<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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 April 30, 2004 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 000-27874

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

                DELAWARE                                 72-1001909
     (STATE OR OTHER JURISDICTION OF        (I.R.S. EMPLOYER IDENTIFICATION NO.)
     INCORPORATION OR ORGANIZATION)

   225 WEST STATION SQUARE, SUITE 200                    15219-1119
        PITTSBURGH, PENNSYLVANIA                         (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

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

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                     Common stock, par value $.01 per share

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. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). [X]

As of October 31, 2003, the aggregate market value of voting common stock held
by non-affiliates of the registrant, based upon the last reported sale price for
the registrant's common stock on the Nasdaq National Market on such date, as
reported in The Wall Street Journal, was $78,852,662.

The number of shares of the registrant's common stock outstanding as of the
close of business on July 7, 2004 was 11,677,351.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the definitive Proxy Statement of Ansoft Corporation (the
"Company") to be furnished in connection with the solicitation of proxies by the
Company's Board of Directors for use at the 2004 Annual Meeting of Stockholders
(the "Proxy Statement") are incorporated by reference into Part III of this
Annual Report on Form 10-K to the extent provided herein. Except as specifically
incorporated by reference herein, the Proxy Statement is not to be deemed filed
as part of this Annual Report on Form 10-K.

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Item of Form 10-K                                                                         Page
-----------------                                                                         ----
<S>                                                                                       <C>
Part I
      1.    Business...................................................................     3
      2.    Properties.................................................................    10
      3.    Legal Proceedings..........................................................    10
      4.    Submission of Matters to a Vote of Security Holders........................    10

Part II

      5.    Market for Registrant's Common Equity and Related Stockholders Matters.....    11
      6.    Selected Consolidated Financial Data.......................................    12
      7.    Management's Discussion and Analysis of Financial Condition
            and Results of Operations..................................................    13
      7(a). Quantitative and Qualitative Disclosure about Market Risk..................    19
      8.    Financial Statements and Financial Statement Schedule......................    20
      9.    Changes and Disagreements with Accountants on Accounting and
            Financial Disclosures......................................................    38
      9(a). Controls and Procedures....................................................    38

Part III

      Part III information (Item 10 through Item 14) will appear in the
      Registrant's Proxy Statement in connection with its Annual
      Meeting of Stockholders. Such Proxy Statement will be filed with
      the Securities and Exchange Commission and such information is
      incorporated herein by this reference as of the date of such
      filing.

Part IV
Item 15. Exhibits and Financial Statement Schedule.....................................    39
Signatures.............................................................................    41
Schedule II - Valuation and Qualifying Accounts
Certifications
</TABLE>

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                                     PART I

ITEM 1. BUSINESS

The statements contained in this report which are not historical are
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements represent the
Company's present expectations or beliefs concerning future events. The Company
cautions that such statements are qualified by important factors that could
cause actual results to differ materially from those in the forward-looking
statements including those factors identified in "Risk Factors" under "Item 1.
Business." The following discussion and analysis also should be read in
conjunction with "Item 6. Selected Consolidated Financial Data" and our
Consolidated Financial Statements and Notes thereto included elsewhere in this
report. Results actually achieved may differ materially from expected results
included in these statements.

OVERVIEW

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

INDUSTRY BACKGROUND

In recent years, engineers have used EDA software to automate the previously
manual, time-consuming and error-prone design process, resulting in dramatic
increases in productivity and efficiency. EDA software can be used in each of
the three phases of the electronic design process: Logic Design and Synthesis,
which provides an outline of the system's overall architecture; Functional
Design and Analysis, which encompasses the specification of desired
functionality, functional design, simulation and analysis; and Physical Design
and Verification, which involves the creation of physical layout (i.e.,
placement and routing) and verification that the design meets required
specifications.

As the marketplace demands higher levels of system performance and
miniaturization, the need to model accurately the electromagnetic interaction in
communication and computing devices and electromechanical components is becoming
increasingly important. The design requirement to fit more devices and
interconnections into smaller spaces results in increased electromagnetic
interaction. Moreover, high performance systems, with frequencies of
approximately 500 MHz and beyond, exhibit a high level of electromagnetic
interaction causing the degradation of the quality of electrical signals. These
problems are exacerbated by time-to-market pressures and the need to reduce
design and development costs.

While traditional EDA tools have become more sophisticated, they frequently lack
the requisite degree of precision in modeling electromagnetic interactions in
components and systems. As a result, the current process for designing and
manufacturing wireless and electronic components and systems is often iterative,
time-consuming and inaccurate. Designs are generated, devices and systems are
developed, prototypes are manufactured, performance is measured and assessed and
designs are then refined to meet the original performance specifications. This
entire process is typically repeated a number of times, lengthening the design
process, increasing costs and resulting in lost market opportunities.

THE ANSOFT SOLUTION

Our software products allow design engineers to model component level and system
level electromagnetic interaction which we believe is crucial to the effective
design of electronic systems and components. Our products apply electromagnetic
principles, derived from Maxwell's Equations, to more accurately model
electromagnetic interaction. By using Ansoft software products to analyze
electromagnetic interaction, we believe that end users of our products are able
to reduce the time-to-market for their products, lower the risks of design
failure and eliminate costly and time-consuming product redesign. Ansoft's
software products may be used as an independent design platform or integrated
with complementary EDA tools within a customer's existing design environment.
Our research and development team has broad expertise in electromagnetic
simulation, electrical engineering, applied mathematics and software
development, enabling Ansoft to continue to advance its electromagnetics-based
EDA software.

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ANSOFT STRATEGY

Ansoft's objective is to become a leading worldwide supplier of high performance
EDA software. Using our proprietary electromagnetic technology as a primary
competitive advantage, we pursue our objectives through the following
strategies: leveraging our technology leadership to solve emerging
electromagnetic design issues in high performance electrical devices and
systems; capitalizing on the growing need for electromagnetic analysis in
increasingly compact and complex electronic and electromechanical components and
systems operating at higher speeds; and expanding our broad range of product
applications to address emerging customer design requirements.

PRODUCTS

Our high-frequency software enables users to design radio frequency integrated
circuits (RFICs), antenna and radar systems and microwave components. Our signal
integrity software enables users to design computer interconnects, monolithic
microwave integrated circuits (MMICs), integrated circuit (IC) packaging
structures and electronic systems by accurately capturing the degradation in
signal quality due to higher clock speeds and smaller physical dimensions. Our
low frequency software products enable designers of electromechanical components
and systems to optimize the electrical performance of their designs while
increasing manufacturing yields.

We currently provide several products that address our customers' component and
system level design needs. Customers encounter different combinations of
challenges in their designs and often purchase multiple products. We have
organized the products below by their market application.

Ansoft High Frequency Software

      HFSS is a three dimensional (3D) electromagnetic field simulation software
      for high frequency, radio frequency (RF) and wireless design. Ansoft HFSS
      brings the power of the finite element method (FEM) to the engineer's
      desktop by leveraging advanced techniques such as automatic adaptive mesh
      generation and refinement, tangential vector finite elements, and Adaptive
      Lanczos Pade Sweep (ALPS). HFSS automatically computes multiple adaptive
      solutions until a user-defined convergence criterion is met.

      Ansoft Designer is the first suite of design tools to fully integrate
      high-frequency, physics-based electromagnetic simulation into a seamless
      environment. Ansoft Designer merges the power of electromagnetics, into
      circuit and system-level simulation. The key to this integration is a
      unique capability called solver-on-demand(TM) that orchestrates the use of
      multiple solvers - while still giving you complete control. Ansoft
      Designer extends this automation and integration even further by enabling
      work created in other types of design software to be rapidly imported as
      easily as if it was created directly in Ansoft Designer.

Ansoft's Signal Integrity Software

      SIwave is a wave-enabled software product for the advanced analysis of
      printed circuit boards (PCBs), components, and packages, SIwave is the
      only signal-integrity tool on the market to generate both frequency- and
      time-domain results, allowing engineers to model not only individual
      components, but also entire PCBs and package structures.

      Q3D Extractor, a physics-based EDA tool for the electromagnetic-field
      simulation of two-dimensional (2D) and arbitrary three-dimensional (3D)
      structures, provides engineers with unprecedented levels of accuracy and
      confidence in their designs. Consisting of 2D and 3D solver engines, an
      easy-to-use drawing tool, and a built-in SPICE simulator, Q3D Extractor
      provides engineers with a complete environment to extensively analyze
      their high-speed electronic designs.

      Turbo Package Analyzer (TPA) is an advanced software tool that automates
      the analysis of all complex semiconductor packages. TPA can analyze
      flip-chip, chip-scale package, and multiple-die system-in-package designs
      common in the networking and broadband communications markets.

Ansoft's Electromechanical (EM) Software

      Maxwell 3D and 2D are comprehensive, easy-to-use software tools for design
      problems requiring an accurate, two-dimensional or three-dimensional
      representation of the electric or magnetic field behavior. Maxwell
      includes

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      AC/DC magnetic, electrostatic, and transient electromagnetic fields;
      thermal analysis; parametric modeling; and optimization. Additionally,
      Maxwell produces highly accurate equivalent circuits for inclusion within
      Ansoft's SIMPLORER(R) and other circuit tools.

      SIMPLORER is a sophisticated multi domain simulation package for the
      design of complex power electronic and drive systems. SIMPLORER is based
      on a unique simulator coupling technology and provides exceptional
      simulation speed combined with high accuracy and numerical stability. The
      intuitive graphical user interface allows a fast and easy model generation
      using three modeling languages - electrical circuits, block diagrams and
      state machines. Models are developed using a powerful schematic capture
      program. Simulation results may be displayed with oscilloscopes or digital
      displays using SIMPLORER's unique Active Elements Technology.

      PEmag is a specialized software package for power electronics engineers
      wishing to perform advanced electromagnetic and signal analysis of
      magnetic components. PEmag is especially well suited for the design of
      custom magnetic components.

      RMxprt helps electric-machine manufacturers capitalize on this growing
      opportunity by allowing designers to make sizing decisions and to estimate
      performance during the initial stage of the design process. RMxprt is an
      ideal tool for calculating critical design parameters, such as torque vs.
      speed, power loss, flux in the air gap, and efficiency.

Ansoft's Add-On Modules

      AnsoftLinks provides unidirectional and bidirectional links for
      streamlining data import and exportation between Ansoft's products and
      popular electronic design automation (EDA) packages and Mechanical CAD
      (MCAD) packages. EDA links include such companies as Cadence(R),
      Synopsys(R), Zuken(R), and Mentor(R). MCAD links include IGES and STEP
      formats common to ProE, Catia and Unigraphics.

      Full-Wave Spice is an add-on module for Ansoft's electromagnetic field
      solvers enabling SPICE transient analysis of interconnects for gigabit
      ethernet, optoelectronic packaging, and other broadband communications
      design. Full-Wave Spice provides high-bandwidth SPICE models at the touch
      of a button. This capability enables engineers to design electronic and
      communication components while taking Gigahertz-frequency effects into
      account.

      Optimetrics is an add-on module for Ansoft's electromagnetic field solvers
      which provides integrated parametrics and optimization. Optimetrics is a
      smart parametrics and optimization engine that allows users to perform
      parametric analysis, optimization, sensitivity analysis, and other design
      studies from an easy to use interface.

RESEARCH AND DEVELOPMENT

Ansoft has a team of research engineers focused on the mathematical and physical
underpinnings of the Company's simulation algorithms. Dr. Zoltan Cendes, a
founder of the Company, serves as the technical leader of the group. By virtue
of over 20 years of research and development by Dr. Cendes prior to the
Company's inception in 1984, and by its internal research and development staff
thereafter, Ansoft has pioneered the following technologies: automatic and
adaptive convergence to solutions, asymptotic waveform evaluation for spectral
domain solutions, transfinite elements, edge elements and tangential vector
finite elements and fast multipole acceleration algorithms.

We continually seek to design and develop new technologies, products and
interfaces based on our core electromagnetic expertise. This effort includes
releasing improved versions of our products on a regular basis as well as
developing new products. Ansoft assigns an interdisciplinary team of personnel
from research and development, software development, documentation, quality
assurance, customer support and marketing to each product development project.
Ansoft develops cooperative relationships with major customers with respect to
beta-testing its new products or enhancements and implementing suggestions for
new product features. The Company also maintains cooperative relationships with
the major hardware vendors on which the Company's products operate.

As of April 30, 2004, Ansoft's research and development group consisted of 101
employees. During fiscal 2004, 2003 and 2002, total research and development
expenses were $15.7 million, $18.6 million and $17.7 million, respectively.

In July 2000, Ansoft announced its formation of Altra Broadband to pursue the
development of intellectual property

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

SALES AND MARKETING

Ansoft markets and sells its products worldwide through its direct sales force.
The Company hires application engineers with significant industry experience who
can analyze the needs of its customers and gain technical insight into the
development of future products and enhancements to existing products. The
Company's application engineers work with the direct sales force to provide
on-site support during critical stages of the user's benchmark, evaluation and
implementation processes. The Company generates sales leads through customer
referrals, advertising in trade publications and on the internet. In addition,
the Company participates in industry trade shows and organizes seminars to
promote and expand the adoption of its products.

