<PAGE>
 
================================================================================

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                 _____________________________________________
                                        
                                   FORM 10-K
 (Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934.
 
     FOR THE FISCAL YEAR ENDED:  MARCH 31, 1998

                                       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:  0-27798
                       ---------------------------------
                       WORKGROUP TECHNOLOGY CORPORATION
            (Exact name of registrant as specified in its charter)

 
              DELAWARE                                        04-3153644
  ---------------------------------                        ----------------
   (State or other jurisdiction of                         (I.R.S. Employer
   incorporation or organization)                         Identification No.)

    91 HARTWELL AVE., LEXINGTON, MA                              02421
 -------------------------------------                       --------------
(Address of principal executive offices)                       (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (781) 674-2000


 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:   NONE

 SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                         COMMON STOCK, $.01 PAR VALUE
                         ----------------------------
                               (Title of class)


 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 if disclosure of delinquent filers pursuant to Item 405
 of Regulation S-K is not contained herein, and will not be contained, to the
 best of registrant's knowledge, in definitive proxy or information statements
 incorporated by reference in Part III of this Form 10-K or any amendment to
 this Form 10-K. [ ]

 The aggregate market value of the voting stock held by nonaffiliates of the
 registrant as of June 15, 1998 (based on the closing price as quoted by Nasdaq
 National Market as of such date) was $22,600,000.

 As of June 15, 1998, 8,371,947 shares of the registrant's common stock were
 outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

 Portions of the Company's Proxy Statement relating to the Company's Annual
 Meeting of Stockholders to be held on July 31, 1998 are incorporated by
 reference into Part III hereof.

================================================================================
<PAGE>
 
                                    PART I

ITEM 1.  BUSINESS

GENERAL

   Founded in 1992, Workgroup Technology Corporation ("WTC" or the "Company")
designs, develops, markets and supports WTC SolutionCenterTM, a family of
products and services that facilitates the management of product information and
work processes performed by multi-functional, enterprise product development
organizations. CMS, a product within the WTC SolutionCenter, provides
organizations with production-proven, enterprise Product Data Management ("PDM")
solutions. WTC OpCenterTM, which the Company expects to release during fiscal
year 1999, provides real-time program management solutions for product
development.  WTC ServiceCenterTM is a line of professional service offerings
providing consulting, training and technical support services to customers.

   The Company was incorporated in the State of Delaware in May 1992.  The
Company's principal executive offices are located at 91 Hartwell Avenue,
Lexington, Massachusetts 02421, and its telephone number is (781) 674-2000.
References herein to "WTC" and "the Company" include Workgroup Technology
Corporation and its wholly owned subsidiary, Workgroup Technology GmbH.

   From time to time, information provided by the Company or statements made by
its employees, including statements made herein, may contain "forward looking"
information which involve risks and uncertainties.  In particular, the
statements set forth under the heading "WTC's Strategy" below regarding the
Company's objectives to expand its technological leadership and product
offerings, enter a new market and broaden distribution and market awareness are
"forward looking" statements and are based on the assumptions and expectations
of the Company's management at the time such statements are made.  The Company's
actual results may vary significantly from those stated in any forward looking
statements.  Important information about the factors that may cause such
differences include, but are not limited to, the risks, uncertainties and other
information discussed in "Certain Factors That May Affect Future Results" in
Management's Discussion and Analysis of Financial Conditions and Results of
Operations included in this Form 10K.

INDUSTRY BACKGROUND

   Intense competitive pressures are pressing companies to shorten development
time-to-market, improve the predictability of product development programs and
reduce total product cost. At the same time, the globalization of markets and
competition demands consistent product quality with an ability to tailor product
features to suit local and regional market conditions. These pressures are
causing companies to reengineer their approach to the management of the product
lifecycle - the conceptual design, engineering, production, marketing, support
and service, and retirement of their products.

   Managing the product lifecycle imposes significant demands on information
systems. Companies must be able to manage product information within global
organizations and distribute this information to support decision making in
remote locations and across functional areas. Increasingly, product information
is created and stored electronically by a wide range of disparate applications
and systems such as Computer Aided Design ("CAD") systems; Electronic Design
Automation ("EDA") systems; word processing, document management and spreadsheet
applications; enterprise manufacturing resource planning ("MRP") systems; and
various project management tools.

   The pressures on product development are driving growth in the PDM market as
companies are pressed to implement PDM and program management solutions to
manage, track and alleviate the increasing complexity of products and product
data with the ultimate goal of shortening and improving the

                                      -1-
<PAGE>
 
predictability of product development cycles. WTC has a proven track record for
developing and implementing software solutions that meet the needs of product
development organizations for developing, using, maintaining and modifying
product data and associated change processes while offering access to current
information at all stages of product development.


WTC SOLUTIONCENTER PRODUCTS

   WTC SolutionCenter is a family of products and services that facilitates the
management of product information and work processes performed by multi-
functional, enterprise product development organizations. CMS, a product within
the WTC SolutionCenter, provides organizations with production-proven,
enterprise Product Data Management ("PDM") solutions. WTC OpCenter, which the
Company expects to release during fiscal year 1999, provides real-time program
management solutions for product development.  WTC ServiceCenter is a line of
professional service offerings providing consulting, training and technical
support services to customers.

   CMS is a family of client/server software products designed to automate and
accelerate the creation, capture, modification, control and reuse of product and
process information.  CMS currently provides thousands of end-users with
production proven solutions and important benefits, including:

     Quick Adaptability:  The highest hurdle companies must overcome when
     instituting a PDM system is lengthy implementation and deployment time.
     CMS is a flexible, modular system and can be used immediately with minimal
     programming or customization. As a result, CMS can be managed without an
     overwhelming burden on programmers and administrators, significantly
     reducing the ongoing cost of ownership.

     Total Functionality:  CMS processes, stores and retrieves all electronic
     data including design models, bills of material, spreadsheets, voice, video
     and multimedia files regardless of their location on the network.
     Additionally, CMS provides the ability to mark up and revise proposed
     changes throughout the entire design and production process.

     Complete Scalability:  CMS is easy to use and can efficiently scale from
     small initial installations to worldwide systems.  CMS is engineered for
     use in a single department with a limited number of users or in a large
     multi-site, extended enterprise of thousands of concurrent users. Utilizing
     Internet technology, CMS accommodates evolving PDM needs for both small
     companies and global enterprises.

     Effective Integration:  Through its open architecture and API module, CMS
     can be integrated with various information systems, tools and industry
     products.  WTC also provides integrations to industry standard tools such
     as Parametric Technology Corporation's ("PTC") Pro/ENGINEER, Mentor
     Graphics, Informative Graphics' Myriad and Engineering Animation, Inc.'s
     ("EAI") PreVIEW.

     Rapid and Accurate Information:  Leveraging the capabilities of the
     Internet and corporate intranets, WTC products rapidly disseminate the most
     current product information worldwide throughout extended enterprise
     networks and across functional areas.

   The CMS product solution is packaged as a suite of modules.  When combined,
the modules form an integrated solution, based upon a unified software
architecture foundation that provides a consistent user interface and common
data management structure.  CMS modules may be deployed in any combination to
meet the specific needs of a customer.  The following modules comprise the CMS
product family:

                                      -2-
<PAGE>
 
   CMS
   ---
   The core of the CMS product family, CMS provides comprehensive document and
   release management, including vault management, version control, security,
   administration and reporting.  CMS manages documents, data and information
   such as CAD models, bills of materials, technical specifications and
   regulatory documents.

   CMS Workflow/TM/
   --------------
   CMS Workflow is a flexible process management application that allows
   companies to model the business process for CMS managed information.  Work
   requests are routed to the appropriate individuals and groups, together with
   the information needed to perform the work.  CMS ensures that all assigned
   personnel are given the correct task to complete.  CMS team members have
   access to the status of all active workflows, as well as the statistics for
   completed workflows.

   CMS Replication Server/TM/
   ------------------------
   When a customer needs to support an enterprise or an extended enterprise
   distributed over wide-area networks ("WAN"), the CMS Replication Server
   supports distribution to multiple sites worldwide.  CMS Replication Server
   distributes read-only copies of files to user-defined replication vaults that
   can exist anywhere on the WAN. The CMS Replication Server reduces network
   traffic and response time for the distributed teams, particularly for those
   sharing work on large design projects.

   WTC WebLink/TM/
   -------------
   WTC WebLink is an easy-to-use toolkit for producing customer-specific CMS Web
   clients.  With WTC WebLink, users can create clients tailored specifically to
   the needs of particular users or groups of users.  This is an ideal solution
   for information consumers who are not familiar with CMS.  Simplified clients
   can be created which mask the complexity of the underlying data management
   system.  Because these clients utilize familiar browser interfaces, user
   training is minimal and usage is encouraged.  WTC WebLink enables
   organizations to replace inefficient paper-based systems for distributing
   product development information from the engineering department to other
   areas of the company where most PDM consumers reside.

   CMS Integrator for Pro/ENGINEER/TM/
   ---------------------------------
   CMS Integrator for Pro/ENGINEER is a tight integration with PTC's
   Pro/ENGINEER family of mechanical design and analysis tools.  This
   integration supports the management of all Pro/ENGINEER configurations and
   automatically extracts and maintains the relationships and attributes which
   define the Pro/ENGINEER design.  By leveraging CMS release management, the
   Pro/ENGINEER design team is able to easily build and retrieve configurations
   throughout the product lifecycle.

   CMS Integrator for Mentor Graphics/TM/
   ------------------------------------
   CMS Integrator for Mentor Graphics represents the first fully integrated data
   management solution for the Mentor Graphics design environment, giving Mentor
   Graphics users the power to build and maintain configurations based on the
   Mentor Graphics Design Architect and BoardStation data models.  CMS
   Integrator for Mentor Graphics shortens cycle time by automatically providing
   access to managed design data by all team members at any design milestone.
   It maintains secure configuration control over the electronic information
   throughout the enterprise allowing for increased reuse of design information
   and eliminating non-value added engineering activity.

