. Our forecast for the
period of time through which our financial resources will be adequate to support our operations is forward-looking information, and actual results could vary.



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|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

The information called for by this item is provided in Item 7A, Quantitative and Qualitative Disclosures About Market
Risk, of the Form 10-K. Our exposures to market risk have not changed materially since March 31, 2010.



|Item 4. | Controls and Procedures
|------- | -----------------------

Conclusion
Regarding the Effectiveness of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as such
term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), that are designed to provide reasonable assurance that information required to be disclosed by us in the reports
that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosures.

As of the end of the period covered by this Report, we conducted an evaluation, under the supervision and with the participation of our
management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). Based on this
evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2010.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended June 30, 2010 that materially
affected, or are reasonably likely to materially affect, those controls.

PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

Prior
to the completion of the Merger, several lawsuits were filed against Symyx, the members of the Symyx board of directors, certain executive officers of Symyx, Accelrys and Merger Sub in purported class action lawsuits brought by individual Symyx
stockholders challenging the Merger. The first of such lawsuits was a class action lawsuit filed in the Superior Court of the State of California, County of Santa Clara, purportedly on behalf of the stockholders of Symyx, against Symyx and its
directors and chief financial officer, as well as Accelrys and Merger Sub, alleging, among other things, that Symyxs directors breached their fiduciary duties to the stockholders of Symyx in connection with the proposed Merger. Subsequent to
the filing of such lawsuit, several additional suits were filed, also in Santa Clara County, each of which was substantially similar to the first lawsuit. The lawsuits were ultimately consolidated into a single action and on May 20, 2010, the
plaintiffs filed a single consolidated complaint. The Complaint serves as the only complaint in the combined litigation going forward, which is pending in the Superior Court for the County of Santa Clara. The Complaint, like the previously filed
complaints, alleges, among other things, that Symyxs directors breached their fiduciary duties to the stockholders of Symyx in connection with the Merger, and was seeking, among other things, to enjoin the defendants from completing the Merger
pursuant to the terms of the Merger Agreement.

On June 22, 2010, the defendants entered into the MOU with the
plaintiffs, pursuant to which the defendants and the plaintiffs agreed to settle the Consolidated Action. Subject to court approval and further definitive documentation the MOU resolves the allegations by the plaintiffs against the defendants made
in connection with the Merger and the Merger Agreement, and provides a release and settlement by the purported class of Symyx stockholders with prejudice of all asserted claims against the defendants without costs to any defendant (other than as
expressly provided in the MOU), in exchange for Symyxs agreement to provide additional supplemental disclosures to the joint proxy statement/prospectus issued by Accelrys and Symyx in connection with the Merger. Accelrys and Symyx made the
appropriate supplemental disclosures and the parties have agreed to present to the Court a stipulation of settlement and any other documentation as may be required in order to obtain approval by the Court of a settlement on behalf of the class of
stockholders and the dismissal of the actions in the Complaint. We will be obligated to pay any attorneys fees and expenses awarded to the plaintiffs, if any. If the settlement is not approved or the conditions of the MOU are not satisfied, we
intend to take all appropriate actions to defend against the allegations made in the Complaint.



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|Item 1A. | Risk Factors
|-------- | ------------

You
should carefully consider the risks described below before investing in our publicly-traded securities. The risks described below are not the only ones facing us. Our business is also subject to the risks that affect many other companies, such as
competition, technological obsolescence, labor relations, general economic conditions, geopolitical changes and international operations. Additional risks not currently known to us or that we currently believe are immaterial also may impair our
business operations and our liquidity. The risks described below could cause our actual results to differ materially from those contained in the forward-looking statements we have made in this Report, the information incorporated herein by reference
and those forward-looking statements we may make from time to time.



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Certain Risks Related to Our Marketplace and Environment

Our revenue from the sale of computer aided design modeling and simulation software to the life science discovery research
marketplace, which has historically constituted a significant portion of our overall revenue, has been declining over the past several years and may continue to decline in future years.Historically we have derived a
significant portion of our revenue from the sale of computer aided design modeling and simulation software to the discovery research departments in pharmaceutical and biotechnology companies. Based on recurring analyses of incoming orders typically
conducted by our sales and marketing departments, we estimate that orders for our computer aided design modeling and simulation software for the life science industry declined approximately 11% between fiscal year 2007 and fiscal year 2008,
approximately 18% between fiscal year 2008 and 2009, and approximately 16% between fiscal year 2009 and 2010. While there is not a linear correlation between product orders and resulting revenue, we believe that our estimates of decreased product
orders ultimately reflect a decline in revenue attributable to sales of our computer aided design modeling and simulation software products. We believe this decline is due to several factors, including industry consolidation, a general reduction in
the level of discovery research activity by our customers, increased competition, including competition from open source software, and reductions in profit and related information technology spending by our customers. If such declines continue and
we do not increase the revenue we derive from our other product and service offerings, our business could be adversely impacted.

Our ability to sustain or increase revenues will depend upon our success in entering new markets and in deriving additional
revenues from our existing customers. Our products are currently used primarily by molecular modeling and simulation specialists in discovery research organizations. One component of our overall business strategy is to derive more revenues
from our existing customers by expanding their usage of our products and services. Such strategy would have our customers utilize our scientific informatics platform and our tools and components to leverage vast amounts of information stored in both
corporate databases and public data sources in order to make informed scientific and business decisions during the research and development process. In addition, we seek to expand into new markets and new areas within our existing markets by
attracting and retaining personnel knowledgeable in these markets, identifying the needs of these markets and developing marketing programs to address these needs. If successfully implemented, these strategies would increase the usage of our
software and services by biologists, chemists, engineers and informaticians operating within our existing pharmaceutical and biotechnology customers, as well as by new customers in other industries. However, if our strategies are not successfully
implemented, our products and services may not achieve market acceptance or penetration in targeted new departments within our existing customers or in new industries. As a result, we may incur additional costs and expend additional resources
without being able to sustain or increase revenue.

