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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
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 0-9722
INTERGRAPH CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 63-0573222
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Intergraph Corporation
Huntsville, Alabama 35894-0001
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (256) 730-2000
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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 $0.10 per share
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(Title of Class)
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. ( )
As of January 31, 2001, there were 49,552,385 shares of Intergraph
Corporation Common Stock $0.10 par value outstanding. The aggregate
market value of the voting stock held by nonaffiliates of the
registrant was approximately $383,877,000 based on the closing sale
price of such stock as reported by The Nasdaq Stock Market on
January 31, 2001, assuming that all shares beneficially held by
executive officers and members of the registrant's Board of
Directors are shares owned by "affiliates," a status which each of
the executive officers and directors individually disclaims.
DOCUMENTS INCORPORATED BY REFERENCE
Documents Form 10-K Reference
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Portions of the Annual Report to
Shareholders for the year ended
December 31, 2000 Part I, Part II, Part IV
Portions of the Proxy Statement
for the May 17, 2001 Annual Meeting
of Shareholders Part III
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PART I
ITEM 1. BUSINESS
Overview
Intergraph Corporation (the "Company"), founded in 1969, is a
worldwide provider of end-to-end technical solutions and systems
integration services. The Company's industry-focused business
segments develop, market, and support software and services for
local and national governments and for global industries,
including process and power, utilities, communications, mapping
and geographic information systems ("GIS"), photogrammetry, and
public safety.
The Company's business segments offer software solutions based
on Microsoft Corporation's Windows operating systems. This open
technology foundation enables the Company's software products to
interoperate with thousands of third-party Windows-based
technical and business applications as well as with UNIX-based
applications. The Company's business segments also offer related
professional services to satisfy engineering, design, modeling,
analysis, mapping, information technology, and creative computing
needs. Products and services are sold through industry-focused
direct and indirect channels worldwide, with United States and
European revenues representing approximately 76% of total
revenues for 2000.
Background
Until the mid 1990s, the unique demands of high-end technical
computing required tremendous processing and graphics
capabilities that could only be performed using reduced
instruction set computing ("RISC") based workstations for the
UNIX operating system. In 1992, the Company began evaluation of
a transition from its own Clipper RISC microprocessor to the
Intel microprocessor and from the UNIX operating system to
Microsoft's Windows NT operating system. In late 1992, based on
commitments from Intel, the Company concluded that systems with
Intel microprocessors and Windows operating systems would become
capable of supporting high-end computing and other enterprisewide
computing environments, while at the same time maintaining
interoperability with existing UNIX-based systems. The Company
therefore chose to migrate products from its own Clipper
microprocessor to Intel microprocessors and from the UNIX
operating system to Microsoft Windows NT.
The Company ceased development of the Clipper RISC
microprocessor at the end of 1993 and made a substantial
investment in the redesign of its hardware platform for
utilization of Intel's microprocessor. The Company chose to use
only Intel microprocessors and to focus its efforts and image
creation toward its core capabilities, specifically very high-
performance computational and 3D graphics capabilities. This
high-end market place in the Windows NT operating system
environment is supported primarily by Intel products. The
transition from its proprietary hardware architecture to that of
Intel was substantially completed during 1994, and since that
time, substantially all of the Company's hardware sales have been
comprised of Intel-based systems. In 1994, the Company also
completed the development effort to port its technical software
applications to the Windows NT operating system, and made Windows
NT available on all of its workstations.
In 1996, a dispute with Intel disrupted relations between the
Company and Intel, causing significant delays in the Company's
hardware development and manufacturing cycles. Unable to acquire
Intel microprocessors and technical information crucial to its
product development, the Company could not introduce new hardware
lines on a timetable competitive with other hardware vendors. As
a consequence, the Company was unable to compete favorably in the
high-performance Intel processor-powered workstation markets.
See Item 3, Legal Proceedings, following, and Management's
Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's 2000 annual report,
portions of which are incorporated by reference in this Form 10-K
annual report, for further discussion of the Company's dispute
with Intel and its effects on the Company's business and
consolidated operating results.
Over the past three years, the Company has taken significant
measures to reduce its losses and return to profitability,
including the outsourcing of its manufacturing function to SCI
Technology Inc., extensive reductions in its workforce, and sales
of several non-core business units and assets. In October 1999,
the Company exited the PC and generic server businesses, which
had been irreparably damaged as a result of the dispute with
Intel, and in third quarter 2000, it exited the development and
design of all hardware products. For further information
regarding these actions, see Management's Discussion and Analysis
of Financial Condition and Results of Operations contained in the
Company's 2000 annual report, portions of which are incorporated
by reference in this Form 10-K annual report.
The Company believes that its operating system and software
applications strategies are the correct choices. However,
competing operating systems and software applications are
available in the market, and the Company competes with companies
with greater financial resources in each of the markets it
serves. Further improvement in the Company's operating results
depends on further market penetration through its ability to
accurately anticipate customer requirements and technological
trends and to rapidly and continuously develop and deliver new
products that are competitively priced, offer enhanced
performance, and meet customers' requirements for standardization
and interoperability, and will further depend on its ability to
successfully implement its strategic direction, which includes
the creation and operation of independent vertical business
units. In addition, the Company continues to face operational
and financial uncertainty of unknown duration and amount due to
its dispute with Intel.
Discontinued Operation
On October 31, 1999, the Company sold its VeriBest Inc.
operating segment. For further information regarding the sale of
VeriBest, see Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in the Company's
2000 annual report, portions of which are incorporated by
reference in this Form 10-K annual report.
BUSINESS SEGMENTS
Effective for 2000 operational and management purposes, the
Company's continuing operations are divided into five separate
business segments. These business segments are focused on
specific vertical markets in which the Company considers itself
to be a leader or sees the potential to lead. The Company's 2000
business segments are Process and Building Solutions, Intergraph
Government Solutions, IPS (which includes Intergraph Public
Safety, Utilities and Communications), Intergraph Mapping and GIS
Solutions, and Z/I Imaging. Each is discussed in further detail
below. For additional information regarding the Company's
business segments, including financial information for 2000, see
Management's Discussion and Analysis of Financial Condition and
Results of Operations and Note 12 of Notes to Consolidated
Financial Statements contained in the Company's 2000 annual
report, which are incorporated herein by reference. The Company's
International Distribution operation, essentially the Company's
international subsidiary distribution operations which serve many
of the Company's business segments, has not yet been absorbed
into the Company's primary business segments and is reflected as
a sixth business segment in the Company's financial
presentations. This operation will be absorbed into the
applicable primary business segments in first quarter 2001.
Process & Building Solutions ("PBS")
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Process & Building Solutions is a global organization that
supplies software and services to the process, power, and marine
industries. PBS focuses on integrated life cycle engineering
solutions for the design and information management of plants and
ships, with emphasis on engineering information management and on
the linkage of engineering systems and business systems.