In North America, the Company maintains sales and support offices in Arizona,
California, Florida, Illinois, Massachusetts, Michigan, New Jersey, Ohio, Texas,
Wisconsin, and Pennsylvania. In Asia-Pacific, the Company maintains sales and
support offices in Japan, Korea, Singapore, Taiwan, and China. In Europe, the
Company maintains sales and support offices in England, Germany, France, Italy
and Denmark. As of April 30, 2004, the Company had a direct sales force of 46
representatives, supported by 104 employees in application engineering,
marketing and sales administration.

CUSTOMERS

The Company has significant breadth in its installed base with over 1,000
customers in the communications, semiconductor, automotive/industrial, computer,
consumer electronics and defense/aerospace industries. No single customer in the
Company's installed base accounted for more than 10% of total revenue within any
of the past three fiscal years. The following table lists a representative
sample of the Company's current worldwide end-user customers by industry that
have generated greater than $100,000 in revenue during the fiscal year ended
April 30, 2003 or April 30, 2004.

<TABLE>
<CAPTION>
COMMUNICATIONS             SEMICONDUCTOR               AUTOMOTIVE/INDUSTRIAL
--------------             -------------               ---------------------
<S>                        <C>                         <C>
Motorola                   Intel                       Daimler Chrysler
Ericsson                   Harris                      Delphi
Rockwell                   AMCC                        Mitsubishi
Siemens                    Amkor Electronics           Ford Motor
EMS                        On Semiconductor            General Motors
Nortel                     LG                          Nissan
ST Microelectronics        Qualcomm                    Robert Bosch
Cisco                                                  Toyota
</TABLE>

<TABLE>
<CAPTION>
COMPUTER                   CONSUMER ELECTRONICS        DEFENSE/AEROSPACE
--------                   --------------------        -----------------
<S>                        <C>                         <C>
Cray                       Kyocera                     Raytheon
Fujitsu                    Matsushita                  Boeing
Hitachi                    Mitsubishi                  Lockheed-Martin
Honeywell                  Phillips                    Northrop Grumman
IBM                        Sony                        TRW
NEC                        Toshiba                     US Navy
Sun Microsystems           Seiko Epson                 NASA
</TABLE>

CUSTOMER SERVICE AND SUPPORT

Ansoft offers customers annual maintenance contracts that may generally be
purchased for 15% of the list price of the respective software product. Customer
support services include on-line and telephone support for design engineers and
on-site and in-house training on all products. Customers with maintenance
agreements receive product enhancement releases, typically identified by a
subsequent whole number version of the same product name (e.g.,

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HFSS V9). Product upgrades that add significant new functionality are typically
separately identified as an add-on module and have a stand-alone list price
(e.g., Optimetrics) and are not covered by the annual maintenance agreement.

We offer a variety of training programs for customers ranging from introductory
level courses to advanced training for an additional fee.

COMPETITION

The electronic design automation software market in which Ansoft competes is
intensely competitive and subject to rapid change. Within our High Frequency
Software products, Ansoft competes directly with certain software offerings from
Agilent Corporation and certain smaller privately-held companies on a limited
basis. Within our Signal Integrity Software products, Ansoft mainly competes
with in-house analysis tools or test and measurement methodologies and products
of certain smaller privately-held companies. Within our Electromechanical
Software products, Ansoft faces limited competition from certain product
offerings from Synopsys, Mentor Graphics, Ansys, and certain smaller
privately-held companies. In addition, the EDA industry has become increasingly
concentrated in recent years as a result of acquisitions, and further
concentration within the EDA industry could result in increased competition for
Ansoft. Increased competition could result in price reductions, reduced margins
or loss of market share, any of which could seriously harm Ansoft's business,
operating results or financial condition. Ansoft may be unable to compete
successfully against current and future competitors, and competitive pressures
faced by Ansoft could seriously harm Ansoft's business, operating results and
financial condition.

We believe that the principal competitive factors in our market include:

      - High performance (problem complexity) and accuracy;

      - Short run time;

      - Ease of use;

      - Depth and breadth of product features;

      - High quality user support;

      - Interoperability; and

      - Price.

PROPRIETARY RIGHTS

Ansoft is heavily dependent on its proprietary software technology. The Company
relies on a combination of non-competition and confidentiality agreements with
its employees, license agreements, copyrights, trademarks and trade secret laws
to establish and protect proprietary rights to its technology. Ansoft does not
hold any patents. All Ansoft software is shipped with a security lock which
limits software access to authorized users. In addition, the Company does not
license or release its source code. Effective copyright and trade secret
protection of the Company's proprietary technology may be unavailable or limited
in certain foreign countries.

EMPLOYEES

As of April 30, 2004, Ansoft had a total of 276 employees, including 101 in
research and development, 150 in sales, marketing, and customer support services
and 25 in administration. None of the Company's employees is represented by a
collective bargaining agreement, nor has the Company experienced any work
stoppage. The Company considers its relations with its employees to be good.
Many of the company's employees are highly skilled, and there is no assurance
that the Company will be able to attract and retain sufficient technical
personnel in the future.

OTHER INFORMATION

Ansoft maintains investor relations pages on its internet website at
http://www.ansoft.com. On these pages, Ansoft makes available its annual,
quarterly and other current reports filed or furnished with the SEC as soon as
practicable. These reports may be reviewed or downloaded free of charge.

RISK FACTORS

Our Future Operating Results Are Uncertain.

Ansoft has incurred net losses in three of the past five fiscal years. There can
be no assurance that Ansoft's revenue and net income will grow or be sustained
in future periods or that Ansoft will be profitable in any future period. Future
operating results will depend on many factors, including the degree and the rate
of growth of the markets in

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which Ansoft competes and the accompanying demand for Ansoft's products, the
level of product and price competition, the ability of Ansoft to develop and
market new products and to control costs, the ability of Ansoft to expand its
direct sales force and the ability of Ansoft to attract and retain key
personnel.

Our Quarterly Operating Results Are Difficult To Predict.

We are unable to accurately forecast our future revenues primarily because of
the emerging nature of the market in which we compete. Our revenues and
operating results generally depend on the size, timing and structure of
licenses. These factors have historically been, and are likely to continue to
be, difficult to forecast. In addition, our current and future expense levels
are based largely on our operating plans and estimates of future revenues and
are, to an extent, fixed. We may be unable to adjust spending sufficiently or
quickly enough to compensate for any unexpected revenue shortfall. Accordingly,
any significant shortfall in revenues in relation to our planned expenditures
would seriously harm our business, financial condition and results of
operations. Such shortfalls in our revenue or operating results from levels
expected by public market analysts and investors could seriously harm the
trading price of our common stock. Additionally, we may not learn of such
revenue shortfalls, earnings shortfalls or other failure to meet market
expectations until late in a fiscal quarter, which could result in an even more
immediate and serious harm to the trading price of our common stock. Our
quarterly operating results have varied, and it is anticipated that our
quarterly operating results will vary, substantially from period to period
depending on various factors, many of which are outside our control. Due to the
foregoing factors, we cannot predict with any significant degree of certainty
our quarterly revenue and operating results. Further, we believe that
period-to-period comparisons of our operating results are not necessarily a
meaningful indication of future performance.

Our Stock Price Is Extremely Volatile.

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

-     Actual or anticipated fluctuations in our operating results;

-     Announcements of technological innovations and new products by us or our
      competitors;

-     New contractual relationships with strategic partners by us or our
      competitors;

-     Proposed acquisitions by us or our competitors; and

-     Financial results that fail to meet public market analyst expectations of
      performance.

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

Businesses Or Assets We Acquire May Not Perform As Projected.

We have acquired or merged with a number of technologies, assets and companies
in recent years, including the Agilent Technologies' HFSS product line within
the past three years. As part of our efforts to increase revenue and expand our
product and services offerings we may acquire additional companies in the
future. In addition to direct costs, acquisitions pose a number of risks,
including potential dilution of earnings per share, delays and other problems of
integrating the acquired products and employees into our business, the failure
to realize expected synergies or cost savings, the failure of acquired products
to achieve projected sales, the drain on management time for acquisition-related
activities, possible adverse effects on customer buying patterns due to
uncertainties resulting from an acquisition, and assumption of unknown
liabilities. The foregoing factors could seriously harm our business, financial
condition and results of operations.

We May Lose Competitive Advantages If Our Proprietary Rights Are Inadequately
Protected.

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

                                       8
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We May Be Unable To Attract And Retain The Key Management And Technical
Personnel That We Need To Succeed.

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

We Depend On International Sales for a Significant Percentage Of Our Revenue.

International revenue, principally from Asian customers, accounted for
approximately 57% and 56% of our total revenue in the years ended April 30, 2004
and 2003, respectively. We expect that international license and service revenue
will continue to account for a significant portion of our total revenue for the
foreseeable future. Our international business activities are subject to a
variety of potential risks, including:

- The impact of recessionary environments in foreign economies;

- Longer receivables collection periods and greater difficulty in accounts
receivable collection;

- Difficulties in staffing and managing foreign operations;

- Political and economic instability;

- Unexpected changes in regulatory requirements;

- Reduced protection of intellectual property rights in some countries; and

- Tariffs and other trade barriers.

Currency exchange fluctuations in countries in which we license our products
could also seriously harm our business, financial condition and results of
operations. In addition, the laws of certain countries do not protect our
products and intellectual property rights to the same extent, as do the laws of
the United States. Moreover, it is possible that we may fail to sustain or
increase revenue derived from international licensing and service or that the
foregoing factors will seriously harm our future international license and
service revenue, and, consequently, seriously harm our business, financial
condition and results of operations.

We Need To Successfully Manage Our Expanding Operations.

Revenues have grown from $8.7 million in fiscal 1996 to $54.7 million in fiscal
year 2004, and the number of employees has grown from 69 in April 1996 to 276 as
of April 30, 2004. Ansoft's ability to manage growth effectively will require it
to continue to improve its operational and financial systems, hire and train new
employees and add additional space, both domestically and internationally.
Ansoft may not be successful in addressing such risks, and the failure to do so
would seriously harm Ansoft's business, financial condition and results of
operations.

We Depend On The Growth Of The Communications, Semiconductor And Electronics
Industries.

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

We Are Controlled By Our Principal Stockholders And Management Which May Limit
Your Ability To Influence Stockholder Matters.

Our executive officers, directors and principal stockholders own approximately
42% of the outstanding shares of Ansoft common stock. As a result, they have the
ability to effectively control us and direct our affairs, including the election
of directors and approval of significant corporate transactions. This
concentration of ownership also may have the effect of delaying, deferring or
preventing a change in control of our company and may make some transactions
more difficult or impossible without the support of these stockholders. The
interests of these stockholders may conflict with those of other stockholders.

                                       9
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Anti-Takeover Provisions in Ansoft's Certificate Of Incorporation, Bylaws, And
Under Delaware Law Could Prevent An Acquisition.

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

ITEM 2. PROPERTIES

Ansoft occupies approximately 28,000 square feet of space at its headquarters in
Pittsburgh, Pennsylvania under a lease expiring in 2006. The Company also leases
sales and support offices in North America, Europe and Asia. Our current
aggregate annual rental expenses for these facilities is approximately $2.5
million. Ansoft believes that its existing facilities are adequate for its
current needs and that suitable additional space will be available when needed.

ITEM 3. LEGAL PROCEEDINGS

Ansoft is not a party to any litigation and is not aware of any threatened
litigation, unasserted claims or assessments that could have a material adverse
effect on the Company's business, consolidated operating results or financial
condition.

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

Not applicable

                                       10
<PAGE>

                                     PART II

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

The following table sets forth, for the periods indicated, the range of high and
low last reported sale prices for the common stock as reported on the Nasdaq
National Market.

<TABLE>
<CAPTION>
                                                         HIGH        LOW
                                                       --------    --------
<S>                                                    <C>         <C>
FISCAL YEAR ENDED APRIL 30, 2005
  1st Quarter (through July 7, 2004).................  $ 15.280    $ 12.860

FISCAL YEAR ENDED APRIL 30, 2004
  1st Quarter........................................  $ 11.200    $  8.050
  2nd Quarter........................................    12.430       9.520
  3rd Quarter........................................    14.900      10.910
  4th Quarter........................................    15.760      12.850

FISCAL YEAR ENDED APRIL 30, 2003
  1st Quarter........................................  $ 12.100    $  5.690
  2nd Quarter........................................     5.989       4.049
  3rd Quarter........................................     7.070       4.750
  4th Quarter........................................     8.530       5.830
</TABLE>

The Company has never paid any cash dividends on its common stock. We currently
intend to retain the earnings from operations for use in the business and do not
anticipate paying cash dividends with respect to our common stock in the
foreseeable future. The payment of any future dividends will be determined by
the Board of Directors in light of the then current conditions, including but
not limited to the Company's earnings and financial condition.

On July 7, 2004, the Company had 288 shareholders of record, of which certain of
the recordholders were registered clearing agencies holding common stock on
behalf of participants of such clearing agencies.

See "Equity Compensation Plan Information," Item 12 in Part III, which is
incorporated by reference herein.

                      Equity Compensation Plan Information
                              As of April 30, 2004

<TABLE>
<CAPTION>
                                                                         Weighted-
                                                                      average exercise
                                                                          price of
                                        Number of securities to be       outstanding      Number of securities remaining
                                          issued upon exercise of         options,        available for future issuance
                                           outstanding options,         warrants and        under equity compensation
                                            warrants and rights            rights                     plans
                                        --------------------------    ----------------    ------------------------------
<S>                                     <C>                           <C>                 <C>
Plan Category
Equity compensation plans approved by
security holders                                 3,464,485                 $ 7.41                    242,100
                                                 ---------                 ------                    -------
Total                                            3,464,485                 $ 7.41                    242,100
                                                 =========                 ======                    =======
</TABLE>

In the fourth quarter of fiscal year ended April 30, 2004, we purchased 183,500
shares of Treasury Stock at an average price of $14.56. For the fiscal year
ended April 30, 2004, we purchased 406,600 shares of Treasury Stock at an
average price of $12.63.