   CMS Integrator for PreVIEW/TM/
   ----------------------------
   CMS Integrator for Myriad/TM/
   ---------------------------
   CMS Integrator for PreVIEW integrates CMS with EAI's PreVIEW and CMS
   Integrator for Myriad integrates CMS with Informative Graphics' Myriad.  Both
   integrations provide wholly electronic management of documents, including a
   paperless review process, which allow users view, mark up and 

                                      -3-
<PAGE>
 
   print files on-line. Project managers and reviewers can easily suggest
   product design changes, confident that those changes will be rapidly and
   accurately communicated to people responsible for source documentation. CMS
   Integrator for PreVIEW and CMS Integrator for Myriad automatically launch and
   support all functions of PreVIEW and Myriad, respectively, including markup
   and watermarking.

   CMS API/TM/
   ---------
   Through its API module, CMS can be integrated to various information systems
   and tools, for example, CAD/CAM, MRP/ERP, document management, workflow and
   even other PDM systems.  WTC provides integrations to many standard industry
   products, such as PTC's Pro/ENGINEER, Mentor Graphics' products, Informative
   Graphics' Myriad and EAI's PreVIEW. CMS API is a programmatic interface that
   enables the building of applications that perform site-specific operations,
   as well as the automation and streamlining of repetitive tasks.

   CMS is a three-tier client/server architecture designed to maximize system
and network performance and flexibility. It involves the client services layer,
the application server layer and the data storage layer.

   Client Services Layer provides the programmatic interface, client
applications, and third-party application integrations to CMS on the user's
platform of choice.  The CMS programmatic interfaces are optimized for high
speed access and provide communication to the CMS application and vault servers.
There are three primary types of access to the CMS application server from the
CMS client: (1) the standard CMS client interface; (2) customer-specific Web
clients created with WTC WebLink; and (3) tool integrations such as Pro/ENGINEER
or Mentor Graphics.

   Application Server Layer maintains the business logic and rules which govern
the use of CMS.  The application servers process the information request
structured at the CMS client desktop, while coordinating the communication with
the CMS vault servers and metadata servers.  Any CMS installation can have
multiple CMS application servers.

   Data Storage Layer consists of files and metadata.  The files are stored in
controlled vault servers, which can be flexibly located throughout the
enterprise.  The metadata information is stored in the Oracle  database server
which also keeps track of the vault server locations and status.

WTC SERVICECENTER

   WTC ServiceCenter is a complete line of technical support, consulting and
training offerings. These services are an important component of the total
solution the Company seeks to provide to its customers.

   System-level training is provided to customers' system administrators and
database administrators to prepare them for successful implementation of CMS.
Implementation services are offered to those customers who request assistance in
installing software, designing databases, organizing data and developing
workflow processes. The Company also provides software maintenance which
includes central call center support, technical updates and maintenance releases
of products.

WTC'S STRATEGY

   WTC's goal is to establish itself as a leader in the PDM market and to
establish itself as the leader in a new, but complementary, market segment that
the Company calls Knowledge-based Program Management. The Company intends to
achieve this goal by providing customers with pragmatic solutions that can be
brought into production quickly to meet customer's business needs and are
adaptable to meet the ever-changing business requirements of product development
organizations. To achieve this goal, the Company has established a three-tiered
strategy:

                                      -4-
<PAGE>
 
   Enhance State-of-the-Art PDM Technology Product Offerings. The Company
believes that it has certain core competencies that can be leveraged in the PDM
market. In line with this strategy, the Company has further enhanced the
functionality of its core client/server technology with upgraded product
releases, additional applications and related products developed both internally
and in conjunction with leading technology partners. During fiscal 1998, the
Company released CMS versions 6.4 and 6.5, WTC WebLink and CMS Integrator for
PreVIEW. The Company plans to continue to build upon its technological base by
adding new modules, features, functionality and integrations to its CMS family
of products. During fiscal 1999, the Company plans to introduce a major new
release of the CMS product at which time the name of the product will be changed
to WTC ProductCenter 7.0.


   Leverage Core PDM Expertise in a New Industry. Building upon its core
competency in providing PDM solutions, WTC is entering a dynamic new market
which the Company calls Knowledge-based Program Management. The Company believes
that this new market has the potential to grow significantly due to the
competitive pressures companies are faced to reduce time-to-market and improve
product development predictability. Unlike traditional PDM which focuses on the
management of "hard data," such as CAD files or documentation, Knowledge-based
Program Management provides for the management of "soft data," such as complex
project processes, human resources utilization or best practices, which are
increasingly critical to product development success. WTC's Knowledge-based
Program Management solution, WTC OpCenter, is designed to improve time to market
by providing people across geographic locations and functional divisions with
real-time visibility into project status. WTC OpCenter is scheduled for release
in fiscal 1999.

   Broaden Distribution Channels and Market Awareness. An important component of
the Company's future success will be the ability to complement its product
development activities with a strong sales and marketing effort. The Company
intends to increase the distribution of its products through the development of
additional strategic relationships with resellers, systems integrators and
consulting firms and through the expansion of its direct sales force. The
Company also plans to continue to build market awareness of its products through
increased marketing and public relations activities.

CUSTOMERS
 
   WTC solutions are used by thousands of individuals at more than 500 customers
worldwide and have been implemented across a range of industries including
telecommunications, medical products, aerospace and defense. WTC customers
include leading corporations such as 3Com Corporation; ADC Telecommunications,
Inc.; AlliedSignal; DSC Communications; Eaton Corporation; Fujitsu Network
Communications; General Electric Company; Moen Incorporated; Siemens Energy &
Automation, Inc.; Tektronix; United States Surgical Corporation and Whirlpool
Corporation.

SALES AND MARKETING

   The Company has implemented a multi-channel sales strategy including direct
sales, Value-Added Resellers ("VARs") and OEM partners to efficiently address
the global market for its products.

   The Company has established a direct sales organization in the United States
to sell to new customers as well as to expand installations within its existing
customer base. The Company provides installation and post-sale consulting
services to facilitate customer implementations and to build long-term customer
relationships. As of March 31, 1998, the Company's sales and marketing
organization consisted of 26 people located in the Company's headquarters in
Lexington, Massachusetts and in locations throughout the United States and
Europe. The Company does not believe that its revenue is materially impacted by
seasonality.

                                      -5-
<PAGE>
 
   The Company utilizes VARs in North America and Europe to complement its
direct sales force. These VARs have vertical market expertise and focus their
efforts on selling CMS within those markets to new customers as well as to their
own installed base. To avoid channel conflict, generally, direct sales personnel
are compensated both on their performance and that of the VARs in their
territory. As of March 31, 1998, the Company had eight VARs located throughout
North America and Europe.

   The Company utilizes OEM relationships to complement its direct sales and VAR
channels. The Company has an OEM partnership with Mentor Graphics Corporation.
In addition, the Company has two OEM partners in the Far East, Zuken, Inc. and
Hitachi, Ltd. Zuken is one of Japan's largest independent software suppliers,
focused on the ECAD marketplace. OEM partners provide vertical market expertise
and sell to customers generally not targeted by or geographically accessible to
the Company's direct sales force.

   The Company's VARs and OEM partners license the Company's products at a
discount for sublicensing and may provide training, support and consulting
services to their customers. The Company receives fees for support and
maintenance provided to these channel partners. The Company and its VARs and OEM
partners generally market CMS and related services through sales teams
consisting of a sales representative and an applications engineer. To support
the sales process, the Company conducts comprehensive marketing programs that
include public relations, seminars, trade shows, direct mail, telemarketing and
customer communications programs. The Company sponsors user groups, focus groups
and a customer advisory board as a source of feedback about its customers'
requirements.

CUSTOMER SUPPORT AND CONSULTING

   The Company's customers utilize CMS in mission-critical applications on which
the success of the organization may depend. Therefore, a high level of customer
service, training and technical support is critical. The Company's customer
support organization provides support through telephone, electronic mail and fax
communications. As of March 31, 1998, the Company's customer support and
consulting organization consisted of 25 people. OEMs and some of the Company's
VARs offer first-level customer support to their end-user customers and rely on
the Company for any additional required support. Additionally, the Company
provides consulting services to those customers seeking assistance in the
implementation, use and expansion of the Company's products.

PRODUCT DEVELOPMENT

   Since its inception, the Company has made substantial investments in research
and development. The Company believes its future success depends in part upon
its ability to enhance its existing products and to develop and introduce
products that address technological developments in the marketplace and the
increasingly sophisticated needs of its customers.

   While the Company expects that certain of its new products will be developed
internally, the Company may, based upon timing and cost considerations, acquire
technology and/or products from third parties. Additionally, the Company's
Workgroup Partners Program provides the Company's customers with various third
party developed applications that are complementary to the Company's products.

   As of March 31, 1998, the Company's product development staff consisted of 45
employees. The Company's total expense for research and development in fiscal
1996, 1997 and 1998 was $3.0 million, $4.6 million and $5.7 million,
respectively.

COMPETITION

   The PDM market is intensely competitive and is subject to rapid change. The
Company's competitors offer a variety of products and services to address this
market. No company is currently the dominant leader

                                      -6-
<PAGE>
 
in the PDM market. However, the Company currently encounters direct competition
for its CMS family of products from a number of public and privately-held
companies. In addition, the possible entrance of new competitors may intensify
competition in the PDM market. Vendors of Relational Database Management Systems
and enterprise MRP systems, among others, may compete with the Company in the
future. Many of the Company's current and possible future competitors have
significantly greater financial, technical, marketing and other resources than
the Company, and many have well established relationships with current and
potential customers of the Company. It is also possible that alliances among
competitors may emerge and rapidly acquire significant market share. The Company
also expects that competition will increase as a result of software industry
consolidations. Increased competition may result in price reductions, reduced
gross margins and loss of market share, any of which would materially adversely
affect the Company's business, operating results and financial condition.

