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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 October 31, 2002

[ ] 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 000-27874

ANSOFT CORPORATION
(Exact name of registrant as specified in its charter)


Delaware 72-1001909
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification no.)

Four Station Square, Suite 200
Pittsburgh, Pennsylvania 15219-1119
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (412) 261-3200


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 [ ]


The number of shares of the registrant's Common Stock outstanding as of the
close of business on December 2, 2002 was 12,226,132.








ANSOFT CORPORATION AND SUBSIDIARIES
FORM 10-Q
INDEX




Page
----

Part I FINANCIAL INFORMATION

Item 1. Financial Statements
Consolidated Balance Sheets - October 31, 2002 (unaudited) and April 30, 2002 1
Consolidated Statements of Operations (unaudited) - Three and six months ended
October 31, 2002 and 2001 2
Consolidated Statements of Cash Flows (unaudited) - Three and six months ended
October 31, 2002 and 2001 3
Notes to the Consolidated Financial Statements (unaudited) 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6
Item 3. Quantitative and Qualitative Disclosure about Market Risk 13
Item 4. Controls and Procedures 13


Part II OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14

Signatures 14









PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
ANSOFT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)




October 31, April 30,
2002 2002
-------- --------
(unaudited)

Assets
Current assets
Cash and cash equivalents $ 3,807 $ 5,269
Accounts receivable 9,884 15,044
Deferred income taxes 236 236
Prepaid expenses and other assets 850 1,005
-------- --------
Total current assets 14,777 21,554

Equipment and furniture 4,760 5,714
Marketable securities 21,295 22,479
Other assets 374 367
Deferred taxes - non current 5,870 4,484
Intangible assets, net 11,699 13,626
-------- --------
Total assets $ 58,775 $ 68,224
======== ========

Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued expenses $ 2,532 $ 3,292
Note payable -- 1,850
Deferred revenue 8,576 8,915
-------- --------
Total current liabilities 11,108 14,057

Line of credit 11,500 10,000
Other liabilities 295 520
-------- --------

Total liabilities 22,903 24,577

Stockholders' equity
Preferred stock -- --
Common stock 122 122
Additional paid-in capital 55,074 54,939
Treasury stock (2,647) (1,671)
Other accumulated comprehensive loss (3,097) (1,704)
Accumulated deficit (13,580) (8,039)
-------- --------
Total stockholders' equity 35,872 43,647

Total liabilities and stockholders' equity $ 58,775 $ 68,224
======== ========



See accompanying notes to the consolidated financial statements.

Page 1






ANSOFT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)





Three months ended October 31, Six months ended October 31,
2002 2001 2002 2001
-------- -------- -------- --------

Revenue
License $ 5,845 $ 8,368 $ 10,890 $ 15,927
Service and other 4,712 4,172 8,955 7,834
-------- -------- -------- --------
Total revenue 10,557 12,540 19,845 23,761

Costs and expenses
Sales and marketing 6,370 6,455 12,894 12,636
Research and development 4,005 3,105 8,046 6,107
Research and development
-Altra Broadband 1,358 1,090 2,461 2,028
General and administrative 975 1,186 2,007 2,217
Amortization 917 1,175 1,926 2,358
-------- -------- -------- --------
Total costs and expenses 13,625 13,011 27,334 25,346
-------- -------- -------- --------
Loss from operations (3,068) (471) (7,489) (1,585)
Other income, net 320 378 562 780
-------- -------- -------- --------
Loss before income taxes (2,748) (93) (6,927) (805)
Income tax benefit 550 28 1,386 242
-------- -------- -------- --------
Net loss $ (2,198) $ (65) $ (5,541) $ (563)
======== ======== ======== ========
Net loss per share
Basic $ (0.19) $ (0.01) $ (0.47) $ (0.05)
======== ======== ======== ========
Diluted $ (0.19) $ (0.01) $ (0.47) $ (0.05)
======== ======== ======== ========
Weighted average shares used in calculation
Basic 11,817 11,836 11,878 11,796
======== ======== ======== ========
Diluted 11,817 11,836 11,878 11,796
======== ======== ======== ========




See accompanying notes to the consolidated financial statements.




