##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
   o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
   INTERGRAPH CORPORATION
  Delaware
    
    63-0573222(State or other jurisdiction of incorporation or organization)
    
    I.R.S. Employer Identification NoOne Madison Industrial Park, Huntsville, Alabama
    
    35894-0001(Address of principal executive offices)
    
    (Zip Code)
 (256) 730-2000
  x o
  x o o
 o x




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##### 



INTERGRAPH CORPORATION
FORM 10-Q*
September 30, 2006
 INDEX
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Unaudited Financial StatementsConsolidated Balance Sheets at September 30, 2006 and
December 31, 2005
    
    
    2Consolidated Statements of Income for the three months and
nine months ended September 30, 2006 and 2005
    
    
    3Consolidated Statements of Cash Flows for the nine months
ended September 30, 2006 and 2005
    
    
    4Notes to Consolidated Financial Statements
    
    
    5 - 18Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    18 - 28Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    28 - 29PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29 - 30Item 1A. Risk Factors
    
    
    30 - 31Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31 - 32Item 6. Exhibits
    
    
    32SIGNATURES
    
    
    33EX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32 SECTION 906 CERTIFICATION OF THE CEO & CFO
  
  -1-




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 INTERGRAPH CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 September 30,
    
    
    December 31,2006
    
    
    2005(In thousands, except share and per share amounts)AssetsCash and cash equivalents
    
    $
    152,285
    
    
    $
    218,897Short-term investments
    
    
    125,491
    
    
    
    88,280Accounts receivable, net
    
    
    178,470
    
    
    
    158,295Inventories, net
    
    
    27,187
    
    
    
    23,467Receivables from IP-related litigation
    
    
    250
    
    
    
    5,805Other current assets
    
    
    42,624
    
    
    
    34,024Total current assets
    
    
    526,307
    
    
    
    528,768Investments
    
    
    9,309
    
    
    
    9,375Capitalized software development costs, net
    
    
    24,615
    
    
    
    23,482Other assets, net
    
    
    21,083
    
    
    
    9,890Property, plant, and equipment, net
    
    
    50,012
    
    
    
    49,079Total Assets
    
    $
    631,326
    
    
    $
    620,594Liabilities and Shareholders EquityTrade accounts payable
    
    $
    18,629
    
    
    $
    17,172Accrued compensation
    
    
    38,665
    
    
    
    38,518Other accrued expenses
    
    
    41,711
    
    
    
    41,290Deferred revenue
    
    
    67,758
    
    
    
    58,489Income taxes payable
    
    
    38,475
    
    
    
    38,104Short-term debt
    
    
    432
    
    
    
    453Total current liabilities
    
    
    205,670
    
    
    
    194,026Deferred income taxes
    
    
    8,150
    
    
    
    7,177Long-term debt
    
    
    
    
    
    
    318Other noncurrent liabilities
    
    
    151
    
    
    
    211Total noncurrent liabilities
    
    
    8,301
    
    
    
    7,706Shareholders equity:Common stock, par value $0.10 per share - 100,000,000
shares authorized; 57,361,362 shares issued
    
    
    5,736
    
    
    
    5,736Additional paid-in capital
    
    
    177,635
    
    
    
    191,275Deferred compensation
    
    
    
    
    
    
    (13,462
    )Retained earnings
    
    
    933,162
    
    
    
    881,719Accumulated other comprehensive income
    
    
    20,273
    
    
    
    8,6511,136,806
    
    
    
    1,073,919Less - cost of treasury shares (27,923,213 shares at September 30, 2006,
and 28,250,554 shares at December 31, 2005)
    
    
    (719,451
    )
    
    
    (655,057
    )Total shareholders equity
    
    
    417,355
    
    
    
    418,862Total Liabilities and Shareholders Equity
    
    $
    631,326
    
    
    $
    620,594
  -2-




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INTERGRAPH CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands, except per share amounts)RevenuesSystems
    
