Intergraph Reports First Quarter 2004 Results.Business Editors HUNTSVILLE, Ala ALA aminolevulinic acid. Ala alanine. ala (a´lah) pl. a´lae [L.] a winglike process. .--(BUSINESS WIRE)--April 28, 2004 Intergraph Corporation (Nasdaq: INGR) today reported operating results for its first quarter ended March 31, 2004. For the quarter, Intergraph reported revenue of $133.0 million, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $8.2 million and net income of $136.0 million. Net income was $3.59 per share (diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) and includes $203.1 million pre-tax intellectual property income, net of all fees and expenses, primarily from the March settlement with Intel. The Company reported restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $4.0 million in Q4 2003 and $0.8 million in Q1 2004. The Company believes a separate disclosure of the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). expenses for each business unit and in total gives a more comparative view of the current and prior quarterly results of operations and is therefore important information to the readers of this press release in evaluating and understanding the Company's results of operations.
(In millions) Q1 2004 Q4 2003 Q1 2003 Q2 2004
forecast
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Revenue $133.0 $145.8 $120.6 $138.7
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Income from operations before
restructuring $9.0 $5.9 $4.2 $6.5
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Restructuring charges $0.8 $4.0 $--- $---
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Income from operations $8.2 $2.0 $4.2 $6.5
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Net income $136.0(a) $1.4 $8.1(a)
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(a) includes intellectual property settlement
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"I am pleased that Intergraph delivered solid operating results as all business units exceeded our previous guidance for the quarter," said Halsey Wise, Intergraph President & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Our efforts to focus on improved profitability helped to produce Intergraph's largest quarterly operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. in twelve years. While I am pleased with these results, we will remain focused on operating performance over the coming quarters. While we expect variations in our quarterly results, we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op regarding our ability to bring our annual operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: more in line with those of our peer group over time." "Finally, I am pleased that we resolved our outstanding litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. with both Intel and Dell for $225 million during the quarter. We believe this settlement is a positive outcome." Traditionally Intergraph's Q1 revenue has been lower than the previous Q4, and this remained true for all business units in Q1 2004. In comparison to Q4 2003, revenue declined 8.8% but income from operations increased by approximately $6.2 million. The Q1 2004 revenue decline was across all business units but especially in IMGS IMGS International Medical Graduates IMGS Image Map Generation Services as a result of higher sales in the previous quarter to international government customers, the delivery of Digital Mapping Digitizing geographic information for a geographic information system (GIS). Cameras from Z/I Imaging(R), and milestone achievement in several long-term projects. The increase in operating income was primarily due to lower operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , including lower restructuring expenses, and higher gross margins that more than offset the impact of the seasonal revenue decline. In comparison to Q1 2003, income from operations almost doubled. This increase in operating income was due to approximately 10% higher revenues and higher gross margins, partially offset by higher operating expenses. Total operating margin was 6.2% for the current quarter compared to 1.4% for Q4 2003 and 3.5% in Q1 2003. Excluding restructuring charges, total operating margin was 6.8% for the current quarter compared to 4.1% for Q4 2003 and 3.5% in Q1 2003. The increase is a result of management's efforts to reduce costs in late 2003 and early 2004, higher software content in revenues, and a better services margin in ISG ISG Iraq Study Group ISG Iraq Survey Group ISG International Steel Group ISG Integrated Security Gateway ISG Information Systems Group ISG Information Systems Group (IBM) ISG Integrated Starter/Generator . Operating Expenses of $58.9 million for Q1 2004, including restructuring charges, were $8.1 million lower than Q4 2003 operating expenses, primarily due to less restructuring costs and the benefits in Q1 2004 from the restructuring completed in Q4 2003 in IMGS and Corporate and early Q1 2004 in PPO PPO abbr. preferred provider organization PPO Managed care Preferred provider organization, see there Infectious disease Pleuropneumonia-like organism, see there . Currency Impact - Fluctuations in the value of the U.S. dollar in international markets had a significant impact on the Company's results of operations. Most international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. sell to customers and incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. and pay operating expenses in local currencies. These local currency revenues and expenses are translated into U.S. dollars for reporting purposes. A weaker U.S. dollar increases the level of reported U.S. dollar orders and revenues, increases the dollar gross margin, and increases reported dollar operating expenses of the international subsidiaries. The Company estimates that the weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. of the U.S.