Page 2







ANSOFT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)



SIX MONTHS ENDED OCTOBER 31
2002 2001
-------- --------

Cash flows from operating activities
Net loss $ (5,541) $ (563)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation 1,065 913
Amortization 1,926 2,358
Deferred taxes (1,386) (431)
Impairment charge to fixed assets 407 --
Non cash charge on marketable securities 78 --
Changes in assets and liabilities, net of effect from acquisitions
Accounts receivable 5,160 (702)
Prepaid expenses and other assets 155 523
Other long-term assets and liabilities, net 154 442
Accounts payable and accrued expenses (1,144) (261)
Deferred revenue (339) 608
-------- --------
Net cash provided by operating activities 535 2,887
-------- --------
Cash flows from investing activities
Purchases of equipment and furniture (517) (1,911)
Investment in acquired businesses -- (7,544)
Purchases of marketable securities (547) (660)
-------- --------
Net cash used in investing activities (1,064) (10,115)
-------- --------
Cash flows from financing activities
Proceeds from line of credit 1,500 1,000
Purchase of treasury stock (976) (70)
Payment of note payable (1,850) --
Proceeds from the issuance of common stock, net 135 816
-------- --------
Net cash provided by (used in) financing activities (1,191) 1,746
-------- --------
Net decrease in cash and cash equivalents (1,720) (5,482)
Effect of exchange rate changes 258 (252)
Cash and cash equivalents at beginning of period 5,269 9,412
-------- --------
Cash and cash equivalents at end of period $ 3,807 $ 3,678
======== ========
Supplemental disclosures of cash flow information
Cash paid for interest $ 213 $ 240
======== ========
Cash paid for income taxes $ 846 $ 203
======== ========





See accompanying notes to the consolidated financial statements.




Page 3







ANSOFT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(1) Basis of Presentation

The unaudited consolidated financial statements include the accounts of Ansoft
and its majority owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of financial position and results of operations have been made.
Operating results for interim periods are not necessarily indicative of results
which may be expected for a full year. The information included in this Form
10-Q should be read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations and the fiscal year ended April
30, 2002 consolidated financial statements and notes thereto included in
Ansoft's annual report on Form 10-K filed with the Securities and Exchange
Commission.

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses and disclosure of contingent assets and liabilities. The
estimates and assumptions used in the accompanying consolidated financial
statements are based on management's evaluation of the relevant facts and
circumstances as of the date of the consolidated financial statements. Actual
results may differ from those estimates.

(2) Comprehensive income (loss)

"Comprehensive income (loss)" includes foreign currency translation gains and
losses and other unrealized gains and losses. A summary of comprehensive income
(loss) follows:





Three Months Ended October 31, Six Months Ended October 31,
(in thousands, except per share amounts)
2002 2001 2002 2001
------- ------- ------- -------

Net loss $(2,198) $ (65) $(5,541) $ (563)
Unrealized loss on marketable securities (298) (1,426) (1,653) (1,504)
Foreign currency translation adjustments 102 -- 260 (252)
------- ------- ------- -------
Comprehensive loss $(2,394) $(1,491) $(6,934) $(2,319)
======= ======= ======= =======


(3) Net income per share

Basic net income per share is calculated using the weighted-average number of
common shares outstanding during the period. Diluted net income per share is
computed using the weighted-average number of common shares and potentially
dilutive common shares outstanding during the period. Potentially dilutive
common shares consist of the incremental common shares issuable upon the
exercise of employee stock options, and are computed using the treasury stock
method. Potentially dilutive common shares are excluded from the calculation if
their effect is antidilutive.


Page 4







(4) Goodwill and Other Intangible Assets


In 2002, Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill
and Other Intangible Assets" became effective and, as a result, the Company has
ceased to amortize approximately $1.2 million of goodwill (net of accumulated
amortization of $2.2 million). In lieu of amortization, the Company is required
to perform an initial impairment review of goodwill in fiscal 2003 and an annual
impairment review thereafter. The Company completed its initial review during
the second quarter of 2003. Based on the initial review, there was no impairment
charge.

The Company reviews the realizability of acquired technology, goodwill and other
intangibles on an ongoing basis, and if there is an indication of impairment,
the Company performs procedures under the applicable accounting pronouncements
to quantify any impairment that exists. Determining the amount of impairment of
these assets requires the Company to estimate future cash flows and make
judgments regarding discount rates and other variables that impact the net
realizable value or fair value of those assets, as applicable. Actual future
cash flows and other assumed variables could differ from these estimates. Future
impairment charges under existing pronouncements and under SFAS No. 142 could be
material.