    $
    79,240
    
    
    $
    78,543
    
    
    $
    228,771
    
    
    $
    222,923Maintenance
    
    
    43,716
    
    
    
    38,470
    
    
    
    122,480
    
    
    
    113,057Services
    
    
    33,902
    
    
    
    32,863
    
    
    
    97,394
    
    
    
    95,739Total revenues
    
    
    156,858
    
    
    
    149,876
    
    
    
    448,645
    
    
    
    431,719Cost of revenuesSystems
    
    
    37,169
    
    
    
    42,874
    
    
    
    107,431
    
    
    
    113,089Maintenance
    
    
    10,695
    
    
    
    9,801
    
    
    
    31,865
    
    
    
    31,465Services
    
    
    24,349
    
    
    
    24,019
    
    
    
    69,899
    
    
    
    69,926Total cost of revenues
    
    
    72,213
    
    
    
    76,694
    
    
    
    209,195
    
    
    
    214,480Gross profit
    
    
    84,645
    
    
    
    73,182
    
    
    
    239,450
    
    
    
    217,239Operating expensesProduct development
    
    
    15,048
    
    
    
    14,596
    
    
    
    46,645
    
    
    
    44,796Sales and marketing
    
    
    31,914
    
    
    
    30,901
    
    
    
    93,880
    
    
    
    92,989General and administrative
    
    
    17,746
    
    
    
    15,948
    
    
    
    50,400
    
    
    
    48,351Restructuring charges
    
    
    
    
    
    
    5,288
    
    
    
    10,390
    
    
    
    8,966Total operating expenses
    
    
    64,708
    
    
    
    66,733
    
    
    
    201,315
    
    
    
    195,102Income from operations
    
    
    19,937
    
    
    
    6,449
    
    
    
    38,135
    
    
    
    22,137Other income (expense), netIntellectual property income (expense), net
    
    
    (367
    )
    
    
    8,858
    
    
    
    23,657
    
    
    
    136,114Interest income
    
    
    1,980
    
    
    
    2,104
    
    
    
    5,881
    
    
    
    5,868Merger-related expenses
    
    
    (1,155
    )
    
    
    
    
    
    
    (1,639
    )
    
    
    Other income (expense), net
    
    
    629
    
    
    
    1,393
    
    
    
    1,109
    
    
    
    954Total other income (expense), net
    
    
    1,087
    
    
    
    12,355
    
    
    
    29,008
    
    
    
    142,936Income before income taxes
    
    
    21,024
    
    
    
    18,804
    
    
    
    67,143
    
    
    
    165,073Income tax expense
    
    
    (400
    )
    
    
    (5,000
    )
    
    
    (15,700
    )
    
    
    (61,800
    )Net income
    
    $
    20,624
    
    
    $
    13,804
    
    
    $
    51,443
    
    
    $
    103,273Net income
per share - basic
    
    $
    0.70
    
    
    $
    0.48
    
    
    $
    1.75
    
    
    $
    3.44- diluted
    
    $
    0.69
    
    
    $
    0.44
    
    
    $
    1.68
    
    
    $
    3.24Weighted average shares
outstanding - basic
    
    
    29,427
    
    
    
    28,834
    
    
    
    29,338
    
    
    
    29,987- diluted
    
    
    30,068
    
    
    
    31,422
    
    
    
    30,564
    
    
    
    31,835
  -3-




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INTERGRAPH CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Nine Months Ended September 30,
    
    2006
    
    
    2005(In thousands)Cash Provided By (Used For):Operating Activities:Net income
    
    $
    51,443
    
    
    $
    103,273Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation
    
    
    6,036
    
    
    
    6,210Amortization of intangible assets and capitalized software
    
    
    12,185
    
    
    
    12,365Stock based compensation
    
    
    5,387
    
    
    
    3,301Net change in restructuring liabilities
    
    
    2,275
    
    
    