For more than 20 years, engineering/procurement/and
construction ("EPC") contractors and process and power plant
owner/operators have used PBS solutions to design, construct,
operate and maintain facilities for petrochemical, chemical,
pharmaceutical, food and beverage, oil and gas, power generation,
pulp and paper, and mining industries. PBS's life cycle
engineering solutions increase the value of plant data by
facilitating capture and re-use of information throughout the
life cycle of a plant, resulting in significant productivity
gains and operational efficiencies.
According to industry analyst Daratech of Cambridge,
Massachusetts, in 1999 Intergraph held a 59% share of the 3D
plant design and visualization market and a 24.5% market share of
the 2D plant design market segment.
PBS's Plant Design System ("PDS") is a comprehensive,
intelligent engineering application that creates and maintains an
accurate database of plant information. That information is a
valuable asset for regulatory compliance, streamlining
operations, maintenance, and downstream retrofit projects.
Integration features enable concurrent engineering, multiple
disciplines working on a project simultaneously, improved design
coordination, reduction of errors, and increased productivity.
PDS consists of integrated 2D and 3D modules which correspond to
basic tasks in the plant design workflow, including process flow
diagrams, piping and instrumentation diagrams, instrumentation
data management, equipment, heating/ventilation/air conditioning,
electrical, structural, and other engineering aspects of a plant.
In addition to PDS, Process & Building Solutions offers its
SmartPlant family of products to support the life cycle
engineering needs of the process and power industries. These
products populate plant data in an open data model, allowing for
easy access and use by engineering, procurement, construction,
maintenance, management, and any other relevant users.
PBS's shipbuilding solutions provide software systems and
services for commercial and military ship design, construction,
and management. In cooperation with international industry
partners, PBS is developing the next generation solution that
will streamline shipbuilding processes, lower manpower and
material costs, and reduce the time to construct world-class
marine vessels. GSCAD is PBS's next-generation naval and
shipbuilding solution for design, construction, and management.
GSCAD design, planning, and engineering analysis tools are built
on an enterprise-wide, integrated infrastructure that accesses
real-time information. This software solution provides the
capability to create a ship design that speeds product
development from conception to market delivery. It also provides
capabilities for performing risk analysis, design integrity, and
functional engineering review of new and modified product
designs.
Intergraph Government Solutions ("IGS")
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Intergraph Government Solutions is a systems integration and
management consulting company that provides business and
technical solutions to a diverse portfolio of government and
commercial clients. IGS partners with clients to achieve their
vision, mission, and goals through intelligent deployment of best
practices and information technology ("IT"). IGS combines
experience in dozens of technical fields with capabilities
covering the gamut of IT services: management consulting,
enterprise application integration, financial and decision-
support systems, system and networking services, advanced
learning systems, command and control systems, product data
management, and ruggedized hardware.
IGS has six divisions serving focused markets or industries.
The Department of Defense ("DOD") division serves the U.S. Air
Force, Joint Operations, U.S. Naval Air Systems Command
("NAVAIR"), the U.S. Army and NASA. With long-term contract
vehicles such as CAD-2 and GSA, the DOD division remains the
largest within IGS. The Marine Life Cycle Solutions division
provides integrated data environments for the U.S. Naval Sea
Systems Command ("NAVSEA"), the U.S. Coast Guard, and commercial
shipyards in the U.S. and around the world. The Government and
Transportation division delivers integrated information
management systems to federal and state departments of
transportation ("DOTs"), state and local government agencies, and
commercial transportation organization owner/operators. The PDM
Solutions division provides product data management ("PDM") and
collaborative product commerce ("CPC") services to commercial
consumer product manufacturing, medical devices manufacturing,
machine design, and process plant industries. The IT Services
division provides local area network and wide area network
("LAN/WAN") planning and implementation, electronic-business,
resident and supplemental staffing, IT outsourcing, and help desk
solutions in both federal and commercial markets. The Federal
Hardware Solutions division develops, implements, and supports
ruggedized hardware for use in difficult environments, and video
analysis products and services for the DOD and federal, state,
and local law enforcement agencies.
Intergraph Public Safety Inc. ("IPS")
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In January 1997, Intergraph Public Safety, Inc. was established
as a wholly-owned subsidiary of the Company. IPS provides total
public safety solutions and has come to be recognized worldwide
as a leading supplier of public safety dispatch systems. In
addition to addressing the public safety market, IPS also
addresses the utilities and communications markets through a
separate organization within IPS ("Intergraph Utilities and
Communications").
IPS develops, markets, and implements computer-based solutions
for emergency medical and rescue units, fire departments, law
enforcement organizations, and other public safety agencies
around the world. Other industries utilizing these solutions
include automobile clubs for roadside assistance, and airports,
campuses, and military bases for security systems.
IPS products provide a complete solution for public safety
agencies. They are designed to interoperate in a comprehensive,
integrated public safety information system. These products
include computer-aided dispatch, police, fire, and emergency
management systems, records management systems, jail management
systems, civil process and mug shot systems, mobile computer
systems, integrated radio and telephony solutions, interfaces to
alarm systems, management information reporting systems,
personnel rostering systems, and training management systems.
The foundation public safety product for IPS is its computer-
aided dispatch system, which is used in local, regional, and
national command and control centers to take trouble calls from
the public and enable the assignment and dispatching of
appropriate resources. This product fully integrates
interactive, intelligent mapping with dispatching, records
management, and communications capabilities. Designed
specifically to support command and control operations, the
system is composed of high-performance graphics workstations and
software. Records management is enhanced by a database that
includes geographic map information as well as address, incident
history, and traffic pattern data.
On January 1, 1999, Intergraph Utilities & Communications was
formally merged into IPS. IPS's dispatch technology is a
complementary application to the mainstream geospatial products,
such as ActiveFRAMME and the new G/Technology products. By
linking Intergraph Public Safety and Intergraph Utilities &
Communications, the Company responded to the utilities and
communications markets' increased demand for a total solution
that integrates Geospatial Resource Management with outage
management and computer-aided dispatch.
Intergraph Utilities and Communications solutions assist
electric, gas, pipeline, and water companies in the management of
customer-centric GIS data, which contains all the information
necessary for distributing electricity and gas, tracking
distribution, and managing service disruptions. Its geospatial
resource management solution spatially enables this data,
integrating operational support systems such as outage analysis,
and provides real-time information for customer service, thereby
increasing operational efficiency enterprise-wide. Utilities
solutions include engineering design and facilities management,
technical document workflow and archiving, mobile computing and
field support, outage management, spatial data analysis and data
warehouse, and real-time display facility analysis. For
Communications, the geospatial network resource management
solutions help the international communications industry automate
its network facility mapping, planning, design, and maintenance
for outside and inside plant.
Intergraph Mapping and GIS Solutions ("IMGS")
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Intergraph Mapping and GIS Solutions is a leading provider of
mapping/GIS software and solutions. Intergraph's roots in this
market go back over 30 years, and the Company is an acknowledged
pioneer in the industry. IMGS develops, markets, and supports
geospatial solutions for business GIS, land records management,
rail transportation, environmental management, utilities and
communications companies, and commercial map production.