                                       11
<PAGE>

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The selected condensed consolidated financial data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and related Notes thereto
appearing elsewhere herein.

<TABLE>
<CAPTION>
                                                            FISCAL YEAR ENDED APRIL 30,
                                                ------------------------------------------------------
                                                  2004       2003        2002       2001        2000
                                                --------   --------    --------   --------    --------
                                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                             <C>        <C>         <C>        <C>         <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA
Revenue:
License                                         $ 32,301   $ 27,540    $ 36,683   $ 29,951    $ 22,709
Service and other                                 22,352     19,779      16,752     13,607      10,782
                                                --------   --------    --------   --------    --------
Total revenue                                     54,653     47,319      53,435     43,558      33,491
                                                --------   --------    --------   --------    --------
Cost of revenue:
License                                              702        683         938        843         780
Service and other                                  1,155        970         871        701         529
                                                --------   --------    --------   --------    --------
Total cost of revenue                              1,857      1,653       1,809      1,544       1,309
                                                --------   --------    --------   --------    --------
Gross profit                                      52,796     45,666      51,626     42,014      32,182
                                                --------   --------    --------   --------    --------
Operating expenses:
Sales and marketing                               26,930     24,611      24,966     22,025      18,579
Research and development                          15,690     18,588      17,705     12,711      10,176
General and administrative                         4,488      4,284       4,555      3,667       3,322
Amortization                                       3,182      3,428       4,129      1,940       2,045
                                                --------   --------    --------   --------    --------
Total operating expenses                          50,290     50,911      51,355     40,343      34,122
                                                --------   --------    --------   --------    --------
Income (loss) from operations                      2,506     (5,245)        271      1,671      (1,940)
Other income (expense),  net                         904      1,152       1,347     (1,608)      1,640
                                                --------   --------    --------   --------    --------
Income (loss) before income taxes                  3,410     (4,093)      1,618         63        (300)
Income tax expense (benefit)                         854       (970)        404        908         (66)
                                                --------   --------    --------   --------    --------
Net income (loss)                               $  2,556   $ (3,123)   $  1,214   $   (845)   $   (234)
                                                ========   ========    ========   ========    ========
Basic net income (loss) per share               $   0.22   $  (0.26)   $   0.10   $  (0.07)   $  (0.02)
                                                ========   ========    ========   ========    ========
Diluted net income (loss) per share             $   0.19   $  (0.26)   $   0.09   $  (0.07)   $  (0.02)
                                                ========   ========    ========   ========    ========
Weighted average shares outstanding - basic       11,672     11,809      11,844     11,690      11,460
Weighted average shares outstanding - diluted     13,248     11,809      13,649     11,690      11,460
</TABLE>

<TABLE>
<CAPTION>
                                                    APRIL 30,
                                  -----------------------------------------------
                                   2004      2003      2002      2001      2000
                                  -------   -------   -------   -------   -------
                                                  (IN THOUSANDS)
<S>                               <C>       <C>       <C>       <C>       <C>
CONSOLIDATED BALANCE SHEET DATA
Cash and cash equivalents         $15,218   $ 7,173   $ 5,269   $ 9,412   $ 2,594
Working capital                    10,465     8,965     7,497    11,653     9,131
Total assets                       67,636    63,154    68,224    57,973    53,610
Long term liabilities              10,000    10,000    10,520     9,060     9,194
Total stockholders' equity         41,686    39,826    43,647    41,595    39,047
</TABLE>


                                       12
<PAGE>

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

The statements contained in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" which are not historical are
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements represent the
Company's present expectations or beliefs concerning future events. The Company
cautions that such statements are qualified by important factors that could
cause actual results to differ materially from those in the forward-looking
statements including those factors identified in "Risk Factors" under "Item 1.
Business." The following discussion and analysis also should be read in
conjunction with "Item 6. Selected Consolidated Financial Data" and our
Consolidated Financial Statements and Notes thereto included elsewhere in this
report. Results actually achieved may differ materially from expected results
included in these statements.

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

Our overall sales increased this past year. We had an increase in revenues of
15% for the fiscal year ending April 30, 2004 as compared to the prior year. The
increase in revenues is primarily attributed to an improving economy
particularly in the technology sectors. The following three specific factors can
be further attributed to the increase in revenues; significant improvement in
our Japanese business, growth in the defense and consumer electronic customers,
as well as, good growth in our electromechanical business. All these factors
contributed to an increase in new license revenue for fiscal year ending April,
30, 2004.

In future years, we believe the technology industry should continue to
experience increased demand for wireless products, as well as, the continuation
of improvement in size, speed and functionality for high performance
electronics.

Ansoft's products are classified into three categories, high frequency (HF),
signal integrity (SI), and electromechanical (EM). The following table presents
product sales by market application as a percentage of total sales:

<TABLE>
<CAPTION>
                     2004  2003  2002
                     ----  ----  ----
<S>                  <C>   <C>   <C>
High Frequency        66%   65%   69%
Signal Integrity      13%   17%   15%
Electromechanical     21%   18%   16%
</TABLE>

CRITICAL ACCOUNTING POLICIES

Ansoft's critical accounting policies are as follows:

-   Revenue Recognition

-   Valuation of Accounts Receivable

-   Impairment of Long-Lived Assets

-   Impairment of Marketable Securities Available for Sale

-   Deferred Tax Asset Valuation Allowance

Revenue Recognition

Revenue consists of fees for licenses of software products and service and other
revenue. Ansoft recognizes revenue in accordance with SOP 97-2, "Software
Revenue Recognition," and related interpretations. Accordingly, revenue is
recognized when all of the following criteria are met: persuasive evidence of an
arrangement exists, delivery has occurred, the vendor's fee is fixed or
determinable, and collectibility is probable.


                                       13
<PAGE>
License revenue - Ansoft licenses its software on a perpetual basis with no
right to return or exchange the licensed software. License revenue is recognized
based on the residual method.

Postcontract customer support ("PCS") for an initial three month period is
bundled with the perpetual licensing fee. Revenue related to the three-month PCS
is deferred and recognized ratably over the three-month term. Ansoft's
vendor-specific objective evidence of fair value, or VSOE, for the three-month
PCS is based upon the pricing for comparable transactions when the element is
sold separately. Ansoft's VSOE for the three-month PCS is based upon one fourth
of the customer's annual maintenance contract renewal rates.

Service and other revenue - consists primarily of PCS revenue. Ansoft offers
customers one-year maintenance contracts generally at 15% of the list price of
the respective software products. Ansoft recognizes all maintenance revenue
ratably over the respective maintenance period. Customers typically renew
maintenance agreements annually.

Revenue from customer training, support and other services is recognized as the
service is performed.

Valuation of Accounts Receivable

Management reviews accounts receivable to determine which are doubtful of
collection. In making the determination of the appropriate allowance for
doubtful accounts, management considers Ansoft's history of write-offs,
relationships with its customers, and the overall credit worthiness of its
customers. The allowance for doubtful accounts as of April 30, 2004 and 2003 was
$903,000 and $818,000 respectively. The increase in allowance in fiscal 2004 was
primarily due to the overall business environment of our customers. No
particular customer was a cause of the changes in allowances. We had no
significant changes in our collection policies or payment terms

Impairment of Long-Lived Assets

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

Goodwill and purchased intangibles with indefinite lives are reviewed annually
for impairment. A determination of impairment is based on the estimated fair
value of the reporting entity.

Impairment of Marketable Securities Available for Sale

An impairment charge is recorded if a decline in the market value of any
available for sale security below cost is deemed to be other than temporary. The
impairment is charged to earnings and a new cost basis for the security is
established.

Deferred Tax Asset Valuation Allowance

Deferred tax assets are recognized for deductible temporary differences, net
operating loss carryforwards, and credit carryforwards if it is more likely than
not that the tax benefits will be realized. The company considers projected
future taxable income and tax planning strategies in making this assessment. To
the extent a deferred tax asset cannot be recognized under the preceding
criteria, a valuation allowance is established.

The judgments used in applying the above policies are based on management's
evaluation of the relevant facts and circumstances as of the date of the
financial statements. Actual results may differ from those estimates. See also
the "Risk Factors" under "Item 1. Business."

                                       14
<PAGE>

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                            FISCAL YEAR ENDED                   FISCAL YEAR ENDED
                                                 APRIL 30                           APRIL 30
                                                 --------                           --------
(IN THOUSANDS)                                               PERCENT                           PERCENT
                                       2004       2003        CHANGE     2003        2002       CHANGE
                                       ----       ----        ------     ----        ----       ------
<S>                                  <C>        <C>          <C>        <C>         <C>       <C>
Sales                                $ 54,653   $ 47,319       15.5%    47,319      53,435       (11.4%)
Cost of Revenue                         1,857      1,653       12.3%     1,653       1,809        (8.6%)
                                     --------   --------                ------      ------
Gross Profit                           52,796     45,666       15.6%    45,666      51,626       (11.5%)
                                     --------   --------                ------      ------
Sales and Marketing                    26,930     24,611        9.4%    24,611      24,966        (1.4%)
Research and Development               15,690     18,588      (15.6%)   18,588      17,705         5.0%
General and Administrative              4,488      4,284        4.8%     4,284       4,555        (5.9%)
Amortization                            3,182      3,428       (7.2%)    3,428       4,129       (17.0%)
                                     --------   --------                ------      ------
Total Operating Expenses               50,290     50,911       (1.2%)   50,911      51,355        (0.8%)
                                     --------   --------                ------      ------
Income (loss) from operations           2,506     (5,245)     147.7%    (5,245)        271    (2,035.4%)
Other income, net                         904      1,152      (21.5%)    1,152       1,347       (14.5%)
                                     --------   --------                ------      ------
Income (loss) before income taxes       3,410     (4,093)     183.3%    (4,093)      1,618      (353.0%)
Income Tax Expense (Benefit)              854       (970)     188.0%      (970)        404      (340.1%)
                                     --------   --------                ------      ------
Net Income (loss)                    $  2,556     (3,123)     181.8%    (3,123)      1,214      (157.2%)
                                     ========   ========                ======      ======
</TABLE>

YEAR ENDED APRIL 30, 2004 COMPARED WITH YEAR ENDED APRIL 30, 2003

Revenue. Total revenue for the year ended April 30, 2004 increased 15% to $54.7
million from $47.3 million in the previous fiscal year. License revenue
increased 17% to $32.3 million from $27.5 million. The increase is primarily
attributable to increased demand from customers for our HF and EM products. The
increase in revenues can also be attributed to an improving economy,
particularly an improvement in the technology sectors resulting in an increased
demand for our software products. Service and other revenue increased by 13% to
$22.4 million from $19.8 million due to the continued growth of the installed
base of customers. Deferred revenue as of April 30, 2004 increased $1.1 million.

International revenue accounted for 57% and 56% of the Company's total product
revenue in the years ended April 30, 2004 and 2003, respectively. Revenue in
Asia accounted for 40% and 41% and revenue in Europe accounted for 17% and 15%
in the years ended April 30, 2004 and 2003. Future international sales may be
subject to additional risks associated with international operations, including
currency exchange fluctuations, tariff regulations and requirements for export,
and licenses may on occasion be delayed or difficult to obtain. We expect
international revenue to remain approximately at 55% of total revenues in the
next fiscal year.

Cost of revenue. Cost of revenue consists primarily of software materials,
personnel and other expenses related to providing maintenance and post-contract
customer support and amortization of acquired technology. Our cost of license
revenue increased 3% to $702,000 from $683,000 in the previous fiscal year. This
increase was attributable to the increase in the number of new license orders
from the previous fiscal year. Our cost of service and other revenue increased
19% to $1.2 million from $970,000 in the previous fiscal year primarily due to
the continued growth in our existing installed customer base. Continuing
increases in our installed customer based should result in increases in the cost
of revenue in future years.

Sales and marketing expenses. Sales and marketing expenses consist of salaries,
commissions paid to sales and marketing personnel, promotional costs and related
operating expenses. Sales and marketing expenses increased 9% to $26.9 million
in the year ended April 30, 2004, as compared to $24.6 million in the previous
fiscal year. The increase was due to higher commission expense as a result of a
higher level of sales. Sales and marketing expenses represented 49% and 52% of
total revenue in the years ended April 30, 2004 and 2003, respectively. The
decrease in the percentage is primarily due to an improvement in operating
margins as a result of increased overall sales from the

                                       15
<PAGE>
prior year. Management expects that sales and marketing expenses will increase
between 6% and 7% in absolute dollars in the next fiscal year. This increase is
due to projected increases in revenues for the fiscal year ending April 30,
2005.