    2,157Provisions for losses on accounts receivable
    
    
    282
    
    
    
    243Income taxes payable
    
    
    921
    
    
    
    19,671Noncurrent portion of deferred taxes
    
    
    445
    
    
    
    (3,349
    )Receivables from IP-related litigation
    
    
    5,555
    
    
    
    40,409Accounts receivable, net
    
    
    (14,034
    )
    
    
    (6,174
    )Net changes in other assets and liabilities
    
    
    (8,911
    )
    
    
    (18,306
    )Net cash provided by operating activities
    
    
    61,584
    
    
    
    159,800Investing Activities:Net proceeds from sales of assets
    
    
    1,014
    
    
    
    641Purchases of property, plant, and equipment
    
    
    (5,063
    )
    
    
    (5,444
    )Purchases of short-term investments
    
    
    (167,925
    )
    
    
    (137,331
    )Proceeds from maturities of short-term investments
    
    
    136,910
    
    
    
    102,483Capitalized software development costs
    
    
    (10,644
    )
    
    
    (7,975
    )Business acquisitions, net of cash acquired
    
    
    (13,546
    )
    
    
    (1,177
    )Other
    
    
    (2,402
    )
    
    
    661Net cash used for investing activities
    
    
    (61,656
    )
    
    
    (48,142
    )Financing Activities:Debt repayment
    
    
    (339
    )
    
    
    (314
    )Treasury stock repurchases
    
    
    (74,054
    )
    
    
    (155,653
    )Proceeds of employee stock purchases and exercises of stock options
    
    
    4,095
    
    
    
    8,169Net cash used for financing activities
    
    
    (70,298
    )
    
    
    (147,798
    )Effect of exchange rate changes on cash
    
    
    3,758
    
    
    
    (6,573
    )Net decrease in cash and cash equivalents
    
    
    (66,612
    )
    
    
    (42,713
    )Cash and cash equivalents at beginning of period
    
    
    218,897
    
    
    
    224,978Cash and cash equivalents at end of period
    
    $
    152,285
    
    
    $
    182,265
  -4-




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INTERGRAPH CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  BASIS OF PRESENTATION
     NOTE 2  STOCK-BASED COMPENSATION
     -5-




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Weighted AverageExercise Price perNumber of Options
    
    
    OptionOutstanding at January 1, 2006
    
    
    1,282,901
    
    
    $
    15.54Granted  Q1
    
    
    
    
    
    
    Exercised  Q1
    
    
    (80,445
    )
    
    
    10.68Forfeited  Q1
    
    
    (26,000
    )
    
    
    22.08Outstanding at March 31, 2006
    
    
    1,176,456
    
    
    $
    15.73Granted  Q2
    
    
    
    
    
    
    Exercised  Q2
    
    
    (46,605
    )
    
    
    15.17Forfeited  Q2
    
    
    (1,500
    )
    
    
    25.06Expired  Q2
    
    
    (1,250
    )
    
    
    5.56Outstanding at June 30, 2006
    
    
    1,127,101
    
    
    $
    15.75Granted  Q3
    
    
    
    
    
    
    Exercised  Q3
    
    
    (29,000
    )
    
    
    11.30Forfeited  Q3
    
    
    (1,000
    )
    
    
    25.06Expired  Q3
    
    
    (1,250
    )
    
    
    5.56Outstanding at September 30, 2006
    
    
    1,095,851
    
    
    $
    15.87
  Weighted Average
    
    AggregateWeighted Average
    
    Remaining
    
    IntrinsicNumber of
    
    Exercise
    
    Contractual Life
    
    ValueOptions
    
    Price
    
    (years)
    
    (In thousands)Vested or expected to vest
    
    
    1,088,571
    
    
    $
    15.82
    
    
    
    5.49
    
    
    $
    29,462Exercisable
    
    
    825,311
    
    
    $
    13.28
    
    
    