Our focus on offering scientific business intelligence solutions to
both existing and new customers and markets may make it more difficult for us to sustain our revenue from the sale of computer aided design modeling and simulation products to the life science discovery research marketplace. Our strategy
involves transforming our product and service offerings by utilizing our scientific informatics platform and our tools and components in order to enable our customers to more effectively utilize the vast amounts of information stored in both their
databases and public data sources in order to make informed scientific and business decisions during the research and development process. This strategy is intended to lead us to new and different markets and customers, as well as increase the usage
of our offerings by existing customers. Executing this strategy will require significant management focus and utilization of resources. Though we intend to continue to dedicate sufficient resources and management focus to our life science computer
aided design modeling and simulation products, it is possible that the strategy will result in loss of management focus and resources relating to these existing products and markets, thereby resulting in decreasing revenues from these markets. If
these revenues are not offset by increasing revenues from new markets and/or customers, our overall revenues will suffer.

We may be unable to develop strategic relationships with our customers.Our overall business strategy is to expand usage of
our products and services by expanding our current customers usage of our products and by marketing and distributing our solutions to a broader, more diversified group of biologists, chemists, engineers and informaticians operating throughout
our customers research and development organizations. A key component of this strategy is to become a preferred provider of scientific software and solutions. Becoming a preferred vendor will require substantial re-training and new skills
development within our sales and service personnel and deployment of a successful account-management sales model. We believe that developing strategic relationships with our customers may lead to additional revenue opportunities. However, executing
this strategy may require significant expense, and there can be no assurance that any such relationships will develop or that such relationships will produce additional revenue or profit opportunities.

Consolidation within the pharmaceutical and biotechnology industries may continue to lead to fewer potential customers for our
products and services. A significant portion of our customer base consists of pharmaceutical and biotechnology companies. Continued consolidation within the pharmaceutical and biotechnology industries may result in fewer customers for
our products and services. If one of the parties to a consolidation uses the products or services of our competitors, we may lose existing customers as a result of such consolidation.



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Increasing competition and increasing costs within the pharmaceutical and
biotechnology industries may affect the demand for our products and services, which may affect our results of operations and financial condition. Our pharmaceutical and biotechnology customers demand for our products is impacted
by continued demand for their products and by our customers research and development costs. Demand for our customers products could decline, and prices charged by our customers for their products may decline, as a result of increasing
competition, including competition from companies manufacturing generic drugs. In addition, our customers expenses could continue to increase as a result of increasing costs of complying with government regulations and other factors. A
decrease in demand for our customers products, pricing pressures associated with the sales of these products, and additional costs associated with product development could cause our customers to reduce research and development expenditures.
Because our products and services depend on such research and development expenditures, our revenues may be significantly reduced.

Health care reform and restrictions on reimbursement may affect the pharmaceutical, biotechnology and industrial chemical companies
that purchase or license our products or services, which may affect our results of operations and financial condition. The continuing efforts of government and third-party payers in the markets we serve to contain or reduce the cost
of health care may reduce the profitability of pharmaceutical, biotechnology and industrial chemical companies causing them to reduce research and development expenditures. Because our products and services depend on such research and development
expenditures, our revenues may be significantly reduced. We cannot predict what actions federal, state or private payers for health care goods and services may take in response to any health care reform proposals or legislation.

We face strong competition in the life science market for computer aided design modeling and simulation software and for
cheminformatics products. The market for our computer aided design modeling and simulation software products for the life science market is intensely competitive. We currently face competition from other scientific software providers, larger
technology and solutions companies, in-house development by our customers, as well as academic and government institutions and the open source community.

Some of our competitors and potential competitors in this sector have longer operating histories than we do and could have greater
financial, technical, marketing, research and development and other resources. Many of our competitors offer products and services directed at more specific markets than those we target, enabling these competitors to focus a greater proportion of
their efforts and resources on these markets. Some offerings that compete with our products are developed and made available at lower cost by government organizations and academic institutions, and these entities may be able to devote substantial
resources to product development and also offer their products to users for little or no charge. We also face competition from open source software initiatives, in which developers provide software and intellectual property free over the Internet.
In addition, many of our customers spend significant internal resources in order to develop their own software. Moreover, we intend to leverage our scientific informatics platform in order to enable our customers to more effectively utilize the vast
amounts of information stored in both their databases and public data sources in order to make informed scientific and business decisions during the research and development process. This strategy could lead to competition from much larger companies
which provide general data storage and management software.

There can be no assurance that our current or potential
competitors will not develop products, services or technologies that are comparable to, superior to, or render obsolete, the products, services and technologies we offer. There can be no assurance that our competitors will not adapt more quickly
than us to technological advances and customer demands, thereby increasing such competitors market share relative to ours. Any material decrease in demand for our technologies or services may have a material adverse effect on our business,
financial condition and results of operations.

We are subject to pricing pressures in some of the markets we serve.The market for computer aided design modeling and simulation products for the life science industry is intensely competitive, which has led to significant pricing pressure and declines in average selling price over the past several years.
Based on recurring analyses of incoming orders typically conducted by our sales and marketing departments, we estimate that the average sales price of our computer aided design modeling and simulation products for the life science industry declined
approximately 6% between fiscal year 2007 and fiscal year 2008, approximately 10% between fiscal year 2008 and fiscal year 2009, and approximately 14% between fiscal year 2009 and fiscal year 2010. While there is not a linear correlation between our
product pricing and competition in the marketplace, we believe that our estimates of decreased prices ultimately reflect increased competition that has led and may continue to lead to pricing pressure with respect to sales of these products. In
response to such increased competition and general adverse economic conditions in this market, we may be required to further modify our pricing practices. Changes in our pricing model could adversely affect our revenue and earnings.



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Our operations may be interrupted by the occurrence of a natural disaster or other
catastrophic event at our primary facilities. Our research and development operations and administrative functions are primarily conducted at our facilities in San Diego, California, and Cambridge, United Kingdom. We also conduct sales and
customer support activities at our facilities in Burlington, Massachusetts, Paris, France, and Tokyo, Japan. Although we have contingency plans in effect for natural disasters or other catastrophic events, the occurrence of such events could still
disrupt our operations. For example, our San Diego and Tokyo facilities are located in areas that are particularly susceptible to earthquakes. Any natural disaster or catastrophic event in our facilities or the areas in which they are located could
have a significant negative impact on our operations.

