MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In October 2002, we initiated a plan to further reduce operating expenses in response both to first quarter revenue results that were below our expectations and to general economic uncertainties. In addition, we revised our revenue expectations for the remainder of the fiscal year and beyond, primarily related to our manufacturing/supply chain product line, which has been affected the most by the current economic conditions. The plan to reduce operating expenses resulted in headcount reductions, consolidation of facilities, cancellation of certain internal capital projects and discontinuation of development and support for certain non-critical products. As a result of the discontinuation of development and support for certain products, coupled with the revised revenue expectations, certain long-lived assets were reviewed and determined to be impaired in accordance with SFAS No. 144. These actions resulted in an aggregate restructuring charge of $55.6 million. In June 2003, we reviewed our estimates to this plan and recorded a $12.5 million increase to the accrual, primarily due to revisions of the facility sub-leasing assumptions, as well as increases to severance and other costs. As of June 30, 2003, there was $18.1 million remaining in accrued expenses relating to the remaining severance obligations and lease payments. During the year ended June 30, 2003, the following activity was recorded (in thousands): We expect that the remaining obligations will be paid by December 2010. In the fourth quarter of fiscal 2002, we initiated a plan to reduce operating expenses and to restructure operations around our two primary product lines, engineering software and manufacturing/supply chain software. We reduced worldwide headcount by approximately 10%, or 200 employees, closed and consolidated facilities, and disposed of certain assets, resulting in an aggregate restructuring charge of $14.4 million. As of June 30, 2003, there was $5.9 million remaining in accrued expenses relating to the remaining severance obligations and lease payments. During the year ended June 30, 2003, the following activity was recorded: We expect that the remaining obligations will be paid by December 2010. 14 Closure/ Employee Consolidation of Severance, Benefits, Facilities and Related Costs Total Accrued expenses, June 30, 2002 $ 4,901 $ 6,436 $11,337 Payments (695) (4,748) (5,443) Accrued expenses, June 30, 2003 $ 4,206 $ 1,688 $ 5,894 Closure/ Employee Impairment Consolidation Severance, Benefits, of Assets and of Facilities and Related Costs Disposition Costs Total Restructuring charge $17,347 $10,028  $40,728 $68,103 Write-off/Impairment of assets — — (39,148) (39,148) Payments (3,548) (7,297) — (10,845) Accrued expenses, June 30, 2003 $13,799 $ 2,731 $ 1,580 $18,110 Fiscal 2002 Fiscal 2003 Summary of Restructuring Accruals