The following table presents the impact of SFAS No. 142 on net income and net
income per share had the standard been in effect for the three and six months
ended October 31, 2001:



Three Months Ended October 31, Six Months Ended October 31,

(in thousands, except per share amounts)

2002 2001 2002 2001
--------- --------- --------- ---------

Reported net loss $ (2,198) $ (65) $ (5,541) $ (563)
Add back: Goodwill amortization -- 128 -- 256
--------- --------- --------- ---------
Adjusted net income (loss) $ (2,198) $ 63 $ (5,541) $ (307)
========= ========= ========= =========

BASIC EARNINGS PER SHARE:
Reported net loss $ (0.19) $ (0.01) $ (0.47) $ (0.05)
Add back: Goodwill amortization -- 0.02 -- 0.02
--------- --------- --------- ---------
Adjusted net income (loss) $ (0.19) $ 0.01 $ (0.47) $ (0.03)
========= ========= ========= =========

DILUTED EARNINGS PER SHARE:
Reported net loss $ (0.19) $ (0.01) $ (0.47) $ (0.05)
Add back: Goodwill amortization -- 0.02 -- 0.02
--------- --------- --------- ---------
Adjusted net income (loss) $ (0.19) $ 0.01 $ (0.47) $ (0.03)
========= ========= ========= =========



Other intangible assets amounted to $10.5 million (net of accumulated
amortization of $12.9 million) at October 31, 2002. These intangible assets
consist primarily of customer lists ($8.8 million net of accumulated
amortization of $9.8 million as of October 31, 2002) and purchased technology,
trademark, and non-compete agreements entered into in connection with business
combinations and are amortized over their estimated useful lives, ranging
between three and seven years. There are no expected residual values related to
these intangible assets. Estimated fiscal year amortization expense in millions
is as follows: 2003 - $3.7 million; 2004 - $3.3 million; 2005 - $1.5 million;
2006 - $1.4 million; and 2007 - $1.2 million.



Page 5







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains certain forward-looking statements that involve
substantial risks and uncertainties. When used in this Form 10-Q, the words
"anticipate," "plan," "believe," "estimate," "expect" and similar expressions as
they relate to Ansoft or its management are intended to identify such
forward-looking statements. Ansoft's actual results, performance or achievements
could differ materially from the results expressed in, or implied by, these
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed in this Form 10-Q and in the "Risk Factors"
section included in Ansoft's report on Form 10-K for the fiscal year ended April
30, 2002.

Overview

Ansoft Corporation ("Ansoft" or the "Company") is a leading developer of
electronic design automation ("EDA") software used in high technology products
and industries. Ansoft's software is used by electrical engineers in the design
of state of the art technology products, such as cellular phones, internet
networking, satellite communications systems, computer chips and circuit boards,
and electronic sensors and motors. Engineers use our software to maximize
product performance, eliminate physical prototypes, and to reduce
time-to-market.

Effective May 3, 2001, Ansoft entered into a Technology License and Transition
Agreement in which Agilent has agreed to license its High Frequency Structure
Simulator (HFSS) software product line and transfer customer obligations for
Agilent HFSS software to Ansoft. The Agilent transaction was accounted for as an
acquisition of intangible assets.

In July 2000, Ansoft announced its formation of Altra Broadband to pursue the
development of critical intellectual property and products for broadband
wireless and optical communications. In spite of certain technical successes,
profitable deployment of intellectual property developed by Altra Broadband's
Irvine Technology Center in this telecom environment was deemed unlikely in the
near term. As such, the Company closed the Irvine Technology Center during the
quarter ended October 31, 2002, resulting in a restructuring charge of $532,000
that is included in "Research and development expense - Altra Broadband."

Results of Operations

The following table sets forth the percentage of total revenue of each item in
Ansoft's consolidated statements of operations:



Three months ended October 31, Six months ended October 31,
2002 2001 2002 2001
---- ---- ---- ----

Revenues:
License 55% 67% 55% 67%
Service and other 45 33 45 33
---- ---- ---- ----
Total revenue 100 100 100 100

Costs and expenses:
Sales and marketing 60 52 65 53
Research and development 38 25 41 26
Research and development -
Altra Broadband 13 9 12 8
General and administrative 9 9 10 9
Amortization 9 9 10 10
---- ---- ---- ----
Total costs and expenses 129 104 138 106
---- ---- ---- ----
Loss from operations (29) (4) (38) (6)
Other income 3 3 3 3
---- ---- ---- ----
Loss before income taxes (26) (1) (35) (3)
Income taxes 5 -- 7 1
---- ---- ---- ----
Net loss (21)% (1)% (28)% (2)%
==== ==== ==== ====