Our insurance coverage may not be sufficient to avoid material
impact on our financial position or results of operations resulting from claims or liabilities against us, and we may not be able to obtain insurance coverage in the future. We maintain insurance coverage for protection against many risks of
liability. The extent of our insurance coverage is under continuous review and is modified as we deem it necessary. Despite this insurance, it is possible that claims or liabilities against us may have a material adverse impact on our financial
position or results of operations. In addition, we may not be able to obtain any insurance coverage, or adequate insurance coverage, when our existing insurance coverage expires. For example, we do not carry earthquake insurance for our facilities
in Tokyo, Japan or San Diego, California, because we do not believe the costs of such insurance are reasonable in relation to the potential risk.

Certain Risks Related to Our Operations

Defects or malfunctions in our products could hurt our reputation among our customers, result in delayed or lost revenue and expose
us to liability. Our business and the level of customer acceptance of our products depend upon the continuous, effective and reliable operation of our software and related tools and functions. To the extent that defects cause our software to
malfunction and our customers use of our products is interrupted, our reputation could suffer and our revenue could decline or be delayed while such defects are remedied. We may also be subject to liability for the defects and malfunctions of
third-party technology partners and others with whom our products and services are integrated.

Delays in the release of
new or enhanced products or services or undetected errors in our products or services may result in increased cost to us, delayed market acceptance of our products and delayed or lost revenue. To achieve market acceptance, new or enhanced
products or services can require long development and testing periods, which may result in delays in scheduled introduction. Any delays in the release schedule for new or enhanced products or services may delay market acceptance of these products or
services and may result in delays in new customer orders for these new or enhanced products or services or the loss of customer orders. In addition, new or enhanced products or services may contain a number of undetected errors or bugs
when they are first released. Although we test each new or enhanced software product or service before it is released to the market, there can be no assurance that significant errors will not be found in existing or future releases. As a result, in
the months following the introduction of certain releases, we may need to devote significant resources to correct these errors. There can be no assurance, however, that all of these errors can be corrected.

We are subject to risks associated with the operation of a global business. We derive a significant portion of our total
revenue from our operations in international markets. In 2010, 2009 and 2008, 54%, 52% and 51%, respectively, of our total revenue was derived from our international operations. Our global business may be affected by local economic conditions,
including inflation, recession and currency exchange rate fluctuations. In addition, political and economic changes throughout the world may interfere with our or our customers activities in particular locations and result in a material
adverse effect on our business, financial condition and operating results. We anticipate that revenue from operations in international markets will continue to account for a significant percentage of future revenue. The following table depicts our
region-specific revenue as a percent of total revenue for each of the last three fiscal years:



|             |  |               |   |  |               |   |  |               |  
|------------ |  | ------------- | - |  | ------------- | - |  | ------------- | -
|             |  | Years Ended   |  
|Region       |  | March 31,2010 |   |  | March 31,2009 |   |  | March 31,2008 |  
|U.S.         |  | 46            | % |  | 48            | % |  | 49            | %
|Europe       |  | 30            | % |  | 28            | % |  | 29            | %
|Asia-Pacific |  | 24            | % |  | 24            | % |  | 22            | %

Other
potential risks inherent in our international business include:



| |  |  | unexpected changes in regulatory requirements;
| | - |  | ----------------------------------------------



| |  |  | longer payment cycles;
| | - |  | ----------------------



| |  |  | currency exchange rate fluctuations;
| | - |  | ------------------------------------



| |  |  | import and export license requirements;
| | - |  | ---------------------------------------



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| |  |  | tariffs and other barriers;
| | - |  | ---------------------------



| |  |  | political unrest, terrorism and economic instability;
| | - |  | -----------------------------------------------------



| |  |  | disruption of our operations due to local labor conditions;
| | - |  | -----------------------------------------------------------



| |  |  | limited intellectual property protection;
| | - |  | -----------------------------------------



| |  |  | difficulties in collecting trade receivables;
| | - |  | ---------------------------------------------



| |  |  | difficulties in managing distributors or representatives;
| | - |  | ---------------------------------------------------------



| |  |  | difficulties in managing an organization spread over various countries;
| | - |  | -----------------------------------------------------------------------



| |  |  | difficulties in staffing foreign subsidiary or joint venture operations; and
| | - |  | ----------------------------------------------------------------------------



| |  |  | potentially adverse tax consequences.
| | - |  | -------------------------------------

Our success depends, in part, on our ability to anticipate and address these risks. There can be no assurance that we will do so
effectively, or that these or other factors relating to our international operations will not adversely affect our business or operating results.

In order to improve our financial position, we have reduced our headcount, which could negatively impact our business. We
have undergone several reductions-in-force over the past several years, and our workforce has declined approximately 25% since March 31, 2006. We do not believe that these reductions have had a material adverse effect on our operations or our
ability to generate revenue to date. However, while we believe we have sufficient staff to operate our business, we do not have duplicative or redundant resources in many of our functions or operations. As a result, there can be no assurance that
further attrition will not impact our ability to operate our business, or adversely impact our revenues.

Failure to
attract and retain skilled personnel could have a material adverse effect on us. Our success depends in part on the continued service of key scientific, sales, business development, marketing, engineering, management and accounting personnel
and our ability to identify, hire and retain additional personnel. There is intense competition for qualified personnel. Immigration laws may further restrict our ability to attract or hire qualified personnel. We may not be able to continue to
attract and retain the personnel necessary for the development of our business. Failure to attract and retain key personnel could have a material adverse effect on our business, financial condition and results of operations. Further, we are highly
dependent on the principal members of our technical, scientific and management staff. One or more of these key employees could retire or otherwise leave our employ within the foreseeable future, and the loss of any of these people could have a
material adverse effect on our business, financial condition or results of operations. We do not intend to maintain key person life insurance on the life of any employee.

Continued turmoil in the worldwide financial markets may negatively impact our business, results of operations, and financial
condition. As widely reported, financial markets in the United States, Europe and Asia have been experiencing extreme disruption in recent months, including, among other things, extreme volatility in security prices, declining valuations of
certain investments, severely diminished liquidity and credit availability, the failure or sale of various financial institutions and an unprecedented level of government intervention. Many economists believe that the United States economy, and
possibly the global economy, is in the midst of a prolonged recession. This protracted downturn may hurt our business in a number of ways, including through general decreases in spending and the adverse impact on our customers ability to
obtain financing, which may lead to delays or failures in our signing customer agreements or signing customer agreements at reduced purchase levels. While we are unable to predict the likely duration and severity of the current disruption in the
financial markets and the adverse economic conditions in the U.S. and other countries, any of the circumstances mentioned above could have a material adverse effect on our revenues, financial condition and results of operations.



