<PAGE>

                          SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C.  20549
                                  __________________
                                           
                                      FORM 10-Q
                                           
X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                 EXCHANGE ACT OF 1934
                                           
                     For the quarterly period ended June 30, 1997
                                           
                                          OR
                                           
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                 EXCHANGE ACT OF 1934
                                           
                            Commission file number  2-7670
                                           
                             ENGINEERING ANIMATION, INC.
                [EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER]
                                           
          DELAWARE                                   42-1323712
(STATE OR OTHER JURISDICTION OF                   (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                  IDENTIFICATION NUMBER)
                                           
                                2321 NORTH LOOP DRIVE
                                  AMES, IOWA  50010
                       (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                ______________________
                                           
                                    (515)296-9908
                 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
                                ______________________


    INDICATE BY CHECK ( X ) 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.
         
         (1)  YES      X               NO   
                  -----------               ----------
         
         (2)  YES      X               NO   
                  -----------               ----------
         

    AS OF AUGUST 7, 1997, THERE WERE 5,724,669 SHARES OF THE REGISTRANT'S $0.01
PAR VALUE COMMON STOCK OUTSTANDING.



<PAGE>

                             ENGINEERING ANIMATION, INC.
                                           
                                      FORM 10-Q
                                           
                                        INDEX
                                           
                                           
PART I.  FINANCIAL INFORMATION                                           PAGE

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets 
         At June 30, 1997 and December 31, 1996                            3
    
         Condensed Consolidated Statements of  Income 
         For the three and six months ended June 30, 1997 and 1996         4
    
         Condensed Consolidated Statements of Cash Flows 
         For the six months ended June 30, 1997 and 1996                   5
     
         Notes to Condensed Consolidated Financial Statements              6
    
Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                               8


PART II. OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders              12
   
Item 6.  Exhibits and Reports on Form 8-K                                 12


SIGNATURES                                                                13


                                    2

<PAGE>



PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

                         ENGINEERING ANIMATION, INC.
                   CONDENSED CONSOLIDATED BALANCE SHEETS
                     (in thousands, except share data)

                                               ---------------------------
                                                  June 30,    December 31,
                                                    1997         1996  
                                               -------------  ------------
Assets                                           (Unaudited)     (Note)
Current assets:
  Cash and cash equivalents                     $  21,209     $  9,350 
  Short-term investments                           21,484        9,884 
  Accounts receivable:
     Billed                                         8,220        6,666 
     Unbilled                                       4,131        3,334 
  Deferred income taxes                               114           48 
  Prepaid expenses                                  1,048          390 
                                               -------------  ------------

        Total current assets                       56,206       29,672 

Property and equipment, net                         7,604        5,192 

Other assets:
  Note receivable                                   1,408        1,408 
  Software development costs, net                   1,129          602 
  Other                                               808        1,082 
                                               -------------  ------------
        Total assets                            $  67,155    $  37,956 
                                               -------------  ------------
                                               -------------  ------------

Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                               $  1,550     $  1,058 
  Accrued expenses                                    525          278 
  Accrued compensation                              1,067        1,135 
  Deferred revenue                                    287          400 
  Deferred income taxes                               119          119 
  Current portion of debt and 
    lease obligations                                 66           62 
  Income taxes payable                               238          132 
                                               -------------  ------------
        Total current liabilities                  3,852        3,184 

Debt and lease obligations, long 
  term portion                                       674          872 
Deferred income taxes                              1,050          826 

Stockholders' equity                              61,579       33,074 
                                               -------------  ------------

        Total liabilities and 
            stockholders' equity               $  67,155    $  37,956 
                                               -------------  ------------
                                               -------------  ------------


Note:    The balance sheet at December 31, 1996 has been derived from the
         audited financial statements at that date but does not include all of
         the information and footnotes required by generally accepted
         accounting principles for complete financial statements.

See accompanying notes.