         The Company believes that the principal competitive factors affecting
its market include product features and functionality, such as flexibility,
scalability, ease of integration, ease of implementation, ease of use, quality,
and performance; price and total cost of ownership; customer service and
support; company reputation and financial viability; and effectiveness of sales
and marketing efforts.  There can be no assurance that the Company will be able
to maintain a competitive position against current and potential competitors.

         The Company will be entering a new market with it's WTC OpCenter
product, which is expected to be released in fiscal 1999.  Although the Company
expects this new market to grow significantly, there can be no assurance that
the market will grow or that WTC OpCenter will be broadly accepted in this
market.  Also there can be no assurance that the Company will be able to compete
effectively against other potential competitors in this market.

PROPRIETARY RIGHTS

         The Company primarily relies upon a combination of copyright, trademark
and trade secret laws, nondisclosure agreements and license agreements to
establish and protect proprietary rights in its products. The Company does not
currently hold any patents. The source code for the Company's products is
protected both as a trade secret and as an unpublished copyrighted work. Despite
these precautions, it may be possible for a third party to copy or otherwise
obtain and use the Company's products or technology without authorization or to
develop similar technology independently. In addition, effective copyright and
trade secret protection may be unavailable or limited in certain foreign
countries.  The software development industry is characterized by rapid
technological change. Therefore, the Company believes that factors such as the
technological and creative skills of its personnel, new product developments,
frequent product enhancements, name recognition and reliable product maintenance
are more important to establishing and maintaining a technology leadership
position than the various legal protections of its technology.  The Company is
not aware that any of its products infringes the proprietary rights of third
parties. There can be no assurance, however, that third parties will not claim
such infringement by the Company or its licensers with respect to current or
future products. The Company expects that software product developers will
increasingly be subject to such claims as the number of products and competitors
in the Company's market segment grows and the functionality of products in
different market segments overlaps. Any such claims, with or without merit,
could be time-consuming, result in costly litigation, cause product shipment
delays or might require the Company to enter into royalty or licensing
agreements. Such royalty or licensing agreements, if required, may not be
available on terms acceptable to the Company.

         Workgroup Technology Corporation, Workgroup, WTC, the Company's logo,
CMS, CMS Workflow, CMS Replication Server, CMS Integrator for Pro/ENGINEER, CMS
Integrator for Mentor Graphics, CMS Integrator for PreVIEW, CMS API, WTC
WebLink, WTC SolutionCenter, WTC ServiceCenter and WTC OpCenter are trademarks
of the Company. All other trademarks and trade names referred to in this report
are the property of their respective owners.

                                      -7-
<PAGE>
 
EMPLOYEES

         As of March 31, 1998, the Company employed 113 persons, including 45
product development personnel, 26 sales personnel, 25 customer support, training
and consulting personnel, 11 finance and administration personnel and 6
marketing personnel.  None of the Company's employees is represented by a
collective bargaining arrangement, and the Company has experienced no work
stoppages.  The Company considers its relations with its employees to be good.

         The Company's future success depends in large part on the ability to
continue to motivate and retain highly qualified employees, including management
personnel, and to attract and retain a significant number of additional
qualified personnel, including sales, product development and operations staff.
Competition for qualified personnel in the Company's industry is intense, and
many of the companies with which the Company competes for qualified personnel
have substantially greater financial and other resources than the Company.
Furthermore, competition for qualified personnel can be expected to become more
intense as competition in the Company's industry increases.  There can be no
assurance that the Company will be able to recruit, retain and motivate a
sufficient number of qualified personnel to compete successfully.  The loss of
any of the Company's senior management personnel or any material failure to
recruit, retain and motivate a sufficient number of qualified personnel could
have a material adverse effect on the Company.


ITEM 2.    PROPERTIES

         The Company's headquarters are located in approximately 29,000 square
feet of office space in Lexington, Massachusetts.  This facility accommodates
research, marketing, sales, customer support and corporate administration.  The
lease on this facility expires in September 2001. The Company also leases office
space for regional offices in Chicago, Illinois and San Mateo, California to
support its field sales and support operations.  The Company believes that its
existing facilities are adequate for its current needs and that, if necessary,
additional facilities are available for lease to meet future needs.


ITEM 3.    LEGAL PROCEEDINGS

         The Company is not a party to any litigation that it believes would
have a material impact on its business.


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

         During the fourth quarter of the year ended March 31, 1998, no matters
were submitted to a vote of security holders of the Company through the
solicitation of proxies or otherwise.

                                      -8-
<PAGE>
 
                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
         MATTERS

   The Company's Common Stock trades on the Nasdaq National Market under the
symbol "WKGP". On June 15, 1998, the closing price of the Company's Common Stock
was $3.50 per share.  As of June 15, 1998, there were approximately 115 holders
of record of the Company's Common Stock and at least 1,500 beneficial holders,
based on information obtained from the Company's transfer agent.

   The following table sets forth quarterly high and low prices of the Common
Stock for the indicated fiscal periods:

<TABLE> 
<CAPTION> 
                               1998                    1997
                         High         Low         High       Low
                         ----         ---         ----       ---
<S>                     <C>          <C>         <C>       <C> 
First Quarter           $5.25        $3.75       $30.75    $21.50
Second Quarter           4.81         3.69        25.00      5.13
Third Quarter            4.75         3.13         7.13      5.00
Fourth Quarter           4.38         3.63         7.25      3.94

</TABLE> 

  The Company has never paid cash dividends on its Common Stock.  The Company
currently intends to retain earnings, if any, for use in its business and does
not anticipate paying any cash dividend in the foreseeable future.  Any future
declaration and payment of dividends will be subject to the discretion of the
Company's Board of Directors, will be subject to applicable law and will depend
upon the Company's results of operations, earnings, financial condition,
contractual limitations, cash requirements, future prospects and other factors
deemed relevant by the Company's Board of Directors.

                                      -9-
<PAGE>
 
ITEM 6.  SELECTED FINANCIAL DATA

  The selected financial data presented below are derived from the financial
statements of the Company, and should be read in connection with those
statements, which are included herein.

<TABLE>
<CAPTION>
 
                                                                          FISCAL YEAR ENDED MARCH 31,
                                                      1998          1997            1996             1995              1994
                                                  ------------  ------------      --------         --------          --------   
                                                                     (in thousands, except per share data)
<S>                                               <C>           <C>               <C>              <C>               <C>
STATEMENT OF OPERATIONS DATA:
Revenue                                              $ 7,638       $10,439          $10,477          $ 4,616           $ 2,531
Gross profit                                           4,465         7,969            8,794            3,404             1,836
Operating expenses                                    14,248        12,255            7,405            4,692             3,599
Income (loss) from operations                         (9,783)       (4,286)           1,389           (1,289)           (1,763)
Net income (loss)                                     (8,075)       (2,407)           1,448           (1,437)           (1,781)
                                            
Basic net income (loss) per  common share             $(0.98)       $(0.30)           $0.80           $(0.84)           $(1.07)
Basic shares outstanding                               8,226         7,994            1,808            1,714             1,667
                                             
Diluted net income (loss) per  common share           $(0.98)       $(0.30)           $0.29           $(0.84)           $(1.07)
Diluted shares outstanding                             8,226         7,994            5,036            1,714             1,667

<CAPTION>  
                                                                                  March 31,
                                                     1998          1997             1996             1995              1994
                                                  ------------  ------------      --------         --------          --------   
                                                                                 (in thousands)
<S>                                               <C>           <C>               <C>              <C>               <C>
Balance Sheet Data:
Working capital (deficit)                            $28,442       $36,555           $39,426          $(1,161)          $  (336)
Total assets                                          35,075        41,796            44,073            4,588             1,735
Convertible preferred stock                                -             -                 -            4,290             3,700
Total stockholders' equity (deficit)                  30,039        37,927            40,114           (5,113)           (3,678)
</TABLE>



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   The following discussion and analysis of the financial condition and results
of operations of the Company should be read in conjunction with the financial
statements and related notes thereto.

Results of Operations

   The following table sets forth for the periods indicated, certain
consolidated financial data as a percentage of revenue:

                                      -10-
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                         
                                                                   PERCENTAGE OF REVENUE
                                                       -----------------------------------------------
                                                      
                                                                 FISCAL YEAR ENDED MARCH 31, 
                                                       -----------------------------------------------
                                                           1998               1997             1996
                                                       ------------        ----------       ----------
<S>                                                <C>                   <C>              <C>
Revenue:                                              
            Software licenses                                  42.9%             62.8%            73.1%
            Maintenance and services                           57.1              37.2             26.9
                                                       ------------        ----------       ----------
                            Total revenue                     100.0             100.0            100.0
                                                      
Gross profit                                                   58.5              76.3             83.9
                                                      
Operating expenses:                                   
            Selling and marketing                              80.9              57.5             34.5
            Research and development                           75.2              44.4             28.8
            General and administrative                         30.4              15.5              7.3
                                                       ------------        ----------       ----------
                            Total operating expenses          186.5             117.4             70.6
                                                      
Income (loss) from operations                                (128.0)%           (41.1)%           13.3%
</TABLE>

FISCAL 1998 COMPARED TO FISCAL 1997

   Revenue.  The Company's revenue consists of license fees for its CMS family
of product data management software products and fees for professional services
and software maintenance.  The Company had total revenue of  $7,638,000 in
fiscal 1998 as compared to total revenue of $10,439,000 in fiscal 1997, a
decrease of  $2,801,000 or 26.8%.