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If we choose to acquire businesses, products or technologies instead of developing
them ourselves, we may be unable to complete these acquisitions or to successfully integrate an acquired business or technology in a cost-effective and non-disruptive manner. From time to time, we may choose to acquire businesses, products
or technologies instead of developing them ourselves. We do not know if we will be able to complete any acquisitions, or whether we will be able to successfully integrate any acquired businesses, operate them profitably or retain their key
employees. Integrating any business, product or technology we acquire could be expensive and time-consuming, disrupt our ongoing business and distract company management. In addition, in order to finance any acquisition, we may utilize our existing
funds, thereby lowering the amount of funds we currently have, or might need to raise additional funds through public or private equity or debt financings. Prolonged tightening of the financial markets may impact our ability to obtain financing to
fund future acquisitions and we could be forced to obtain financing on less than favorable terms. Additionally, equity financings may result in dilution to our stockholders. If we are unable to integrate any acquired entities, products or
technologies effectively, our business could suffer. In addition, under certain circumstances, amortization of assets or charges resulting from the costs of acquisitions could harm our business, financial condition, or operating results.

Certain Risks Related To Our Financial Performance

We have a history of losses and our future profitability is uncertain. We generated net losses for the years ended
March 31, 2007 and 2006. Although we generated net income for the years ended March 31, 2010, 2009 and 2008, we may experience future net losses which may limit our ability to fund our operations and we may not generate income from
operations in the future. Our future profitability depends upon many factors, including several that are beyond our control. These factors include without limitation:



| |  |  | changes in the demand for our products and services;
| | - |  | ----------------------------------------------------



| |  |  | the introduction of competitive software;
| | - |  | -----------------------------------------



| |  |  | our ability to license desirable technologies;
| | - |  | ----------------------------------------------



| |  |  | changes in the research and development budgets of our customers and potential customers;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | our ability to successfully, cost effectively and timely develop, introduce and market new products, services and product enhancements; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the acquisition of any new entities or businesses which may have a dilutive effect upon our earnings.
| | - |  | -----------------------------------------------------------------------------------------------------

Our sales forecast and/or revenue projections may not be accurate. We use a pipeline system, a common industry
practice, to forecast sales and trends in our business. Our sales personnel monitor the status of proposals, including the date when they estimate a customer will make a purchase decision and the potential size of the order. We aggregate these
estimates on a quarterly basis in order to generate a sales pipeline. While the pipeline process provides us with some guidance in business planning and forecasting, it is based on estimates only and is therefore subject to risks and uncertainties.
Any variation in the conversion of the pipeline into revenue or the pipeline itself could cause us to improperly plan or budget and thereby adversely affect our business, results of operations and financial condition.

If we are unable to license software to, or collect receivables from, our customers our operating results may be adversely
affected. While the majority of our current customers are well-established, large pharmaceutical customers and universities, we also provide products and services to smaller biotechnology companies. We have not experienced significant
customer defaults during the past three fiscal years. Our financial success depends upon the creditworthiness and ultimate collection of amounts due from our customers, including our smaller customers with fewer financial resources. If we are not
able to collect from our customers, we may be required to write-off significant accounts receivable and recognize bad debt expenses which could materially and adversely affect our operating results.

Our quarterly operating results, particularly our quarterly cash flows, may fluctuate. Quarterly operating results may
fluctuate as a result of a number of factors, including lengthy sales cycles, market acceptance of new products and upgrades, timing of new product introductions, changes in pricing policies, changes in general economic and competitive conditions,
and the timing and integration of acquisitions. We may also experience fluctuations in quarterly operating results due to general and industry specific economic conditions that may affect the research and development expenditures of pharmaceutical
and biotechnology companies. In particular, historically we have received approximately two-thirds of our annual customer orders in the second half of our fiscal year. In accordance with our revenue recognition policies, the revenue associated with
these orders is generally recognized over the contractual license term. Therefore, because we accrue sales commissions and royalties upon the receipt of customer orders, we generally experience an increase in operating costs and expenses during the
second half of our fiscal year with only a minimal corresponding incremental increase in revenue. Additionally, our cash flows from operations have historically been positive in the fiscal quarter ended March 31 as we collect the accounts
receivable generated from these customer orders, while we have historically experienced negative cash flows from operations in the other three fiscal quarters. As a result of these seasonal variations, we believe that quarter-to-quarter comparisons
of our operating results are not a good indication of our future performance and that our interim financial results are not necessarily indicative of results for a full year or for any subsequent interim period.



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We may be required to indemnify PDD, or may not be able to collect on indemnification
rights from PDD. On April 30, 2004, we spun-off our drug discovery subsidiary, PDD, into an independent, separately traded, publicly held company through the distribution to our stockholders of a dividend of one share of PDD common
stock for every two shares of our common stock. As part of the spin-off, we agreed to indemnify the indebtedness, liabilities and obligations of PDD. One such obligation includes a guarantee by us to the landlord of PDDs obligations under
certain facility leases, with respect to which PDD will indemnify us should we be required to make any payment under the guarantee. These indemnification obligations could be as significant as the remaining future minimum lease payments, which
totaled approximately $14.3 million as of June 30, 2010. PDDs ability to satisfy any such indemnification obligations (including, without limitation, PDDs commitment to indemnify us in the event of our payment under our guarantee of
its leases) will depend upon PDDs future financial strength. We cannot assure you that, if PDD becomes obligated to indemnify us for any substantial obligations, PDD will have the ability to do so. There also can be no assurance that we will
be able to satisfy any indemnification obligations to PDD. Any failure by PDD to satisfy its obligations and any required payment by us could have a material adverse effect on our business.

Enacted and proposed changes in securities laws and regulations have increased our costs and may continue to increase our costs in
the future. The Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) required changes in some of our corporate governance and securities disclosure and compliance practices. Under Sarbanes-Oxley, publicly-held companies, including us, are
required to, among other things, furnish independent annual audit reports regarding the existence and reliability of their internal control over financial reporting and have their chief executive officer and chief financial officer certify as to the
accuracy and completeness of their financial reports.