Page 6






Comparison of the Three and Six Months Ended October 31, 2002 and 2001

Revenue. Total revenue in the three and six-month periods ended October 31, 2002
decreased 16% to $10.6 million and $19.8 million, respectively. License revenue
during the three-month period ended October 31, 2002 decreased 30% to $5.8
million from $8.4 million during the comparable period in the prior fiscal year.
License revenue during the six-month period ended October 31, 2002 decreased 32%
to $10.9 million from $15.9 million during the comparable period in the prior
fiscal year. The decrease is primarily attributable to reduced demand from
customers due to the economic slowdown, particularly in the telecommunications
sector. Service and other revenue in the three and six-month periods ended
October 31, 2002 increased 13% and 14%, respectively, due to the continued
growth of the installed base of customers under annual maintenance agreements.

International revenue accounted for 55% and 54% of the Company's total product
revenue in the three-month periods ended October 31, 2002 and 2001,
respectively. International revenue accounted for 55% and 56% of the Company's
total product revenue in the six-month periods ended October 31, 2002 and 2001,
respectively. The Company's future international sales may be subject to
additional risks associated with international operations, including currency
exchange fluctuations, tariff regulations and requirements for export, which
licenses may on occasion be delayed or difficult to obtain.

Sales and marketing expenses. Sales and marketing expenses consist of salaries,
commissions paid to internal sales and marketing personnel, promotional costs
and related operating expenses. Sales and marketing expenses in the three-month
period ended October 31, 2002 decreased by 1% to $6.4 million, as compared to
$6.5 million in the same period in the previous fiscal year. The decrease was
due primarily to lower commission expense, as well as cost control measures.
Sales and marketing expenses increased by 2% to $12.9 million in the six-month
period ended October 31, 2002, as compared to $12.6 million in the same period
in the previous fiscal year. Sales and marketing expenses represented 60% and
52% of total revenue in the three-month periods ended October 31, 2002 and 2001,
respectively. Sales and marketing expenses represented 65% and 53% of total
revenue in the six-month periods ended October 31, 2002 and 2001, respectively.
Ansoft expects that sales and marketing expenses will decrease as a percentage
of revenue although increase in absolute dollars in future periods.

Research and development expenses. Research and development expenses include all
costs associated with the development of new products and enhancements to
existing products. Total research and development expenses for the three-month
period ended October 31, 2002 increased 28% to $5.4 million, as compared to $4.2
million for the same period in the previous fiscal year. The increase is mainly
due to the continued research and development efforts for Ansoft's current and
future software products. Also contributing to the increase were approximately
$532,000 in a restructuring charge related to the closing of Altra Broadband's
Irvine Technology Center during the quarter. Research and development expenses
represented 51% (38% excluding Altra Broadband expense) and 34% (25% excluding
Altra Broadband expense) of total revenue in the three-month periods ended
October 31, 2002 and 2001, respectively. Research and development expenses
represented 53% (41% excluding Altra Broadband expense) and 34% (26% excluding
Altra Broadband expense) of total revenue in the six-month periods ended October
31, 2002 and 2001, respectively. Ansoft anticipates that research and
development expenses will decrease as a percentage of revenue and in absolute
dollars in future periods due to the closing of the Irvine Technology Center and
other cost control measures.

General and administrative expenses. General and administrative expenses for the
three-month period ended October 31, 2002 was $1.0 million, as compared to $1.2
million in the same period in the previous fiscal year. General and
administrative expenses for the six-month period ended October 31, 2002
decreased 9% to $2.0 million. The decline is due to general cost control
measures. General and administrative expenses represented 9% of total revenue in
the three-month periods ended October 31, 2002 and 2001, respectively. The
Company anticipates that general and administrative expenses will decrease as a
percentage of revenue but increase in absolute dollars in future periods.

Page 7







Amortization expense. Amortization expense for the three-month period ended
October 31, 2002 was $917,000, as compared to $1.2 million in the same period in
the previous fiscal year. Amortization expense for the six-month period ended
October 31, 2002 was $1.9 million, as compared to $2.4 million in the same
period in the previous fiscal year. The decrease was due to the Company ceasing
to amortize approximately $1.2 million of goodwill in conjunction with the
adoption of SFAS 142, effective May 1, 2002.

Other income. Other income for the three-month period ended October 31, 2002 was
$320,000, a decrease from the $378,000 reported for the same period in the
previous fiscal year. Other income for the six-month period ended October 31,
2002 was $562,000, a decrease from the $780,000 reported for the same period in
the previous fiscal year. The decrease is due primarily to lower interest rates
and investment returns in the current period.