                                       3

<PAGE>

                            ENGINEERING ANIMATION, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
              (in thousands, except per share data; unaudited)

<TABLE>
<CAPTION>
                                        -----------------------    -----------------------
                                          Three Months ended        Six Months ended 
                                               June 30                    June 30
                                           1997        1996           1997         1996
                                        ---------    ----------    ---------    ----------
<S>                                     <C>          <C>          <C>           <C>
 Net revenues:                                                                 
  3D visualization software products    $  3,608     $  1,299     $  6,657     $ 2,100 
  Interactive software products            2,774        1,605        4,984       2,437 
  Custom animation products                2,420        1,632        4,837       3,100 
                                        ---------    ----------    ---------    ----------
                                                                               
Total revenues                             8,802        4,536       16,478       7,637 
                                                                               
Cost of revenues                           2,779        1,564        5,204       2,654 
                                        ---------    ----------    ---------    ----------
                                                                               
Gross profit                               6,023        2,972       11,274       4,983 
                                                                               
Operating expenses:                                                            
  Sales and marketing                      2,588        1,529        4,957       2,618 
  General and administrative                 970          653        1,895       1,092 
  Research and development                 1,029          384        1,946         638 
                                        ---------    ----------    ---------    ----------
                                                                               
Total operating expenses                   4,587        2,566        8,798       4,348 
                                        ---------    ----------    ---------    ----------
                                                                               
Income from operations                     1,436          406        2,476         635 
                                                                               
Interest income, net                         295          328          560         395 
                                        ---------    ----------    ---------    ----------
                                                                               
Income before income taxes                 1,731          734        3,036       1,030 
Income taxes                                 690          300        1,210         420 
                                        ---------    ----------    ---------    ----------
                                                                               
Net income                              $  1,041      $   434      $ 1,826      $  610 
                                        ---------    ----------    ---------    ----------
                                        ---------    ----------    ---------    ----------
Earnings per share of common stock       $  0.18      $  0.08      $  0.32      $ 0.13 
                                        ---------    ----------    ---------    ----------
                                        ---------    ----------    ---------    ----------
Weighted average number of common and                                          
  equivalent shares outstanding            5,763        5,389        5,624        4,843
                                        ---------    ----------    ---------    ----------
                                        ---------    ----------    ---------    ----------
</TABLE>


See accompanying notes.



                                       4

<PAGE>


                         ENGINEERING ANIMATION, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (in thousands; unaudited)

                                                    ---------------------------
                                                    Six Months ended June 30,
                                                          1997         1996
                                                    -------------  ------------
Net cash provided (used) by operating
   activities                                            $  491       $  (689)

Investing activities
Purchase of notes receivable                                 -          (658)
Purchases of property and equipment                     (3,089)       (2,247)
Development of software                                   (574)         (150)
Other activities                                             -          (145)
Purchases of marketable securities                     (11,600)          -  
                                                    -------------  ------------
        Net cash used by investing activities          (15,263)       (3,200)

Financing activities
Proceeds from short-term borrowing                           -          600 
Payments on short-term borrowing                             -          (600)
Decrease in restricted cash                                140          -   
Payments on long-term debt                                (194)       (1,201)
Net proceeds from issuance of common stock              26,685        29,066
                                                    -------------  ------------
        Net cash provided by financing activities       26,631        27,865
                                                    -------------  ------------

        Net increase in cash and cash equivalents       11,859        23,976

Cash and cash equivalents at beginning of period         9,350           491
                                                    -------------  ------------
Cash and cash equivalents at end of period           $  21,209     $  24,467 
                                                    -------------  ------------
                                                    -------------  ------------


See accompanying notes.


                                       5

<PAGE>


                             ENGINEERING ANIMATION, INC.
                                           
                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                     (Unaudited)
                                           
1.  BASIS OF PRESENTATION

    The consolidated financial statements include the accounts of Engineering 
Animation Europe B.V., the Company's wholly-owned subsidiary established in 
June 1996. All significant intercompany accounts and transactions have been 
eliminated in consolidation.  The unaudited condensed consolidated financial 
statements included herein reflect all adjustments, consisting only of normal 
recurring accruals which in the opinion of management are necessary to fairly 
state the Company's financial position, results of operations, and cash flows 
for the periods presented.  These financial statements should be read in 
conjunction with the Company's audited financial statements as included in 
the Company's Form 10-K as filed with the Securities and Exchange Commission 
on March 31, 1997.  The results of operations for the six month period ended 
June 30, 1997 are not necessarily indicative of the results that may be 
expected for any subsequent quarter or for the fiscal year ending 
December 31, 1997.  The December 31, 1996 balance sheet was derived from audited
financial statements, but does not include all disclosures required by 
generally accepted accounting principles.

2.  PUBLIC OFFERINGS

    In February 1996, the Company completed its initial public offering and 
issued 1,825,000 shares of its common stock.  The Company received 
approximately $29.0 million of cash, net of underwriting discounts and other 
offering costs. In June 1997, the Company completed a follow-on offering of 
1,000,000 shares of its common stock.  The Company received approximately 
$26.6 million of cash, net of underwriting discounts and other offering costs.