We expect continued compliance with Sarbanes-Oxley to remain costly.
Further, Sarbanes-Oxley and the related SEC and NASDAQ compliance rules may make it more difficult and expensive for us to maintain director and officer liability insurance, and we may be required to accept reduced coverage or incur
substantially higher costs to obtain coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors, or qualified executive officers. We continually evaluate and
monitor regulatory developments and cannot estimate the timing or magnitude of additional costs we may incur as a result.

Our business, financial condition and results of operations may be adversely impacted by fluctuations in foreign currency exchange
rates. Our international sales generally are denominated in local currencies. Fluctuations in the value of currencies in which we conduct business relative to the United States dollar result in currency transaction gains and losses, and the
impact of future exchange rate fluctuations cannot be accurately predicted. Future fluctuations in currency exchange rates may have a material adverse impact on revenue from international sales, and thus on our business, financial condition and
results of operations. When deemed appropriate, we may engage in currency exchange rate hedging transactions in an attempt to mitigate the impact of adverse exchange rate fluctuations. However, currency hedging policies may not be successful, and
they may increase the negative impact of exchange rate fluctuations.

If we consume cash more quickly than expected, we
may be unable to raise additional capital and we may be forced to curtail operations. We anticipate that our existing capital resources will be adequate to fund our operations for at least the next twelve months. However, our capital
requirements will depend on many factors, including the potential acquisition of other businesses or technologies. If we determine that we must raise additional capital, we may attempt to do so through public or private financings involving debt or
equity. However, additional capital may not be available on favorable terms, or at all. If adequate funds are not available, we may be required to curtail operations significantly or to obtain funds by entering into arrangements with collaborative
partners or others that may require us to relinquish rights to certain of our technologies, products or potential markets that we would not otherwise relinquish.

Negative conditions in the global credit markets may materially impair the value or reduce the liquidity of a portion of our
investment portfolio.Recent U.S. sub-prime mortgage defaults have had a significant impact across various sectors of the financial markets, causing global credit and liquidity issues. The short-term funding markets experienced credit issues
from the second half of calendar 2007 and through the fourth quarter of calendar 2008, which led to liquidity issues and failed auctions in the ARS market. If the global credit market continues to deteriorate, the liquidity of our investment
portfolio may continue to be impacted.

Included in our marketable securities portfolio at June 30, 2010 were ARS that we
purchased for $5.6 million. Under the terms of the ARS Agreement, we have the right to sell our ARS at par value to the Investment Firm between June 30, 2010 and July 2, 2012 and the Investment Firm has the right to purchase the ARS from
us any time after the Acceptance Date as long as we receive par value. If the ARS Agreement expires or is otherwise terminated prior to the purchase or sale of the ARS under the terms of the ARS Agreement, or if the Investment Firm is unable to
fulfill its obligations under the ARS Agreement, we may have no recourse beyond recovering or retaining the ARS for sale at future auctions. If such future auctions fail and the credit ratings of these investments deteriorate, the fair value of
these ARS may decline further and we may incur additional impairment charges in connection with these securities, which would negatively affect our reported earnings, cash flows and financial condition.



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Certain Risks Related to Owning Our Stock

We expect that our stock price will fluctuate significantly, and as a result, our stockholders may not be able to resell their
shares at or above their original investment price. The stock market, historically and in recent years, has experienced significant volatility particularly with technology company stocks. The volatility of technology company stock prices
often does not relate to the operating performance of the companies represented by the stock. Factors that could cause volatility in the price of our common stock include without limitation:



| |  |  | actual and anticipated fluctuations in our quarterly financial and operating results;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | market conditions in the technology and software sectors;
| | - |  | ---------------------------------------------------------



| |  |  | issuance of new or changed securities analysts reports or recommendations;
| | - |  | ---------------------------------------------------------------------------



| |  |  | developments or disputes concerning our intellectual property or other proprietary rights or other legal claims;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | introduction of technological innovations or new commercial products by us or our competitors;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | market acceptance of our products and services;
| | - |  | -----------------------------------------------



| |  |  | additions or departures of key personnel; and
| | - |  | ---------------------------------------------



| |  |  | the acquisition of new businesses or technologies
| | - |  | -------------------------------------------------

These and other external factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit
or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock.

As institutions hold the majority of our common stock in large blocks, substantial sales by these stockholders could depress the
market price for our shares. As of July 21, 2010, the top ten institutional holders of our common stock held approximately 44% of our outstanding common stock. As a result, if one or more of these major stockholders were to sell all or
a portion of their holdings, or if the market were to perceive that such sale or sales may occur, the market price of our common stock may fall significantly.

Because we do not intend to pay dividends, our stockholders will benefit from an investment in our common stock only if our stock
price appreciates in value. We have never declared or paid any cash dividends on our common stock. We currently intend to retain our future earnings, if any, to finance the expansion of our business and do not expect to pay any cash
dividends in the foreseeable future. As a result, the success of an investment in our common stock will depend entirely upon any future appreciation in its value. There is no guarantee that our common stock will appreciate in value or even maintain
the price at which it was purchased.

Anti-takeover provisions under the Delaware General Corporation Law, provisions in
our certificate of incorporation and bylaws, and our adoption of a stockholder rights plan may make the accomplishment of mergers or the assumption of control by a principal stockholder more difficult, thereby making the removal of management more
difficult. Certain provisions of the Delaware General Corporation Law may delay or deter attempts to secure control of our company without the consent of our management. Also, our governing documents provide for a staggered board of
directors, which will make it more difficult for a potential acquirer to gain control of our board of directors. In 2002, we adopted a stockholder rights plan, which is triggered upon commencement or announcement of a hostile tender offer or when
any one person or group acquires 15% or more of our common stock. The rights plan, once triggered, enables our stockholders (other than the stockholder responsible for triggering the rights plan) to purchase our common stock at reduced prices. These
provisions of our governing documents and stockholder rights plan, and of Delaware law, could have the effect of delaying, deferring or preventing a change of control, including without limitation a proxy contest, making the acquisition of a
substantial block of our common stock more difficult. The provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock. Further, the existence of these anti-takeover measures may cause
potential bidders to look elsewhere, rather than initiating acquisition discussions with us.