Research and development expenses. Research and development expenses include all
costs associated with the development of new products and enhancements to
existing products. Total research and development expenses decreased by 16% to
$15.7 million in the year ended April 30, 2004, as compared to $18.6 million in
the previous fiscal year. The decrease in research and development expenses was
primarily attributable to the closing of our Altra Broadband development site in
Irvine, California in the third quarter of fiscal year ended April 30, 2003 and
the consolidation of some research and development facilities during the fiscal
year ending April 30, 2004. Research and development expenses represented 29%
and 39% of total revenue in the years ended April 30, 2004 and 2003,
respectively. Ansoft anticipates that research and development expenses will
increase approximately 10% for the next fiscal year. Research and development
costs will increase primarily due to anticipated growth in our personnel to meet
software development requirements.

General and administrative expenses. General and administrative expenses
increased by 5% to $4.5 million in the year ended April 30, 2004, as compared to
$4.3 million in the previous fiscal year. General and administrative expenses
represented 8% and 9% of total revenue in the years ended April 30, 2004 and
2003. Ansoft anticipates that general and administrative expenses for the next
fiscal year are expected to increase approximately 10%.

Amortization expense. Amortization expense in the fiscal year ended April 30,
2004 was $3.2 million, as compared to $3.4 million the previous fiscal year. The
decrease was mainly due to certain intangibles becoming fully amortized in the
current fiscal year.

Other income (expense) and interest expense, net. Other income (expense) and
interest expense for the year ended April 30, 2004 was $904,000, compared to
$1.2 million reported for the previous fiscal year. The decrease is due
primarily to lower interest rates and investment returns in the current period.

Income tax expense (benefit). In the year ended April 30, 2004, the Company
recorded a tax expense of $854,000. The effective tax rate of 25% is primarily
the result of research and development tax credits available in the current
year.

YEAR ENDED APRIL 30, 2003 COMPARED WITH YEAR ENDED APRIL 30, 2002

Revenue. Total revenue for the year ended April 30, 2003 decreased 11% to $47.3
million from $53.4 million in the previous fiscal year. License revenue
decreased 25% to $27.5 million from $36.7 million. The primary reason for the
decrease in license revenue for the period ending April 30, 2003 was due to the
overall downturn in the technology sector. Service and other revenue increased
by 18% to $19.8 million from $16.8 million due to the continued growth of the
installed base of customers under annual maintenance agreements. Primarily due
to this growth of the installed base of customers under maintenance contracts,
deferred revenue as of April 30, 2003 increased $2 million.

International revenue accounted for 56% and 55% of the Company's total product
revenue in the years ended April 30, 2003 and 2002, respectively. The Company's
future international sales may be subject to additional risks associated with
international operations, including currency exchange fluctuations, tariff
regulations and requirements for export, which licenses may on occasion be
delayed or difficult to obtain.

Cost of revenue. Cost of revenue consists primarily of software materials,
personnel and other expenses related to providing maintenance and post-contract
customer support and amortization of acquired technology. Our cost of license
revenue decreased 27% to $683,000 from $938,000 in the previous fiscal year.
This decrease was primarily due to lower overall sales of new licenses in fiscal
2003. Our cost of service and other revenue increased 11% to $970,000 from
$871,000 in the previous fiscal year primarily due to increased personnel
providing customer support.

Sales and marketing expenses. Sales and marketing expenses consist of salaries,
commissions paid to sales and marketing personnel, promotional costs and related
operating expenses. Sales and marketing expenses decreased 1% to $24.6 million
in the year ended April 30, 2003, as compared to $25 million in the previous
fiscal year. The decrease was due to lower commission expense as a result of a
lower level of sales. Sales and marketing expenses represented 52% and 47% of
total revenue in the years ended April 30, 2003 and 2002, respectively.

                                       16
<PAGE>

Research and development expenses. Research and development expenses include all
costs associated with the development of new products and enhancements to
existing products. Total research and development expenses increased by 5% to
$18.6 million in the year ended April 30, 2003, as compared to $17.7 million in
the previous fiscal year. Research and development expenses increased by 15% due
to the continued research and development efforts for Ansoft's current and
future software products. Research and development expenses decreased by 10% due
to the closing of the Altra Broadband Irvine Technology Center and other cost
control measures. In July 2000, Ansoft announced its formation of Altra
Broadband to pursue the development of critical intellectual property and
products for broadband wireless and optical communications. In spite of certain
technical successes, profitable deployment of intellectual property developed by
Altra Broadband's Irvine Technology Center in this telecom environment was
deemed unlikely in the near term. As such, the Company closed the Irvine
Technology Center during the quarter ended October 31, 2002, resulting in a
restructuring charge of $532,000 that is included in "Research and development
expense." Research and development expenses represented 39% and 33% of total
revenue in the years ended April 30, 2003 and 2002, respectively.

General and administrative expenses. General and administrative expenses
decreased by 6% to $4.3 million in the year ended April 30, 2003, as compared to
$4.6 million in the previous fiscal year. The decrease is due to general cost
control measures. General and administrative expenses represented 9% of total
revenue in each of the years ended April 30, 2003 and 2002.

Amortization expense. Amortization expense in the year ended April 30, 2003 was
$3.4 million, as compared to $4.1 million the previous fiscal year. The decrease
was mainly due to the Company ceasing to amortize approximately $1.2 million of
goodwill in conjunction with the adoption of SFAS 142, effective May 1, 2002.

Other income (expense) and interest expense, net. Other income (expense) and
interest expense for the year ended April 30, 2003 was $1.2 million, compared to
$1.3 million reported for the previous fiscal year. The decrease is due
primarily to lower interest rates and investment returns in the current period.

Income tax expense (benefit). In the year ended April 30, 2003, the Company
recorded a tax benefit of $1 million. In addition, during the year a study of
federal research and development credits was completed. The Company has
determined that it has approximately $2.2 million in research and development
credits for all years through April 30, 2003 that are available to reduce future
federal income taxes, if any, through April 30, 2022. The ultimate realization
of these and other deferred tax assets are dependant upon the generation of
future taxable income. Based on an analysis of taxable income projections,
management has recorded a valuation allowance.

QUARTERLY RESULTS OF OPERATIONS

The following table presents unaudited quarterly results for each quarter of
fiscal 2004 and fiscal 2003. The information has been prepared on a basis
consistent with the Company's annual consolidated financial statements and, in
the opinion of management, contains all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the information for
such periods. The Company's quarterly results have been in the past, and may be
in the future, subject to fluctuations due to increased competition, the timing
of new product announcements, changes in pricing policies by the Company or its
competitors, market acceptance of new and enhanced versions of the Company's
products and the size and timing of significant license transactions. The
Company believes that results of operations for the interim periods are not
necessarily indicative of the results to be expected for any future period. The
Company's business historically has shown sequential increases in revenues on a
quarterly basis, with the first fiscal quarter generally being the lowest
quarter for revenue in the fiscal year.

                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                               FISCAL 2004
                                                APRIL 30,  JAN. 31,   OCT. 31,    JULY 31,
                                                  2004       2004       2003        2003
                                                --------   --------   --------    --------
                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                             <C>        <C>        <C>         <C>
Total revenue                                   $ 17,761   $ 13,982   $ 12,258    $ 10,651
Income (loss) from operations                   $  3,585   $  1,008   $   (237)   $ (1,850)
Net income (loss)                               $  2,830   $    941   $    (22)   $ (1,192)
Basic net income (loss) per share               $   0.24   $   0.08   $  (0.00)   $  (0.10)
Diluted net income (loss) per share             $   0.21   $   0.07   $  (0.00)   $  (0.10)
Weighted average number of shares outstanding

    - basic                                       11,738     11,640     11,637      11,672
    - diluted                                     13,504     13,306     11,637      11,672

<CAPTION>
                                                               FISCAL 2003
                                                APRIL 30,  JAN. 31,    OCT. 31,    JULY 31,
                                                  2003       2003        2002        2002
                                                --------   --------    --------    --------
                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                             <C>        <C>         <C>         <C>
Total revenue                                   $ 15,112   $ 12,362    $ 10,557    $  9,288
Income (loss) from operations                   $  2,611   $   (367)   $ (3,068)   $ (4,421)
Net income (loss)                               $  2,476   $    (58)   $ (2,198)   $ (3,343)
Basic net income (loss) per share               $   0.21   $  (0.00)   $  (0.19)   $  (0.28)
Diluted net income (loss) per share             $   0.20   $  (0.00)   $  (0.19)   $  (0.28)
Weighted average number of shares outstanding

    - basic                                       11,715     11,764      11,817      11,940
    - diluted                                     12,488     11,764      11,817      11,940
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

As of April 30, 2004, Ansoft had $15.2 million in cash and cash equivalents and
working capital of $10.5 million. Net cash provided by operating activities was
$13.8 million, $4.2 million and $4.4 million in fiscal 2004, 2003, and 2002,
respectively.

Net cash (used in) provided by investing activities was $(3.9) million, $975,000
and $(11.2) million in fiscal 2004, 2003, and 2002, respectively. Capital
expenditures, consisting primarily of purchases of computer equipment, were $1.3
million, $755,000 and $2.6 million in fiscal 2004, 2003, and 2002, respectively.
Net proceeds from the sale (purchase) of securities were $(2.6) million, $1.3
million, and $(1.0) million in fiscal 2004, 2003, and 2002, respectively. Net
cash used in the investment of acquired business from Agilent was $7.5 million
in fiscal 2002.

Net cash (used in) provided by financing activities were $(2.1) million, $(3.6)
million and $3.2 million in fiscal 2004, 2003, and 2002, respectively. In fiscal
2003 Ansoft repaid its note payable of $1.9 million. Proceeds from the issuance
of common stock were $3.0 million, $494,000, and $2.3 million in fiscal 2004,
2003, and 2002, respectively. Funds used for the purchase of treasury stock were
$5.1 million, $2.3 million and $70,000 in fiscal 2004, 2003, and 2002,
respectively.

Ansoft has available a $20.0 million secured line of credit from a domestic
financial institution at an interest rate equal to LIBOR plus an applicable
margin rate. The line of credit expires on September 30, 2005. The line of
credit is secured by the marketable securities held with this institution, and
includes a minimum tangible net worth covenant. The Company was in compliance
with all financial covenants as of April 30, 2004 and 2003. As of April 30,
2004, $10.0 million was the outstanding balance on the line of credit. Ansoft
believes that the available funds will be sufficient to meet its anticipated
cash needs for working capital and capital expenditures for at least the next
year. Thereafter, if cash generated from operations is insufficient to satisfy
the Company's liquidity requirements, Ansoft may seek additional funds through
equity or debt financing. There can be no assurance that additional financing
will be available or that, if available, such financing will be on terms
favorable to Ansoft.

A summary of Ansoft's significant contractual obligations and commitments is as
follows (in 000s):

<TABLE>
<CAPTION>
                                             PAYMENT DUE BY PERIOD
                                        LESS THAN    1-3       3-5     MORE THAN
                               TOTAL     1 YEAR     YEARS     YEARS     5 YEARS
                              -------   ---------  -------   -------   ---------
<S>                           <C>       <C>        <C>       <C>       <C>
CONTRACTUAL OBLIGATIONS

Long Term Debt Obligations    $10,000          -   $10,000         -         -
Operating Lease Obligations   $ 3,731    $ 1,332   $ 1,766   $   633         -
                              -------    -------   -------   -------   -------

Total                         $13,731    $ 1,332   $11,766   $   633         -
</TABLE>

                                       18
<PAGE>

Stock Repurchase Program. In September 2002, our Board of Directors voted to
amend the existing 1,000,000 common stock repurchase program to permit the
Company to acquire an additional 1,000,000 shares of its Common Stock. Common
shares reacquired are intended to be used for general corporate purposes. As of
the date we filed this Annual Report on Form 10-K with the SEC, we had
repurchased 1.75 million shares under the repurchase program. For the fiscal
year ending April 30, 2004, we purchased 406,600 shares at an average price of
$12.63.

Foreign Currency Fluctuations. Foreign currency exchange rates positively
(negatively) affected revenue by approximately $1.8 million, $1.4 million and
($653,000) in fiscal 2004, 2003, and 2002, respectively, primarily due to the
fluctuations of the Japanese yen and euro in relation to the U.S. dollar.

EFFECTS OF INFLATION

To date, inflation has not had a material impact on the Company's consolidated
financial results.

Seasonal Effects

Traditionally, sales in the first quarter will decrease from the fourth quarter
of the prior fiscal year. Revenues will sequentially increase over the next
three quarters of the fiscal year. The fourth quarter is typically the highest
revenue quarter for the fiscal year.

ITEM 7.(a) QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rate Risk. The Company's exposure to market risk for changes in
interest rates relates primarily to its investment portfolio. The Company
mitigates its risk by diversifying its investments among securities and limits
the amount of credit exposure to any one issuer. The Company does not hedge any
interest rate exposures. The portfolio includes only marketable securities with
active secondary or resale markets to ensure portfolio liquidity.

The following table presents the carrying value and related weighted-average
interest rates for the Company's investments subject to variable interest rates
and debt. The carrying value approximates fair value at April 30, 2004.

<TABLE>
<CAPTION>
                                                              APRIL 30,
                                     --------------------------------------------------------------
                                       2005      2006     2007   2008   2009  THEREAFTER    TOTAL
                                                       (AMOUNTS IN THOUSANDS)
<S>                                  <C>       <C>        <C>    <C>    <C>   <C>         <C>
Marketable Securities (bond funds)   $17,413        --     --     --     --       --      $ 17,413
Average % Rate                          4.91%              --     --     --       --          4.91%
Variable Rate Debt                        --   $10,000     --     --     --       --      $ 10,000
Average % Rate                            --      1.90%    --     --     --       --          1.90%
</TABLE>

As of April 30, 2003, the Company had bond mutual funds and variable rate debt
of $19.3 million, and $10 million, respectively. The average rates of return for
bond mutual funds and variable rate debt at April 30, 2003 were 5.88%, and
1.94%, respectively.