    4.91
    
    
    $
    24,429
   -6-




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Weighted AverageNumber of
    
    
    Grant-Date FairRestricted Stock
    
    
    ValueShares/Units
    
    
    per ShareNon-vested at January 1, 2006
    
    
    641,628
    
    
    $
    27.32Granted  Q1
    
    
    101,000
    
    
    
    38.83Vested  Q1
    
    
    (140,615
    )
    
    
    24.96Forfeited  Q1
    
    
    (15,862
    )
    
    
    25.88Non-vested at March 31, 2006
    
    
    586,151
    
    
    $
    29.91Granted  Q2
    
    
    122,380
    
    
    
    39.92Vested  Q2
    
    
    (21,090
    )
    
    
    28.81Forfeited  Q2
    
    
    (9,749
    )
    
    
    43.61Non-vested at June 30, 2006
    
    
    677,692
    
    
    $
    31.56Granted  Q3
    
    
    5,000
    
    
    
    42.72Vested  Q3
    
    
    (17,375
    )
    
    
    26.28Forfeited  Q3
    
    
    (18,687
    )
    
    
    26.58Non-vested at September 30, 2006
    
    
    646,630
    
    
    $
    31.93
  Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2005(In thousands)Net income, as reported
    
    $
    13,804
    
    
    $
    103,273Deduct: Total
stock-based compensation
expense determined under
fair-value-based method
for all awards (net of
income tax)
    
    
    (150
    )
    
    
    (795
    )Pro forma net income
    
    $
    13,654
    
    
    $
    102,478Basic income per share:As reported
    
    $
    0.48
    
    
    $
    3.44Pro forma
    
    $
    0.47
    
    
    $
    3.42Diluted income per share:As reported
    
    $
    0.44
    
    
    $
    3.24Pro forma
    
    $
    0.43
    
    
    $
    3.22
  -7-




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NOTE 3  INVENTORIES
  September 30,
    
    
    December 31,2006
    
    
    2005(In thousands)Raw materials
    
    $
    3,409
    
    
    $
    8,150Work-in-process
    
    
    11,177
    
    
    
    8,068Finished goods
    
    
    10,549
    
    
    
    5,479Service spares
    
    
    2,052
    
    
    
    1,770Totals
    
    $
    27,187
    
    
    $
    23,467
   NOTE 4  CAPITALIZED SOFTWARE DEVELOPMENT COSTS
  -8-




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NOTE 5  INTANGIBLE ASSETS
   September 30, 2006
    
    
    December 31, 2005Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedGross
    
    
    Amortization
    
    
    Net
    
    
    Gross
    
    
    Amortization
    
    
    Net(In thousands)Capitalized software
development
    
    $
    85,722
    
    
    $
    (61,107
    )
    
    $
    24,615
    
    
    $
    75,078
    
    
    $
    (51,596
    )
    
    $
    23,482Other intangible assets
    
    
    50,978
    
    
    
    (39,005
    )
    
    
    11,973
    
    
    
    43,281
    
    
    
    (36,331
    )
    
    
    6,950Goodwill
    
    
    6,839
    
    
    
    
    
    
    
    6,839
    
    
    
    208
    
    
    
    
    
    
    
    208Totals
    
    $
    143,539
    
    
    $
    (100,112
    )
    
    $
    43,427
    
    
    $
    118,567
    
    
    $
    (87,927
    )
    
    $
    30,640
   NOTE 6  PROPERTY, PLANT, AND EQUIPMENT, NET
  NOTE 7  SUPPLEMENTARY CASH FLOW INFORMATION
  -9-




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Nine Months Ended September 30,
    
    2006
    
    
    2005(In thousands)(Increase) decrease in:Inventories, net
    
    $
    (3,330
    )
    
    $
    (717
    )Deferred tax assets
    
    
    1,654
    
    
    
    524Other assets
    
    
    (9,638
    )
    
    
    (1,757
    )Increase (decrease) in:Trade accounts payable
    
    
    802
    
    
    