Certain Risks Related to Intellectual
Property

We may not be able to protect adequately the trade secrets and confidential information that we disclose to
our employees. We rely upon trade secrets, technical know-how and continuing technological innovation to develop and maintain our competitive position. Competitors through their independent discovery (or improper means, such as unauthorized
disclosure or industrial espionage) may come to know our proprietary information. We generally require employees and consultants to execute confidentiality and assignment-of-inventions agreements. These agreements typically provide that all
materials and confidential information developed by or made known to the employee or consultant during his, her or its relationship with us are to be kept confidential, and that all inventions arising out of the employees or consultants
relationship with us are our exclusive property. Our employees and consultants may breach these agreements, and in some instances we may not have an adequate remedy. Additionally, in some instances, we may have failed to require that employees and
consultants execute confidentiality and assignment-of-inventions agreements.



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Foreign laws may not afford us sufficient protections for our intellectual property,
and we may not seek patent protection outside the United States. We believe that our success depends, in part, upon our ability to obtain international protection for our intellectual property. However, the laws of some foreign countries may
not be as comprehensive as those of the United States and may not be sufficient to protect our proprietary rights abroad. In addition, we generally do not pursue patent protection outside the United States because of cost and confidentiality
concerns. Accordingly, our international competitors could obtain foreign patent protection for, and market overseas, products and technologies for which we are seeking patent protection in the United States.

A patent issued to us may not be sufficiently broad to protect adequately our rights in intellectual property to which the patent
relates. Due to cost and other considerations, we generally do not rely on patent protection to enforce our intellectual property rights, and have filed only a limited number of patent applications. Even if patents are issued to us, these
patents may not sufficiently protect our interest in our software or other technologies because the scope of protection provided by any patents issued to or licensed by us are subject to the uncertainty inherent in patent law. Third parties may be
able to design around these patents or develop unique products providing effects similar to our products. In addition, others may discover uses for our software or technologies other than those uses covered in our patents, and these other uses may
be separately patentable. A number of pharmaceutical and biotechnology companies, software organizations and research and academic institutions, have developed technologies, filed patent applications or received patents on various technologies that
may be related to our business. Some of these technologies, patent applications or patents may conflict with our technologies, patent applications or patents. These conflicts could also limit the scope of patents, if any, that we may be able to
obtain, or result in the denial of our patent applications.

We may be subject to claims of infringement by third
parties. A number of patents may have been issued or may be issued in the future that could cover certain aspects of our technology or functionality of our products and could prevent us from using technology that we use or expect to use, or
making or selling certain of our products. In addition, to the extent our employees are involved in research areas similar to those areas in which they were involved at their former employers, we may inadvertently use or disclose alleged trade
secrets or other proprietary information of their former employer. Thus, our products may infringe patent or other intellectual property rights of third parties, and we may be subject to infringement claims by third parties. Any such claims, with or
without merit, could be time consuming to defend, result in costly litigation, divert managements attention and resources, cause product shipment delays or require us to enter into royalty or licensing agreements. Such licenses may not be
available on terms acceptable to us, if at all. In the event of a successful claim of product infringement against us, our failure or inability to license or design around the infringed technology could have a material adverse effect on our
business, financial condition and results of operations.

Third-party software codes incorporated into our products
could subject us to liability or limit our ability to sell such products. Some of our products include software codes licensed from third parties, including the open source community. Some of these licenses impose certain obligations upon
us, including royalty and indemnification obligations. In the case of codes licensed from the open source community, the licenses may also limit our ability to sell products containing such code. Though we generally review the applicable licenses
prior to incorporating third party code into our software products, there can be no assurance that such third party codes incorporated into our products would not subject us to liability or limit our ability to sell the products containing such
code, thereby having a material adverse affect upon our business.

Certain Risks Related to the Combined Company Resulting from the Merger

Any failure to integrate successfully the businesses of Accelrys and Symyx in the expected timeframe will adversely
affect the combined companys future results.The success of the Merger will depend, in large part, on the ability of the combined company to realize the anticipated benefits, including annual net operating synergies, from combining the
businesses of Accelrys and Symyx. To realize these anticipated benefits, the combined company must successfully integrate the businesses of Accelrys and Symyx. This integration will be complex and time-consuming.

The failure to integrate successfully and to manage successfully the challenges presented by the integration process may result in the
combined companys failure to achieve some or all of the anticipated benefits of the Merger.

Potential difficulties that
may be encountered in the integration process include the following:



| |  |  | lost sales and customers as a result of customers of either of the two companies deciding not to do business with the combined company;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | complexities associated with managing the larger, more complex, combined business;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | integrating personnel from the two companies while maintaining focus on providing consistent, high quality products;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the Merger; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | performance shortfalls at one or both of the companies as a result of the diversion of managements attention caused by completing the Merger and
integrating the companies operations.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The combined companys future results will suffer if the combined company does
not effectively manage its expanded operations following the Merger.The size of the combined companys business is significantly larger than the current businesses of Accelrys and Symyx as stand-alone entities. The combined
companys future success depends, in part, upon its ability to manage this expanded business, which will pose substantial challenges for the combined companys management, including challenges related to the management and monitoring of
new operations and associated increased costs and complexity. Accelrys cannot assure you that the combined company will be successful or that the combined company will realize the expected operating efficiencies, annual net operating synergies,
revenue enhancements and other benefits currently anticipated to result from the Merger.

The Merger may not be
accretive and may cause dilution to the combined companys earnings per share, which may negatively impact the price of the common stock of the combined company following the completion of the Merger.Accelrys currently anticipates that
the Merger will be accretive to the earnings per share of the combined company for the first full calendar year following the completion of the Merger. This expectation is based on preliminary estimates and assumes certain synergies expected to be
realized by the combined company during such time. Such estimates and assumptions could materially change due to additional transaction-related costs, the failure to realize any or all of the benefits expected in the Merger or other factors beyond
the control of Accelrys. All of these factors could delay, decrease or eliminate the expected accretive effect of the Merger and cause resulting dilution to the combined companys earnings per share or to the price of the common stock of the
combined company.