3.  EARNINGS PER SHARE

    Per share earnings are based on the weighted average number of shares of 
common stock and common stock equivalents outstanding. The dilutive effect of 
outstanding stock options was determined based upon the treasury stock 
method. Pursuant to the Securities and Exchange Commission Staff Accounting 
Bulletin No. 83, common stock equivalents granted at exercise prices less 
than the initial public offering price during the twelve months immediately 
preceding the initial public offering have been included in the determination 
of shares used in the calculation of earnings per share as if they were 
outstanding for all periods.

    The Company repaid approximately $1,712,000 of bank debt with the 
proceeds of the initial public offering.  The impact on earnings per share 
was not significant.

    In February 1997, the Financial Accounting Standards Board issued 
Statement No. 128, EARNINGS PER SHARE, which is required to be adopted on 
December 31, 1997.  At that time, the 

                                       6

<PAGE>

Company will be required to change the method currently used to compute 
earnings per share and to restate all prior periods.  Under the new 
requirements for calculating primary earnings per share, the dilutive effect 
of stock options will be excluded.  The impact is expected to result in an 
increase in primary earnings per share for the three months ended June 30, 
1997 and June 30, 1996 of $0.03 and $0.01 per share, respectively, and an 
increase in primary earnings per share for the six months ended June 30, 1997 
and June 30, 1996 of $0.06 and $0.02 per share, respectively.  The 
impact of Statement 128 on the calculation of fully diluted earnings per 
share for these quarters is not expected to be material.

                                       7




<PAGE>
                             ENGINEERING ANIMATION, INC.

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.

RESULTS OF OPERATIONS

NET REVENUES  

The Company's total revenues are derived from sales of three dimensional 
("3D") visualization software products, interactive software products and 
custom animation products.  3D visualization software products were formerly 
referred to as animation software tools.  Revenues from sales of 3D 
visualization software products are recognized upon delivery of the product 
to the customer and satisfaction of significant related obligations, if any.  
Revenues from customer support are included in 3D visualization software 
products revenue and represent less than 5% of total revenues. Customer 
support revenues are deferred and recognized ratably over the period the 
customer support services are provided.  The Company recognizes revenues from 
interactive software products and custom animation products based upon labor 
and other costs incurred and progress to completion on contracts.

The Company's total revenues increased 94% to $8.8 million for the three 
months ended June 30, 1997 from $4.5 million for the three months ended June 
30, 1996, and increased 116% to $16.5 million for the six months ended June 
30, 1997 from $7.6 million for the six months ended June 30, 1996.  3D 
visualization software products revenue increased 178% to $3.6 million for 
the three months ended June 30, 1997 from $1.3 million for the three months 
ended June 30, 1996, and increased 217% to $6.7 million for the six months 
ended June 30, 1997 from $2.1 million for the six months ended June 30, 1996, 
as a result of increased product sales.  Interactive software product 
revenues increased 73% to $2.8 million for the three months ended June 30, 
1997 from $1.6 million for the three months ended June 30, 1996, and 
increased 105% to $5.0 million for the six months ended June 30, 1997 from 
$2.4 million for the six months ended June 30, 1996, primarily due to 
additional projects for interactive software products.  Custom animation 
products revenue increased 48% to $2.4 million for the three months ended 
June 30, 1997 from $1.6 million for the three months ended June 30, 1996, and 
increased 56% to $4.8 million for the six months ended June 30, 1997 from 
$3.1 million for the six months ended June 30, 1996, primarily due to 
additional projects in custom animation products.

COST OF REVENUES

The Company's cost of revenues includes cost of production, packaging and 
distribution costs, royalties and amortization of capitalized software costs. 
The Company's cost of revenues increased 78% to $2.8 million for the three 
months ended June 30, 1997 from $1.6 million for the three months ended June 
30, 1996, and increased 96% to $5.2 million for the six months ended June 30, 
1997 from $2.7 million for the six months ended June 30, 1996, primarily due 
to expenses associated with new development contracts in 3D visualization 
software products and 

                                       8

<PAGE>


increased development costs for interactive software projects. The Company's 
cost of revenues as a percentage of revenues decreased to 32% for the three 
months ended June 30, 1997 from 34% for the three months ended June 30, 1996 
and decreased to 32% for the six months ended June 30, 1997 compared to 35% 
for the six months ended June 30, 1996.  The decrease in cost of revenues as 
a percentage of revenues was primarily the result of spreading expenses over 
higher revenues.