    (3,050
    )Accrued compensation and other accrued expenses
    
    
    (4,919
    )
    
    
    (6,527
    )Deferred revenue
    
    
    7,306
    
    
    
    (6,762
    )Other liabilities
    
    
    (786
    )
    
    
    (17
    )Net changes in other assets and liabilities
    
    $
    (8,911
    )
    
    $
    (18,306
    )
  NOTE 8  EARNINGS PER SHARE
  NOTE 9  COMPREHENSIVE INCOME
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Net income
    
    $
    20,624
    
    
    $
    13,804
    
    
    $
    51,443
    
    
    $
    103,273Unrealized holding
gains (losses)
arising during the
period
    
    
    372
    
    
    
    
    
    
    
    5,669
    
    
    
    (40
    )Translation
adjustment for
financial
statements
denominated in a
foreign currency
    
    
    2,229
    
    
    
    (647
    )
    
    
    5,953
    
    
    
    (8,362
    )Comprehensive income
    
    $
    23,225
    
    
    $
    13,157
    
    
    $
    63,065
    
    
    $
    94,871
 -10-




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NOTE 10  RESTRUCTURING CHARGES
  OtherOne-time
    
    
    Associated
    
    
    TotalSeverance
    
    
    Costs
    
    
    Restructuring(In thousands)Accrual balance, December 31, 2005
    
    $
    1,865
    
    
    $
    373
    
    
    $
    2,238Restructuring charges  Q1 2006
    
    
    3,508
    
    
    
    1,166
    
    
    
    4,674Costs paid or otherwise settled  Q1 2006
    
    
    (2,613
    )
    
    
    (1,163
    )
    
    
    (3,776
    )Foreign currency exchange  Q1 2006
    
    
    43
    
    
    
    
    
    
    
    43Accrual balance, March 31, 2006
    
    
    2,803
    
    
    
    376
    
    
    
    3,179Restructuring charges  Q2 2006
    
    
    4,580
    
    
    
    1,136
    
    
    
    5,716Costs paid or otherwise settled  Q2 2006
    
    
    (3,335
    )
    
    
    (1,087
    )
    
    
    (4,422
    )Foreign currency exchange  Q2 2006
    
    
    59
    
    
    
    (2
    )
    
    
    57Accrual balance, June 30, 2006
    
    
    4,107
    
    
    
    423
    
    
    
    4,530Restructuring charges  Q3 2006
    
    
    
    
    
    
    
    
    
    
    Costs paid or otherwise settled  Q3 2006
    
    
    (1,970
    )
    
    
    (356
    )
    
    
    (2,326
    )Foreign currency exchange  Q3 2006
    
    
    71
    
    
    
    
    
    
    
    71Accrual balance, September 30, 2006
    
    $
    2,208
    
    
    $
    67
    
    
    $
    2,275
  -11-




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NOTE 11  INTELLECTUAL PROPERTY INCOME, NET
    NOTE 12  SHORT-TERM INVESTMENTS
  Available-for-sale securities
    
    September 30, 2006
    
    
    December 31, 2005(In thousands)Debt securities:Due within one year
    
    $
    36,080
    
    
    $
    Due after one year through five years
    
    
    
    
    
    
    400Due after five years through ten years
    
    
    2,865
    
    
    
    5,360Due after ten years
    
    
    80,350
    
    
    
    82,520119,295
    
    
    
    88,280Equity securities
    
    
    6,196
    
    
    
    Total available-for-sale securities
    
    $
    125,491
    
    
    $
    88,280
 NOTE 13  SEGMENT REPORTING
  -12-




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-13-




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Revenues:PP&M:Unaffiliated customers
    
    $
    55,277
    
    
    $
    41,754
    
    
    $
    155,035
    
    
    $
    120,207Intersegment revenues
    
    
    152
    
    
    
    233
    
    
    
    508
    
    
    
    97355,429
    
    
    
    41,987
    
    
    