Foreign Currency Risk. The Company transacts business in various foreign
currencies. Accordingly, the Company is subject to exposure from adverse
movements in foreign currency exchange rates. As of April 30, 2004, the Company
had no hedging contracts outstanding. The Company assesses the need to utilize
financial instruments to hedge currency exposures on an ongoing basis.
Approximately 50-57% of our sales are subject to foreign exchange fluctuations,
however, the company did not experience any material fluctuations in fiscal year
ending April 30, 2004.

                                       19
<PAGE>

ITEM 8.   FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                       ----
<S>                                                                                                    <C>
Report of Independent Registered Public Accounting Firm                                                 21
Consolidated Balance Sheets as of April 30, 2004 and 2003                                               22
Consolidated Statements of Operations for the fiscal years ended April 30, 2004, 2003 and 2002          23
Consolidated Statements of Stockholders' Equity and Comprehensive Income for the
   fiscal years ended April 30, 2004, 2003 and 2002                                                     24
Consolidated Statements of Cash Flows for the fiscal years ended April 30, 2004, 2003 and 2002          25
Notes to Consolidated Financial Statements                                                              26
Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts                                                         43
</TABLE>

                                       20
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Ansoft Corporation:

We have audited the accompanying consolidated balance sheets of Ansoft
Corporation and subsidiaries as of April 30, 2004 and 2003, and the related
consolidated statements of operations, stockholders' equity and comprehensive
income and cash flows for each of the years in the three-year period ended April
30, 2004. In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedule as listed in
the accompanying index. These consolidated financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Ansoft Corporation
and subsidiaries as of April 30, 2004 and 2003, and the results of their
operations and their cash flows for each of the years in the three-year period
ended April 30, 2004, in conformity with U.S. generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

As discussed in note 1 to the consolidated financial statements, the Company
changed its method of accounting for goodwill and other intangible assets in
fiscal 2003.

KPMG LLP

Pittsburgh, Pennsylvania
May 27, 2004

                                       21
<PAGE>

                       ANSOFT CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                              April 30,    April 30,
                                                                2004         2003
                                                              ---------    ---------
<S>                                                           <C>          <C>
ASSETS
Current assets
Cash and cash equivalents                                     $  15,218    $   7,173
Accounts receivable, net of allowance for doubtful accounts
  of $903 and $818, respectively                                 10,179       13,968
Deferred income taxes                                               343          310
Prepaid expenses and other assets                                   675          842
                                                              ---------    ---------
Total current assets                                             26,415       22,293

Equipment and furniture, net                                      3,598        3,829
Marketable securities                                            25,502       21,785
Other assets                                                        383          436
Deferred income taxes                                             5,158        4,909
Goodwill, net                                                     1,239        1,239
Other intangible assets, net                                      5,341        8,663
                                                              ---------    ---------
Total assets                                                  $  67,636    $  63,154
                                                              =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses                         $   4,015    $   2,449
Deferred revenue                                                 11,935       10,879
                                                              ---------    ---------
Total current liabilities                                        15,950       13,328

Line of credit                                                   10,000       10,000
                                                              ---------    ---------

Total liabilities                                                25,950       23,328

Stockholders' equity
Preferred stock, par value $0.01 per share; 1,000 shares
   authorized,  no shares outstanding                                --           --
Common stock, par value $0.01 per share; 25,000 shares
   authorized; issued 12,778 and 12,296 shares, respectively
   and outstanding 11,744 and 11,669, respectively                  129          123
Additional paid-in capital                                       58,562       55,522
Treasury stock, 1,034 and 627 shares, respectively               (9,090)      (3,954)
Accumulated other comprehensive income (loss)                       691         (703)
Accumulated deficit                                              (8,606)     (11,162)
                                                              ---------    ---------
Total stockholders' equity                                       41,686       39,826
                                                              ---------    ---------
Total liabilities and stockholders' equity                    $  67,636    $  63,154
                                                              =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       22
<PAGE>

                       ANSOFT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
         FISCAL YEAR ENDED APRIL 30,              2004        2003        2002
         ---------------------------            --------    --------    --------
<S>                                             <C>         <C>         <C>
Revenue:
License                                         $ 32,301    $ 27,540    $ 36,683
Service and other                                 22,352      19,779      16,752
                                                --------    --------    --------
    Total revenue                                 54,653      47,319      53,435
                                                --------    --------    --------
Cost of revenue:
License revenue                                      702         683         938
Service and other                                  1,155         970         871
                                                --------    --------    --------
    Total cost of revenue                          1,857       1,653       1,809
                                                --------    --------    --------
Gross profit                                      52,796      45,666      51,626
Operating Expenses:
Sales and marketing                               26,930      24,611      24,966
Research and development                          15,690      18,588      17,705
General and administrative                         4,488       4,284       4,555
Amortization                                       3,182       3,428       4,129
                                                --------    --------    --------
    Total operating expenses                      50,290      50,911      51,355
                                                --------    --------    --------
Income (loss) from operations                      2,506      (5,245)        271
Other income                                       1,138       1,428       1,878
Interest expense                                    (234)       (276)       (531)
                                                --------    --------    --------
Income (loss) before income taxes                  3,410      (4,093)      1,618
Income taxes expense (benefit)                       854        (970)        404
                                                --------    --------    --------
Net income (loss)                               $  2,556    $ (3,123)   $  1,214
                                                ========    ========    ========
Basic net income (loss) per share               $   0.22    $  (0.26)   $   0.10
                                                ========    ========    ========
Diluted net income (loss) per share             $   0.19    $  (0.26)   $   0.09
                                                ========    ========    ========
Weighted average shares outstanding - basic       11,672      11,809      11,844
Weighted average shares outstanding - diluted     13,248      11,809      13,649
</TABLE>

See accompanying notes to consolidated financial statements.

                                       23
<PAGE>

                       ANSOFT CORPORATION AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                                         ACCUMULATED
                                                                   ADDITIONAL                               OTHER
                             COMPREHENSIVE       COMMON STOCK       PAID-IN        TREASURY STOCK       COMPREHENSIVE   ACCUMULATED
                             INCOME (LOSS)     SHARES     AMOUNT    CAPITAL      SHARES      AMOUNT     INCOME (LOSS)     DEFICIT
                             -------------     ------     ------   ----------    ------     --------    -------------   -----------
<S>                          <C>               <C>        <C>      <C>           <C>        <C>         <C>             <C>
Balance, April 30, 2001                        11,960     $  119   $   52,684      (256)    $(1,601)       $   (354)     $ (9,253)
Purchase of treasury stock                         --         --           --        (7)        (70)             --            --
Issuance of common stock                          236          3        1,335        --          --              --            --
Tax effect of stock option
   Exercises                                       --         --          920        --          --              --            --
Net income                      $ 1,214            --         --           --        --          --              --         1,214
Foreign currency translation       (525)           --         --           --        --          --            (525)           --
Reclassification adjustment         117            --         --           --        --          --             117            --
Change in unrealized loss on
   marketable securities           (942)           --         --           --        --          --            (942)           --
                                -------
Comprehensive income (loss)     $  (136)           --         --           --        --          --              --            --
                                               ------     ------   ----------    ------     --------       --------      --------

Balance, April 30, 2002                        12,196     $  122   $   54,939      (263)    $(1,671)       $ (1,704)     $ (8,039)
Purchase of treasury stock                         --         --           --      (364)     (2,283)             --            --
Issuance of common stock                          100          1          493        --          --              --            --
Tax effect of stock option
   Exercises                                       --         --           90        --          --              --            --
Net income                      $(3,123)           --         --           --        --          --              --        (3,123)
Foreign currency translation        394            --         --           --        --          --             394            --
Reclassification adjustment          78            --         --           --        --          --              78            --
Change in unrealized loss on
   marketable securities            529            --         --           --        --          --             529            --
                                -------
Comprehensive income (loss)     $(2,122)           --         --           --        --          --              --            --
                                               ------     ------   ----------    ------     --------       --------      --------

Balance, April 30, 2003                        12,296     $  123   $   55,522      (627)    $(3,954)       $   (703)     $(11,162)
Purchase of treasury stock                         --         --           --      (407)     (5,136)             --            --
Issuance of common stock                          482          6        2,363        --          --              --            --
Tax effect of stock option
   Exercises                                       --         --          677        --          --              --            --
Net Income                      $ 2,556            --         --           --        --          --              --         2,556
Foreign currency translation        267            --         --           --        --          --             267            --
Reclassification adjustment           7            --         --           --        --          --               7            --
Change in unrealized gain on
   marketable securities          1,120            --         --           --        --          --           1,120            --
                                -------
Comprehensive income (loss)     $ 3,950            --         --           --        --          --              --            --
                                               ------     ------   ----------    ------     --------       --------      --------

Balance, April 30, 2004                        12,778     $  129   $   58,562    (1,034)    $(9,090)       $    691      $ (8,606)
</TABLE>

See accompanying notes to consolidated financial statements.

                                       24
<PAGE>

                       ANSOFT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                            FISCAL YEAR ENDED APRIL 30,
                                                          --------------------------------
                                                            2004        2003        2002
                                                          --------    --------    --------
<S>                                                       <C>         <C>         <C>
Cash flows from operating activities
Net income (loss)                                         $  2,556    $ (3,123)   $  1,214
Adjustments to reconcile net income (loss) to net cash
   provided by operating activities
Depreciation                                                 1,536       1,838       1,936
Amortization                                                 3,322       3,724       4,709
Deferred taxes                                                (282)       (408)     (2,093)
Impairment charge to equipment                                  --         407          --
Non-cash charge on marketable securities                        --          78         117
Loss (Gain) on marketable securities                             7        (113)         --
Changes in assets and liabilities, net of effect from
   acquisitions
Accounts receivable                                          3,789       1,076      (6,835)
Prepaid expenses and other assets                              167         163         261
Other long-term assets and liabilities, net                     53        (589)        166
Accounts payable and accrued expenses                        1,566        (843)      1,258
Deferred revenue                                             1,056       1,964       3,631
                                                          --------    --------    --------
   Net cash provided by operating activities                13,770       4,174       4,364
                                                          --------    --------    --------
Cash flows from investing activities
Purchases of equipment and furniture                        (1,305)       (755)     (2,630)
Investment in acquired businesses                               --          --      (7,544)
Proceeds from the sale of equipment                             --         395          --
Proceeds from the sale of marketable securities             12,723       6,983          --
Purchase of marketable securities                          (15,320)     (5,648)       (996)
                                                          --------    --------    --------
   Net cash (used in) provided by investing activities      (3,902)        975     (11,170)
                                                          --------    --------    --------
Proceeds from (repayments of) line of credit, net               --          --       1,000
Payment of note payable                                         --      (1,850)         --
Purchase of treasury stock                                  (5,136)     (2,283)        (70)
Proceeds from the issuance of common stock, net              3,046         494       2,258
                                                          --------    --------    --------
   Net cash (used in)  provided by financing activities     (2,090)     (3,639)      3,188
Effect of exchange rate changes                                267         394        (525)
Cash and cash equivalents at beginning of  year              7,173       5,269       9,412
                                                          --------    --------    --------
Cash and cash equivalents at end of year                  $ 15,218    $  7,173    $  5,269
                                                          ========    ========    ========
Supplemental disclosures of cash flow information
   Cash paid for interest                                 $    234    $    276    $    414
                                                          ========    ========    ========
   Cash paid for income taxes                             $     99    $    846    $    203
                                                          ========    ========    ========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       25
<PAGE>

                       ANSOFT CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Ansoft Corporation ("Ansoft" or the "Company") is a developer of electronic
design automation ("EDA") software used in high technology products and
industries. Ansoft's software is used by electrical engineers in the design of
state of the art technology products, such as cellular phones, internet
networking, satellite communications systems, computer chips and circuit boards,
and electronic sensors and motors.

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of the
Company and its subsidiaries. All intercompany transactions have been
eliminated. Effective May 3, 2001, Ansoft entered into an agreement to acquire
the following intangible assets related to the Agilent HFSS software product:
customer list, non-compete agreement, and trademark. As part of the agreement
Agilent agreed to transfer customer obligations for Agilent HFSS software to
Ansoft. The acquisition cost was $7,850 in cash and assumed liabilities of
$1,544 for a total cost of $9,394.

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

The restructuring was committed to and completed in the quarter ended October
31, 2002. The total $532 restructuring charge was comprised of a $407 charge for
the impairment of fixed assets and a charge of $125 for the remaining lease
obligations for which a liability was recorded as of October 31, 2002. The
impairment charge was based on third-party offers to purchase the remaining
assets.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and disclosure of contingent assets and
liabilities. The estimates and assumptions used in the accompanying financial
statements are based on management's evaluation of the relevant facts and
circumstances as of the date of the financial statements. Actual results may
differ from those estimates. Estimates which are particularly significant to the
consolidated financial statements include deferred revenue, the allowance for
doubtful accounts, future cash flows related to long-lived assets, other than
temporary declines in the market value of marketable securities, and the
deferred tax valuation allowance.

Cash Equivalents

Cash equivalents include only highly liquid debt instruments purchased with
original maturity dates of three months or less.