Income taxes. In the three and six-month periods ended October 31, 2002, the
Company recorded tax benefits of $550,000 and $1.4 million, respectively. The
Company is in process of determining the extent of research and development
credits for the years prior to fiscal 2001 that have not been recorded. These
credits, once quantified, will be available to reduce future federal income
taxes, if any, through April 30, 2022.

Liquidity and Capital Resources

As of October 31, 2002, Ansoft had $3.8 million in cash and cash equivalents and
working capital of $3.7 million. Net cash provided by operating activities in
the six-month periods ended October 31, 2002 and 2001 was $535,000 and $2.9
million, respectively.

Net cash used in investing activities in the six-month periods ended October 31,
2002 and 2001 were $1.1 million and $10.1 million, respectively. Capital
expenditures were $517,000 and $1.9 million in the six-month periods ended
October 31, 2002 and 2001, respectively. In the six-month period ended October
31, 2001 the Company invested $7.5 million in acquired businesses. Purchases of
marketable securities were $547,000 and $660,000 in the six-month periods ended
October 31, 2002 and 2001, respectively.

Net cash used in financing activities was $1.2 million in the six-month period
ended October 31, 2002. Net cash provided by financing activities was $1.7
million in the six-month period ended October 31, 2001. Proceeds from the
issuance of common stock were $135,000 and $816,000 in the six-month periods
ended October 31, 2002 and 2001, respectively. Proceeds from the line of credit
were $1.5 million and $1.0 million in the six-month periods ended October 31,
2002 and 2001, respectively. Payment of note payable was $1.9 million in the
six-month period ended October 31, 2002. Funds used for the purchase of treasury
stock were $976,000 and $70,000 in the six-month periods ended October 31, 2002
and 2001, respectively.

Ansoft has available a $20.0 million secured line of credit from a domestic
financial institution at an interest rate equal to LIBOR plus an applicable
margin rate. The line of credit expires on September 30, 2004, and is secured by
the marketable securities held with the institution. As of October 31, 2002,
$11.5 million was the outstanding balance on the line of credit. Ansoft believes
that the available funds will be sufficient to meet its anticipated cash needs
for working capital and capital expenditures for at least the foreseeable
future. Thereafter, if cash generated from operations is insufficient to satisfy
the Company's liquidity requirements, Ansoft may seek additional funds through
equity or debt financing. There can be no assurance that additional financing
will be available or that, if available, such financing will be on terms
favorable to Ansoft.

Page 8








A summary of Ansoft's significant contractual obligations and commitments as of
October 31, 2002 is as follows (in thousands):

Debt Operating Leases Capital Leases
Fiscal 2003 - $ 702 $ 190
2004 - $1,145 $ 368
2005 $11,500 $ 887 $ 112
2006 - $ 705 -
2007 - $ 110 -

Critical Accounting Policies

Certain accounting policies are very important to the portrayal of Ansoft's
financial condition and results of operations and require management's most
subjective or complex judgments. The policies are as follows:

Revenue Recognition

License revenues are recognized when persuasive evidence of an arrangement
exists, delivery of the product has occurred, no significant obligations remain,
the fee is fixed or determinable and collectibility is probable. Revenue earned
on software arrangements involving multiple elements is allocated to each
element based on the relative fair values of the elements. The revenue allocated
to software products is recognized after shipment of the products and
fulfillment of acceptance terms.

In general, postcontract customer support ("PCS") for a three-month period is
bundled with the initial licensing fee. Revenue related to the three-month PCS
is deferred and recognized ratably over the term of the agreement. Revenue
related to all other PCS arrangements is deferred and recognized ratably over
the term of the agreement. Revenue from customer training, support and other
services is recognized as the service is performed.

Valuation of Accounts Receivable

Management reviews accounts receivable to determine which are doubtful of
collection. In making the determination of the appropriate allowance for
doubtful accounts, management considers Ansoft's history of write-offs,
relationships with its customers, and the overall credit worthiness of its
customers.

Impairment of Intangible Assets

The Company reviews assets for impairment whenever events or changes in
circumstances indicate that the carrying value of the assets may not be
recoverable. A determination of impairment is made based on estimates of future
cash flows. If such assets are considered to be impaired the amount of the
impairment is based on the excess of the carrying value over the fair value of
the assets. The fair value of the assets is measured using estimated discounted
future cash flows.