dollar in its international markets, primarily in Europe, positively
impacted revenue by approximately 6.2%, negatively impacted operating
expenses by approximately 4.7% and improved its quarterly operating
results by approximately $0.05 per share (diluted) in comparison to the
first three months of 2003. In comparison to the quarter ended December
31, 2003, the Company estimates the weakening of the U.S. dollar
positively impacted revenue by approximately 1.6%, negatively impacted
operating expenses by approximately 1.2%, and improved its quarterly
operating results by approximately $0.02 per share (diluted).Total Other Income, Net for the quarter was $205.0 million, which is primarily composed of $203.1 million pre-tax intellectual property income, net of all fees and expenses associated with protecting and licensing the Company's intellectual property, including the March settlement with Intel. The balance is primarily interest income and exchange gains. Income Tax Expense was $77.2 million for the quarter. The effective tax rate was approximately 36% for Q1 2004 and will fluctuate from quarter to quarter, depending on the jurisdictions in which taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. is earned. The Balance Sheet continues to reflect a strong financial position. Cash decreased from $265.8 million at December 31, 2003 to $250.5 million at March 31, 2004, due primarily to payments for legal fees and other IP-related expenses, tax payments, restructuring charges, and Dutch tender offer expenses. Business Outlook Information contained in this news release (including this Business Outlook) includes statements that are forward-looking as defined in Section 21E of the Securities Exchange Act of 1934. Readers are cautioned against placing undue reliance on any forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Please refer to the "Cautionary Note Regarding Forward-Looking Statements" at the end of this news release. Commenting on the Q1 results, Wise said, "Our three phase operating plan of 'Now - Next - After Next' is progressing. We are pleased that many of the changes made in the 'Now' phase appear to be succeeding. First, our actions and focus have helped to improve our operating profit performance. Second, I am proud to report that the changes our Board has made since July 2003 relative to governance Governance makes decisions that define expectations, grant power, or verify performance. It consists either of a separate process or of a specific part of management or leadership processes. Sometimes people set up a government to administer these processes and systems. have resulted in a recent Institutional Shareholder Services (ISS ISS See Institutional Shareholder Services (ISS). ) Corporate Governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. Quotient quotient - The number obtained by dividing one number (the "numerator") by another (the "denominator"). If both numbers are rational then the result will also be rational. score of 99.1 relative to the Russell 3000 Index The Russell 3000 Index is a stock market index of US stocks. The ticker is "RUA" or similar. See Russell Indexes page for main discussion. See also the iShares Russell 3000. . Finally, as we look ahead to the 'Next' phase, we are deeply involved in creating Intergraph's first strategic plan in many years. We will use the output of this plan to determine areas in which we may pursue growth." Commenting on the Company's patent litigation and enforcement program, Wise stated, "We remain focused on the opportunities, as well as the challenges, that lie ahead. We are pleased with the Intel and AMD (Advanced Micro Devices, Inc., Sunnyvale, CA, www.amd.com) A major manufacturer of semiconductor devices including x86-compatible CPUs, embedded processors, flash memories, programmable logic devices and networking chips. settlements, but are mindful mind·ful adj. Attentive; heedful: always mindful of family responsibilities. See Synonyms at careful. mind that the conduct and ultimate outcome of complex litigation are rarely smooth or predictable." Capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. The Company did not repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. any of its common stock in Q1 2004. In Q4 2003 the Company repurchased 10 million shares of its common stock via a Dutch tender offer for $260 million. Total expenditures under the tender offer and repurchase program through March 31, 2004 have been $378 million. The Company has a $250 million open market repurchase plan with $135 million remaining that can be used to purchase stock in the future. The termination date termination date, n See expiration date. for the current stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program is December 31, 2005. Review of Intergraph's Core Businesses Intergraph consists of four core business units - three focused on visualization Using the computer to convert data into picture form. The most basic visualization is that of turning transaction data and summary information into charts and graphs. Visualization is used in computer-aided design (CAD) to render screen images into 3D models that can be viewed from all software and the fourth focused on government IT services. Each core business unit is managed as a separate business. Therefore, the Company believes that providing details about each business unit is useful to investors.