   Software license revenue decreased 50.0% in fiscal 1998 to $3,277,000 from
$6,553,000 in fiscal 1997.  The revenue decrease resulted primarily from lower
demand for the CMS 6 Series product as well as a delay in the release of an
enhanced version of the product with additional functionality and integrations.
The Company initiated a strategy of releasing the components of the additional
features of the enhanced product in stages which began in the second half of
fiscal 1998 with the release of the Company's Web interface and customization
toolkit, WTC WebLink, and a redline markup product, CMS Integrator for PreVIEW.
The completed enhanced version of the CMS product is expected to be released in
fiscal 1999.

   Maintenance and services revenue increased 12.2% to $4,361,000 from
$3,886,000 for fiscal 1997.  This increase resulted primarily from higher
maintenance revenue as a result of an increase in the customer maintenance base.

   Cost of Revenue and Gross Profit.  The Company's cost of software license
revenue consists primarily of royalties payable to third parties upon the
license of products as well as costs associated with media, packaging,
documentation and delivery of the Company's product.  Gross profit associated
with software license revenue for fiscal 1998 was $3,000,000 or 91.5% of
software license revenue versus $6,213,000 or 94.8% of software license revenue
in fiscal 1997. The decrease in gross margin of $3,213,000 resulted primarily
from lower software revenue in fiscal 1998.

   Cost of maintenance and services revenue consists primarily of personnel and
related costs for the Company's customer support and professional services
organizations. The Company's gross profit on maintenance and services revenue
decreased to $1,465,000 in fiscal 1998 from $1,756,000 in fiscal 1997. As a
percentage of maintenance and services revenue, the gross margin decreased to
33.6% in fiscal year 1998 from 45.2% in fiscal 1997.  This decrease in gross
profit is due to incremental costs associated with the 

                                      -11-
<PAGE>
 
hiring and training of additional staff in the customer support and professional
services organizations as well as a greater utilization of outside contractors
versus employees in the professional services organization which are more costly
to the Company.

   Selling and Marketing.  The Company's products are distributed worldwide
through its direct sales organization as well as its network of resellers and
OEM partners.  Selling and marketing expenses increased 3.0% in fiscal 1998 to
$6,178,000 from $5,999,000 in fiscal 1997. This increase is primarily
attributable to the costs associated with additional marketing programs.
Selling and marketing expenses as a percentage of revenue increased to 80.9% in
fiscal 1998 from 57.5% in fiscal 1997.  This increase as a percentage of revenue
resulted primarily from lower revenue in fiscal 1998.

   Research and Development.  Research and development expenses increased 24.0%
in fiscal 1998 to $5,747,000 from $4,635,000 in fiscal 1997. The increase in
fiscal 1998 resulted primarily from the employment of additional staff and the
use of external contractors to develop and enhance the Company's products.  As a
result of this expense increase and the lower revenue level of the Company,
research and development expenses as a percentage of revenue increased to 75.2%
in fiscal 1998 from 44.4% in fiscal 1997.

   General and Administrative.  In fiscal 1998, general and administrative
expenses increased 43.3% to $2,323,000 from $1,621,000 in fiscal 1997.  As a
percentage of revenue, general and administrative expenses increased to 30.4% in
fiscal 1998 from 15.5% in fiscal 1997.  General and administrative expenses
increased primarily as a result of an increase in personnel costs and expenses
associated with the termination and recruitment of several management positions
in fiscal 1998.

   Interest Income.  Interest income consists primarily of interest earned on
cash and cash equivalents during the year.  As a result of a lower average cash
balance during fiscal 1998, interest income decreased 9.0% to $1,780,000 in
fiscal 1998 from $1,957,000 in fiscal 1997.

   Provision for Income Taxes.  For fiscal 1998, the provision for income taxes
increased to $70,000 from $55,000 for fiscal 1997. The provision for taxes
resulted primarily from taxable income in the Company's foreign subsidiaries as
well as certain state taxes.

FISCAL 1997 COMPARED TO FISCAL 1996

   Revenue.  The Company's revenue consists of license fees for its CMS family
of product data management software products and fees for professional services
and software maintenance.  The Company had total revenue of  $10,439,000 in
fiscal 1997 as compared to total revenue of $10,477,000 in fiscal 1996, a
decrease of less than 1%.

   International revenue decreased 59.5% to $1,088,000 in fiscal 1997 from
$2,686,000 in fiscal 1996.  This decrease was primarily due to non-recurring
license fees received from Hitachi, Ltd. in connection with a source code
license and maintenance that amounted to $1,800,000 in fiscal 1996.
International revenue accounted for 10.4% and 25.6% of total revenue in fiscal
1997 and fiscal 1996, respectively.

   Software license revenue decreased 14.5% in fiscal 1997 to $6,553,000 from
$7,661,000 in fiscal 1996.  The revenue decline resulted from a delay in
shipment of a server product for the Windows NT operating system, lower than
expected revenue in the European market and lower revenue from prospective and
existing customers as customers delayed orders in anticipation of the release of
the Company's new CMS 7 Series of products.

                                      -12-
<PAGE>
 
   Maintenance and services revenue increased 38.0% to $3,886,000 from
$2,816,000 for fiscal 1996.  This increase resulted primarily from an increase
in the number of customers with maintenance agreements as well as an increase in
usage of the Company's professional services.

   Cost of Revenue and Gross Profit. Gross profit associated with software
license revenue for fiscal 1997 was $6,213,000 or 94.8% of software license
revenue versus $7,211,000 or 94.1% of software license revenue in fiscal 1996.
The decrease in gross margin of $998,000 resulted primarily from lower software
revenue in fiscal 1997.

   The Company's gross profit on maintenance and services revenue increased to
$1,756,000 in fiscal 1997 from $1,583,000 in fiscal 1996. As a percentage of
maintenance and services revenue, the gross margin decreased to 45.2% in fiscal
1997 from 56.2% in fiscal 1996.  This decrease was due to a greater utilization
of the professional services organization on support, training and other
projects in fiscal 1997 as well as costs associated with hiring and training
additional staff for the Company's customer support organization.

   Selling and Marketing.  Selling and marketing expenses increased 65.9% in
fiscal year 1997 to $5,999,000 from $3,617,000 in fiscal 1996. Selling and
marketing expenses as a percentage of revenue increased to 57.5% in fiscal 1997
from 34.5% in fiscal 1996.  These increases resulted primarily from costs
incurred as a result of an increase in sales and marketing personnel and
programs as well as an increase in international selling expenses due to the
costs associated with the Company's subsidiaries in Europe.

   Research and Development.  Research and development expenses increased 53.5%
in fiscal 1997 to $4,635,000 from $3,020,000 in fiscal 1996. Research and
development expenses as a percentage of revenue increased to 44.4% in fiscal
1997 from 28.8% in fiscal 1996.  These increases in fiscal 1997 resulted
primarily from employment of additional staff and the use of independent
contractors to develop and enhance the Company's products, expand the
integration of its products with other applications and provide quality
assurance.

   General and Administrative.  In fiscal 1997, general and administrative
expenses increased 111.1% to $1,621,000 from $768,000 in fiscal 1996.  As a
percentage of revenue, general and administrative expenses increased to 15.5% in
fiscal 1997 from 7.3% in fiscal 1996.  General and administrative expenses
increased primarily as a result of severance related and other personnel
expenses as well as additional administrative expenses attributable to the
Company's status as a public company.

   Interest Income, (Net).  Interest income, (net) consists of interest earned
on cash and cash equivalents, offset by interest expense associated with
equipment financing.  Interest income for fiscal 1997 increased to $1,827,000
from $94,000 in fiscal 1996 due to higher cash and cash equivalent balances
during fiscal 1997 as a result of the Company's initial public offering.

   Provision for Income Taxes.  For fiscal 1997, the provision for income taxes
increased to $55,000 from $35,000 for fiscal 1996. The provision for taxes
resulted primarily from taxable income in the Company's foreign subsidiaries as
well as certain state taxes.

LIQUIDITY AND CAPITAL RESOURCES

   Cash and cash equivalents at March 31, 1998 decreased $6,172,000 to
$31,779,000 from $37,951,000 at March 31, 1997.  This decrease results primarily
from cash used for operating activities of $5,246,000 as well as capital
expenditures of $1,099,000 in fiscal 1998.

   The Company believes its existing cash and cash equivalent balances will be
sufficient to meet its cash requirements for at least the next fiscal year.

                                      -13-
<PAGE>
 
   To date, neither foreign currency exposure nor inflation has had a material
impact on the Company's financial results.

YEAR 2000

   The Company is in the process of replacing certain systems and evaluating and
upgrading other computer applications to ensure their functionality with respect
to the Year 2000 millennium change.  Presently the Company does not anticipate
that material incremental costs will be incurred in any future year as a result
of the Year 2000 millennium change.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

   The Company does not provide forecasts of its future financial performance.
However, from time to time information provided by the Company or statements
made by its employees may contain "forward looking" information that involves
risks and uncertainties.  In particular, statements contained in filings with
the Securities and Exchange Commission, press releases and oral statements which
are not historical facts constitute forward looking statements and are made
under the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995.  The Company's actual results of operations and financial condition
have varied and may in the future vary significantly from those stated in any
forward looking statements and there can be no assurance that the results set
forth in those statements will be achieved.