Goodwill

The Company reviews goodwill for impairment based on a comparison of the fair
value of the reporting unit (determined to be Ansoft taken as a whole) and its
carrying amount. If the carrying amount exceeds fair value, the implied fair
value of reporting unit goodwill is compared to the carrying amount of the
goodwill and an impairment charge is recorded.

Page 9








Impairment of Marketable Securities Available for Sale

If a decline in the market value of any available for sale security below cost
is deemed to be other than temporary, an impairment charge is recorded. The
impairment is charged to earnings and a new cost basis for the security is
established. During the six-month period ended October 31, 2002, the marketable
securities declined $1.7 million in market value and have declined a total of
$2.6 million below cost. This decline is deemed to be temporary. While this
assessment is a judgment based on all of the information available at the time
of the assessment, other information or economic developments in the future may
lead to changes in this assessment.

Deferred Tax Asset Valuation Allowance

Deferred tax assets are recognized for deductible temporary differences, net
operating loss carryforwards, and credit carryforwards if it is more likely than
not that the tax benefits will be realized. To the extent a deferred tax asset
cannot be recognized under the preceding criteria, a valuation allowance has
been established.

The judgments used in applying the above policies are based on management's
evaluation of the relevant facts and circumstances as of the date of the
financial statements. Actual results may differ from those estimates. See also
the "Additional Risk Factors that may effect Future Results" section of this
Management's Discussion and Analysis.

Recent Accounting Pronouncements

In June 2002, the Financial Accounting Standards Board issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146
eliminates Emerging Issues Task Force, or EITF, Issue No. 94-3 "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (Including Certain Costs Incurred in a Restructuring)." Under SFAS No.
146, liabilities for costs associated with an exit or disposal activity are
recognized when the liabilities are incurred, as opposed to being recognized at
the date of entity's commitment to an exit plan under EITF No. 94-3.
Furthermore, SFAS No. 146 establishes that fair value is the objective for
initial measurement of the liabilities. This Statement will be effective for
exit or disposal activities that are initiated after December 31, 2002.

Additional Risk Factors that may affect Future Results

Our Future Operating Results Are Uncertain.
During the fiscal year ended April 30, 2002, Ansoft had net income of $1.2
million. Ansoft has incurred net losses in each of the years in the three-year
period ending April 30, 2001. There can be no assurance that Ansoft's revenue
and net income will grow or be sustained in future periods or that Ansoft will
be profitable in any future period. Future operating results will depend on many
factors, including the degree and the rate of growth of the markets in which
Ansoft competes and the accompanying demand for Ansoft's products, the level of
product and price competition, the ability of Ansoft to develop and market new
products and to control costs, the ability of Ansoft to expand its direct sales
force and the ability of Ansoft to attract and retain key personnel.

Our Quarterly Operating Results Are Difficult To Predict.
We are unable to accurately forecast our future revenues primarily because of
the emerging nature of the market in which we compete. Our revenues and
operating results generally depend on the size, timing and structure of
significant licenses. These factors have historically been, and are likely to
continue to be, difficult to forecast. In addition, our current and future
expense levels are based largely on our operating plans and estimates of future
revenues and are, to an extent, fixed. We may be unable to adjust spending
sufficiently or quickly enough to compensate for any unexpected revenue
shortfall. Accordingly, any significant shortfall in revenues in relation to our

Page 10







planned expenditures would seriously harm our business, financial condition and
results of operations. Such shortfalls in our revenue or operating results from
levels expected by public market analysts and investors could seriously harm the
trading price of our common stock. Additionally, we may not learn of such
revenue shortfalls, earnings shortfalls or other failure to meet market
expectations until late in a fiscal quarter, which could result in an even more
immediate and serious harm to the trading price of our common stock. Our
quarterly operating results have varied, and it is anticipated that our
quarterly operating results will vary, substantially from period to period
depending on various factors, many of which are outside our control. Due to the
foregoing factors, we cannot predict with any significant degree of certainty
our quarterly revenue and operating results. Further, we believe that
period-to-period comparisons of our operating results are not necessarily a
meaningful indication of future performance.

Our Stock Price Is Extremely Volatile.
The trading price of our common stock has fluctuated significantly in the past,
and the trading price of our common stock is likely to be highly volatile and
could be subject to wide fluctuations in price in response to such factors as:

- - Actual or anticipated fluctuations in our operating results;
- - Announcements of technological innovations and new products by us or our
competitors;
- - New contractual relationships with strategic partners by us or our
competitors;
- - Proposed acquisitions by us or our competitors; and
- - Financial results that fail to meet public market analyst expectations of
performance.