Process, Power & Offshore (PPO)
(In millions) Q1 2004 Q4 2003 Q1 2003 Q2 2004
forecast
---------------------------------------------------------------
Revenue $33.7 $36.0 $30.5 $35.0
---------------------------------------------------------------
Income from
operations before
restructuring $4.1 $3.5 $4.2 $5.0
---------------------------------------------------------------
Restructuring
charges $0.8 $--- $--- $---
---------------------------------------------------------------
Income from
operations $3.3 $3.5 $4.2 $5.0
---------------------------------------------------------------
Despite a revenue decline of 6.4% from Q4 2003, income from operations before restructuring increased 19% due primarily to savings associated with a restructuring completed in mid-January and lower operating expenses across the division. Including restructuring charges of $0.8 million, income from operations was $3.3 million for the current quarter, a 5% decline over the prior quarter. In comparison to Q1 2003, revenue increased 10.5% and income from operations before restructuring was relatively flat. The revenue increase was due primarily to shipbuilding maintenance revenue associated with our GRAD shipbuilding contract signed in April 2003 and increasing services and maintenance revenue from new products. Despite this revenue increase, income from operations before restructuring was relatively flat due primarily to higher R&D and sales & marketing expenses. First quarter revenue remained strong in oil and gas (both on- and offshore) and in the pharmaceutical sector. We believe that current oil prices will stimulate emphasis on reliable operations and reduced maintenance cycles. Also, the Company believes higher oil prices could, in the longer term, stimulate additional investment in plant revamps and capacity extensions. We are also beginning to see some potential signs of recovery in the power sector, especially outside the U.S. It is anticipated that recovery of the U.S. markets will be slow. Revenue increased in the Asia Pacific and European/Middle East/Africa regions compared to the first quarter last year, while the Americas region reported slightly lower revenue. For 2004, the Asia Pacific region is projected to be the strongest growth region. The division expects continued success in several new product offerings including SmartPlant(R) 3D and SmartPlant P&ID for plant design, IntelliShip(TM) for ship design and construction, MARIAN(R) for materials management Materials management is the branch of logistics that deals with the tangible components of a supply chain. Specifically, this covers the acquisition of spare parts and replacements, quality control of purchasing and ordering such parts, and the standards involved in ordering, , and SmartPlant Foundation for data management. For Q2 of 2004, the division forecasts revenue of $35.0 million and operating profit of $5.0 million.
Intergraph Mapping and Geospatial Solutions (IMGS)
(In millions) Q1 2004 Q4 2003 Q1 2003 Q2 2004 Backlog
forecast
---------------------------------------------------------------------
Revenue $52.0 $60.2 $46.8 $55.0 $74.8
---------------------------------------------------------------------
Income (loss) from
operations before
restructuring $3.7 $3.7 $0.2 $2.4
---------------------------------------------------------------------
Restructuring
charges $--- $1.6 $--- $---
---------------------------------------------------------------------
Income (loss) from
operations $3.7 $2.1 $0.2 $2.4
---------------------------------------------------------------------
In Q1 2004, IMGS revenue decreased 14% from the previous quarter while operating income was flat before considering restructuring charges taken in Q4 2003. This was primarily due to the combination of reduced operating expenses from the restructuring actions taken in 2003 and higher gross margins generated from increased software sales. More specifically, the reduction in revenue was due to higher sales in the previous quarter to international government customers, the delivery of Digital Mapping Cameras from Z/I Imaging, and milestones achieved in several long-term projects. In Q1 2004, revenue included the delivery of a large photogrammetric and mapping software order that drove higher gross margins. In addition, product development, sales and marketing, G&A and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. cost reductions made in 2003 translated into lower overall expenses in Q1. In comparison to Q1 2003, total revenue for the period increased by 11% and operating income increased by $3.5 million. The increase in revenue is primarily associated with the delivery of photogrammetric and mapping software products on a large, non-recurring order mentioned above and increased product and services volume on certain large projects. The associated improvement in operating income resulted from increased revenue volume and a more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. revenue mix with higher margin software sales. For Q2, IMGS is projecting an increase in revenue to $55 million with an operating income of $2.4 million. In this quarter, IMGS expects to make significant product deliveries related to a large non-recurring photogrammetric and mapping product order in current backlog. However, since the related products contain substantial third party content, the expected increase in revenue will not translate into correspondingly higher gross margins. Ending backlog increased by $6.6 million (10%) in the first quarter to $74.8 million. The increase is primarily associated with the large non-recurring photogrammetric and mapping product order mentioned above.