Solutions provide geographic visualization and analysis tools
useful in many businesses, including real estate, retailing,
service networks, transportation networks, site assessment,
agriculture, insurance, and health care. IMGS also develops and
sells geospatial solutions that help governments improve public
service, respond more efficiently to legislated and political
mandates, implement successful GIS systems more quickly, and
reduce the total cost of GIS ownership.
IMGS solutions include Intergraph's GeoMedia family of
products. GeoMedia is a complete Windows-based desktop GIS
solution for all decision support, query, and reporting
activities. IMGS's other flagship mapping product, Modular GIS
Environment ("MGE"), is used by transportation agencies as a high-
end software for basemap analysis. MGE offers project
management, coordinate system operations, data query and access,
multiple configuration options, and a range of common tools
across the MGE modules. MGE is interoperable with the GeoMedia
product suite.
IMGS also provides solutions for end-to-end digital map and
cartographic production. These solutions help cartographers
manage the map production environment where the end products vary
widely from atlases to single hardcopy maps to purely digital
products. From map scanning to printing, IMGS's end-to-end
cartographic production tools provide the means to collect,
analyze and process, prepress prepare, and output data.
Z/I Imaging, Inc.
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Z/I Imaging, a 60%-owned subsidiary of the Company, was formed
in October 1999 to develop, market, and sell Windows NT-based
imaging solutions for photogrammetry professionals. Solutions
include aerial cameras, stereo softcopy workstations, analytic
stereo plotters, photogrammetric scanners, and image management,
processing, and distribution software. Z/I Imaging systems are
nonproprietary, enabling industry and government professionals to
use them as a front-end to mapping, GIS, and civil engineering
software from a variety of leading vendors.
Intergraph Computer Systems ("ICS")
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Prior to its closure in third quarter 2000, Intergraph Computer
Systems developed high-performance core hardware, including high-
end workstations, add-in graphics subsystems, specialty servers,
and digital video products, for use in numerous professional-
level and/or technical disciplines.
See Management's Discussion and Analysis of Financial
Condition and Results of Operations and Note 15 of Notes to
Consolidated Financial Statements contained in the Company's 2000
annual report, portions of which are incorporated by reference in
this Form 10-K annual report, for a discussion of the sales of
ICS's Intense 3D division and high-end workstation and server
business and the closure of its remaining operations.
Product Development
The Company believes a strong commitment to ongoing product
development is critical to success in the markets in which it
competes.
Product development expenditures include all costs related to
designing new or improving existing products. During the year
ended December 31, 2000, the Company spent $56.3 million (8.2% of
revenues) for the product development activities of its
continuing operations compared to $62.6 million (6.8% of
revenues) in 1999, and $76.8 million (7.6% of revenues) in 1998.
See Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in the Company's 2000 annual
report, portions of which are incorporated by reference in this
Form 10-K annual report, for further discussion of product
development expenses, including portions capitalized and their
recoverability.
The markets in which the Company's business units compete
continue to be characterized by rapid technological change,
resulting in shorter product cycles, higher performance and lower
priced product offerings, intense price and performance
competition, and development and support of software standards
that result in less specific hardware and software dependencies
by customers. The operating results of the Company and its
competitors will continue to depend on the ability to accurately
anticipate customer requirements and technological trends and to
rapidly and continuously develop and deliver new products that
are competitively priced, offer enhanced performance, and meet
customers' requirements for standardization and interoperability.
Manufacturing and Sources of Supply
In fourth quarter 1998, the Company sold substantially all of
its U.S. manufacturing inventory and assets to SCI Technology,
Inc. ("SCI"), a wholly-owned subsidiary of SCI Systems, Inc., and
outsourced to SCI the responsibility for manufacturing of
substantially all of the Company's hardware products. Prior to
the sale, this responsibility, which included the assembly and
testing of components and subassemblies manufactured by the
Company and others, was that of the Company's ICS business
segment. In third quarter 2000, the Company sold its Intense3D
graphics accelerator division and its high-end workstation and
server business and closed the ICS business segment. Under its
existing contract with SCI, the Company serves as the
intermediary between SCI and the companies which acquired its
former operations. For a complete description of these
transactions and their impact on the Company's operating results
and cash flows, including exposures associated with the SCI
contract, see Note 15 of Notes to Consolidated Financial
Statements contained in the Company's 2000 annual report,
portions of which are incorporated by reference in this Form 10-K
annual report.
Prior to the third quarter 2000 exit of hardware development,
substantially all of the Company's microprocessor needs were
supplied by Intel Corporation. See Item 3, Legal Proceedings,
following and Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in the Company's
2000 annual report, portions of which are incorporated by
reference in this Form 10-K annual report, for a discussion of
the Company's litigation with Intel and related effects on the
Company's microprocessor supply and results of operations in 2000
and prior years.
The Company maintains inventories to meet its hardware warranty
and service obligations, and two of the Company's business
segments continue light manufacturing and assembly operations.
All other business segments purchase hardware from third parties
for resale to customers. The Company is not required to carry
extraordinary amounts of inventory to meet customer demands.
Sales and Support
Sales. The Company's products are sold through a combination of
direct and indirect channels in approximately 67 countries
worldwide. Direct channel sales, which provide the majority of
the Company's product revenues, are generated by the Company's
direct sales force through sales offices in approximately 40
countries worldwide. The efforts of the direct sales force are
augmented by sales through indirect channels, including dealers,
value added resellers, distributors, and system integrators.
Sales through indirect channels provided approximately 11% of
total Company systems revenues in 2000, compared to 25% in 1999
and 22% in 1998. The decline in 2000 was due primarily to the
Company's exit of the hardware development business in third
quarter.
Each of the Company's business units maintains its own sales
force. Selling efforts are organized along key industry lines
for their major product applications. The Company believes an
industry focus better enables it to meet the specialized needs of
customers. In general, the direct sales forces are compensated
through a combination of base salary and commission. Sales
quotas are established along with certain incentives for
exceeding quota. Additional specific incentive programs may be
established periodically.
Customer Support. The Company believes that a high level of
customer support is important to the sale of its technical
solutions and integration services. Customer support includes
preinstallation guidance, customer training, onsite installation,
hardware preventive maintenance, repair service, software help
desk and technical support services in addition to consultative
professional services. The Company employs engineers and
technical specialists to provide customer assistance,
maintenance, and training. Maintenance and repair of systems are
covered by standard warranties and by maintenance agreements to
which most users subscribe. The trend in the industry toward
lower priced products and longer warranty periods has resulted in
reduced levels of maintenance revenue for the Company. The
Company believes this trend will continue in the future and that
its hardware maintenance revenue will continue to decline as a
result of its exit of the hardware development business.
However, the decline in maintenance revenues may be partially
offset by growth in the Company's professional services business.
The Company is endeavoring to grow its services business;
however, revenues from these services typically fluctuate
significantly from quarter to quarter and produce lower gross
margins than systems or maintenance revenues.