OPERATING EXPENSES

SALES AND MARKETING.  The Company's sales and marketing expenses include 
personnel costs related to sales, marketing and customer service activities, 
as well as costs attributable to promotional materials, mail campaigns, trade 
shows and advertising.  The Company's sales and marketing expenses increased 
69% to $2.6 million for the three months ended June 30, 1997 from $1.5 
million for the three months ended June 30, 1996, and increased 89% to $5.0 
million for the six months ended June 30, 1997 from $2.6 million for the six 
months ended June 30, 1996, primarily due to costs associated with expansion 
of sales force and increased marketing costs. Sales and marketing expenses 
decreased to 29% of total revenues for the three months ended June 30, 1997 
from 34% for the three months ended June 30, 1996, and decreased to 30% of 
total revenues for the six months ended June 30, 1997 from 34% for the six 
months ended June 30, 1996. The decrease in sales and marketing expenses as a 
percentage of revenues was primarily the result of spreading expenses over 
higher revenues. 

GENERAL AND ADMINISTRATIVE.  The Company's general and administrative 
expenses consist of salaries and facility costs for administrative, executive 
and accounting personnel, as well as consulting expenses, insurance costs, 
professional fees and other costs.  The Company's general and administrative 
expenses increased 49% to $970,000 for the three months ended June 30, 1997 
from $653,000 for the three months ended June 30, 1996, and increased 74% to 
$1.9 million for the six months ended June 30, 1997 from $1.1 million for the 
six months ended June 30, 1996, primarily a result of increased 
administrative staff and related costs.  General and administrative expenses 
decreased to 11% of total revenues for the three months ended June 30, 1997 
from 14% for the three months ended June 30, 1996, and decreased to 12% of 
total revenues for the six months ended June 30, 1997 from 14% for the six 
months ended June 30, 1996.  The decrease of general and administrative 
expenses as a percentage of revenues was primarily a result of  spreading 
expenses over higher revenues.   

RESEARCH AND DEVELOPMENT.    The Company's research and development expenses 
consists of salaries, related facility costs, equipment costs and outside 
consulting fees.  The Company's research and development expenses increased 
168% to $1.0 million for the three months ended June 30, 1997 from $384,000 
for the three months ended June 30, 1996, and increased 205% to $1.9 million 
for the six months ended June 30, 1997 from $638,000 for the six months ended 
June 30, 1996. Research and development expenses increased to 12% of total 
revenues for the three months ended June 30, 1997 from 8% for the three 
months ended June 30, 1996, and increased to 12% of total revenues for the 
six months ended June 30, 1997 from 8% for the six months ended June 30, 
1996.  The increase in research and development expenses was primarily 

                                       9

<PAGE>


due to additional personnel and related costs required to meet the 
increased demand for 3D visualization software and interactive software 
products.

LIQUIDITY AND CAPITAL RESOURCES

The Company historically has satisfied its cash requirements through 
borrowings, customer advances, capital lease financing and net proceeds of 
approximately $29.0 million from the Company's initial public offering of 
Common Stock in February 1996 and approximately $26.6 million from the 
Company's follow-on offering of Common Stock in June 1997.  As of June 30, 
1997, the Company had $21.2 million in cash and cash equivalents and $21.5 
million in short-term investments.

Net cash provided by operating activities was $491,000 for the six months 
ended June 30, 1997, primarily due to net income, depreciation and an 
increase in accounts payable, offset by an increase in accounts receivables.  
Accounts receivable at June 30, 1997 increased approximately $1.5 million to 
$8.2 million from $6.7 million at December 31, 1996.  The increase in 
accounts receivable was due to increased revenues and increased size of the 
Company's contracts, which historically have taken a longer period to collect 
than smaller contracts.  The Company's accounts receivable balance will vary 
from quarter to quarter, depending on the number and size of client projects 
and on the timing of completion of the projects.

The Company believes its current cash and short-term investment balances will 
be sufficient to meet anticipated cash needs for working capital and capital 
expenditures for at least the next twelve months.  There can be no assurance 
that additional capital beyond the amounts currently forecasted by the 
Company will not be required nor that any such required additional capital 
will be available on reasonable terms, if at all, at such time as required by 
the Company.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

The Company or its representatives from time to time may make or may have 
made certain forward-looking statements, orally or in writing, including 
without limitations any such statements made or to be made in the 
Management's Discussion and Analysis contained in its various SEC filings.  
The Company wishes to ensure that such statements are accompanied by 
meaningful cautionary statements, so as to ensure to the fullest extent 
possible the protections of the safe harbor established in the Private 
Securities Litigation Reform Act of 1995.  Accordingly, such statements are 
qualified in their entirety by reference to and are accompanied by the 
following discussion of certain important factors that could cause actual 
results to differ materially from those projected in such forward-looking 
statements.