Intergraph Solutions Group (ISG)
(In millions) Q1 2004 Q4 2003 Q1 2003 Q2 2004 Backlog
forecast
----------------------------------------------------------------------
Revenue $30.1 $32.9 $27.5 $28.9 $61.9
----------------------------------------------------------------------
Income from
operations
before
restructuring $3.8 $2.1 $1.1 $2.5
----------------------------------------------------------------------
Restructuring
charges $--- $--- $--- $---
----------------------------------------------------------------------
Income from
operations $3.8 $2.1 $1.1 $2.5
----------------------------------------------------------------------
For Q1 2004, ISG reported a 9% decrease in revenue compared to Q4 2003 and a $1.7 million (84%) increase in operating income. The decrease in revenue was due primarily to the nonrecurring Q4 2003 $4.0 million sale of low margin material on the U.S. Air Force Enhanced Technical Information Management System (ETIMS ETIMS Enhanced Technical Information Management System ) contract. Services revenue on the ETIMS contract increased $3.0 million in Q1, of which $1.8 million was due to increased billable hours Billable Hours is a Canadian comedy series, which airs on Showcase. Set in the fictional Toronto law firm of Fagen & Harrison, the series focuses on three young lawyers struggling to balance their expectations in life with the difficult realities of building a career required to meet customer schedule requirements. The significant increase in operating income was due to a 22% increase in gross profit attributed to increased billable hours on the ETIMS contract, higher utilization rates as labor resources transitioned from unbillable to billable work, and fewer holiday hours. In comparison to Q1 2003, total revenue increased 10% and operating income increased by $2.7 million. The revenue increase was due to the ETIMS contract and higher utilization rates as labor resources transitioned from unbillable to billable work, which were partly offset by a planned decline in legacy hardware maintenance revenue due to expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. contracts. The significant increase in operating income in comparison to Q1 2003 was due to a 32% increase in gross profit and a 12% decrease in operating expenses. The higher gross profit resulted from the increased billable hours on the ETIMS contract required to meet customer schedule requirements and higher utilization rates as labor resources transitioned from unbillable to billable work. Total systems and services backlog decreased from $66.7 million to $61.9 million during the first quarter, reflecting continued performance on federal government contracts that are cyclically funded. ISG remains cautiously optimistic of ongoing strength in the federal government sector, specifically in the Department of Defense, Homeland Security Noun 1. Homeland Security - the federal department that administers all matters relating to homeland security Department of Homeland Security executive department - a federal department in the executive branch of the government of the United States and Force Protection markets. For Q2 2004, ISG is forecasting revenue of $28.9 million and operating income of $2.5 million. Revenue and operating income are expected to decline relative to Q1 2004 due to planned lower service revenue from the ETIMS contract and the end of performance on a subcontract sub·con·tract n. A contract that assigns some of the obligations of a prior contract to another party. intr. & tr.v. sub·con·tract·ed, sub·con·tract·ing, sub·con·tracts from NASA NASA: see National Aeronautics and Space Administration. NASA in full National Aeronautics and Space Administration Independent U.S. . The Company anticipates these expected decreases in revenue will be partly offset by increased shipments of the Company's ruggedized systems.
Intergraph Public Safety (IPS)
(In millions) Q1 2004 Q4 2003 Q1 2003 Q2 2004 Backlog
forecast
----------------------------------------------------------------------
Revenue $16.9 $17.2 $16.5 $18.4 $37.5
----------------------------------------------------------------------
Income from
operations
before
restructuring $2.1 $3.8 $3.5 $2.3
----------------------------------------------------------------------
Restructuring
charges $--- $--- $--- $---
----------------------------------------------------------------------
Income from
operations $2.1 $3.8 $3.5 $2.3
----------------------------------------------------------------------
The 2004 plan for IPS (1) (Inches Per Second) The measurement of the speed of tape passing by a read/write head or paper passing through a pen plotter. (2) (IPS) (Intrusion Prevention S is to grow orders substantially in order to increase revenue and operating profits in 2005 and beyond. To win more business, IPS has added sales, implementation, and R&D resources that have substantially increased costs. For Q1 2004, IPS reported revenue slightly below Q4 2003 levels and income from operations that declined substantially from Q4 2003. The slight decrease in total revenues from Q4 2003 is primarily the result of lower maintenance revenues from a large upgrade in Australia that was completed in Q4 2003. Gross profits declined 11% as a result of more competitive pricing, cost growth on certain projects and higher headcount. Orders were $13.3 million in Q1 2004 - 138% higher than Q4 2003. In comparison to the first quarter of 2003, revenues increased slightly and income from operations declined by 40% due to a 33% increase in operating expenses as explained above. Orders were 33% higher than Q1 2003. Since January 2004, IPS has signed new contracts in the U.S. and Canada ranging in size from $0.8 million to $2.5 million for both IPS's Computer Aided Dispatch A dispatch or dispatches can refer to:
According to the U.S. , Gilbert, Arizona Gilbert is a town in Maricopa County, Arizona, USA. According to 2006 Census Bureau estimates, the population of the city is 191,517. [1] Although it is large and growing rapidly, Gilbert is still incorporated as a town rather than as a city; it has the highest , and Montgomery County Montgomery County may refer to:
capital - a seat of government city, metropolis, urban center - a large and densely populated urban area; may include several independent administrative districts; "Ancient Troy was a great city" to adopt the IPS solution. This increases the number of people in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. protected by IPS solutions by almost 1.5 million. Orders for significant upgrades were also received from existing IPS customers, including Toronto Police Services The Toronto Police Service (TPS), formerly the Metropolitan Toronto Police, is the police force for the City of Toronto, Ontario, Canada. History Creation to 1859 reforms , Canada, and Fort Lauderdale, Florida Fort Lauderdale, known as the "Venice of America" due to its expansive and intricate canal system, is a city in Broward County, Florida, United States. The city's population is described as metropolitan, where diverse culture is commonplace. According to 2006 U.S. . In Europe, the German Federal Police The Bundespolizei (BPOL) is the (primarily) uniformed federal police force of Germany. It is subordinate to the Federal Ministry of the Interior (Bundesministerium des Innern). ordered additional systems for the next steps in their nationwide installation of a command and control infrastructure. The German Federal Police are responsible for border control; rail, airport and nuclear transport security; and other homeland security functions in Germany. These and other new contracts helped increase backlog from $35.4 million to $37.5 million at March 31, 2004.
Corporate Holding Company
(In millions) Q1 2004 Q4 2003 Q1 2003 Q2 2004
forecast
---------------------------------------------------------------------
Revenue $2.8 $3.4 $3.5 $2.7
---------------------------------------------------------------------
Income (loss) from
operations before
restructuring $(4.7) $(7.1) $(4.7) $(5.7)
---------------------------------------------------------------------
Restructuring
charges $--- $2.4 $--- $---
---------------------------------------------------------------------
Income (loss) from
operations $(4.7) $(9.5) $(4.7) $(5.7)
---------------------------------------------------------------------
The corporate holding company reports revenues and costs including: -- Oversight
Oversight may refer to:
Treasurer, Strategic Planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. , General Counsel, Corporate Marketing, the Board of Directors, internal and external audit, and other costs that are directly the result of Intergraph being a publicly held company. -- Revenues and costs for Teranetix(TM) (a provider of commercial repair and logistics services) and international hardware maintenance. -- Residual costs of exiting the hardware business, including management of warranty reserves and a repair depot. The loss in the holding company decreased $4.8 million from Q4 2003 to Q1 2004 due to the Company's restructuring efforts in Q4 2003 and the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of its hardware warranty obligations. The loss in the holding company was flat from Q1 2003 to Q1 2004 due to higher legal expenses in Q1 2004 that offset expense reductions in Corporate since Q1 2003. Intellectual Property (IP) The Company has intellectual property that is used in a variety of industries, including computers, consumer electronics, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , and electronics design. The Company defends the value of its intellectual property (IP) portfolio through licensing and litigation. The Company remains actively engaged in licensing discussions, as well as patent litigation, with several companies. All income and expenses associated with the IP portfolio, including legal expenses, are classified and reported in the Other Income (Expense) section of the income statement. Intel Litigation: On July 29, 2001, the Company filed a patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. case against Intel Corporation (company) Intel Corporation - A US microelectronics manufacturer. They produced the Intel 4004, Intel 8080, Intel 8086, Intel 80186, Intel 80286, Intel 80386, Intel 486 and Pentium microprocessor families as well as many other integrated circuits and personal computer networking in the U.S. District Court for the Eastern District of Texas. The Texas case pertained to the Company's parallel instruction computing computing - computer (PIC (1) (Programmable Interrupt Controller) An Intel 8259A chip that controls interrupts. Starting with the 286-based AT, there are two PICs in a PC, providing a total of 15 usable IRQs. ) patents and went