International Operations
International markets, particularly Europe and Asia, continue
in importance to the industry and to each of the Company's
operating segments. Sales outside the U.S. represented
approximately 52% of total revenues from continuing operations in
2000 and 1999. European and Asia Pacific revenues represented
approximately 27% and 12%, respectively, of total revenues from
continuing operations in 2000, compared to 31% and 11%,
respectively, in 1999. The Company's operations are subject to
and may be adversely affected by a variety of risks inherent in
doing business internationally, such as government policies or
restrictions, currency exchange fluctuations, and other factors.
There are currently wholly-owned sales and support subsidiaries
of the Company located across Europe. European subsidiaries are
supported by service and technical assistance operations located
in The Netherlands. Outside of Europe, the Company's systems are
sold and supported through a combination of subsidiaries and
distributorships. At December 31, 2000, the Company had
approximately 860 employees in Europe, 590 employees in the Asia
Pacific region, and 610 employees in other international
locations.
Fluctuations in the value of the U.S. dollar in international
markets can have a significant impact on the Company's results of
operations. The Company conducts business in all major markets
outside the U.S., but the most significant of these operations
with respect to currency risk are located in Europe and Asia.
Local currencies are the functional currencies for the Company's
European subsidiaries. The U.S. dollar is the functional
currency for all other international subsidiaries. See Note 1 of
Notes to Consolidated Financial Statements contained in the
Company's 2000 annual report, portions of which are incorporated
by reference in this Form 10-K annual report, for a description
of the Company's policy for managing the currency risks
associated with its international operations.
The Company has historically experienced slower collection
periods for its international accounts receivable than for
similar sales to customers in the United States. The Company
continues to experience slow collections throughout the Middle
East region, particularly in Saudi Arabia. Total accounts
receivable from Middle Eastern customers was approximately $18
million at December 31, 2000 and $20 million at December 31,
1999.
For further discussion of the Company's international
operations, see Management's Discussion and Analysis of Financial
Condition and Results of Operations and Notes 1, 5, and 12 of
Notes to Consolidated Financial Statements contained in the
Company's 2000 annual report, portions of which are incorporated
by reference in this Form 10-K annual report.
U.S. Government Business
Total revenue from the United States government was
approximately $132 million in 2000, $149 million in 1999, and
$166 million in 1998, representing approximately 19% of total
revenue in 2000 and 16% of revenue in 1999 and 1998. The
majority of these revenues are attributed to the IGS business
segment.
The Company sells to the U.S. government under long-term
contractual arrangements, primarily indefinite delivery,
indefinite quantity, and cost-based contracts, and through sales
of commercial products not covered by long-term contracts.
Approximately 38% of the Company's 2000 federal government
revenues were earned under long-term contracts. The Company
believes its relationship with the federal government to be good.
While it is fully anticipated that these contracts will remain in
effect through their expiration, the contracts are subject to
termination at the election of the government. Any loss of a
significant government contract would have an adverse impact on
the results of operations of IGS and the Company as a whole.
The Company has historically experienced slower collection
periods for its U.S. government accounts receivable than for its
commercial customers. At December 31, 2000, accounts receivable
from the U.S. government totaled approximately $28 million versus
approximately $33 million at December 31, 1999.
Backlog
An order is entered into backlog only when the Company receives
a purchase order or a signed contract from a customer. The
Company's backlog of unfilled systems and services orders at
December 31, 2000 and 1999 was $268 million and $250 million,
respectively. Substantially all of the December 2000 backlog of
orders is expected to be earned and recognized as revenue in
2001.
The Company does not consider its business to be seasonal,
though typically fourth quarter orders and revenues exceed those
of other quarters.
The Company does not ordinarily provide return of merchandise
or extended payment terms to its customers.
Competition
The markets in which the Company competes continue to be
characterized by intense price and performance competition. To
compete successfully, the Company and others serving these
markets must accurately anticipate customer requirements and
technological trends and rapidly and continuously develop
products with enhanced performance that can be offered at
competitive prices. The Company and its competitors engage in
the practice of price discounting to meet competitive industry
conditions. Other important competitive factors include quality,
reliability, customer service and support, and training.
Management of the Company believes that competition will remain
intense, particularly in product pricing.
The Company's competition varies among its business segments.
PBS competes with the software products of Bentley Systems, Inc.
("BSI") (an approximately 31%-owned affiliate of the Company),
Cadcentre, Rebis Industrial Workgroup Software, and several
smaller companies. The primary competitors of IMGS are ESRI,
Autodesk Inc., BSI, Laser-Scan, BAE SYSTEMS, and MapInfo
Corporation. IPS considers its primary competitors to be TriTech
Software Systems, Litton PRC, Tiburon, Inc., and
Motorola/Printrak International Inc. in the Public Safety market
and ESRI and General Electric/Smallworld in the Utilities and
Communications markets. IGS offers a wide range of service
oriented solutions to government and commercial entities. The
primary competitors in this diverse market are considered to be
Computer Sciences Corporation ("CSC"), Science Applications
International Corporation ("SAIC"), International Business
Machines Corporation ("IBM"), Lockheed Martin Corporation, KPMG,
and Accenture. The primary competitor of Z/I Imaging is LH
Systems, LLC, a joint venture of Leica Geosystems and BAE
SYSTEMS. Other competitors in the reconnaissance and
photogrammetry businesses include Recon/Optical, Inc., DAT/EM
Systems International, ISM, INPHO, Autometric Incorporated (a
subsidiary of The Boeing Company), and ERDAS. Several
companies with greater financial resources than the Company are
active in the markets it serves, particularly those served by its
IGS business segment.
The Company believes that its experience and ability to provide
total solutions and services gives it an advantage over vendors
who provide only software, hardware, or services.
Environmental Affairs
The Company's facilities are subject to numerous laws and
regulations designed to protect the environment. In the opinion
of the Company, compliance with these laws and regulations has
not had, and should not have, a material effect on the capital
expenditures, earnings, or competitive position of the Company.
Licenses, Copyrights, Trademarks, Patents, and Proprietary
Information
The Company develops its own graphics, data management, and
applications software as part of its continuing product
development activities. The Company has standard license
agreements with Microsoft Corporation for use and distribution of
the Windows NT operating system and with UNIX Systems
Laboratories for use and distribution of the UNIX operating
system. The license agreements are perpetual and allow the
Company to sublicense the operating systems software upon payment
of required sublicensing fees. The Company also has an extensive
program for the licensing of third party application and general
utility software for use on systems and workstations.
The Company owns and maintains a number of registered patents
and registered and unregistered copyrights, trademarks, and
service marks. The patents and copyrights held by the Company
are the principal means by which the Company preserves and
protects the intellectual property rights embodied in the
Company's products. Similarly, trademark rights held by the
Company are used to preserve and protect the goodwill represented
by the Company's registered and unregistered trademarks.