    155,543
    
    
    
    121,180SG&I:Unaffiliated customers
    
    
    101,279
    
    
    
    106,646
    
    
    
    291,959
    
    
    
    307,155Intersegment revenues
    
    
    767
    
    
    
    1,260
    
    
    
    2,483
    
    
    
    3,411102,046
    
    
    
    107,906
    
    
    
    294,442
    
    
    
    310,566Corporate:Unaffiliated customers
    
    
    302
    
    
    
    1,476
    
    
    
    1,651
    
    
    
    4,357Intersegment revenues
    
    
    (28
    )
    
    
    82
    
    
    
    48
    
    
    
    230274
    
    
    
    1,558
    
    
    
    1,699
    
    
    
    4,587157,749
    
    
    
    151,451
    
    
    
    451,684
    
    
    
    436,333Eliminations
    
    
    (891
    )
    
    
    (1,575
    )
    
    
    (3,039
    )
    
    
    (4,614
    )Total revenues
    
    $
    156,858
    
    
    $
    149,876
    
    
    $
    448,645
    
    
    $
    431,719Operating income (loss):PP&M
    
    $
    15,526
    
    
    $
    8,964
    
    
    $
    40,120
    
    
    $
    22,697SG&I
    
    
    10,528
    
    
    
    2,059
    
    
    
    20,337
    
    
    
    14,866Corporate
    
    
    (6,117
    )
    
    
    (4,574
    )
    
    
    (22,322
    )
    
    
    (15,426
    )Eliminations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    19,937
    
    
    $
    6,449
    
    
    $
    38,135
    
    
    $
    22,137
   NOTE 14  LETTERS OF CREDIT
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NOTE 15  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
    NOTE 16  LITIGATION
  Clipper System Patents:
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BSI Litigation:
    Shareholder Litigation: Emil R. Rossi, Individually and on behalf of all others similarly situated v. Sidney L.
McDonald, R. Halsey Wise, Thomas J. Lee, Lawrence R. Greenwood, Linda L. Green, Richard W. Cardin,
Michael D. Bills, Kevin M. Twomey and Intergraph Corporation Shalom Rechdiener, on behalf of himself and all others
similarly situated v. Sidney L. McDonald, R. Halsey Wise, Thomas J. Lee, Lawrence R. Greenwood,
Linda L. Green, Richard W. Cardin, Michael D. Bills, Kevin M. Twomey, Intergraph Corporation,
Hellman & Friedman LLC, Texas Pacific Group and JMI Equity
 In Re Intergraph Corporation Consolidated
Shareholders Litigation Sidney L. McDonald, R.
Halsey Wise, Larry J. Laster, Thomas J. Lee, Lawrence R. Greenwood, Linda L. Green, Richard W.
Cardin, Michael D. Bills, Kevin M. Twomey, Intergraph Corporation, Hellman & Friedman LLC, Texas
Pacific Group and JMI Equity.
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Other Litigation:
   NOTE 17  INCOME TAXES
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NOTE 18  BUSINESS ACQUISITION
  NOTE 19  PROPOSED MERGER AGREEMENT
   
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Cautionary Note Regarding Forward-Looking Statements
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Overview
   -19-




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CRITICAL ACCOUNTING POLICIES
    RESULTS OF OPERATIONS
 Revenues
    Systems:
 -23-




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Maintenance:
 Services:
 Gross Margin
  Systems:
 Maintenance:
 Services:
 Operating Expenses
  -24-




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Product Development Expenses:
 Sales and Marketing Expenses:
 General and Administrative Expenses:
 Restructuring Charges:
 Non-Operating Income and Expense
 Intellectual Property:
     -25-




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Other:
 Income Taxes
         Results by Operating Segment
  -26-




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LITIGATION AND OTHER RISKS AND UNCERTAINTIES
  LIQUIDITY AND CAPITAL RESOURCES
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Impact of Currency Fluctuations and Currency Risk Management
  .
 Impact of Interest Rates on Investment Earnings
  