The Merger has resulted in changes to our board of directors that may affect the combined
companys operations.Upon completion of the Merger, the composition of our board of directors changed in accordance with the Merger Agreement. The combined companys board of directors now consists of 10 members, including the six
directors of Accelrys prior to the Merger and four of the individuals who served as directors of Symyx prior to the Merger. This new composition of our board of directors may affect the business strategy and operating decisions of the combined
company.

The loss of key personnel could have a material adverse effect on the combined companys business,
financial condition or results of operations.The success of the Merger will depend in part on the combined companys ability to retain key Accelrys and Symyx employees who continue employment with the combined company. It is possible
that these employees might decide not to remain with the combined company now that the Merger has been completed. If these key employees terminate their employment, the combined companys sales, marketing or development activities might be
adversely affected, managements attention might be diverted from successfully integrating Symyxs operations to recruiting suitable replacements and the combined companys business, financial condition or results of operations could
be adversely affected. In addition, the combined company might not be able to locate suitable replacements for any such key employees who leave the combined company or offer employment to potential replacements on reasonable terms.

The success of the combined company will also depend on relationships with third parties and pre-existing customers of Accelrys and
Symyx, which relationships may be affected by customer preferences or public attitudes about the Merger. Any adverse changes in these relationships could adversely affect the combined companys business, financial condition or results of
operations.The combined companys success will be dependent on the ability to maintain and renew relationships with pre-existing customers and other clients of both Accelrys and Symyx and to establish new client relationships. There
can be no assurance that the business of the combined company will be able to maintain pre-existing customer contracts and other business relationships, or enter into or maintain new customer contracts and other business relationships, on acceptable
terms, if at all. The failure to maintain important customer relationships could have a material adverse effect on the business, financial condition or results of operations of the combined company.

The combined companys ability to utilize its NOL and tax credit carryforwards in the future may be substantially limited by
Sections 382 and 383 of the Code.In general, under Section 382 and 383 of the Code, a corporation that undergoes an ownership change is subject to limitations on its ability to utilize its pre-change net operating loss
and credit carryforwards to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders increases by more than 50 percentage points over such
stockholders lowest percentage ownership during the testing period (which is generally three years). The amount of the annual limitation is generally equal to the value of the stock of the corporation immediately prior to the ownership
change, multiplied by the adjusted federal tax-exempt rate set by the Internal Revenue Service.

As a result of the Merger, it
is possible that either or both of Accelrys and Symyx will be deemed to have undergone an ownership change for purposes of Section 382 of the Code. Accordingly, the combined companys ability to utilize Accelryss and
Symyxs NOL and tax credit carryforwards may be substantially limited as described in the preceding paragraph. These limitations could in turn result in increased future tax payments for the combined company, which could have a material adverse
effect on the business, financial condition or results of operations of the combined company.

The price of our common
stock following the Merger may be affected by factors different from those that affected the price of shares of Accelrys or Symyx prior to the Merger. The business of Accelrys differs from the business of Symyx in important respects and,
accordingly, the results of operations of the combined company and the price of our common stock following the completion of the Merger may be affected by factors different from those factors that affected the independent results of operations of
Accelrys and Symyx. As a result, the price of our common stock could fluctuate in a manner or based on factors not in keeping with the historical results of fluctuations in the stock prices of Accelrys or Symyx prior to the Merger.



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|Item 5. | Other Information
|------- | -----------------

Assumption of the
Symyx Technologies, Inc. 2007 Stock Incentive Plan, As Amended

On August 3, 2010, following the completion of the Merger,
our board of directors approved the assumption of the Symyx 2007 Stock Incentive Plan, as amended (the 2007 Plan), in accordance with NASDAQ Listing Rule 5635 (Rule 5635), which provides that shares available under certain
plans acquired in mergers and other acquisitions may be used for certain post-transaction grants by the acquiring company without further stockholder approval.

Administration and Participants.The 2007 Plan will be administered by the Human Resources Committee (the HR
Committee) of our board of directors. In accordance with Rule 5635, directors, employees and consultants of the Company and its affiliates are eligible to participate in the 2007 Plan, provided that such individuals were not employed or
engaged by us or any of our subsidiaries at the time the Merger was completed.

Awards, Share Reserve and Term.The
2007 Plan provides for the grant of stock options, restricted stock units and other equity-based incentive awards. Pursuant to Rule 5635, we may issue up to 5,081,555 shares of our common stock upon the vesting and exercise of awards granted
pursuant to the 2007 Plan (plus any shares that would otherwise return to the 2007 Plan as a result of forfeiture, termination or expiration of previously granted awards as set forth therein), which number represents the number of shares available
for issuance under the 2007 Plan as of the completion of the Merger, adjusted according to the Exchange Ratio. Additionally, as required by Rule 5635, the 2007 Plan will terminate on June 12, 2017, which is the date on which such plan, as previously
approved by the stockholders of Symyx, would have terminated.

The foregoing description of the 2007 Plan is not complete and
is subject to, and qualified in its entirety by, the full text of the 2007 Plan, which is attached as Exhibit 10.6 to this Quarterly Report on Form 10-Q, the terms of which are incorporated herein by reference.

2010 Management Incentive Plan and Executive Bonus

On August 3, 2010, the HR Committee, based in part on input from management, approved our management incentive plan for the two quarters
ending December 31, 2010 (the 2010 Management Incentive Plan), pursuant to which our management-level employees will be eligible to receive cash bonuses based upon our achievement of certain corporate goals specified in the 2010
Management Incentive Plan, including achievement of certain non-GAAP operating income and revenue targets, and individual performance objectives. These bonuses are designed to attract, motivate, retain and reward our management-level employees.
Under the 2010 Management Incentive Plan, the Chief Executive Officer has a bonus target equal to 54% of his base salary (based on an annual incentive target of 90% of base salary); the Chief Financial Officer, Chief Technology Officer and General
Counsel each have a bonus target equal to 30% of their respective base salaries (based on an annual incentive target of 50% of their respective base salaries), the Senior Vice President, Worldwide Sales and Support has a bonus target of 60% of his
base salary (based on an annual incentive target of 100% of base salary) of which a portion is based upon achievement under the 2010 Management Incentive Plan and the remainder of which is based upon performance against the sales quota, and the
Executive Vice President, Software Products has a bonus target equal to 32.5% of his base salary (based on an annual incentive target of 65% of base salary). All other executive officers have a bonus target equal to 24% of their respective base
salaries (based on an annual incentive target of 40% of base salary). Payouts under the 2010 Management Incentive Plan will vary dependant upon the level of achievement of the specified corporate and individual goals, and will range from zero to two
times the targeted bonus amount. The HR Committee will make all final determinations regarding the achievement of goals and the payment of bonuses pursuant to the 2010 Management Incentive Plan. The HR Committee has the ability to modify, suspend or
terminate the 2010 Management Incentive Plan at any time.