As industry standards proliferate, there is a possibility that
the patents of others may become a significant factor in the
Company's business. Personal computer technology, which was used
in the Company's workstation and server products, is widely
available, and many companies, including Intergraph, have
developed and continue to develop patent positions concerning
technological improvements related to personal computers,
workstations and servers. With the possible exception of its
ongoing litigation with Intel (in which the Company expects to
prevail), it does not appear that the Company will be prevented
from using the technology necessary to support existing products,
since patented technology is typically available in the industry
under royalty bearing licenses or patent cross licenses, or the
technology can be purchased on the open market.
In addition, computer software technology is increasingly being
protected by patents, and many companies, including Intergraph,
are developing patent positions for software innovations. It is
unknown at the present time whether various patented software
technology will be made generally available under license or
whether specific innovations will be held by their inventors and
not made available to others. In many cases, it may be possible
to employ software techniques that avoid the patents of others,
but the possibility exists that some features needed to compete
successfully in a particular segment of the software market may
be unavailable or may require an unacceptably high cost via
royalty arrangements. Patented software techniques that become
de facto industry standards are among those that may raise costs
or may prevent the Company from competing successfully in
particular markets.
An inability to retain significant third party license rights,
in particular the Microsoft license, to protect the Company's
copyrights, trademarks, and patents, or to obtain current
technical information or any required patent rights of others
through licensing or purchase, all of which are important to
success in the markets in which the Company competes, could
significantly reduce the Company's revenues and adversely affect
its results of operations.
Risks and Uncertainties
In addition to those described above and in Item 3, Legal
Proceedings, the Company has risks and uncertainties related to
its business and operating environment. See Management's
Discussion and Analysis of Financial Condition and Results of
Operations and Note 2 of Notes to Consolidated Financial
Statements contained in the Company's 2000 annual report,
portions of which are incorporated by reference in this Form 10-K
annual report, for further discussion of these risks and
uncertainties.
Employees
At December 31, 2000, the Company had approximately 4,600
employees. Of these, approximately 2,060 were employed outside
the United States. The Company's employees are not subject to
collective bargaining agreements, and there have been no work
stoppages due to labor difficulties. Management of the Company
believes its relations with employees to be good.
ITEM 2. PROPERTIES
The Company's corporate offices and primary development centers
are located in Huntsville, Alabama. All of the Company's
business segments have headquarters located within the Huntsville
facilities. The business segments also maintain sales and support
facilities throughout the world.
The Company owns approximately 1,400,000 square feet of space
in Huntsville that is utilized for product development, sales,
and administration. The Huntsville facilities also include over
500 acres of unoccupied land. The Company maintains sales and
support locations in major U.S. cities outside of Huntsville
through operating leases.
Outside the U.S., the Company owns approximately 90,000 square
feet of office space, primarily in the United Kingdom. Sales and
support facilities are leased in most major international
locations.
The Company considers its facilities to be adequate for the
immediate future.
ITEM 3. LEGAL PROCEEDINGS
The Company filed a legal action on November 17, 1997, in U.S.
District Court for the Northern District of Alabama, Northeastern
Division (the "Alabama Court"), charging Intel Corporation with
unlawful anti-competitive business practices. Intergraph alleges
that Intel attempted to coerce the Company into relinquishing
certain computer hardware patents to Intel through a series of
wrongful acts, including interference with business and
contractual relations, interference with technical assistance
from third party vendors, breach of contract, negligence,
misappropriation of trade secrets, and fraud based upon Intel's
failure to promptly notify the Company of defects in Intel's
products and timely correction of such defects, and further
alleging that Intel infringed upon the Company's patents. The
Company's patents (the "Clipper Patents") define the architecture
of the cache memory of Intergraph's Clipper microprocessor. The
Company believes this architecture is at the core of Intel's
Pentium line of microprocessors and systems. Intel's Pentium 4
processor was not commercially available at the time of the
filing of the lawsuit, and the Company has not yet completed its
infringement analysis of Intel's Pentium 4 processor. On
December 3, 1997, the Company amended its complaint to include a
count alleging violations of federal antitrust laws. Intergraph
asserts claims for compensatory and treble damages resulting from
Intel's wrongful conduct and infringing acts, and punitive
damages in an amount sufficient to punish and deter Intel's
wrongful conduct. Additionally, the Company requested that Intel
be enjoined from continuing the alleged wrongful conduct which is
anticompetitive and/or violates federal antitrust laws, so as to
permit Intergraph uninterrupted development and sale of Intel-
based products.
On November 21, 1997, the Company filed a motion in the
Alabama Court to enjoin Intel from disrupting or delaying its
supply of products and product information pending resolution of
Intergraph's legal action. On April 10, 1998, the Alabama Court
ruled in favor of Intergraph and enjoined Intel from any action
adversely affecting Intel's business relationship with Intergraph
or Intergraph's ability to design, develop, produce, manufacture,
market or sell products incorporating, or based upon, Intel
products or information. On April 16, 1998, Intel appealed to
the United States Court of Appeals for the Federal Circuit (the
"Appeals Court"), and on November 5, 1999, the Appeals Court
vacated the preliminary injunction that had been entered by the
Alabama Court. This ruling by the Appeals Court did not impact
the Company's operations due to an Agreement and Consent Order
which Intel entered into with the Federal Trade Commission on
March 17, 1999 not to restrict sales or take coercive actions
such as those alleged by the Company in its lawsuit against
Intel.
On June 17, 1998, Intel filed its answer in the Alabama case,
which included counterclaims against Intergraph, including claims
that Intergraph had infringed seven patents of Intel. On July 8,
1998, the Company filed its answer to the Intel counterclaims,
among other things denying any liability under the patents
asserted by Intel. The Company does not believe that Intel's
counterclaims, including the alleged infringement of Intel
patents, will result in a material adverse consequence for the
Company.
On June 17, 1998, Intel filed a motion before the Alabama
Court requesting a determination that Intel is licensed to use
the Clipper Patents. This "license defense" was based on Intel's
interpretation of the Company's acquisition of the Advanced
Processor Division of Fairchild Semiconductor Corporation in
1987. On September 15, 1998, the Company filed a cross motion
with the Alabama Court requesting summary adjudication of the
"license defense" in favor of the Company. On November 13, 1998,
the Company amended its complaint to include two additional
counts of patent infringement against Intel. The Company
requested the court to issue a permanent injunction enjoining
Intel from further infringement and to order that the financial
impact of the infringement be calculated and awarded in treble to
Intergraph. On June 4, 1999, the Alabama Court granted the
Company's September 15, 1998 motion and ruled that Intel had no
license to use the Company's Clipper Patents. However, on
October 12, 1999, the Alabama Court reversed its June 4, 1999
order and dismissed the Company's patent claims against Intel
based upon Intel's "license defense". The Company appealed the
Alabama Court's October 12, 1999 order to the United States Court
of Appeals for the Federal Circuit. On March 1, 2001, the
Appeals Court reversed the October 12, 1999 decision of the
Alabama Court, specifically holding that Intel was never licensed
under the Company's Clipper patents. On March 15, 2001, Intel
filed a petition for rehearing with the Appeals Court, requesting
that it reconsider its March 1, 2001 decision. A decision on
Intel's request is expected to be issued before May 1, 2001. The
Company believes that the Federal Circuit's March 1, 2001 patent
license decision is well supported by law and fact, and will
continue to aggressively pursue its patent case for the payment
of royalties by Intel for their use of the Company's Clipper
technology in Intel's Pentium line of products.