Marketable Securities

Marketable securities consist of corporate bonds, bond and government agency
mutual funds, and mortgage backed securities and are classified as available for
sale as of April 30, 2004 and 2003. Marketable securities available for sale are
recorded at fair market value based on quoted market prices and any unrealized
gains or losses are recorded as a separate component of stockholders' equity.
Costs of investments sold/held are determined on the average cost

                                       26
<PAGE>

method. An impairment charge is recorded if a decline in the market value of any
available for sale security below cost is deemed to be other than temporary. The
impairment is charged to earnings and a new cost basis for the security is
established. Dividend and interest income are recognized when earned.

Equipment and Furniture

Equipment and furniture are stated at cost less accumulated depreciation and
amortization. Depreciation for financial reporting purposes is computed using
the straight-line method based upon the estimated useful lives of the assets,
which range from three to seven years. Assets acquired under capital leases and
leasehold improvements are amortized over their useful life or the lease term,
as appropriate.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets, which include customer lists, non-compete
agreement, and purchased technology, are stated at cost less accumulated
depreciation and are reviewed periodically (at least annually) for impairment.
The non-compete agreement is a result of the Agilent transaction discussed in
note 2. Purchased technology represents acquired software which has been fully
developed, achieved technological feasibility, reached commercial viability, and
is generating revenue. In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets" which was
adopted on May 1, 2002 (the beginning of Ansoft's fiscal year 2003), goodwill
and purchased intangibles with indefinite useful lives are no longer amortized
but are reviewed periodically (at least annually) for impairment. Accordingly,
Ansoft has ceased to amortize approximately $1.2 million of goodwill, net of
amortization, including workforce intangibles that were subsumed into goodwill
upon adoption of SFAS No. 142. Acquired intangibles with definite lives are
amortized on a straight-line basis over the remaining estimated economic life of
the underlying products and technologies (original lives assigned are three to
seven years), and reviewed for impairment in accordance with SFAS No. 144,
"Accounting for Impairment or Disposal of Long-lived Assets."

The Company reviews the realizability of acquired technology, goodwill and other
intangibles on an ongoing basis, and if there is an indication of impairment,
the Company performs procedures under the applicable accounting pronouncements
to quantify any impairment that exists. Determining the amount of impairment of
these assets requires the Company to estimate future cash flows and make
judgments regarding discount rates and other variables that impact the net
realizable value or fair value of those assets, as applicable. Actual future
cash flows and other assumed variables could differ from these estimates. Future
impairment charges under existing pronouncements could be material.

The pro forma effects of the adoption of SFAS No. 142 are as follows:

<TABLE>
<CAPTION>
                                         Fiscal Year Ended April 30,
                                  (in thousands, except per share amounts)
                                     2004          2003           2002
                                  -----------   -----------    -----------
<S>                               <C>           <C>            <C>
Reported net income (loss)        $     2,556   $    (3,123)   $     1,214
Add back: Goodwill amortization            --            --            368
                                  -----------   -----------    -----------
Adjusted net income (loss)        $     2,556   $    (3,123)   $     1,582
                                  ===========   ===========    ===========

BASIC EARNINGS PER SHARE:
Reported net income (loss)        $      0.22   $     (0.26)   $      0.10
Add back: Goodwill amortization            --            --           0.03
                                  -----------   -----------    -----------
Adjusted net income (loss)        $      0.22   $     (0.26)   $      0.13
                                  ===========   ===========    ===========

DILUTED EARNINGS PER SHARE:
Reported net loss                 $      0.19   $     (0.26)   $      0.09
Add back: Goodwill amortization            --            --           0.03
                                  -----------   -----------    -----------
Adjusted net income (loss)        $      0.19   $     (0.26)   $      0.12
                                  ===========   ===========    ===========
</TABLE>

Prior to the adoption of SFAS No. 142, goodwill was amortized on a straight-line
basis over the expected periods to be benefited, generally seven years, and
assessed for recoverability by determining whether the amortization of goodwill
balance over its remaining life could be recovered through undiscounted future
operating cash flows.

Impairment of Long-Lived Assets

                                       27
<PAGE>

SFAS No. 144 provides a single accounting model for long-lived assets to be
disposed of. SFAS No. 144 also changes the criteria for classifying an asset
held for sale; and broadens the scope of businesses to be disposed of that
qualify for reporting as discontinued operations and changes the timing of
recognizing losses on such operations. The Company adopted SFAS No. 144 on May
1, 2002. The adoption of SFAS No. 144 did not affect the Company's financial
statements.

In accordance with SFAS No. 144, long-lived assets, such as property, plant and
equipment, and purchased intangibles subject to amortization, are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to estimated undiscounted future cash flows expected to be generated by the
asset. If the carrying amount of an asset exceeds its estimated future cash
flows, an impairment charge is recognized by the amount by which the carrying
amount of an asset exceeds the fair value of the asset.

Prior to the adoption of SFAS No. 144, the Company accounted for long-lived
assets in accordance with SFAS No. 121, "Accounting for Impairment of Long-Lived
Assets to be Disposed Of".

Revenue Recognition

Revenue consists of fees for licenses of software products and service and other
revenue. Ansoft recognizes revenue in accordance with SOP 97-2, "Software
Revenue Recognition," and related interpretations. Accordingly revenue is
recognized when all of the following criteria are met: persuasive evidence of an
arrangement exists, delivery has occurred, the vendor's fee is fixed or
determinable, and collectability is probable.

License revenue - Ansoft licenses its software generally on a perpetual basis
with no right to return or exchange the licensed software. License revenue is
recognized based on the residual method.

Postcontract customer support ("PCS") is bundled with the perpetual licensing
fee. Revenue related to the three-month PCS is deferred and recognized ratably
over the three-month term. Ansoft's vendor-specific objective evidence of fair
value, or VSOE, for the three-month PCS is based upon the pricing for comparable
transactions when the element is sold separately. Ansoft's VSOE for the
three-month PCS is based upon one fourth of the customer's annual maintenance
contract renewal rates. Three-month PCS services provided are the same as
maintenance.

During the fiscal year ended April 30, 2002, the Company changed the PCS period
bundled with the perpetual license from a one-year period to a three-month
period to more closely align our pricing policy with other vendors within our
industry. In addition, we no longer believed we could continue to expect future
releases offered to customers under three-month PCS would contain only
enhancements limited to bug fixes covered by warranty provisions and therefore
the Company began deferring the PCS in fiscal 2002. Prior to fiscal 2002, the
Company recognized PCS revenue together with the licensing fee on delivery of
the software if collectibility of the resulting receivable was probable,
enhancements were limited to bug fixes covered by warranty provisions, and the
costs of providing these services were expected to be insignificant. Pursuant to
this policy, there were no deferred amounts recorded prior to fiscal 2002 and
the estimated costs of providing PCS were accrued at the time of revenue
recognition.

Service and other revenue - consists primarily of maintenance revenue. Ansoft
offers customers one-year maintenance contracts generally at 15% of the list
price of the respective software products. Ansoft recognizes all maintenance
revenue ratably over the respective maintenance period. Customers renew
maintenance agreements annually.

Revenue from customer training, support and other services is recognized as the
service is performed.

Deferred revenue

Ansoft's deferred revenue consists of unearned revenue on annual maintenance
contracts and the deferred component of PCS.

Software Development Costs

The Company accounts for software development costs in accordance with SFAS No.
86, "Accounting for the Costs of Computer Software to be Sold, Leased or
Otherwise Marketed." Software development costs are capitalized beginning when a
product's technological feasibility has been established by completion of a
working model of the product and ending when a product is available for general
release to customers. Completion of a working model of

                                       28
<PAGE>

the Company's products and general release have substantially coincided. As a
result, the Company has not capitalized any software development costs during
these periods since the amounts have not been material.

Income Taxes

The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets are recognized for deductible
temporary differences, net operating loss carryforwards, and credit
carryforwards if it is more likely than not that the tax benefits will be
realized. To the extent a deferred tax asset cannot be recognized under the
preceding criteria, a valuation allowance is established.

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated using the weighted-average
number of common shares outstanding during the period. Diluted net income (loss)
per share is computed using the weighted-average number of common shares and
potentially dilutive common shares outstanding during the period. Potentially
dilutive common shares consist of the incremental common shares issuable upon
the exercise of employee stock options, and are computed using the treasury
stock method.

The following is a reconciliation of the numerators and denominators of the
basic and diluted EPS computations for the years presented:

<TABLE>
<CAPTION>
                                                    INCOME (LOSS)        SHARES    PER SHARE AMOUNT
                                                    -------------        ------    ----------------
<S>                                                 <C>                  <C>       <C>
           FISCAL YEAR ENDED APRIL 30, 2004
Basic net income (loss) per share                     $  2,556           11,672       $     0.22
Effect of dilutive securities:
   Stock options                                            --            1,576            (0.03)
                                                      --------           ------       ----------
Diluted net income (loss) per share                   $  2,556           13,248       $     0.19
                                                      ========           ======       ==========

           FISCAL YEAR ENDED APRIL 30, 2003
Basic net income (loss) per share                     $ (3,123)          11,809       $    (0.26)
Effect of dilutive securities:
   Stock options                                            --               --               --
                                                      --------           ------       ----------
Diluted net income (loss) per share                   $ (3,123)          11,809       $    (0.26)
                                                      ========           ======       ==========

           FISCAL YEAR ENDED APRIL 30, 2002
Basic net income (loss) per share                     $  1,214           11,844       $     0.10
Effect of dilutive securities:
   Stock options                                            --            1,805            (0.01)
                                                      --------           ------       ----------
Diluted net income (loss) per share                   $  1,214           13,649       $     0.09
                                                      ========           ======       ==========
</TABLE>

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with the
Financial Accounting Standards Board's ("FASB") SFAS No. 123 "Accounting for
Stock-Based Compensation." This statement permits a company to choose either a
fair value based method of accounting for its stock-based compensation
arrangements or to comply with the Accounting Principles Board ("APB") Opinion
No. 25 intrinsic value based method, adding pro forma disclosures of net income
and earnings per share computed as if the fair value based method had been
applied in the financial statements. The Company has adopted SFAS No. 123 by
retaining the APB Opinion No. 25 method of accounting for stock-based
compensation with annual pro forma disclosures of net income and earnings per
share.

Under APB No. 25, because the exercise price of the Company's employee stock
options equals the market price of the underlying stock on the date of grant, no
compensation expense has been recognized in the Company's consolidated financial
statements during fiscal 2004, 2003 or 2002.

Pro forma information regarding net income and earnings (loss) per share is
required by SFAS No. 123. This

                                       29
<PAGE>

information is required to be determined as if the Company had accounted for its
employee stock options (including shares issued under the Stock Purchase Plan,
collectively called "options") granted subsequent to April 30, 1995 under the
fair value method prescribed by SFAS No. 123. The fair value of options granted
in fiscal years 2004, 2003 or 2002 has been estimated at the date of grant using
a Black-Scholes option pricing model with the following weighted average
assumptions:

<TABLE>
<CAPTION>
                            FISCAL YEAR ENDED APRIL 30,
                           ------------------------------
                             2004       2003       2002
                           --------   --------   --------
<S>                        <C>        <C>        <C>
Risk-free rate (%)             2.00       2.00       4.00
Volatility (%)               115.40     110.00      75.55
Expected life (in years)       6.00       7.50       9.90
Dividend yield (%)             0.00       0.00       0.00
</TABLE>

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in the opinion of management, the
existing models do not necessarily provide a reliable single measure of the fair
value of its options. However, based solely on this analysis, the weighted
average estimated fair value of employee stock options granted during 2004, 2003
or 2002 was $7.78, $4.65 and $8.70 per share, respectively.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows (unaudited):

<TABLE>
<CAPTION>
                                                          FISCAL YEAR ENDED APRIL 30,
                                                        --------------------------------
                                                          2004        2003        2002
                                                        --------    --------    --------
<S>                                                     <C>         <C>         <C>
Net income (loss), as reported                          $   2,556   $  (3,123)  $  (1,214)
Deduct: Total stock-based employee compensation
  expense determined under fair value based method, net
  of tax                                                   (2,469)     (2,956)     (2,073)
                                                        ---------   ---------   ---------
Pro forma net income (loss)                             $      87   $  (6,079)  $    (859)

Pro forma net income (loss) per basic and diluted
  common share                                          $    0.01   $   (0.51)  $   (0.07)
</TABLE>

Because the Company anticipates making additional grants and options vest over
several years, the effects on pro forma disclosures of applying SFAS No. 123 are
not likely to be representative of the effects on pro forma disclosures of
future years.

Comprehensive Income

Comprehensive income includes foreign currency translation gains and losses and
other unrealized gains and losses related to marketable securities that have
been previously excluded from net income and reflected instead in equity. The
Company has reported the components of comprehensive income, net of tax of $0 in
2004, 2003 and 2002, in its consolidated statements of stockholders' equity and
comprehensive income.

Foreign Currency Translation

The functional currency of the Company's foreign subsidiaries is the respective
local currency. Accordingly, assets and liabilities are translated to United
States dollars at the exchange rates in effect as of the balance sheet date, and
results of operations are translated using the average rates in effect for the
period presented. Transaction gains and losses, which are included in other
income (expense) in the accompanying consolidated statements of income, have not
been significant.