   The Company's future results may be subject to substantial risks and
uncertainties.  Because the Company derives the majority of its revenue from
software license fees, the Company's quarterly and annual operating results are
sensitive to the size, timing and shipment of individual orders, customer order
deferrals in anticipation of new products or the lengthening of the sales cycle
either generally or with respect to individual customers.  In addition, the
Company's growth is dependent on achieving broader market acceptance of its
products and the ability of the Company to introduce new and enhanced versions
of its products in a timely manner to meet the evolving needs of its customers.
In addition, the Company relies on certain intellectual property protection to
preserve its intellectual property rights.  Any invalidation of the Company's
intellectual property rights or lengthy and expensive defense of those rights
could have a material adverse effect on the Company.  The segment of the
software industry in which the Company is engaged is extremely competitive.
Certain current and potential competitors of the Company are more established
and benefit from greater market recognition and substantially greater financial,
development and marketing resources than the Company.

   The Company's quarterly and annual operating results are impacted by a
variety of factors that could materially adversely affect revenues and
profitability, including the timing and shipment of enhancements to the
Company's products and changes or anticipated changes in economic conditions.
Because the Company's operating expenses are relatively fixed, an unanticipated
shortfall in revenue in a quarter may have an adverse impact on the Company's
results of operations for that quarter. As a result of the foregoing and other
factors, the Company may experience material fluctuations in future operating
results on a quarterly or annual basis which could materially and adversely
affect its business, financial condition, operating results and stock price.

                                      -14-
<PAGE>
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   Financial statements and supplementary data are included herein and are
indexed under Item 14 (a) (1) - (2).


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         There have been no changes in or disagreements with accountants on
accounting or financial disclosure matters in the last two years.



                                   PART III
                                        
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required by this item may be found under the sections
captioned "Election of Directors," "Occupations of Directors and Executive
Officers" and "Section 16 Reporting" in the Company's Proxy Statement (the "1998
Proxy Statement") for the Company's Annual Meeting of Stockholders to be held on
July 31, 1998, and is incorporated herein by reference.  The 1998 Proxy
Statement will be filed with the Securities and Exchange Commission not later
than 120 days after the close of the Company's year ended March 31, 1998.


ITEM 11.  EXECUTIVE COMPENSATION

         The information required by this item may be found under the section
captioned "Compensation and Other Information Concerning Directors and Officers"
in the 1998 Proxy Statement, and is incorporated herein by reference.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

         The information required by this item may be found under the section
captioned "Management and Principal Holders of Voting Securities" in the 1998
Proxy Statement, and is incorporated herein by reference.

                                      -15-
<PAGE>
 
                                    PART IV
                                        
<TABLE>
<CAPTION>
ITEM  14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
             REPORTS ON FORM 8-K

         (a)(1)   Financial Statements.

         The following financial statements are filed as part of this report:
                                                                                            Page
                                                                                            ----
<S>                                                                                         <C>
 
Report of Independent Accountants.........................................................   F-1
 
Consolidated Balance Sheets at March 31, 1998 and 1997....................................   F-2
 
Consolidated Statements of Operations for the years ended March 31, 1998, 1997 and 1996...   F-3
 
Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the years ended
    March 31, 1998, 1997 and 1996.........................................................   F-4
 
Consolidated Statements of Cash Flows for the years ended March 31, 1998, 1997 and 1996...   F-5
 
Notes to Consolidated Financial Statements................................................   F-6
 
</TABLE>
   (a)(2) Financial Statement Schedules:
 
   All schedules for which provisions made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.

                                      -16-
<PAGE>
 
                       REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders of
Workgroup Technology Corporation:

   We have audited the accompanying consolidated balance sheets of Workgroup
Technology Corporation as of March 31, 1998 and 1997 and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the three years in the period ended March 31, 1998.  These
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.

   We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

   In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Workgroup
Technology Corporation as of March 31, 1998 and 1997 and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended March 31, 1998, in conformity with generally accepted accounting
principles.



                                        COOPERS & LYBRAND L.L.P.

Boston, Massachusetts
April 29, 1998

                                      F-1
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION

                          CONSOLIDATED BALANCE SHEETS
                            March 31, 1998 and 1997
(dollars in thousands)
<TABLE>
<CAPTION>
 
 
ASSETS                                                              1998      1997
                                                                  --------  --------
<S>                                                               <C>       <C>
Current assets:
 Cash and cash equivalents                                         $31,779   $37,951
 Accounts receivable (net of allowance of
   $200 and $50 in 1998 and 1997, respectively)                      1,497     2,179
 Prepaid expenses and other current assets                             202       294
                                                                   -------   -------
 
     Total current assets                                           33,478    40,424
 
 Property and equipment, net                                         1,574     1,339
 Other assets                                                           23        33
                                                                   -------   -------
 
      Total assets                                                 $35,075   $41,796
                                                                   =======   =======
 LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
 Accounts payable                                                 $  1,031   $   660
 Accrued expenses                                                    1,753       963
 Accrued vacation                                                      229       271
 Accrued royalties                                                     139       181
 Deferred revenue                                                    1,884     1,794
                                                                  --------   -------
 
     Total current liabilities                                       5,036     3,869
 
Commitments (Note G)
 
Stockholders' equity:
 Preferred stock, $.01 par value; 1,000,000 shares authorized,
  no shares issued or outstanding at March 31, 1998 and 1997             -         -
 Common stock, $.01 par value; 30,000,000 shares
  authorized, 8,367,671 and 8,114,084 shares issued and
  outstanding at March 31, 1998 and 1997, respectively                  84        81
 Additional paid-in capital                                         44,142    43,955
 Cumulative translation adjustment                                     (13)      (10)
 Accumulated deficit                                               (14,174)   (6,099)
                                                                  --------   -------
  
     Total stockholders' equity                                     30,039    37,927
                                                                  --------   -------
  
      Total liabilities and stockholders' equity                  $ 35,075   $41,796
                                                                  ========   =======
 
</TABLE>


    The accompanying notes are an integral part of the financial statements.

                                      F-2
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS
               for the years ended March 31, 1998, 1997 and 1996
                     (in thousands, except per share data)
 
 
<TABLE> 
<CAPTION> 
                                                1998      1997      1996
                                              --------  --------  --------
<S>                                           <C>       <C>       <C>
Revenue:
 Software licenses                            $ 3,277   $ 6,553   $ 7,661
 Maintenance and services                       4,361     3,886     2,816
                                              -------   -------   -------
 
     Total revenue                              7,638    10,439    10,477
 
Cost of revenue:
 Cost of software licenses                        277       340       450
 Cost of maintenance and services               2,896     2,130     1,233
                                              -------   -------   -------
 
     Total cost of revenue                      3,173     2,470     1,683
 
 Gross profit                                   4,465     7,969     8,794
 
Operating expenses:
 Selling and marketing                          6,178     5,999     3,617
 Research and development                       5,747     4,635     3,020
 General and administrative                     2,323     1,621       768
                                              -------   -------   -------
 
     Total operating expenses                  14,248    12,255     7,405
                                              -------   -------   -------
 
Income (loss) from operations                  (9,783)   (4,286)    1,389
 
Interest income                                 1,780     1,957       130
Interest expense                                   (2)      (23)      (36)
                                              -------   -------   -------
 
Income (loss) before income taxes              (8,005)   (2,352)    1,483
 
Provision for income taxes                         70        55        35
                                              -------   -------   -------
 
Net income (loss)                             $(8,075)  $(2,407)  $ 1,448
                                              =======   =======   =======
 
Basic net income (loss) per common share       $(0.98)   $(0.30)    $0.80
Basic shares outstanding                        8,226     7,994     1,808
 
Diluted net income (loss) per common share     $(0.98)   $(0.30)    $0.29
Diluted shares outstanding                      8,226     7,994     5,036
</TABLE> 


    The accompanying notes are an integral part of the financial statements.

                                      F-3
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION

           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
               for the years ended March 31, 1998, 1997 and 1996
                                (in thousands)
<TABLE>
<CAPTION>
 
 
                                                     
                                    Common Stock     Additional    Officers'      Cumulative                     Total     
                                   --------------     Paid-In        Notes       Translation  Accumulated     Stockholders'
                                   Shares  Amount     Capital      Receivable    Adjustment     Deficit      Equity (Deficit)
                                   ------------------------------------------------------------------------------------------------
<S>                                 <C>      <C>      <C>         <C>           <C>           <C>             <C>
 
 
Balance at March 31, 1995           1,722    $17       $    17        $(7)                      $(5,140)          $(5,113)
Issuance of common stock            2,664     27        36,429                                                     36,456
Conversion of preferred stock                                       
 (Note D)                           3,298     33         6,857                                                      6,890
Exercise of warrants                  133      1           399                                                        400
Sale of stock under stock plans       110      1            25                                                         26
Foreign currency translation                                        
 adjustment                                                                        $  7                                 7
Net income                                                                                        1,448             1,448
                               ---------------------------------------------------------------------------------------------------- 

                                                                    
Balance at March 31, 1996           7,927     79        43,727         (7)            7          (3,692)           40,114
Sale of stock under stock plans       188      2            72                                                         74
Stock option compensation                                  156                                                        156
Collection of officers' notes                                         $ 7                                               7
Foreign currency translation                                        
 adjustment                                                                         (17)                              (17)
Net loss                                                                                         (2,407)           (2,407)
                                 
                               ----------------------------------------------------------------------------------------------------
Balance at March 31, 1997           8,115     81        43,955          -           (10)         (6,099)           37,927
Sale of stock under stock plans       253      3           187                                                        190
Foreign currency translation                                        
 adjustment                                                                          (3)                               (3)
Net loss                                                                                         (8,075)           (8,075)
                               ---------------------------------------------------------------------------------------------------- 

 
Balance at March 31, 1998           8,368  $  84      $ 44,142          -         $ (13)       $(14,174)         $ 30,039
                               ====================================================================================================
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                      F-4
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
               for the years ended March 31, 1998, 1997 and 1996
                            (dollars in thousands)
<TABLE> 
<CAPTION> 
 