On March 10, 2000, the Alabama Court entered an order
dismissing the antitrust claims of the Company. This dismissal
was based in part upon a February 17, 2000 decision by the
Appeals Court in another case (CSU v. Xerox). The Company
believes this dismissal to be in error and intends to pursue its
antitrust case against Intel. On April 26, 2000, the Company
appealed this dismissal to the United States Court of Appeals for
the Federal Circuit. The oral argument for this appeal was heard
on March 5, 2001. No decision has been issued by the Appeals
Court. However, on February 20, 2001, the US Supreme Court
denied CSU's request for appeal in CSU v. Xerox. The Supreme
Court's denial of CSU's appeal may have an adverse impact on the
Company's antitrust appeal. However, the Company does not
believe that the outcome of the antitrust appeal will materially
affect the Company's remaining claims or the value of the overall
lawsuit.
On March 17, 2000, Intel filed a series of motions in the
Alabama Court to dismiss certain Alabama state law claims of the
Company. The Company filed its responses to Intel's motions on
July 17, 2000, together with its own motions to dismiss certain
Intel counter-claims. Intel's responses were filed on November
3, 2000. The Alabama Court has taken the motions under
submission. No oral argument has been scheduled, and no decision
has been entered by the Alabama Court.
The trial date for this case, previously scheduled for June
2000, has been continued. A formal schedule has not yet been
entered, and the Company believes that a new trial date will not
be scheduled until after the conclusion of the pending Appeal
process.
During the course of the Intel litigation, the Company has
employed a variety of experts to prepare estimates of the damages
suffered by the Company under various claims of injury brought by
the Company. The following damage estimates were provided to
Intel in the August/September 1999 time frame in due course of
the litigation process: estimated damages for injury covered
under non-patent claims through June 1999 - $100 million and
estimated additional damages for injury covered under non-patent
claims through December 2003 - $400 million, subject to present-
value reduction. These numbers are estimates only and any
recovery of damages in this litigation could be substantially
less than these estimates or substantially greater than these
estimates depending on a variety of factors that cannot be
determined at this time. Factors that could lead to recovery of
substantially less than these estimates include, but are not
limited to, the failure of the Alabama Court or the Appeals Court
to sustain the legal basis for one or more of the Company's
claims, the failure of the jury to award amounts consistent with
these estimates, the failure of the Alabama Court or the Appeals
Court to sustain any jury award in amounts consistent with these
estimates, the settlement by the Company of the Intel litigation
in an amount inconsistent with these estimates, and the failure
of the Company to successfully defend itself against Intel's
patent counterclaims in the Alabama Court and in the Appeals
Court and a consequential recovery by Intel for damages and/or a
permanent injunction against the Company. Factors that could
lead to recovery substantially greater than these estimates
include, but are not limited to, success by the Company in
recovering punitive damages on one or more of its non-patent
claims.
The Company believes it was necessary to take legal action
against Intel in order to defend its former workstation business,
its intellectual property, and the investments of its
shareholders. The Company is vigorously prosecuting its
positions and defending against Intel's claims and believes it
will prevail in these matters, but at present is unable to
predict an outcome. The Company does expect, however, that it
will continue to incur substantial legal and administrative
expenses in connection with the lawsuit.
The Company has other ongoing litigation, none of which is
considered to represent a material contingency for the Company at
this time. However, any unanticipated unfavorable ruling in any
of these proceedings could have an adverse impact on the
Company's results of operations and cash flow.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
Certain information with respect to the executive officers of
the Company is set forth below. Officers serve at the discretion
of the Board of Directors.
Name Age Position Officer Since
- ---- --- -------- -------------
James F. Taylor Jr. 56 Chief Executive Officer and Director 1977
Roger O. Coupland 54 President, Intergraph Public 1991
Safety, Inc.
Graeme J. Farrell 58 Executive Vice President and Managing 1994
Director, Asia Pacific Operations
William E. Salter 59 President, Intergraph Government 1984
Solutions
K. David Stinson Jr. 47 President, Process and Building 1996
Solutions
Preetha R. Pulusani 40 Executive Vice President, Mapping 1997
and GIS Solutions
Edward A. Wilkinson 67 Executive Vice President 1987
Jack C. Ickes 41 Vice President of Corporate Services 2000
David Vance Lucas 39 Vice President and General Counsel 2000
Larry T. Miles 40 Vice President of Finance 2001
Eugene H. Wrobel 58 Vice President and Treasurer 1998
James F. Taylor Jr. joined the Company in July 1969, shortly
after its formation, and is considered a founder. He has served
as a Director since 1973. Mr. Taylor was responsible for the
design and development of the Company's first commercial computer-
aided-design products and for many application specific products.
He was elected Vice President in 1977 and Executive Vice
President in 1982. He assumed management responsibility for the
Company's Public Safety division in 1995. Effective March 2,
2000, he was elected Chief Executive Officer of Intergraph
Corporation. Mr. Taylor holds degrees in mathematics and
physics.
Dr. Roger O. Coupland joined the Company in 1983 as project
manager for the Australian Army AUTOMAP 2 project. Since that
time, he has served as manager of the Company's Mapping and
Utilities division and subsequently, as the Company's Federal
Sales Director. Dr. Coupland was elected Vice President in 1991,
with responsibility for the Company's Dispatch Management
division, and Executive Vice President in January 2001. He
currently serves as President of the Company's Intergraph Public
Safety business segment. Dr. Coupland holds a First Class Honors
degree in Physics and a Ph.D. in Theoretical Physics from The
University of Nottingham, England.
Graeme J. Farrell joined the Company in February 1986 as the
Financial Controller for Intergraph's subsidiaries in Australia
and New Zealand. In 1987, the Company appointed him Finance
Director for its Asia Pacific region. He was elected Vice
President of Business Operations for Asia Pacific in 1994, and in
August 1999 he was elected Executive Vice President. Prior to
joining the Company, Mr. Farrell was involved in accounting
software development for five years, and prior to that he was
Finance director of Dennison Manufacturing's (USA) Australian
operations for five years. Mr. Farrell is a Chartered Secretary
and qualified accountant holding a public practice certificate.
Dr. William E. Salter joined the Company in April 1973. Since
that time, he has served in several managerial positions in the
Company's Federal Systems business and as Director of Marketing
Communications. Dr. Salter was elected Vice President in August
1984 and is currently an Executive Vice President of the Company
and President of Intergraph Government Solutions. He holds a
doctorate in electrical engineering.
