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Intergraph Reports Second Quarter 2002 Results

July 31, 2002 – Intergraph Corporation has reported operating results for its second quarter ended June 30, 2002.

For the quarter, Intergraph reported operating income of $2.7 million and net income of $280.6 million on revenues of $122.6 million. Net income per share was $5.37 (diluted), including $5.29 per share earned from the sale of assets and settlement of a patent infringement lawsuit. Revenues were slightly below expectations, but income from operations increased 39% over operating income of $1.9 million in Q1 2002.

In comparison to second quarter last year, income from operations increased substantially over the $1.4 million reported in 2001, even though revenue declined 4% from $127.8 million. The revenue decline is due primarily to less hardware maintenance and to Z/I Imaging and Intergraph Public Safety (IPS) being below Q2 2001 levels because of less capital spending by their customers in the earth imaging and utilities and communications markets.

Gross margins improved almost 3 percentage points over Q2 2001 because of an improved product mix and several non-recurring transactions. The Company expects gross margins to return to the 44% to 46% range in Q3 2002.

Operating expenses: In order to remain profitable on weak revenues, the Company continues to monitor expenses closely. Operating expenses were slightly higher than Q1 2002 but flat with Q2 2001. Sales and marketing expenses were higher in second quarter 2002 because the Company attended more trade shows, and three of the divisions held user group conferences during the quarter.