 ITEM 4. CONTROLS AND PROCEDURES
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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  Clipper System Patents:
  BSI Litigation:
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Shareholder Litigation: Emil R. Rossi,
Individually and on behalf of all others similarly situated v. Sidney L. McDonald, R. Halsey Wise,
Thomas J. Lee, Lawrence R. Greenwood, Linda L. Green, Richard W. Cardin, Michael D. Bills, Kevin M.
Twomey and Intergraph Corporation Shalom Rechdiener, on behalf of himself and all others similarly situated v. Sidney L.
McDonald, R. Halsey Wise, Thomas J. Lee, Lawrence R. Greenwood, Linda L. Green, Richard W. Cardin,
Michael D. Bills, Kevin M. Twomey, Intergraph Corporation, Hellman & Friedman LLC, Texas Pacific
Group and JMI Equity
 In Re Intergraph Corporation Consolidated Shareholders
Litigation Sidney L. McDonald, R. Halsey Wise, Larry J. Laster,
Thomas J. Lee, Lawrence R. Greenwood, Linda L. Green, Richard W. Cardin, Michael D. Bills, Kevin M.
Twomey, Intergraph Corporation, Hellman & Friedman LLC, Texas Pacific Group and JMI Equity
 Other Litigation:
 
 ITEM 1A. RISK FACTORS
  The proposed merger with entities primarily sponsored by Hellman & Friedman, LLC and Texas
Pacific Group (see Note 19 of Notes to Consolidated Financial Statements) is subject to certain
closing conditions and is the subject of certain lawsuits that could result in the merger not being
completed, which may in turn result in a decline in the price of the Companys common stock.
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Whether or not the merger with entities primarily sponsored by Hellman & Friedman, LLC and Texas
Pacific Group is completed, the announcement and pendency of the merger could cause disruptions in
operations, which could have an adverse effect on Intergraphs business and financial results.
    
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ISSUER PURCHASES OF EQUITY SECURITIES
 
 Total Number of
    
    
    Approximate Dollar ValueTotal
    
    
    
    
    
    
    Shares Purchased
    
    
    of Shares that May Yet BeNumber of
    
    
    Average
    
    
    as Part of Publicly
    
    
    Purchased Under theShares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    Plans or ProgramsPeriod
    
    Purchased
    
    
    per Share(1)
    
    
    or Programs(2)
    
    
    ($000)(3)07/1/06 - 07/31/06
    
    
    6,564
    
    
    $
    35.34
    
    
    
    6,564
    
    
    $
    99,76808/1/06 - 08/31/06
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,76809/1/06 - 09/30/06
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,768Total third quarter
    
    
    6,564
    
    
    $
    35.34
    
    
    
    6,564
    
    
    $
    99,768
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ITEM 6. EXHIBITS
  ExhibitNumber
    
    Description31.1
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
by R. Halsey Wise dated November 6, 200631.2
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
by Anthony Colaluca, Jr. dated November 6, 200632
    
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
by R. Halsey Wise and Anthony Colaluca, Jr. dated November 6, 2006
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INTERGRAPH CORPORATION AND SUBSIDIARIES
 
 SIGNATURES
  INTERGRAPH
CORPORATION
 By:
    
    /s/ R. Halsey Wise
    
    By:
    
    /s/ Anthony Colaluca, Jr.R. Halsey Wise
    
    
    
    Anthony Colaluca, Jr.President and
Chief Executive Officer
    
    
    
    Executive Vice President and
Chief Financial Officer(Principal Executive Officer)
    
    
    
    (Principal Financial Officer)Date:
    
    November 6, 2006
    
    Date:
    
    November 6, 2006By:
    
    /s/ Larry T. MilesLarry T. Miles
Vice President and
Corporate Controller(Principal Accounting Officer)Date:
    
    November 6, 2006
 -33-