K. David Stinson Jr. joined the Company in 1996. Prior to
joining the Company, Mr. Stinson acted as Vice President of
Engineering and Nuclear Projects for the Tennessee Valley
Authority ("TVA"), the nation's largest government owned electric
power utility. Before joining TVA, he was founder and Chief
Executive Officer of Digital Engineering, with responsibility for
developing software to assist with the operations, maintenance,
and environmental qualification of nuclear facilities and other
process plants. Mr. Stinson was elected Executive Vice President
in 1996 and currently serves as President of the Company's
Process and Building Solutions business segment. He is a
graduate of the U.S. Air Force Academy and holds a masters degree
in management administration science.
Preetha R. Pulusani joined the Company in 1980 as a software
engineer, and since that time has held several positions in the
areas of marketing and development of mapping technology for the
Company. She was elected Vice President in 1997 and has served
as Executive Vice President, with responsibility for the Mapping
and Geographic Information Systems business of Intergraph, since
August 1998. Ms. Pulusani holds a master's degree in computer
science.
Edward A. Wilkinson joined the Company in 1985 as Director of
Government Relations. He was elected Vice President of Federal
Systems in 1987 and Executive Vice President in 1994. Prior to
joining the Company, Mr. Wilkinson served 34 years in the U.S.
Navy, retiring with the rank of Rear Admiral. He holds a
master's degree in mechanical engineering.
Jack C. Ickes joined the Company in January 1991. Since that
time, he has held several managerial positions in the Company's
hardware business. He was elected a Vice President of
Intergraph Computer Systems in July 1999 and a Vice President of
the Company in December 2000. Mr. Ickes currently serves as the Vice
President of Corporate Services. He holds a bachelor of science
degree in electrical engineering.
David Vance Lucas joined the Company in 1994 as a staff
attorney responsible for corporate, commercial and intellectual
property representation. He was promoted to Senior Counsel in
1997 and elected Vice President and General Counsel in 2000. Mr.
Lucas continues to represent the Company in the areas noted
above, as well as managing the Company's litigation. Prior to
joining the Company, Mr. Lucas was a partner with the law firm of
Johnson, Johnson & Moore. He is admitted to practice before the
United States Supreme Court, United States Court of Appeals for
the Federal Circuit and the Eleventh Circuit, as well as the
Federal and State Courts within Alabama. Mr. Lucas holds a
bachelor's degree in corporate finance and economics and a juris
doctor in law.
Larry T. Miles joined the Company in 1988 as a tax accountant,
and since that time has held several positions in the finance and
accounting areas. He has served as the Company's Management
Reporting Manager since 1998 and was elected Vice President of
Finance in March 2001. Before joining Intergraph, Mr. Miles
worked in public accounting for six years. He holds a bachelor's
degree in accounting and is a certified public accountant.
Eugene H. Wrobel joined the company in 1982 as Finance Director
in Europe. He returned to the U.S. in August 1985 as Director of
International Finance, and in January 1990 was appointed Director
of Business Operations for the Americas (the United States,
Canada, and Latin America). He transferred into the Treasury
Department in April 1998 and was elected Vice President and
Treasurer in November 1998. He holds a bachelor's degree in
accounting and is a certified public accountant.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
SHAREHOLDER MATTERS
The information appearing under "Dividend Policy" and "Price
Range of Common Stock" on page 60 of the Intergraph Corporation
2000 annual report to shareholders is incorporated by reference
in this Form 10-K annual report.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data for the five years ended December 31,
2000 appearing under "Five Year Financial Summary" on the inside
front page of the Intergraph Corporation 2000 annual report to
shareholders is incorporated by reference in this Form 10-K
annual report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and
Results of Operations appearing on pages 16 to 32 of the
Intergraph Corporation 2000 annual report to shareholders is
incorporated by reference in this Form 10-K annual report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Information relating to the Company's market risks appearing
under "Impact of Currency Fluctuations and Currency Risk
Management" and "Liquidity and Capital Resources" in Management's
Discussion and Analysis of Financial Condition and Results of
Operations appearing on pages 27 to 32 of the Intergraph
Corporation 2000 annual report to shareholders is incorporated by
reference in this Form 10-K annual report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and report of independent
auditors appearing on pages 33 to 60 of the Intergraph
Corporation 2000 annual report to shareholders are incorporated
by reference in this Form 10-K annual report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The information appearing under "Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance"
on pages 4 to 7 of the Intergraph Corporation proxy
statement relative to the annual meeting of shareholders to be
held May 17, 2001, is incorporated by reference in this Form 10-K
annual report. Directors are elected for terms of one year at
the annual meeting of the Company's shareholders.
Information relating to the executive officers of the Company
appearing under "Executive Officers of the Company" on pages 12
to 13 in this Form 10-K annual report is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The information appearing under "Executive Compensation" on
pages 7 to 15 of the Intergraph Corporation proxy statement
relative to the annual meeting of shareholders to be held May 17,
2001, is incorporated by reference in this Form 10-K annual
report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information appearing under "Common Stock Outstanding and
Principal Shareholders" on pages 1 to 4 of the Intergraph
Corporation proxy statement relative to the annual meeting of
shareholders to be held May 17, 2001, is incorporated by
reference in this Form 10-K annual report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON
FORM 8-K
Page in
Annual Report *
---------------
(a) 1) The following consolidated financial statements of
Intergraph Corporation and subsidiaries and the
report of independent auditors thereon are
incorporated by reference from the Intergraph
Corporation 2000 annual report to shareholders:
Consolidated Balance Sheets at December 31, 2000
and 1999 33
Consolidated Statements of Operations for the
three years ended December 31, 2000 34
Consolidated Statements of Cash Flows for the
three years ended December 31, 2000 35
Consolidated Statements of Shareholders' Equity
for the three years ended December 31, 2000 36
Notes to Consolidated Financial Statements 37-59
Report of Independent Auditors 60
* Incorporated by reference from the indicated pages of the 2000 annual
report to shareholders.
Page in
Form 10-K
---------
2) Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts
and Reserves for the three years ended
December 31, 2000 20
All other schedules are omitted because they are not applicable
or the required information is shown in the financial statements
or notes thereto.
Financial statements of 50%-or-less-owned companies have been
omitted because the registrant's proportionate share of income
before income taxes of the companies is less than 20% of
consolidated income before income taxes, and the investments in and
advances to the companies are less than 20% of consolidated total
assets.
3) Exhibits
Page in
Number Description Form 10-K
------ ----------- ---------
3(a) Certificate of Incorporation, Bylaws, and Certificate
of Merger (1).
3(b) Amendment to Certificate of Incorporation (2).
3(c) Restatement of Bylaws (3).
4 Shareholder Rights Plan, dated August 25, 1993 (4)
and amendment dated March 16, 1999 (10).
10(a)* Employment Contract of Manfred Wittler dated
November 1, 1989 (5) and amendments dated
February 18, 1998 (8) and June 7, 1999 (12).