                                       30
<PAGE>

Fair Value of Financial Instruments

The carrying value and fair value of the Company's receivables, payables and
debt obligations are estimated to be substantially the same at April 30, 2004
and 2003.

Reclassification

2. ACQUISITIONS AND RELATED INTANGIBLE ASSETS

Effective May 3, 2001, Ansoft entered into an agreement to acquire the following
intangible assets related to the Agilent HFSS software product: customer list,
non-compete agreement, and trademark. As part of the agreement Agilent agreed to
transfer customer obligations for Agilent HFSS software to Ansoft. The
acquisition cost was $7,850 in cash and assumed liabilities of $1,544 for a
total cost of $9,394.

3. EQUIPMENT AND FURNITURE

Equipment and furniture consist of the following:

<TABLE>
<CAPTION>
                                                        APRIL 30,
                                                    -----------------
                                                      2004      2003
                                                    -------   -------
<S>                                                 <C>       <C>
Computers and equipment                             $ 7,410   $ 9,660
Furniture and fixtures                                1,610     1,411
Leasehold improvements                                  873       570
                                                    -------   -------
                                                      9,893    11,641
Less allowances for depreciation and amortization     6,295     7,812
                                                    -------   -------
                                                    $ 3,598   $ 3,829
                                                    =======   =======
</TABLE>

4. OTHER INTANGIBLE ASSETS

Other intangible assets consist of the following:

<TABLE>
<CAPTION>
                                       APRIL 30,
                                   -----------------
                                     2004      2003
                                   -------   -------
<S>                                <C>       <C>
Customer list                      $18,488   $18,488
Non-compete                          2,500     2,500
Purchased technology                 2,230     2,230
Trademark                              212       212
                                   -------   -------
                                    23,430    23,430
Less allowances for amortization    18,089    14,767
                                   -------   -------
                                   $ 5,341   $ 8,663
                                   =======   =======
</TABLE>

These intangible assets are amortized over their estimated useful lives, ranging
between three and seven years. There are no expected residual values related to
these intangible assets. Estimated fiscal year amortization expense is as
follows: 2005 - $1,510; 2006 - $1,434; 2007 - $1,272; and 2008 - $1,125.

                                       31
<PAGE>

5. MARKETABLE SECURITIES

Marketable securities, classified as available for sale, are summarized as
follows:

<TABLE>
<CAPTION>
                               AMORTIZED    UNREALIZED   UNREALIZED      MARKET
                                  COST         GAIN        (LOSS)        VALUE
                               ----------   ----------   ----------    ----------
<S>                            <C>          <C>          <C>           <C>
April 30, 2004
  Mutual Bond Funds            $   17,413   $    1,183   $     (290)   $   18,306
  Mortgage Backed Securities        4,251           --          (48)        4,203
  Corporate Bonds                   3,064           --          (71)        2,993
                               ----------   ----------   ----------    ----------
Total marketable securities    $   24,728   $    1,183   $     (409)   $   25,502

April 30, 2003
  Mutual Bond Funds            $   19,628   $      177   $     (550)   $   19,255
  Mortgage Backed Securities        2,510           20           --         2,530
                               ----------   ----------   ----------    ----------
Total marketable securities    $   22,138   $      197   $     (550)   $   21,785
</TABLE>

Other income (loss) consists of dividend and interest income, realized gains and
losses on securities and other than temporary declines in fair value of
marketable securities. Dividend and interest income was $1,145, $1,315 and
$1,995 in fiscal year 2004, 2003 and 2002, respectively. Gross realized gains
were $0, $113 and $0 in fiscal year 2004, 2003 and 2002, respectively. Gross
realized losses were $7, $0 and $0 in fiscal year 2004, 2003 and 2002,
respectively. Other than temporary declines were $0, $78 and $117 in fiscal year
2004, 2003 and 2002, respectively.

The following table sets forth certain information relating to the estimated
fair value and unrealized losses on marketable securities available-for-sale as
of April 30, 2004. Unrealized losses have been segregated into those existing
for less than twelve months and those existing for twelve months or longer.

<TABLE>
<CAPTION>
                            Less than 12 months  12 months or longer         Total
                            -------------------  -------------------  --------------------
       Description of        Fair    Unrealized   Fair    Unrealized   Fair     Unrealized
         Securities          Value     Losses     Value     Losses     Value      Losses
       --------------       -------  ----------  -------  ----------  --------  ----------
<S>                         <C>      <C>         <C>      <C>         <C>       <C>
Mutual Bond Funds           $ 5,415    $ 290         --         --    $  5,415    $ 290
Mortgage Backed Securities  $ 4,203    $  48         --         --    $  4,203    $  48
Corporate Bonds             $ 2,993    $  71         --         --    $  2,993    $  71
   Total                    $12,611    $ 409         --         --    $ 12,611    $ 409
</TABLE>

At April 30, 2004, the contractual maturities of the debt securities available
for sale are:

<TABLE>
<CAPTION>
                                           Amortized Cost  Fair Value
                                           --------------  ----------
<S>                                        <C>             <C>
Due in one year or less
Due after one year through five years         $    249     $    240
Due after five years through ten years        $  3,016     $  2,955
Due after ten years                           $  4,050     $  4,001
   Total                                      $  7,315     $  7,196
</TABLE>


                                       32
<PAGE>

6. LINE OF CREDIT

The Company has available a $20,000 secured line of credit from a domestic
financial institution at an interest rate equal to LIBOR plus an applicable
margin rate. The line of credit expires on September 30, 2005 and is secured by
the marketable securities held with the institution. As of April 30, 2004 and
2003, $10,000 was the outstanding balance on the line of credit and the weighted
average interest rate was 1.90% and 1.94%, respectively. The Company was in
compliance with all financial covenants as of April 30, 2004 and 2003.

7. LEASES

The Company leases its corporate headquarters in Pittsburgh, Pennsylvania, and
other facilities under operating lease agreements that expire over the next five
years. Rental expense incurred by the Company under operating lease agreements
totaled $2,500, $2,658 and $2,209 for the years ended April 30, 2004, 2003 and
2002, respectively. The future minimum lease payments for such operating leases
as of April 30, 2004, are:

<TABLE>
<CAPTION>
YEAR ENDING APRIL 30,
---------------------
<S>                          <C>
     2005                      1,332
     2006                      1,142
     2007                        624
     2008                        633
                             -------
                             $ 3,731
                             =======
</TABLE>

8. COMMON STOCK OPTIONS

The Company's 1988 Stock Option Plan (1988 Plan) authorizes the issuance of 850
shares of common stock for the grant of incentive or nonstatutory stock options
to employees and directors. Under the terms of the 1988 Plan, options to
purchase common stock are granted at no less than the stock's estimated fair
market value at the date of the grant and may be exercised during specified
future periods as determined by the Board of Directors. The 1988 Plan provides
that the options shall expire no more than ten years after the date of the
grant.

The Company's 1995 Stock Option Plan (1995 Plan) authorizes the issuance of
3,500 shares of common stock for the grant of incentive or nonstatutory stock
options to employees and directors. Under the terms of the 1995 Plan, options to
purchase common stock are granted at no less than the stock's estimated fair
market value at the date of the grant and may be exercised during specified
future periods as determined by the Board of Directors. The 1995 Plan provides
that the options shall expire no more than ten years after the date of the
grant.

Shares underlying outstanding options under the 1988 Plan and the 1995 Plan are
as follows:

<TABLE>
<CAPTION>
                                  SHARES UNDERLYING
                                 OUTSTANDING OPTIONS
                              -------------------------
                              SHARES         PRICE
                              ------    ---------------
<S>                           <C>       <C>
Outstanding, April 30, 2001    2,622    $ 1.75 -- $ 9.75
  Granted                      1,291    $ 9.03 -- $13.55
  Exercised                     (219)   $ 1.75 -- $ 9.75
  Terminated                     (57)   $ 5.00 -- $ 9.75
                              ------    ----------------
Outstanding, April 30, 2002    3,637    $ 1.75 -- $13.55
                              ======
  Granted                        651    $ 9.03 -- $13.55
  Exercised                      (93)   $ 1.75 -- $ 9.75
  Terminated                    (212)   $ 4.75 -- $12.95
                              ------    ----------------
Outstanding, April 30, 2003    3,983    $ 1.75 -- $13.55
                              ======
  Granted                         79    $ 8.05 -- $10.91
  Exercised                     (482)   $ 1.75 -- $12.95
  Terminated                    (116)   $ 4.75 -- $12.95
                              ------    ----------------
Outstanding, April 30, 2004    3,464    $ 1.75 -- $13.55
                              ======
</TABLE>

                                       33
<PAGE>

Options to purchase 2,186 shares of common stock were exercisable as of April
30, 2004 and options to purchase 242 shares of common stock were available for
future grant as of April 30, 2004.

The following table summarizes information about stock options outstanding as of
April 30, 2004:

<TABLE>
<CAPTION>
                             OPTIONS OUTSTANDING              OPTIONS EXERCISABLE
                    -------------------------------------  ------------------------
                                   WEIGHTED-
                       NUMBER       AVERAGE     WEIGHTED-     NUMBER     WEIGHTED-
    RANGE OF         OUTSTANDING   REMAINING     AVERAGE    EXERCISABLE   AVERAGE
    EXERCISE        AT APRIL 30,  CONTRACTUAL   EXERCISE   AT APRIL 30,  EXERCISE
     PRICES             2004         LIFE         PRICE        2004        PRICE
----------------    ------------  -----------   ---------  ------------  ---------
<S>                 <C>           <C>           <C>        <C>           <C>
$ 1.75 -- $ 2.00           55          0.8        $  1.95          55      $ 1.95
$ 3.50 -- $ 5.13        1,459          5.0        $  5.04       1,096      $ 5.06
$ 5.50 -- $ 8.25          541          5.7        $  6.49         395      $ 6.41
$ 8.31 -- $12.02          935          7.2        $  9.13         451      $ 9.12
$12.95 -- $13.55          474          7.6        $ 12.99         189      $12.99
</TABLE>

9. SEGMENT REPORTING, EXPORT SALES AND CREDIT RISK

The Company has adopted the provisions of SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", which requires the reporting
of segment information using the "management approach". Under this approach,
operating segments are identified in substantially the same manner as they are
reported internally and used by the Company's chief operating decision maker
("CODM") for purposes of evaluating performance and allocating resources.
Ansoft's chief operating decision maker is its President and Chief Executive
Officer, or CEO. Based on this approach, the Company has one reportable segment
as the CODM reviews financial information on a basis consistent with that
presented in the consolidated financial statements.

Ansoft's products are classified into three categories, high frequency (HF),
signal integrity (SI), and electromechanical (EM). Ansoft's CEO reviews sales by
product category. The following table presents product sales by market
application as a percentage of total sales:

<TABLE>
<CAPTION>
                     2004    2003    2002
                     ----    ----    ----
<S>                  <C>     <C>     <C>
High Frequency        66%     65%     69%
Signal Integrity      13%     17%     15%
Electromechanical     21%     18%     16%
</TABLE>

Profitability information by product category is not available as operating
expenses and other income and expense items are managed on a functional basis.

Export sales, principally to Asia, accounted for 57%, 56% and 55% of total
product revenue in 2004, 2003 and 2002, respectively. Included in export sales
to Asia were sales to Japan, which accounted for approximately 23%, 21% and 18%
of total revenue in fiscal 2004, 2003 and 2002, respectively. No other foreign
country accounted for more than 10% of total revenue during these periods.

The Company markets its software products to customers throughout the world
directly and generally does not require collateral. However, letters of credit
are obtained from certain international customers prior to shipment. The Company
performs ongoing credit evaluations of its customers and maintains an allowance
for potential credit losses. The Company believes that it has adequately
provided for credit losses.

                                       34
<PAGE>

10. INCOME TAX

Income (loss) before taxes includes domestic and foreign income as follows:

<TABLE>
<CAPTION>
                                        APRIL 30,
                              -----------------------------
                               2004       2003       2002
                              -------    -------    -------
<S>                           <C>        <C>        <C>
Domestic                      $ 1,648    $(4,363)   $ 1,250
Foreign                         1,762        270        368
                              -------    -------    -------
Total                         $ 3,410    $(4,093)   $ 1,618
                              =======    =======    =======
</TABLE>

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                        APRIL 30,
                              -----------------------------
                               2004       2003       2002
                              -------    -------    -------
<S>                           <C>        <C>        <C>
Current:
  Federal                     $   499    $  (495)   $ 1,611
  State                           192         24        886
  Foreign                         445         --         --
                              -------    -------    -------
     Total                      1,136       (471)     2,497
Deferred:
  Federal                        (394)      (337)    (1,508)
  State                           (72)      (162)      (585)
  Foreign                         184         --         --
                              -------    -------    -------
     Total                       (282)      (499)    (2,093)
                              -------    -------    -------
Total expense (benefit) for
  income tax                  $   854    $  (970)   $   404
                              =======    =======    =======
</TABLE>

The Company's actual income tax expense (benefit) differs from the expected
income tax expense (benefit) computed by applying the statutory federal rate to
income before income taxes as a result of the following:

<TABLE>
<CAPTION>
                                                      APRIL 30,
                                            -----------------------------
                                              2004       2003       2002
                                            -------    -------    -------
<S>                                         <C>        <C>        <C>
Income tax expense (benefit) at statutory
  rate                                      $ 1,159    $(1,392)   $   549
State income tax, net of federal benefit         79        (92)       199
Research and development credit                (480)    (1,575)      (505)
Rate differential between U.S. and
  foreign taxes                                  30         --         --
Change in valuation allowance                   (55)     1,843         40
Intangible Amortization                          74         77        210
Other, net                                       47        169        (89)
                                            -------    -------    -------
Actual income tax expense (benefit)         $   854    $  (970)   $   404
                                            =======    =======    =======
</TABLE>

In addition to amounts applicable to income before taxes, the following income
tax expense (benefit) amounts were recorded in stockholders' equity.