to trial on July 2, 2002. On March 29, 2004, the Company resolved its dispute with Intel Corporation regarding its PIC patents, and both parties agreed to dismiss all outstanding patent infringement claims and lawsuits against each other. Per the terms of the settlement agreement, Intel Corporation paid the Company $125 million on April 5, 2004 and will pay an additional $100 million in four quarterly installments over the following year. In addition, the Company will grant Dell certain licenses to its patents and has agreed to dismiss its separate pending litigation against Dell in the OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and case. OEM Litigation: On December 16, 2002, the Company filed a patent infringement action against Dell, Gateway and Hewlett-Packard/Compaq (HP) in the U.S. District Court for the Eastern District of Texas. The Company's complaint alleges that products from the three computer vendors infringe in·fringe v. in·fringed, in·fring·ing, in·fring·es v.tr. 1. To transgress or exceed the limits of; violate: infringe a contract; infringe a patent. 2. U.S. Patent Numbers 4,899,275 and 4,933,835 and 5,091,846. These computer system-level patents relate to memory management technology. Per the terms of the March 29, 2004 settlement agreement with Intel Corporation, the Company has agreed to dismiss its separate pending litigation in the OEM action against Dell. The OEM action against the remaining defendants, Gateway and HP, seeks an unspecified Adj. 1. unspecified - not stated explicitly or in detail; "threatened unspecified reprisals" specified - clearly and explicitly stated; "meals are at specified times" amount of damages for past infringement. HP and Gateway have asserted various defenses, pre-trial motions and countersuits against the Company. The Court has scheduled the Markman hearing A Markman hearing is a pre-trial hearing in the United States court system during which a judge hears testimony from both parties on the appropriate meanings of the relevant key words used in the claims of a patent, the infringement of which is alleged by the plaintiff. for May 7, 2004, and has set the OEM case for trial on August 2, 2004. On May 28, 2003, HP filed a patent countersuit coun·ter·sue tr.v. coun·ter·sued, coun·ter·su·ing, coun·ter·sues Law To bring proceedings against (a plaintiff) in direct opposition to a suit brought against onself. against the Company in the Northern District of California. HP also asked the Texas court to transfer the OEM case to the Northern District of California for consolidation with HP's countersuit. The Texas court denied HP's motion to transfer the Texas OEM case to California. HP's countersuit did not specify any accused infringing products or resulting damages, and was initially dismissed as legally defective defective adj. not being capable of fulfilling its function, ranging from a deed of land to a piece of equipment. (See: defect, defective title) . HP has since filed a corrected amended complaint amended complaint n. what results when the party suing (plaintiff or petitioner) changes the complaint he/she has filed. It must be in writing, and can be done before the complaint is served on any defendant, by agreement between the parties (usually their lawyers), asserting four separate patents against a variety of Intergraph products, including SmartPlant 3D, IntelliShip, SmartPlant, SmartSketch(R), I/Mobile TC, and IntelliWhere(TM). The Company has filed a motion to have HP's California countersuit transferred to the Northern District of Alabama. The California court has not yet ruled on the Company's motion to transfer. The Company has not determined what impact, if any, HP's countersuit may have on the Company's operations and cash flows. The Company will vigorously defend against HP's countersuit. HP has also filed an amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. answer and counterclaim A claim by a defendant opposing the claim of the plaintiff and seeking some relief from the plaintiff for the defendant. A counterclaim contains assertions that the defendant could have made by starting a lawsuit if the plaintiff had not already begun the action. in the Texas case, which alleges that Intergraph's patent assertions are a violation of the Sherman Antitrust Act Sherman Antitrust Act, 1890, first measure passed by the U.S. Congress to prohibit trusts; it was named for Senator John Sherman. Prior to its enactment, various states had passed similar laws, but they were limited to intrastate businesses. . The Company has filed a motion to dismiss HP's antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. counterclaims as a matter of law. The Texas court has not yet ruled on Intergraph's motion to dismiss. The Company believes HP's antitrust counterclaim to be without merit and will vigorously defend the same. On April 1, 2004, HP filed a patent countersuit against the Company in Mannheim, Germany. HP's German suit accuses the Company's SmartPlant 3D products of infringing two foreign patents related to the automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. dimensioning technology asserted in HP's California countersuit. On April 19, 2004, HP filed three separate legal actions against the Company. HP filed a patent infringement action in Delaware and in the Eastern District of Texas. The Delaware action accuses the Company's Z/I