10(b) Amended and Restated Loan and Security Agreement,
by and between Intergraph Corporation and Foothill
Capital Corporation, dated November 30, 1999 (12).
10(c)* Intergraph Corporation 1997 Stock Option Plan (6)
and amendment dated January 11, 1999 (11).
10(d) Indemnification Agreement between Intergraph
Corporation and each member of the Board of Directors
of the Company dated June 3, 1997 (7).
10(e)* Intergraph Corporation Nonemployee Director Stock
Option Plan (8).
10(f) Asset Purchase Agreement by and among SCI Technology,
Inc. as Buyer and Intergraph Corporation as Seller
dated November 13, 1998, with Exhibits and
Schedule 1 (9).
10(g)* Employment Contract of John W. Wilhoite dated
August 23, 1999.
10(h)* Employment Contract of Graeme J. Farrell dated
March 26, 1997.
10(i)* Employment Contract of Lewis N. Graham, Jr. dated
February 6, 2001.
10(j)* Z/I Imaging Corporation 1999 Stock Option Plan.
10(k)* Z/I Imaging Corporation 2000 Stock Option Plan.
13 Portions of the Intergraph Corporation 2000 Annual
Report to Shareholders incorporated by reference
in this Form 10-K Annual Report
21 Subsidiaries of the Company 21
23 Consent of Independent Auditors 22
99 Consent of Linda L. Green
*Denotes management contract or compensatory plan, contract, or
arrangement required to be filed as an Exhibit to this Form 10-K
- ------------
(1) Incorporated by reference to exhibits filed with the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1984, under the Securities Exchange Act
of 1934, File No. 0-9722.
(2) Incorporated by reference to exhibits filed with the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1987, under the Securities Exchange
Act of 1934, File No. 0-9722.
(3) Incorporated by reference to exhibits filed with the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993, under the Securities Exchange
Act of 1934, File No. 0-9722.
(4) Incorporated by reference to exhibits filed with the
Company's Current Report on Form 8-K dated August 25, 1993,
under the Securities Exchange Act of 1934, File No. 0-9722.
(5) Incorporated by reference to exhibits filed with the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992, under the Securities Exchange Act of
1934, File No. 0-9722.
(6) Incorporated by reference to exhibits filed with the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996, under the Securities Exchange Act of
1934, File No. 0-9722.
(7) Incorporated by reference to exhibits filed with the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997, under the Securities Exchange Act
of 1934, File No. 0-9722.
(8) Incorporated by reference to exhibits filed with the
Company's Annual Report on Form 10-K for the year ended
December 31, 1997, under the Securities Exchange Act of
1934, File No. 0-9722.
(9) Incorporated by reference to exhibits filed with the
Company's Current Report on Form 8-K dated November 13, 1998,
under the Securities Exchange Act of 1934, File No. 0-9722.
(10) Incorporated by reference to exhibits filed with the Company's
Annual Report on Form 10-K for the year ended December 31, 1998,
under the Securities Exchange Act of 1934, File No. 0-9722.
(11) Incorporated by reference to exhibit filed with the Company's
Registration Statement on Form S-8 dated May 24, 1999, under
the Securities Exchange Act of 1933, File No. 333-79137.
(12) Incorporated by reference to exhibits filed with the Company's
Annual Report on Form 10-K for the year ended December 31, 1999,
under the Securities Exchange Act of 1934, File No. 0-9722.
- ----------
(b) Reports on Form 8-K - on December 22, 2000, the Company filed
a Current Report on Form 8-K, reporting a resolution by the
Company's Board of Directors to terminate the Company's Stock
Bonus Plan. See Note 11 of Notes to Consolidated Financial
Statements contained in the Company's 2000 annual report,
portions of which are incorporated by reference in this Form
10-K annual report, for further discussion.
(c) Exhibits - the response to this portion of Item 14 is
submitted as a separate section of this report.
(d) Financial statement schedules - the response to this portion
of Item 14 is submitted as a separate section of this report.
- ----------
Information contained in this Form 10-K annual report includes
statements that are forward looking as defined in Section 21E of
the Securities Exchange Act of 1934. Actual results could differ
materially from those projected in the forward looking
statements. Information concerning factors that could cause
actual results to differ materially from those in the forward
looking statements is contained in the "Management's Discussion
and Analysis of Financial Condition and Results of Operations"
section of the Company's 2000 annual report, portions of which
are incorporated by reference in this Form 10-K annual report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
INTERGRAPH CORPORATION
By /s/ James F. Taylor Jr. Date: March 22, 2001
------------------------
James F. Taylor Jr.
Chief Executive Officer
(Principal Executive Officer)
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 and on the
dates indicated.
Date
----
Chairman of the Board March __, 2001
- --------------------------
James W. Meadlock
/s/ James F. Taylor Jr. Chief Executive Officer
- -------------------------- and Director March 22, 2001
James F. Taylor Jr.
/s/ Lawrence R. Greenwood Director March 23, 2001
- --------------------------
Lawrence R. Greenwood
/s/ Larry J. Laster Director March 22, 2001
- --------------------------
Larry J. Laster
/s/ Thomas J. Lee Director March 26, 2001
- --------------------------
Thomas J. Lee
/s/ Sidney L. McDonald Director March 23, 2001
- --------------------------
Sidney L. McDonald
Director March __, 2001
- --------------------------
Joe C. Moquin
Director March __, 2001
- --------------------------
Robert E. Thurber
/s/ Larry T. Miles Vice President of Finance March 22, 2001
- -------------------------- (Principal Financial and
Larry T. Miles Accounting Officer)
INTERGRAPH CORPORATION AND SUBSIDIARIES
SCHEDULE II ---- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Column A Column B Column C Column D Column E
- --------------------- ----------- ---------- ----------- -------------
Additions
Balance at charged to
beginning costs and Balance at
Description of period expenses Deductions end of period
- --------------------- ----------- ---------- ----------- -------------
Allowance for doubtful
accounts deducted
from accounts
receivable in
the balance sheet 2000 $16,066,000 5,507,000 3,404,000 (1) $18,169,000
1999 $13,814,000 6,900,000 4,648,000 (1) $16,066,000
1998 $14,488,000 3,168,000 3,842,000 (1) $13,814,000
Allowance for
obsolete inventory
deducted from
inventories in the
balance sheet 2000 $33,896,000 16,089,000 (3) 21,429,000 (2) $28,556,000
1999 $31,249,000 23,187,000 (4) 20,540,000 (2) $33,896,000
1998 $36,508,000 19,346,000 24,605,000 (2) $31,249,000
(1) Uncollectible accounts written off, net of recoveries.
(2) Obsolete inventory reduced to net realizable value.
(3) Includes a $4.7 million inventory write-down resulting from
the Company's exit of the hardware development and design business
in third quarter 2000.
(4) Includes a $7 million inventory write-down resulting from the
Company's exit from the personal computer and
generic server businesses in third quarter 1999.