In addition, the stock market in general, The Nasdaq National Market and the
market for technology companies in particular has experienced extreme price and
volume fluctuations that have often been unrelated or disproportionate to the
operating performance of such companies. These broad market and industry factors
may seriously harm the market price of our common stock in future periods.

Businesses Or Assets We Acquire May Not Perform As Projected.
We have acquired or merged with a number of technologies, assets and companies
in recent years, including the following: Agilent Technologies, Inc.'s HFSS
product line, SIMEC Corporation, Pacific Numerix Corporation, Compact Software,
Inc., the Electronic Business Unit of MacNeal Schwendler Company and Boulder
Microwave Technologies, and as part of our efforts to increase revenue and
expand our product and services offerings we may acquire additional companies.
In addition to direct costs, acquisitions pose a number of risks, including
potential dilution of earnings per share, delays and other problems of
integrating the acquired products and employees into our business, the failure
to realize expected synergies or cost savings, the failure of acquired products
to achieve projected sales, the drain on management time for acquisition-related
activities, possible adverse effects on customer buying patterns due to
uncertainties resulting from an acquisition, and assumption of unknown
liabilities. The foregoing factors could seriously harm our business, financial
condition and results of operations.

We May Lose Competitive Advantages If Our Proprietary Rights Are Inadequately
Protected.
Ansoft's success depends, in part, upon its proprietary technology. We rely on a
combination of trade secrets, copyrights, trademarks and contractual commitments
to protect our proprietary rights in our software products. We generally enter
into confidentiality or license agreements with our employees, distributors and
customers, and limit access to and distribution of our software, documentation
and other proprietary information. Despite these precautions, a third party may
still copy or otherwise obtain and use our products or technology without
authorization, or develop similar technology independently. In addition,
effective patent, copyright and trade secret protection may be unavailable or
limited in certain foreign countries. It is possible that we may fail to
adequately protect our proprietary rights. This would seriously harm Ansoft's
business, operating results and financial condition.


Page 11








We May Be Unable To Attract And Retain The Key Management And Technical
Personnel That We Need To Succeed.
Ansoft's future operating results depend in large part upon the continued
services of its key technical and management personnel. Ansoft does not have
employment contracts with any executive officer. Ansoft's future success will
also depend in large part on its ability to continue to attract and retain
highly skilled technical, marketing and management personnel. The competition
for such personnel, as well as for qualified EDA engineers, is intense. If
Ansoft is unable to attract, hire and retain qualified personnel in the future,
the development of new products and the management of Ansoft's increasingly
complex business would be impaired. This could seriously harm Ansoft's business,
operating results and financial condition.

We Depend On International Sales for a Significant Percentage Of Our Revenue.
International revenue, principally from Asian customers, accounted for
approximately 55% and 53% of our total revenue in the years ended April 30, 2002
and 2001, respectively. We expect that international license and service revenue
will continue to account for a significant portion of our total revenue for the
foreseeable future. Our international business activities are subject to a
variety of potential risks, including:

- - The impact of recessionary environments in foreign economies;
- - Longer receivables collection periods and greater difficulty in accounts
receivable collection;
- - Difficulties in staffing and managing foreign operations;
- - Political and economic instability;
- - Unexpected changes in regulatory requirements;
- - Reduced protection of intellectual property rights in some countries; and
- - Tariffs and other trade barriers.

Currency exchange fluctuations in countries in which we license our products
could also seriously harm our business, financial condition and results of
operations by resulting in pricing that is not competitive with products priced
in local currencies. Furthermore, we may not be able to continue to generally
price our products and services internationally in U.S. dollars because of
changing sovereign restrictions on importation and exportation of foreign
currencies as well as other practical considerations. In addition, the laws of
certain countries do not protect our products and intellectual property rights
to the same extent, as do the laws of the United States. Moreover, it is
possible that we may fail to sustain or increase revenue derived from
international licensing and service or that the foregoing factors will seriously
harm our future international license and service revenue, and, consequently,
seriously harm our business, financial condition and results of operations.

We Need To Successfully Manage Our Expanding Operations.
Ansoft has experienced rapid growth in recent years which has placed and could
continue to place a significant strain on the its managerial and other
resources. Revenues have grown from $26.3 million in fiscal 1998 to $53.4
million in fiscal year 2002. Ansoft's ability to manage growth effectively will
require it to continue to improve its operational and financial systems, hire
and train new employees and add additional space, both domestically and
internationally. Ansoft may not be successful in addressing such risks, and the
failure to do so would seriously harm Ansoft's business, financial condition and
results of operations.