                                                               1998       1997       1996
                                                            -------    -------    -------
<S>                                                        <C>        <C>        <C>
Cash flows from operating activities:
 Net (loss) income                                          $(8,075)   $(2,407)   $ 1,448
 Adjustments to reconcile net income (loss) to net cash
   provided by (used in) operating activities:
  Depreciation and amortization                                 776        582        399
  Equity-based compensation                                      73        156          -
  Provision for doubtful accounts                               150         50          -
  Loss on disposal of assets                                     88          -          -
  Changes in operating assets and liabilities:
   Accounts receivable                                          532       (154)       437
   Prepaid expenses and other current assets                     92        (60)      (190)
   Other assets                                                  10         11        (13)
   Accounts payable                                             371       (230)       468
   Accrued expenses                                             731        195        381
   Accrued vacation                                             (42)        68         95
   Accrued royalties                                            (42)        40         40
   Customer deposits                                              -          -       (100)
   Deferred revenue                                              90        153     (2,349)
                                                            -------    -------    -------
 
   Net cash provided by (used in) operating activities       (5,246)    (1,596)       616
 
Cash flows from investing activities:
 Purchases of property and equipment                         (1,099)    (1,160)      (442)
 
Cash flows from financing activities:
 Proceeds from issuance of preferred stock                        -          -      2,600
 Proceeds from issuance of common stock                         190         74     36,882
 Proceeds from the collection of officers' notes                  -          7          -
 Payments of capital lease obligations                          (14)      (316)      (251)
                                                            -------    -------    -------
 
   Net cash provided by (used in) financing activities          176       (235)    39,231
 
Effect of exchange rate changes on cash                          (3)       (17)         7
                                                            -------    -------    -------
Net increase (decrease) in cash and cash equivalents         (6,172)    (3,008)    39,412
Cash and cash equivalents, beginning of year                 37,951     40,959      1,547
                                                            -------    -------    -------
 
Cash and cash equivalents, end of year                      $31,779    $37,951    $40,959
                                                            =======    =======    =======
 
Supplemental cash flow information:
 Interest paid                                              $     2    $    23    $    36
 Income taxes paid                                          $    22    $    55    $    35
Supplemental disclosure for non-cash transactions:
 Acquisition of property and equipment
   under capital lease obligations                                -          -    $   264
 Conversion of preferred stock                                    -          -    $ 6,890
 
</TABLE>
    The accompanying notes are an integral part of the financial statements

                                      F-5
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.  Nature of the Business              
    ----------------------

    Workgroup Technology Corporation (the "Company"), incorporated on May 11,
    1992, provides both production-proven, enterprise Product Data Management
    (through the CMS product) and real-time Knowledge-based Program Management
    solutions for product development. WTC SolutionCenter/TM/ is a line of
    productivity enhancing products and services that are pragmatic and results-
    driven, offering even complex enterprises a quick return on investment.

B.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES       
    ------------------------------------------

    PRINCIPLES OF CONSOLIDATION                     
    The consolidated financial statements include the accounts of the Company
    and its wholly-owned subsidiaries. All significant intercompany transactions
    and balances have been eliminated.

    Certain amounts from prior years have been reclassified to conform to the
    current year's presentation.

    REVENUE RECOGNITION
    Revenue is recognized from the license of software upon shipment provided
    that no significant vendor or postcontract support obligations remain
    outstanding and collection of the resulting receivable is deemed probable.
    Payments received in advance for services, development or product are
    initially recorded as deferred revenue. Revenue from training and consulting
    is recognized as the services are performed. Maintenance and support revenue
    is recognized ratably over the contract term, typically one year.

    FOREIGN CURRENCY TRANSLATION              
    The functional currency of the Company's foreign subsidiaries is the local
    currency. Assets and liabilities are translated into U.S. dollars at the
    exchange rates in effect at the balance sheet date and income and expense
    items are translated at the average rates for the period. The effect of such
    translations are excluded from net earnings and accumulated as a separate
    component of stockholders' equity. Transaction gains and losses from foreign
    currency transactions have not been material to date.

    CASH EQUIVALENTS                         
    Cash equivalents consist of commercial paper and money market mutual funds
    with remaining maturities at acquisition of three months or less and are
    carried at cost plus accrued interest which approximates market value.
   
    The Company has approximately $155,000 of restricted cash included in the
    March 31, 1998 and March 31, 1997 cash balances. This restricted cash serves
    as collateral for a letter of credit obtained in fiscal year 1997 related to
    the Company's property lease.

    PROPERTY AND EQUIPMENT
    Property and equipment are stated at cost. Depreciation is provided under
    the straight-line method based upon the following estimated useful lives:
    
      Computer software                  3 years
      Furniture and fixtures             3 years
      Equipment                          3 years
      Leasehold improvements             Estimated useful life of  
       and equipment under                the asset or term of the 
       capital leases                     lease whichever is shorter

    Major replacements of, or improvements to, property and equipment are
    capitalized. Minor replacements, repairs and maintenance are charged to
    expense as incurred. Upon retirement or sale, the cost of the assets
    disposed and the related accumulated depreciation are removed from the
    accounts and any resulting gain or loss is recorded in operations.
   
    RESEARCH AND DEVELOPMENT COSTS                                            
    Research and development expenditures are charged to operations as incurred.
    The Company capitalizes eligible software costs incurred after technological
    feasibility of the product has been established. The Company believes it has
    achieved technological feasibility when the working model has been
    established, which is typically demonstrated by beta shipment. Qualifying
    capitalized costs for the years ended March 31, 1998, 1997 and 1996 have
    been immaterial and, therefore, the Company has not capitalized such costs.
      
    ROYALTY EXPENSE                  
    Royalty expense with respect to sales of product under royalty agreements is
    recorded when the revenue is recognized.

    WARRANTY COSTS
    The Company provides for warranty expenses, based on past experience, on an
    accrual basis.

    INCOME TAXES
    The Company uses the asset and liability approach in its method of
    accounting for income taxes which requires the recognition of deferred tax
    liabilities and assets for expected future tax consequences of temporary
    differences between the carrying amounts and the tax basis of assets and
    liabilities. A valuation allowance against deferred tax assets is recorded
    if, based upon weighted available evidence, it is more likely than not that
    some or all of the deferred tax assets will not be realized.
    
    BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE                  
    The Company has adopted Statement of Financial Accounting Standards ("SFAS")
    No. 128, "Earnings per Share" in fiscal year 1998 and all historical net
    income (loss)

                                      F-6
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

    per share data presented has been restated to conform to the provisions of
    this statement. SFAS No. 128 requires the disclosure of basic and diluted
    earnings per share.

    The Company's basic net income (loss) per share is computed by dividing net
    income (loss) by the weighted average number of shares of common stock and
    diluted net income (loss) per share is based on the same computation and
    includes dilutive potential common shares. Potential common shares include
    shares issuable upon the exercise of stock options or warrants, net of
    shares assumed to have been purchased with the proceeds. Potential common
    shares, which consisted only of stock options, were antidilutive for fiscal
    years 1998 and 1997 and therefore the basic and diluted net loss per share
    were the same for those periods. For fiscal year 1996, the diluted net
    income per share computation included approximately 2,863,000 and 362,000
    shares of preferred stock and stock options, respectively.

    NEW ACCOUNTING STANDARDS
    The Company will adopt Statement of Financial Accounting Standard (FAS) No.
    130 "Reporting Comprehensive Income" in fiscal 1999. This Statement
    establishes standards for reporting and displaying comprehensive income and
    its components (revenues, expenses, gains and losses) in a full set of
    general-purpose financial statements. This Statement requires the
    classification of items of comprehensive income by their nature in a
    financial statement and the accumulated balance of other comprehensive
    income separately from retained earnings and additional paid-in capital in
    the equity section of the balance sheet. The Company believes that adoption
    of this Statement will not have a material effect on its financial
    statements.

    The Company will also adopt FAS No. 131 "Disclosures About Segments of an
    Enterprise and Related Information" in fiscal 1999. This Statement
    supercedes FAS No. 14 "Financial Reporting for Segments of a Business
    Enterprise," but retains the requirement to report information about major
    customers. This Statement establishes standards for reporting information
    about operating segments in annual financial statements. Operating segments
    are defined as components of an enterprise evaluated regularly by the
    Company's senior management in deciding how to allocate resources and in
    assessing performance. The Company believes that adoption of this Statement
    will not significantly change its segment reporting disclosures.

    The Company will adopt Statement of Position 97-2 "Software Revenue
    Recognition" in fiscal 1999. This Statement supersedes Statement of Position
    91-1 on software revenue recognition. The Company believes that adoption of
    this Statement will not have a material effect on its financial statements.

    The Company will adopt Statement of Position 98-1 "Internal Use Software" in
    fiscal 2000. This Statement provides guidance on the accounting for the
    costs of software developed or obtained for internal use. The Company
    believes that the adoption of this Statement will not have a material effect
    on its financial statements.

    RISKS AND UNCERTAINTIES
    The preparation of financial statements in conformity with generally
    accepted accounting principles requires management to make estimates and
    assumptions that affect the reported amounts of assets and liabilities and
    disclosures of contingent assets and liabilities at the date of the
    financial statements and the reported amounts of revenues and expenses
    during the reporting period. Actual results could differ from those
    estimates and would impact future results of operations and cash flows.

    The Company invests its cash primarily in commercial paper and money market
    mutual funds with a large commercial bank. The Company has not experienced
    any losses to date on its invested cash.

    The Company sells its product to a wide variety of customers in a variety of
    industries. The Company performs ongoing credit evaluations of its customers
    but does not require collateral or other security to support customer
    receivables. The Company believes any credit losses will not be material.