The Company cautions the reader that this list of factors may not be 
exhaustive. The Company operates in a continually changing business 
environment, and new risk factors emerge from time to time.  Management 
cannot predict such risk factors, nor can it assess the impact, if any, of 
such risk factors on the Company's business or the extent to which any 
factors, or combination 

                                       10

<PAGE>



of factors, may cause actual results to differ materially from those 
projected in any forward-looking statements.  Accordingly, forward-looking 
statements should not be relied upon as a prediction of actual results.

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

The Company may experience material fluctuations in future revenues and 
operating results on a quarterly or annual basis resulting from a number of 
factors, including:  the time of the introduction of new visualization 
software and interactive software products by the Company and by its 
competitors; seasonality of certain customer purchases of interactive 
software products; product mix; general economic conditions; and the 
Company's ability to obtain agreements from publishers and distributors to 
market the Company's interactive software products.  The Company's products 
are sold in markets which change rapidly and the Company must continually 
anticipate and adapt its products to emerging computer technologies and 
capabilities.  The market for the Company's three-dimensional visualization 
software products is emerging and dependent upon a number of a variables, 
including consumer preferences and the rate of adoption of new technology.  
There is a risk that these markets will not continue to grow and that the 
Company's three-dimensional visualization software products will not be 
accepted by the markets.  The market for the Company's interactive software 
products is emerging and dependent upon a number of variables, including 
consumer preferences, shipments of, and the installed base of, multimedia 
personal computers, and the number of developers creating interactive 
software products.  There is risk that the Company's interactive software 
products will not be accepted by the market or that the Company will be 
unable to respond to evolving requirements of the market.

For a more complete discussion of these risk factors, see the Company's Form 
10-K, filed March 31, 1997.




                                       11

<PAGE>


PART II. OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders

At the Annual Meeting of Stockholders of the Company held on April 30, 1997, 
the stockholders of the Company (1) elected Jamie A. Wade as director of the 
Company to hold office until the 2000 annual meeting of stockholders (subject 
to the election and qualification of his successor and to his earlier death, 
resignation or removal); (2) approved the amendment and restatement of the 
Company's Non-Employee Directors Stock Option Plan, decreasing the number of 
shares reserved for issuance under such plan by 190,000 to 60,000; (3) 
approved the amendment and restatement of the Company's Employee Stock Option 
Plan, increasing the number of shares reserved for issuance under such plan 
by 190,000 to 1,190,000; and (4) ratified the appointment of Ernst & Young 
LLP as auditors. The votes were as follows:

<TABLE>
<CAPTION>
                                            Votes for      Votes withheld      Abstain

<S>                                        <C>             <C>                 <C>

(1) Election of director:
    Jamie A. Wade                           4,351,791

(2) Approval of Amendment and 
    Restatement of Non-Employee 
    Directors Stock Option Plan             4,299,673           25,852           6,814

(3) Approval of Amendment and 
    Restatement of Employee Stock
    Option Plan                             2,765,546        1,562,785           4,008

(4) Ratification of the appointment
    of Ernst & Young LLP as auditors        4,350,696            4,759             491

</TABLE>


Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits - See Index to Exhibits

         (b)  Reports on Form 8-K.

              No Reports on Form 8-K were filed during the quarter ended June
              30, 1997.


                                       12

<PAGE>
              
                        SIGNATURES
                                           

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

Date: August 8, 1997_______________    ENGINEERING ANIMATION, INC.
                                       (Registrant)

                                       By:  /s/ Michael K. Jewell
                                           -----------------------------
                                           Michael K. Jewell
                                           Vice President of Finance and
                                           Chief Financial Officer
                                           (Duly Authorized Officer and
                                           Principal Financial Officer)






                                       13

<PAGE>




                            INDEX TO EXHIBITS
                                           

Exhibit       Description
-------       -----------

10.1          Amended and Restated 1994 Stock Option Plan

10.2          Amended and Restated Non-Employee Directors Stock Option Plan

27.           Financial Data Schedule











                                     14