Imaging digital camera of infringing a patent related to scanning technology. The new Texas case accuses the Company's SmartPlant 3D, Intelliship, SmartPlant Offshore and SmartSketch products of infringing a patent related to dimensional conversions in computer-aided design computer-aided design (CAD) or computer-aided design and drafting (CADD), form of automation that helps designers prepare drawings, specifications, parts lists, and other design-related elements using special graphics- and calculations-intensive software. HP also filed an action in the German patent office to invalidate in·val·i·date tr.v. in·val·i·dat·ed, in·val·i·dat·ing, in·val·i·dates To make invalid; nullify. in·val our foreign Clipper clipper, type of sailing ship, designed for speed. Long and narrow, the clipper had the greatest beam aft of the center; the bow cleaved the waves; and the ship carried, besides topgallant and royal sails, skysails and moonrakers—a veritable cloud of sails. patents. The Company is evaluating HP's latest filings, but plans to vigorously defend against the same. Advanced Micro Devices (AMD) Litigation: On January 15, 2004, Advanced Micro Devices (AMD) filed a Declaratory Judgment declaratory judgment In law, a judgment merely declaring a right or establishing the legal status or interpretation of a law or instrument. It is binding but is distinguished from other judgments or court opinions in that it includes no executive element (an order that Act (DJA DJA See Dow Jones Averagesr (DJA). ) patent action against the Company in the Northern District of California. AMD asserted that the Company's family of "Clipper" patents (U.S. Patent Nos. 4,860,192, 4,884,197, 4,899,275, 4,933,835 and 5,091,846) are either invalid Null; void; without force or effect; lacking in authority. For example, a will that has not been properly witnessed is invalid and unenforceable. INVALID. In a physical sense, it is that which is wanting force; in a figurative sense, it signifies that which has no effect. or not infringed by AMD's microprocessor microprocessor, integrated circuit containing the arithmetic, logic, and control circuitry required to interpret and execute instructions from a computer program. products. On April 9, 2004, AMD agreed to settle its patent lawsuit lawsuit: see procedure; tort. against the Company and to take a license to the Company's Clipper patents. Under the terms of this license, AMD will pay the Company $10 million by May 7, 2004 and will make additional cash payments equal to 2% of the AMD Computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. Product Group's pre-tax operating profits, if any, for the 2005 through 2007 calendar years, subject to a limit of $5 million per year. Conference Call and Webcast Intergraph will provide an online, real-time Webcast and rebroadcast of the first quarter conference call to be held Thursday, April 29, 2004, at 11:00 a.m. (Eastern time). The live broadcast will be available online at www.intergraph.com/investors. Listeners will be asked to pre-register and should plan to visit this Web page a few minutes before the broadcast begins. The replay will be available shortly after the conference call ends and is expected to remain available online until April 30, 2005. In addition, the replay can be heard by telephone any time before the close of business May 29, 2004. Call 1-800-285-0609 and refer to reservation #3008612. Statements and comments made during the conference calls that are not solely historical in nature are "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially and adversely. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that our projected results expressed or implied therein will not be realized.
Intergraph Corporation
Consolidated Balance Sheets (Unaudited)
March 31, December 31,
2004 2003
---------- ------------
(in thousands)
Assets
Cash and cash equivalents $250,504 $265,782
Accounts receivable, net 146,340 150,927
Inventories, net 15,459 15,443
Other current assets 237,599 37,673
----------- -----------
Total current assets 649,902 469,825
Investments in affiliates 9,499 9,499
Capitalized software development costs, net 28,839 29,520
Other assets, net 37,504 12,500
Property, plant, and equipment, net 51,845 51,099
----------- -----------
Total Assets $777,589 $572,443
=========== ===========
Liabilities and Shareholders' Equity
Trade accounts payable $17,249 $23,052
Accrued compensation 32,663 38,781
Other accrued expenses 49,707 40,855
Billings in excess of sales 49,532 48,711
Income taxes payable 98,700 27,177
----------- -----------
Total current liabilities 247,851 178,576
Deferred income taxes and other noncurrent
liabilities 14,651 14,013
Total shareholders' equity 515,087 379,854
----------- -----------
Total Liabilities and Shareholders'
Equity $777,589 $572,443
=========== ===========
Intergraph Corporation
Consolidated Statements of Operations (Unaudited)
Quarter Ended
March 31,
2004 2003
--------- --------
(in thousands, except per share amounts)
Revenues
Systems $70,379 $70,406
Maintenance 33,003 30,057
Services 29,587 20,090
--------- --------
Total revenues 132,969 120,553
--------- --------
Cost of Revenues
Systems 34,347 36,460
Maintenance 10,484 12,296
Services 21,027 15,196
--------- --------
Total cost of revenues 65,858 63,952
--------- --------
Gross profit 67,111 56,601
Product development 14,564 11,872