<TABLE>
<CAPTION>
                                             Fiscal year ending April 30,
                                             ----------------------------
                                              2004       2003      2002
                                              ----       ----      ----
<S>                                          <C>         <C>       <C>
Compensation expense for tax purposes in
  excess of amounts recognized for financial
  statement purposes.                         (677)       (90)     (920)
                                              ====       ====      ====
</TABLE>

                                       35
<PAGE>

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities are presented below:

<TABLE>
<CAPTION>
                                                              APRIL 30,
                                                         ------------------
                                                           2004       2003
                                                         -------    -------
<S>                                                      <C>        <C>
Deferred tax assets:
Net operating loss carryforward                          $   241    $   425
Capital loss carryovers                                      395        392
Allowance for doubtful accounts                              343        310
Alternative minimum tax credit carryforward                  256        256
Research and development tax credit carryforward           2,157      2,215
Intangible assets                                          4,004      3,400
Net unrealized losses on available for sale securities       989      1,417
                                                         -------    -------
Total gross deferred tax assets                            8,385      8,415
Less valuation allowance                                  (2,523)    (3,006)
                                                         -------    -------
Net deferred tax assets                                    5,862      5,409
Deferred tax liabilities:
Furniture and equipment                                     (361)      (190)
                                                         -------    -------
Total gross deferred tax liability                          (361)      (190)
                                                         -------    -------
Net deferred taxes                                         5,501      5,219
                                                         =======    =======
</TABLE>

The valuation allowance for deferred tax assets as of May 1, 2003 and 2002 was
$3,006 and $1,393, respectively. The net change in the total valuation allowance
for the years ended April 30, 2004 and April 30, 2003 was a decrease of $483 and
an increase of $1,613, respectively. A change in the valuation allowance of $428
and $230 was recorded in accumulated other comprehensive income relating to
marketable securities for the year ended April 30, 2004 and 2003, respectively.
Management evaluates the recoverability of the deferred tax assets and the level
of the valuation allowance on a quarterly basis. In assessing the realizability
of the deferred tax assets, management considers whether it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income during the periods in which those temporary differences
become deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning strategies in
making this assessment.

As of April 30, 2004, the Company had net foreign operating loss carryforwards
of $710, which are available to offset future foreign taxable income through
April 30, 2007. The Company also has alternative minimum tax credit
carryforwards of $256 which are available to reduce future federal income taxes,
if any, over an indefinite period. The Company has research and development
credit carryforwards of $2,157 as of April 30, 2004. These credits will be
available to reduce future federal income taxes, if any, through April 30, 2023.
The Company also has capital loss carryovers of $1,160 that are available to
offset capital gains through April 30, 2007.

11. EMPLOYEE BENEFIT PLAN

The Company has a 401(k) savings and retirement plan which covers its full-time
employees who have attained the age of 21 and have completed six months of
service. Eligible employees make voluntary contributions to the plan up to 15%
of their annual compensation. The Company is not required to contribute, nor has
it contributed, to the 401(k) plan.

12. COMMITMENTS AND CONTINGENCIES

The Company is not a party to any litigation and is not aware of any threatened
litigation, unasserted claims or assessments that could have a material adverse
effect on the Company's business, consolidated operating results or consolidated
financial condition.

                                       36
<PAGE>

13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

A summary of quarterly financial information follows:

<TABLE>
<CAPTION>
                                                       FISCAL 2004                                FISCAL 2003
                                     APRIL 30,   JAN. 31,   OCT. 31,    JULY 31,   APRIL 30,   JAN. 31,    OCT. 31,    JULY 31,
                                       2004       2004       2003        2003        2003       2003        2002        2002
                                     ---------  ---------  ---------   ---------   ---------  ---------   ---------   ---------
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                  <C>        <C>        <C>         <C>         <C>        <C>         <C>         <C>
Total revenue                        $  17,761  $  13,982  $  12,258   $  10,651   $  15,112  $  12,362   $  10,557   $   9,288
Income (loss) from operations        $   3,585  $   1,008  $    (237)  $  (1,850)  $   2,611  $    (367)  $  (3,068)  $  (4,421)
Net income (loss)                    $   2,830  $     941  $     (22)  $  (1,192)  $   2,476  $     (58)  $  (2,198)  $  (3,343)
Basic net income (loss) per share    $    0.24  $    0.08  $   (0.00)  $   (0.10)  $    0.21  $    0.00   $   (0.19)  $   (0.28)
Diluted net income (loss) per share  $    0.21  $    0.07  $   (0.00)  $   (0.10)  $    0.20  $    0.00   $   (0.19)  $   (0.28)
Weighted average number of
shares outstanding
  - basic                               11,738     11,640     11,637      11,672      11,715     11,764      11,817      11,940
  - diluted                             13,504     13,306     11,637      11,672      12,488     11,764      11,817      11,940
</TABLE>

                                       37
<PAGE>

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

None.

9(a). CONTROLS AND PROCEDURES

Under the supervision and with the participation of the Company's management,
including the Company's Chief Executive Officer and Chief Financial Officer, the
Company has evaluated the effectiveness of the design and operation of its
disclosure controls and procedures (as defined in Exchange Act Rule 13a-14(c))
as of the end of the period covered by this annual report on Form 10-K, and,
based on their evaluation, the Chief Executive Officer and Chief Financial
Officer have concluded that these disclosure controls and procedures are
effective in all material respects, including those to ensure that information
required to be disclosed in reports filed or submitted under the Securities
Exchange Act is recorded, processed, summarized, and reported, within the time
periods specified in the Commission's rules and forms, and is accumulated and
communicated to management, including the Company's Chief Executive Officer and
Chief Financial Officer, as appropriate to allow for timely disclosure. There
have been no significant changes in our internal controls or in other factors
that could significantly affect these controls in the fourth quarter and
subsequent to the date of their evaluation.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY - The information set
forth under the captions "Election of Directors", "Employment Contracts and
Change of Control Agreements", "Executive Compensation", "Director
Compensation", "Beneficial Ownership of Common Stock" and "Background of
Directors" in the Proxy Statement for the 2004 Annual Meeting of Shareholders of
the Company is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION - The information set forth under the captions
"Employment Contracts and Change of Control Agreements" and "Executive
Compensation" in the Proxy Statement for the 2004 Annual Meeting of Shareholders
of the Company is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND RELATED
STOCKHOLDER MATTERS - The information set forth under the captions "Fiscal
Year-End Option Values", "Option Grants In Last Fiscal Year", "Summary
Compensation Table" and "Beneficial Ownership of Common Stock" in the Proxy
Statement for the 2004 Annual Meeting of Shareholders of the Company is
incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS - The information
set forth under the captions "Compensation Committee Interlocks and Insider
Participation" and "Independent Public Accountants" in the Proxy Statement for
the 2004 Annual Meeting of Shareholders of the Company is incorporated herein by
reference.

ITEM 14. PRINCIPLE ACCOUNTING FEES AND SERVICE - The information set forth under
the caption "Independent Public Accountants" in the Proxy Statement for the 2004
Annual Meeting of Shareholders of the Company is incorporated herein by
reference.








                                       38
<PAGE>

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Documents filed as part of this report:

1. Financial statements. The following consolidated financial statements are
filed as part of this Annual Report on Form 10-K.

<TABLE>
<CAPTION>
                                                                                                        PAGE
                                                                                                        ----
<S>                                                                                                     <C>
Report of Independent Registered Public Accounting Firm                                                  21
Consolidated Balance Sheets as of April 30, 2004 and 2003                                                22
Consolidated Statements of Operations for the years ended April 30, 2004, 2003 and 2002                  23
Consolidated Statements of Stockholders' Equity and Comprehensive Income for the years ended
     April 30, 2004, 2003 and 2002                                                                       24
Consolidated Statements of Cash Flows for the years ended April 30, 2004, 2003 and 2002                  25
Notes to Consolidated Financial Statements                                                               26
</TABLE>

2. Financial Statement Schedule:

Schedule II--Valuation and Qualifying Accounts for each of the years in the
three-year period ended April 30, 2004.

FINANCIAL STATEMENT SCHEDULES NOT LISTED ABOVE HAVE BEEN OMITTED BECAUSE THEY
ARE INAPPLICABLE, ARE NOT REQUIRED UNDER APPLICABLE PROVISIONS OF REGULATION
S-X, OR THE INFORMATION THAT WOULD OTHERWISE BE INCLUDED IN SUCH SCHEDULES IS
CONTAINED IN THE REGISTRANT'S FINANCIAL STATEMENTS OR ACCOMPANYING NOTES.

3. Exhibits. The Exhibits listed below are filed or incorporated by reference as
part of this Annual Report on Form 10-K.

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                            DESCRIPTION
 ------                            -----------
 <S>     <C>
  3.1    Amended and Restated Certificate of Incorporation of the Company
         (incorporated by reference from Registration Statement No. 333-40189)

  3.2    Certificate of Amendment to the Company's Amended and Restated
         Certificate of Incorporation (incorporated by reference from
         Registration Statement No. 333-40189)

  3.3    Bylaws of the Company (incorporated by reference from Registration
         Statement No. 333-1398).

 10.1    1988 Stock Option Plan of the Company (incorporated by reference from
         Registration Statement No. 333-1398).**

 10.2    1995 Stock Option Plan of the Company (incorporated by reference from
         Registration Statement No. 333-1398).**

 10.3    Zoltan Cendes Stock Option Agreement, dated April 30, 1995
         (incorporated by reference from Registration Statement No. 333-1398).

10.10    Jacob K. White Stock Option Agreement dated February 1, 1996, as
         amended (incorporated by reference from Registration Statement
         No. 333-40189)

10.11    John N. Whelihan Stock Option Agreement dated February 1, 1996, as
         amended. (incorporated by reference from Registration Statement No.
         333-40189)

10.12    Agilent HFSS Technology and License Transfer Agreement dated May 1,
         2001*

10.12    Revolving Credit Facility dated January 7, 1999*

 21.1    Subsidiaries of the registrant (incorporated by reference from the
         Company's Annual Report on Form 10-K for the fiscal year ended April
         30, 1997).

 31.1    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 31.2    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 32.1    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant
         to Section 906 Of The Sarbanes-Oxley Act of 2002

 32.2    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant
         to Section 906 Of The Sarbanes-Oxley Act of 2002
</TABLE>

 * Filed herewith

** Incentive or stock compensation plan of the Company.

                                       39
<PAGE>

(b) Reports on Form 8-K:

On May 27, 2004, Registrant filed a current report on Form 8-K to provide under
Item 12 the Registrant's press release in connection with its results of
operation and fiscal condition for Registrant's fiscal year ended April 30,
2004. The current report on Form 8-K included the following financial
statements:

1) Consolidated Statements of Operation for the 3 months ended April 30, 2003
   and 2004 and the fiscal year ended April 30, 2003 and 2004.

2) Consolidated Balance Sheets as of April 30, 2003 and 2004.


                                       40

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on July 14, 2004

                                               ANSOFT CORPORATION

                                               By /s/ Nicholas Csendes
                                                  ----------------------
                                               Nicholas Csendes
                                               President

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 and
in the capacities indicated on July 14, 2004.

<TABLE>
<CAPTION>
       SIGNATURE                                TITLE
       ---------                                -----
<S>                            <C>
 /s/ Nicholas Csendes          Director, President and Chief Executive
------------------------       Officer (Principal Executive Officer)
Nicholas Csendes

 /s/ Zoltan J. Cendes          Director, Chief Technology Officer and
------------------------       Chairman of the Board of Directors
Zoltan J. Cendes

 /s/ Thomas A.N. Miller        Director, Chief Financial Officer
------------------------       (Principal Financial and Accounting Officer)
Thomas A.N. Miller

 /s/ Peter Robbins             Director
------------------------
Peter Robbins

 /s/ Ulrich L. Rohde           Director
------------------------
Ulrich L. Rohde

 /s/ John N. Whelihan          Director
------------------------
John N. Whelihan

 /s/ Jacob White               Director
------------------------
Jacob White
</TABLE>

                                       41
<PAGE>

Code of Business Conduct - refer to the Company's website:  www.ansoft.com

<PAGE>

                  SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                    BALANCE AS OF      ADDITIONS                    BALANCE AS OF
                                    THE BEGINNING   CHARGED TO COSTS                 THE END OF
                                    OF THE PERIOD     AND EXPENSES     DEDUCTIONS    THE PERIOD
<S>                                 <C>             <C>                <C>          <C>
YEAR ENDED APRIL 30, 2004
  ALLOWANCE FOR DOUBTFUL ACCOUNTS         818              250            (165)          903
YEAR ENDED APRIL 30, 2003
  ALLOWANCE FOR DOUBTFUL ACCOUNTS         621              373            (176)          818
YEAR ENDED APRIL 30, 2002
  ALLOWANCE FOR DOUBTFUL ACCOUNTS         221              688            (288)          621
</TABLE>