C.  PROPERTY AND EQUIPMENT
    ----------------------

    Property and equipment consisted of the following:
    (in thousands) 
<TABLE>
<CAPTION>
                                               March 31,
                                               ---------
                                            1998        1997
                                         ----------  ----------
<S>                                   <C>             <C>
    Computer software                       $   423     $   477
    Furniture and fixtures                      110          79
    Equipment                                 2,230       1,732
    Leasehold improvements                       92          96
                                            -------     -------
                                              2,855       2,384
    Less accumulated
     depreciation and  amortization          (1,281)     (1,045)
                                            -------     -------
                                            $ 1,574     $ 1,339
                                            =======     =======
</TABLE>


D.  STOCKHOLDERS' EQUITY
    --------------------
 
    INITIAL PUBLIC OFFERING
    On March 21, 1996, the Company completed its initial public offering ("IPO")
    and sold an aggregate of 2,663,668 shares of Common Stock at $15.00 per
    share, resulting in net proceeds to the Company of approximately
    $36,500,000. In addition, upon the closing of the IPO all issued and
    outstanding shares of Series A, B, C and D Redeemable Convertible Preferred
    Stock were automatically converted into 3,297,566 shares of Common Stock in
    accordance with the underlying agreements.

                                      F-7
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


    PREFERRED STOCK
    The Board of Directors was authorized upon the closing of the IPO, subject
    to certain limitations prescribed by law, without further stockholder
    approval, to issue from time to time up to an aggregate of 1,000,000 shares
    of preferred stock in one or more series and to fix or alter the
    designations, preferences, rights and any qualifications, limitations or
    restrictions of the shares of each such series thereof, including the
    dividend rights, dividend rates, conversion rights, voting rights, terms of
    redemption (including sinking fund provisions), redemption price or prices,
    liquidation preferences and the number of shares constituting any series or
    designation of such series.

    COMMON STOCK
    All share and per share amounts have been restated to reflect a three into
    two reverse stock split of its common stock which was approved by the Board
    of Directors on January 26, 1996.

    STOCK PLANS
    At March 31, 1998, the Company has four stock-based compensation plans which
    are described below. In October 1995, the Financial Accounting Standards
    Board issued SFAS 123, "Accounting for Stock-Based Compensation." SFAS 123
    requires that companies either recognize compensation expense for grants of
    stock, stock options and other equity instruments based on fair value or
    provide a pro forma basis disclosure of net income (loss) and earnings
    (loss) per share which reflects such compensation expense in the notes to
    the financial statements. The Company adopted the disclosure provisions of
    SFAS 123 in fiscal year 1997 and has continued to apply APB Opinion 25 and
    related Interpretations in accounting for its plans. The Company recognized
    $73,000 and $156,000 of compensation cost for its fixed stock option plans
    in fiscal years 1998 and 1997, respectively, and no compensation cost in
    fiscal year 1996. Had compensation cost for the Company's four stock-based
    compensation plans been determined based on the fair value at the grant
    dates for awards under those plans consistent with the method of SFAS 123,
    the Company's net income (loss) and earnings (loss) per share would have
    been on a pro forma basis:

<TABLE>
<CAPTION>
 
(in thousands, except per share amounts)
                                          1998           1997           1996
                                   -------------  -------------  ------------
<S>                                <C>            <C>            <C>
    Net income (loss)
                 As reported            $(8,075)       $(2,407)        $1,448
                 Pro forma              $(9,487)       $(3,020)        $1,377
 
    Net income (loss) per share
                 As reported            $ (0.98)       $ (0.30)        $ 0.80
                 Pro forma              $ (1.15)       $ (0.38)        $ 0.76
</TABLE>

    For fiscal years 1998 and 1997, the fair value of each option grant is
    estimated on the date of grant using the Black-Scholes option-pricing model
    with the following weighted-average assumptions used for grants:

<TABLE>
<CAPTION>
 
                                 1998      1997
                               --------  --------
<S>                            <C>       <C>
    Expected volatility            80.3%     93.5%
    Risk-free interest rates        6.0%      6.4%
    Dividend rate                     0%        0%
    Expected life               5 years   5 years
</TABLE>

    Because the Company went public on March 21, 1996, the fair value of each
    option grant for fiscal year 1996 is estimated on the date of grant using
    the minimum value method assuming a risk-free interest rate of 6%, an
    expected life of 5 years and no dividend yield or volatility.

    The weighted-average fair value of options granted during fiscal year 1998,
    1997 and 1996 is estimated as $2.82, $7.21 and $0.78, respectively. The
    effects of applying SFAS 123 in this pro forma disclosure are not an
    indication of future amounts. SFAS 123 does not apply to awards prior to
    1995 and additional awards in future years are anticipated.

    Stock Option Plans
    The Company has three fixed stock option plans. The 1992 and 1996 Stock
    Option Plans provide for the granting of incentive stock options to
    employees to purchase common stock at not less than the fair market value
    per share of common stock on the date of the grant. The Plans also provide
    for the granting of nonqualified stock options, stock awards and purchase
    rights to employees, consultants, directors and officers of the Company. The
    options generally become exercisable ratably over four or five years from
    the date of grant and expire ten years from the date of grant. The maximum
    number of shares for which options may be granted under the 1992 Plan is
    356,559. In January 1996, the Board of Directors terminated the granting of
    options under the 1992 plan. At March 31, 1998, 1,665,190 shares were
    available for grant under the 1996 Plan.

    The Company's 1996 Non-Employee Director Stock Option Plan (the "Director
    Option Plan") provides for the granting of options to purchase a maximum of
    100,000 shares of Common Stock of the Company to non-employee directors.
    Under the Director Option Plan, each non-employee director shall receive an
    option to purchase 15,000 shares of the Company's Common Stock upon the
    later of (i) the effective date of an IPO, or (ii) the date on which the
    director first is elected to the Board of Directors. Each non-employee
    director who is still a member of the Board of Directors upon the full
    vesting of this most recently granted option under the Director Option Plan
    shall receive additional options to purchase 15,000 shares of Common Stock.
    All options granted under the Director Option Plan vest in twelve equal
    quarterly installments beginning three months from the date of grant. All
    options granted under the Director Option Plan will have an exercise price
    equal to the fair market value of the Common Stock on the date of grant. The
    term of each option 

                                      F-8
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


    will be for a period of ten years from the date of grant. At March 31, 1998,
    65,000 shares were available for grant under the Director Option Plan.

    During fiscal year 1997, the Board of Directors approved the repricing of
    certain outstanding stock options previously granted under the 1992 and 1996
    Plans. Certain options outstanding at prices ranging from $8.50 to $25.75
    were canceled and reissued as new grants on October 18, 1996 to reduce their
    exercise price to $6.375, the fair market value of the stock on that date. A
    total of 145,833 options were granted under this repricing.

    The following is a summary of the Company's stock option plans as of March
    31, 1996, 1997 and 1998 and changes during the years ending on those dates:

<TABLE>
<CAPTION>
                                                                  (in thousands, except per share amounts)

                                                                                           Weighted
                                                                        Number              Average
                                                                      of Shares          Exercise Price
                                                                  ------------------  --------------------
<S>                                                               <C>                 <C>
     Options outstanding
                     at March 31, 1995                                    616                $ 0.25
                   Granted                                                841                  2.95
                   Exercised                                             (110)                 0.24
                   Canceled                                               (38)                 0.86
                                                                        -----
     Options outstanding                                      
                     at March 31, 1996                                  1,309                  1.79
                   Granted                                                487                  9.62
                   Exercised                                             (173)                 0.25
                   Canceled                                              (331)                 9.09
                                                                        -----
     Options outstanding                                      
                     at March 31, 1997                                  1,292                  3.08
                   Granted                                              1,180                  4.13
                   Exercised                                             (228)                 0.43
                   Canceled                                              (518)                 3.74
                                                                        -----      
     Options outstanding                                                           
                     at March 31, 1998                                  1,726                  3.95
                                                              
     Price range $0.15 - $1.95                                
                     (remaining contractual life of 6.5 years)
                   Outstanding                                            331                $ 0.45
                   Exercisable                                            176                  0.41
     Price range $3.81 - $8.50                                                     
                     (remaining contractual life of 8.9 years)                     
                   Outstanding                                          1,363                  4.44
                   Exercisable                                             89                  5.70
     Price range $15.00 - $25.75                                                   
                     (remaining contractual life of 6.5 years)                     
                   Outstanding                                             32                 19.02
                   Exercisable                                             20                 17.69
                                                              
     Options exercisable, March 31                            
                   1996                                                   156                $ 0.22
                   1997                                                   332                  1.34
                   1998                                                   285                  3.27
</TABLE>

    Employee Stock Purchase Plan
    The 1996 Employee Stock Purchase Plan provides for the issuance of up to
    350,000 shares of Common Stock to eligible employees. The shares are
    issuable at the lesser of 85% of the average market price on the first or
    last business day of semiannual periods. During fiscal years 1998 and 1997,
    25,996 and 14,660 shares, respectively, were issued under this plan. The
    weighted average fair value of the purchase rights granted in fiscal years
    1998 and 1997 was $1.16 and $1.81, respectively.

E.  BENEFIT PLAN
    ------------

    The Company maintains the Workgroup Technology Corporation 401(k) Plan (the
    "401(k) Plan") for all eligible employees which provides for matching
    employer contributions determined annually by the Board of Directors. There
    have been no matching employer contributions made to the 401(k) Plan as of
    March 31, 1998.

F.  INCOME TAXES
    ------------

    In fiscal years 1998 and 1997, the provision for income taxes reflects
    foreign and state income taxes. In fiscal year 1996, the provision for
    income taxes reflects foreign taxes on royalties from customers in Japan and
    Germany.