Sales and marketing 26,081 24,677
General and administrative 17,461 15,817
Restructuring charges 826 ---
--------- --------
Income from operations 8,179 4,235
Intellectual property income, net 203,060 5,330
Gains on sales of assets --- 1,220
Interest income 881 1,923
Other income (expense), net 1,072 (43)
--------- --------
Total other income (expense) 205,013 8,430
--------- --------
Income before income taxes 213,192 12,665
Income tax expense (77,200) (4,550)
--------- --------
Net income $135,992 $8,115
========= ========
Earnings per share:
Basic $3.75 $0.18
Diluted $3.59 $0.17
Weighted average shares outstanding:
Basic 36,268 46,200
Diluted 37,843 48,408
Systems orders $73,000 $87,000
Services orders $43,300 $17,200
Intergraph Corporation
Business Unit Information (Unaudited)
Quarter Ended
March 31, 2004
----------------------------
Total Operating
Revenues Income (Loss)
-------------- -------------
(in thousands)
PPO $33,730 $3,313
IMGS 52,014 3,666
ISG 30,095 3,831
IPS 16,932 2,096
Corporate 2,841 (4,727)
Eliminations (2,643) ---
-------------- -------------
Total Company $132,969 $8,179
============== =============
Cautionary note regarding forward-looking statements This news release contains forward-looking statements (all statements other than those made solely with respect to historical fact) within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, the business outlook of Intergraph Corporation (the "Company"), projections about revenues, operating income levels, margins, and market conditions and their anticipated impact on the Company and its vertical business segments; expectations regarding Intergraph's various ongoing litigation proceedings; expectations regarding future results and cash flows; information regarding the development, timing of introduction, and performance of new products; and any statements of the plans, strategies, and objectives of management for future operations. These forward-looking statements are subject to known and unknown risks and uncertainties (some of which are beyond the Company's control) that could cause actual results to differ materially and adversely from those anticipated in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, potential adverse outcomes or rulings in our ongoing efforts to protect our intellectual property, including the Company's claims against certain original equipment manufacturers, including Gateway Inc.(TM) and Hewlett-Packard Co.(TM) or their countersuits against the Company, and other ongoing and potential litigation and patent enforcement efforts, the ability, timing, and costs (including the calculation of success and other fees) to enforce and protect the Company's intellectual property rights; potential adverse outcomes in our efforts to improve our operating performance (including uncertainties with respect to the timing and magnitude of any expected improvements); material changes with respect to our business, litigation prospects, or the securities markets (including the market for Intergraph common stock); risks associated with doing business internationally (including foreign currency fluctuations); worldwide political and economic conditions and changes; the ability to attract or retain key personnel; increased competition; rapid technological change; unanticipated changes in customer requirements; the ability to access the technology necessary to compete in the markets served; risks associated with various ongoing litigation proceedings; and other risks detailed in our press releases or in our annual, quarterly, or other filings with the Securities and Exchange Commission. Intergraph Background Information Intergraph Corporation is a pioneer of computer graphics software and services in the commercial and government sectors. Founded in 1969, we have delivered numerous innovations in interactive graphics solutions. Today, we help our customers organize complex data into understandable visual representations, enabling them to make better and faster operational decisions. They create intelligent maps, manage assets and infrastructure, build and operate plants and ships, and dispatch emergency services emergency services Emergency care '…services …necessary to prevent death or serious impairment of health and, because of the danger to life or health, require the use of the most accessible hospital available and equipped to furnish those services' to those in need. Headquartered in Huntsville, Alabama Huntsville is the county seat of Madison County, Alabama. Huntsville is the largest city in northern Alabama in a region of a half-million people, with the city proper having 168,132 residents (2006 estimate). , Intergraph employs more than 3,000 professionals and has operations in more than 60 countries. The Company's intellectual property division manages Intergraph's portfolio of intellectual property, including patents, copyrights, and trademarks. The Company has more than $500 million in revenue and trades on the NASDAQ market under the symbol INGR. More information can be found at www.intergraph.com. Intergraph, the Intergraph logo, IntelliShip, IntelliWhere, MARIAN, SmartPlant, SmartSketch, and Z/I Imaging are registered trademarks and Teranetix is a trademark of Intergraph Corporation. Other brands and product names are trademarks of their respective owners. |
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