We Depend On The Growth Of The Communications, Semiconductor And Electronics
Industries.
Ansoft is dependent upon the communications and semiconductor industry and, more
generally, the electronics industry. These industries are characterized by rapid
technological change, short product life cycles, fluctuations in manufacturing
capacity and pricing and gross margin pressures. Segments of these industries
have experienced significant economic downturns characterized by decreased
product demand, production over-capacity, price erosion, work slowdowns and
layoffs. Any prolonged significant downturn could be especially severe on
Ansoft. During such downturns, the number of new integrated circuit design
projects often decreases. Since acquisitions of new licenses from Ansoft are
largely dependent upon the commencement of new design projects, any slowdown in
these industries could seriously harm Ansoft's business, financial condition and
results of operations.

Page 12







We Are Controlled By Our Principal Stockholders And Management Which May Limit
Your Ability To Influence Stockholder Matters.
Our executive officers, directors and principal stockholders own approximately
47% of the outstanding shares of Ansoft common stock. As a result, they have the
ability to effectively control us and direct our affairs, including the election
of directors and approval of significant corporate transactions. This
concentration of ownership also may have the effect of delaying, deferring or
preventing a change in control of our company and may make some transactions
more difficult or impossible without the support of these stockholders. The
interests of these stockholders may conflict with those of other stockholders.

Anti-Takeover Provisions in Ansoft's Certificate Of Incorporation, Bylaws, And
Under Delaware Law Could Prevent An Acquisition.
We have adopted a number of provisions that could have anti-takeover effects.
The Board of Directors has the authority to issue up to 1,000,000 shares of
Preferred Stock without any further vote or action by Ansoft's stockholders.
This and other provisions of Ansoft's Certificate of Incorporation, Bylaws and
Delaware Law may have the effect of deterring hostile takeovers or delaying or
preventing changes in control or management, including transactions in which the
stockholders of Ansoft might otherwise receive a premium for their shares over
then current market prices.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

There have been no material changes in reported market risks faced by the
Company since April 30, 2002.


ITEM 4. CONTROLS AND PROCEDURES


The Company's Chief Executive Officer and Chief Financial Officer, after
evaluating the effectiveness of the Company's disclosure controls and procedures
(as defined in Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of
1934, as amended) as of a date within 90 days of the filing of this quarterly
report (the "Evaluation Date"), have concluded that, as of the Evaluation Date,
the Company's disclosure controls and procedures were effective to ensure the
timely collection, evaluation and disclosure of information relating to the
Company that would potentially be subject to disclosure under the Securities
Exchange Action of 1934, as amended, and the rules and regulations promulgated
thereunder. There were no significant changes in the Company's internal controls
or in other factors that could significantly affect the internal controls
subsequent to the Evaluation Date.




Page 13








PART II OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The Company's annual meeting of stockholders was held on September 23, 2002 at
which the actions below were taken:

1. The stockholders elected the following seven directors to the Company's
Board of Directors, by the votes indicated below, to serve for the
ensuing year.

Shares in Shares
Name Favor Against
---- ----- -------

Zoltan J. Cendes 8,827,090 719,086
Nicholas Csendes 8,827,090 719,086
Thomas A.N. Miller 8,809,543 736,633
Peter Robbins 9,147,450 398,726
Ulrich L. Rohde 9,147,450 398,726
John N. Whelihan 9,147,450 398,726
Jacob K. White 9,147,450 398,726

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.
99.1 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 Of The Sarbanes-Oxley Act of 2002
99.2 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 Of The Sarbanes-Oxley Act of 2002

(b) The Company filed the following reports on Form 8-K during the quarter
ended October 31, 2002.

Date of report Item Reported
September 16, 2002 Item 5. Other Events

SIGNATURES

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

Date: December 9, 2002 ANSOFT CORPORATION

By: /s/ Nicholas Csendes
------------------------------------------
Nicholas Csendes
President and Chief Executive Officer

By: /s/ Anthony L. Ryan
------------------------------------------
Anthony L. Ryan
Chief Financial Officer



Page 14










CERTIFICATIONS


I, Nicholas Csendes, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ansoft Corporation, the
registrant;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: December 9, 2002

By: /s/ Nicholas Csendes
-------------------------------------
Nicholas Csendes
President and Chief Executive Officer







I, Anthony L. Ryan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ansoft Corporation, the
registrant;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date: December 9, 2002


By: /s/ Anthony L. Ryan
----------------------------------
Anthony L. Ryan
Chief Financial Officer