In addition, on August 3, 2010, the HR Committee awarded Trevor
Heritage, the Companys Executive Vice President, Software Products, a bonus in the amount of $97,500.

The foregoing
description of the 2010 Management Incentive Plan is not complete and is subject to, and qualified in its entirety by, the full text of the 2010 Management Incentive Plan, which is attached as Exhibit 10.7 to this Quarterly Report on Form 10-Q, the
terms of which are incorporated herein by reference.

Change in Fiscal Year

On August 3, 2010, our board of directors approved a change in our fiscal year end from March 31 to December 31. We plan to file a
Transition Report on Form 10-K with the SEC on or before March 16, 2011 to cover the nine-month transition period from April 1, 2010 through December 31, 2010.



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|Item 6. | Exhibits
|------- | --------



|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2.1           |  | Agreement and Plan of Merger and Reorganization, dated April 5, 2010, by and among Accelrys, Inc., Alto Merger Sub, Inc. and Symyx Technologies, Inc. (incorporated by reference to
Exhibit 2.1 of Accelrys, Inc.s Current Report on Form 8-K filed on April 6, 2010).                                                                                                                                                                                        
|              | 
|3.1           |  | Restated Certificate of Incorporation of Pharmacopeia, Inc., as amended (including a Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred
Stock) (incorporated by reference to Exhibit 3.2 to Accelrys, Inc.s Annual Report on Form 10-K for the fiscal year ended March 31, 2005).                                                                                                                                  
|              | 
|3.2           |  | Certificate of Amendment of Amended and Restated Certificate of Accelrys, Inc. (incorporated by reference to Exhibit 3.4 to Accelrys, Inc.s Quarterly Report Form 10-Q for the
quarter ended September 30, 2007).                                                                                                                                                                                                                                             
|              | 
|3.3           |  | Certificate of Amendment to the Restated Certificate of Incorporation of Accelrys, Inc. (incorporated by reference to Exhibit 3.1 to Accelrys, Inc.s Current Report on Form 8-K
filed on July 2, 2010).                                                                                                                                                                                                                                                       
|              | 
|3.4           |  | Amended and Restated Bylaws of Accelrys, Inc. as amended on June 9, 2005 (incorporated by reference to Exhibit 3.3 to Accelrys, Inc.s Annual Report on Form 10-K for the
fiscal year ended March 31, 2005).                                                                                                                                                                                                                                                   
|              | 
|4.1           |  | Rights Agreement, dated as of September 6, 2002, between Pharmacopeia, Inc. and American Stock Transfer & Trust Company, as Rights Agent, which includes as
Exhibit A thereto the Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock and Exhibit B thereto the Form of Right Certificate (incorporated by reference to Exhibit 4.1 to
Accelrys, Inc.s Current Report on Form 8-K filed on September 4, 2002).
|              | 
|4.2           |  | First Amendment to Rights Agreement, dated as of April 5, 2010 (incorporated by reference to Exhibit 4.1 to Accelrys, Inc.s Current Report on Form 8-K filed on April 6, 2010).                                                                                                                                                                                                                                                                               
|              | 
|10.1          |  | Form of Voting Agreement, dated April 5, 2010, by and between Accelrys, Inc. and the directors and certain executive officers of Symyx Technologies, Inc. (incorporated by
reference to Exhibit 10.1 to Accelrys, Inc.s Current Report on Form 8-K filed on April 6, 2010).                                                                                                                                                                                   
|              | 
|10.2          |  | First Quarter Fiscal Year 2011 Management Incentive Plan (incorporated by reference to Exhibit 10.1 to Accelrys, Inc.s Current Report on Form 8-K filed on April 15, 2010).                                                                                                                                                                                                                                                                                   
|              | 
|10.3          |  | Offer Letter, dated April 9, 2010, from Accelrys, Inc. to Todd Johnson (incorporated by reference to Accelrys, Inc.s Current Report on Form 8-K filed on April 22,
2010).                                                                                                                                                                                                                                                                                     
|              | 
|10.4          |  | Employment Agreement, dated as of April 21, 2010, by and between Accelrys, Inc. and Todd Johnson (incorporated by reference to Accelrys, Inc.s Current Report on Form 8-K filed
on April 22, 2010).                                                                                                                                                                                                                                                           
|              | 
|10.5          |  | Separation Agreement and Release, dated April 21, 2010, by and between Ilene Vogt and Accelrys, Inc. (incorporated by reference to Accelrys, Inc.s Current Report on Form 8-K
filed on April 22, 2010).                                                                                                                                                                                                                                                       
|              | 
|10.6          |  | Symyx Technologies, Inc. 2007 Stock Incentive Plan, as amended, and the forms of agreement related thereto (incorporated by reference to Accelrys, Inc.s Registration Statement
on Form S-8 (Registration No. 333-168656) filed on August 9, 2010).                                                                                                                                                                                                           
|              | 
|10.7*         |  | 2010 Management Incentive Plan for the Period of July 1, 2010 through December 31, 2010                                                                                                                                                                                                                                                                                                                                                                        
|              | 
|31.1*         |  | Section 302 Certification of the Principal Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                   
|              | 
|31.2*         |  | Section 302 Certification of the Principal Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                   
|              | 
|32.1*         |  | Section 906 Certification of the Chief Executive Officer and Chief Financial Officer                                                                                                                                                                                                                                                                                                                                                                           



|* | Filed herewith
|- | --------------



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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.



ACCELRYS, INC.By:

/s/ MICHAEL A. PIRAINOMichael A. PirainoExecutive Vice President and Chief FinancialOfficer (Duly Authorized Officer, PrincipalFinancial Officer and Principal AccountingOfficer)Date: August 9, 2010




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