    Deferred income taxes represent the tax effects of transactions which are
    reported in different periods for financial and tax reporting purposes. The
    components of deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
(in thousands)
March 31,                                           1998      1997      1996
------------------------------------------------  --------  --------  --------
<S>                                               <C>       <C>       <C>
 
    Deferred tax assets:
                   Loss carryforward              $ 4,578   $ 1,723   $ 1,306
                   Research & development
                      credit carryforwards          1,005       612       521
                   Depreciation & amortization        135       187        94
                   Vacation accrual                    92       212        73
                   Rent                                48        20         -
                                                  -------   -------   -------
   Gross deferred tax asset                         5,858     2,754     1,994
    Valuation allowance                            (5,858)   (2,754)   (1,994)
                                                  -------   -------   -------
    Net                                                 -         -         -
                                                  =======   =======   =======
</TABLE>

    At March 31, 1998, the Company has available net operating loss
    carryforwards of $11,369,000 which it may use to offset future federal
    taxable income. The net operating loss carryforwards, if not utilized, will
    begin to expire in 2008. The utilization of the net operating loss
    carryforwards and credit carryforwards for income tax purposes may be
    restricted due to limitations which arise because of a change of ownership.
    Additionally, the Company also has available research and development
    credits of $649,000 and $539,000 for federal and state purposes,
    respectively. The research and 

                                      F-9
<PAGE>
 
    development credits, if not utilized, will expire from 2008 through 2012.
    Due to the uncertainty of the realization of deferred tax assets, a full
    valuation allowance has been recorded.

G.  COMMITMENTS
    -----------

    LEASE COMMITMENTS
    The Company leases the facility it occupies under a noncancelable operating
    lease agreement which expires September 30, 2001. Total rent expense for the
    years ended March 31, 1998, 1997 and 1996 was $682,000, $457,000 and
    $135,000, respectively. The future minimum payments under such commitments
    as of March 31, 1998 are as follows:

<TABLE>
<CAPTION>
                         (in thousands)
<S>                <C>                   <C> 
                   1999                  $610
                   2000                   639
                   2001                   668
                   2002                   341
</TABLE>

H.  SIGNIFICANT CUSTOMERS
    ---------------------

    During fiscal year 1995, the Company entered into a one-time source code
    license agreement with Hitachi, Ltd. Pursuant to this agreement and related
    transactions, the Company recognized revenue of $1.8 million, which
    represented 17% of the total revenue for the year ended March 31, 1996.
    Additionally, a different customer represented 11% of total revenue for the
    year ended March 31, 1997.

    The Company operates in one industry segment. Export sales for the years
    ended March 31, 1998, 1997 and 1996 were approximately $414,000, $1,088,000
    and $2,686,000, respectively (including $39,000, $679,000 and $2,024,000 of
    sales into Japan, respectively).

                                      F-10
<PAGE>
 
<TABLE>
<CAPTION>
(a)(3)    List of Exhibits.

     The following exhibits are filed as part of and incorporated by reference
into, this Annual Report on Form 10-K:
   Exhibit
   Number         Description
   -------        -----------
<S>               <C>
    3.1(1)        Amended and Restated Certificate of Incorporation of the Company
    3.2(1)        Amended and Restated By-Laws of the Company
    4.1(1)        Specimen certificate representing the Common Stock
   10.1(1)+       1996 Stock Plan
   10.2(2)+       Form of Incentive Stock Option Agreement under the 1996 Stock Plan
   10.3(2)+       Form of Non-Qualified Stock Option Agreement under the 1996 Stock Plan
   10.4(1)+       1996 Employee Stock Purchase Plan
   10.5(2)+       1996 Employee Stock Purchase Plan Enrollment Authorization Form
   10.6(1)+       1996 Non-Employee Director Stock Option Plan
   10.7(2)+       Form of Non-Qualified Stock Option Agreement under the 1996 Non-Employee Director Stock
                  Option Plan of the Registrant
   10.8(1)        Registration Rights Agreement between the Company and the Preferred Stockholders, James
                  Carney and James Simmons, as amended as of November 27, 1995
   10.9(3)        Master Lease Agreement between the Company and Mortimer B. Zuckerman and Edward H.
                  Linde, Trustees of 91 Hartwell Avenue Trust dated July 30, 1996
   10.10(3)+      Employment Agreement between the Company and James Carney
   10.11(1)+      Form of Executive Management Incentive Compensation Plan of the Company
   10.12(1)       Form of Non-Competition Agreement between the Company, its executive officers and
                  founders
   10.13*+        Transition and Severance Agreement between the Company and James Carney dated March 13,
                  1998
   10.14*+        Employment Agreement between the Company and John P. McDonough
   10.15*+        Severance Agreement between the Company and Thomas Bilotta
   21.1*          Subsidiaries of the Company
   23.1*          Consent of Independent Accountants (Coopers & Lybrand)
   24.1*          Power of Attorney (see page 18)
------------------
     (1)  Incorporated herein by reference to the exhibits to the Company's
          Registration Statement on Form S-1 (File No. 333-00810).
     (2)  Incorporated herein by reference to the Company's Annual Report on Form 10-K for the 
          fiscal year ended March 31, 1996.
     (3)  Incorporated herein by reference to the Company's Annual Report on Form 10-K for the 
          fiscal year ended March 31, 1997.
     *    Filed herewith.
     +    Indicates a management contract or any compensatory plan, contract or arrangement.
 
</TABLE>
(b)  Reports On Form 8-K

         There were no reports on Form 8-K filed by the Company for the quarter
ended March 31, 1998.

(c)  Exhibits.

         The Company hereby files as part of this Annual Report on Form 10-K the
exhibits listed in Item 14(a)(3) set forth above.
<PAGE>
 
                                  SIGNATURES
                                        

     Pursuant to the requirements of Section 13 or 15(d) 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.


                                     WORKGROUP TECHNOLOGY 
                                     CORPORATION.


Date: June 29, 1998                  By:  /s/ John P. McDonough
                                          ---------------------
                                          John P. McDonough
                                          Chief Executive Officer and President

                       POWER OF ATTORNEY AND SIGNATURES
                                        
     We, the undersigned officers and directors of Workgroup Technology
Corporation, hereby severally constitute and appoint John P. McDonough and Diane
M. Marcou, and each of them singly, our true and lawful attorneys, with the
power to them and each of them singly, to sign for us and in our names in the
capacities indicated below, any amendments to this Report on Form 10-K, and
generally to do all things in our names and on our behalf in such capacities to
enable Workgroup Technology Corporation to comply with the provisions of the
Securities Exchange Act of 1934, as amended, and all the requirements of the
Securities and Exchange Commission.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant, in the capacities indicated, on the 29th day of June, 1998.


<TABLE>
<CAPTION>
             SIGNATURE                                      Title(s)
             ---------                                      --------
<S>                                                <C>
 
/s/ John P. McDonough          President, Chief Executive Officer, Director and
-----------------------------  Secretary (Principal Executive Officer)
John P. McDonough                  



/s/ Diane M. Marcou            Vice President- Finance and Administration and Treasurer
-----------------------------  (Principal Financial and Accounting Officer)
Diane M. Marcou                    



/s/ James M. Carney            Chairman
-----------------------------
James M. Carney                    



/s/ Stephen J. Gaal            Director
-----------------------------
Stephen J. Gaal                    



/s/ Charles E. Moran           Director
-----------------------------
Charles E. Moran
</TABLE>
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION
                    INDEX TO EXHIBITS FILED WITH FORM 10-K
                           YEAR ENDED MARCH 31, 1998

<TABLE>
<CAPTION>
Exhibit
Number            Description
-------           -----------
<S>               <C>
   3.1(1)         Amended and Restated Certificate of Incorporation of the Company
   3.2(1)         Amended and Restated By-Laws of the Company
   4.1(1)         Specimen certificate representing the Common Stock
  10.1(1)+        1996 Stock Plan
  10.2(2)+        Form of Incentive Stock Option Agreement under the 1996 Stock Plan
  10.3(2)+        Form of Non-Qualified Stock Option Agreement under the 1996 Stock Plan
  10.4(1)+        1996 Employee Stock Purchase Plan
  10.5(2)+        1996 Employee Stock Purchase Plan Enrollment Authorization Form
  10.6(1)+        1996 Non-Employee Director Stock Option Plan
  10.7(2)+        Form of Non-Qualified Stock Option Agreement under the 1996 Non-Employee Director Stock
                  Option Plan of the Registrant
  10.8(1)         Registration Rights Agreement between the Company and the Preferred Stockholders, James
                  Carney and James Simmons, as amended as of November 27, 1995
  10.9(3)         Master Lease Agreement between the Company and Mortimer B. Zuckerman and Edward H.
                  Linde, Trustees of 91 Hartwell Avenue Trust dated July 30, 1996
  10.10(3)+       Employment Agreement between the Company and James Carney
  10.11(1)+       Form of Executive Management Incentive Compensation Plan of the Company
  10.12(1)        Form of Non-Competition Agreement between the Company, its executive officers and
                  founders
  10.13*+         Transition and Severance Agreement between the Company and James Carney dated March 13,
                  1998
  10.14*+         Employment Agreement between the Company and John P. McDonough
  10.15*+         Severance Agreement between the Company and Thomas Bilotta
  21.1*           Subsidiaries of the Company
  23.1*           Consent of Independent Accountants (Coopers & Lybrand)
  24.1*           Power of Attorney (see page 18)
------------------
     (1)  Incorporated herein by reference to the exhibits to the Company's
          Registration Statement on Form S-1 (File No. 333-00810).
     (4)  Incorporated herein by reference to the Company's Annual Report on Form 10-K for the 
          fiscal year ended March 31, 1996.
     (5)  Incorporated herein by reference to the Company's Annual Report on Form 10-K for the 
          fiscal year ended March 31, 1997.
     *    Filed herewith.
     +    Indicates a management contract or any compensatory plan, contract or arrangement.
 
</TABLE>