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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

**FORM 10-Q**

****

(Mark One)

**[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934**

For the quarterly period ended June 30, 2005

OR

**[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934**

For the transition period from _____ to _____

Commission file number 0-9722
| **INTERGRAPH CORPORATION**(Exact name of registrant as specified in its charter)** **    |
|-----------------------------------------------------------------------------------------------|
| **Delaware**(State or other jurisdiction of incorporation or organization)               | **63-0573222**I.R.S. Employer Identification No.   |
| **Huntsville, Alabama 35894-0001** (Address of principal executive offices) (Zip Code)   |
| **(256) 730-2000**(Registrant's telephone number, including area code)                        |

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 theregistrant 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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes    X     No ___

Common stock, par value $0.10 per share:  28,768,212 sharesoutstanding as of July 31, 2005
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**INTERGRAPH CORPORATIONFORM 10-Q*June 30, 2005**

| **INDEX**      |
|----------------|
|                |   |  |  |
|                |   |  |  |
|                |   |  | Page No. |
|                |   |  |  |
| **PART I.**    | **FINANCIAL INFORMATION** |  |
|                | ** ** |  |
|                | Item 1. | Unaudited Financial Statements |  |
|                |   |  |  |
|                | Consolidated Balance Sheets at June 30, 2005, and December 31, 2004 | 2 |
|                |   |  |  |
|                | Consolidated Statements of Income for the quarters and six months                 ended June 30, 2005, and 2004 | 3 |
|                |   |  |  |
|                | Consolidated Statements of Cash Flows for the six months ended                June 30, 2005, and 2004 | 4 |
|                |   |  |  |
|                | Notes to Consolidated Financial Statements | 5 - 15 |
|                |   |  |  |
|                | Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 15 - 23 |
|                |   |  |  |
|                | Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 23 - 24 |
|                |   |  |  |
|                | Item 4. | Controls and Procedures | 24 |
|                |   |  |  |
|                |   |  |  |
| **PART II.**   | **OTHER INFORMATION** |  |
|                |   |  |  |
|                | Item 1. | Legal Proceedings | 24 - 25 |
|                |   |  |  |
|                | Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 25 - 26 |
|           |  |  |  |
|                | Item 4. | Submission of Matters to a Vote of Security Holders | 26 |
|                |   |  |  |
|                | Item 6. | Exhibits | 27 |
|                |   |  |  |
|                |   |  |  |
| **SIGNATURES** |  | 28 |

* Information contained in this Form 10-Q includes statements that are forward-looking as defined in Section 21E of the Securities Exchange Act of 1934.  Actual results may differ materially from those projected in theforward-looking statements.  Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is described in the Company's filings with the Securities and Exchange Commission, including its mostrecent Annual Report on Form 10-K and this Form 10-Q.

Intergraph is a registered trademark of Intergraph Corporation.  All other marks referenced herein are the property of referenced party.

**PART I.   FINANCIAL INFORMATION**

****

**ITEM 1.   FINANCIAL STATEMENTS**

****

**INTERGRAPH CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Unaudited)**
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|------------------------------------------------------|---------------------------------------------------------------------------------------------------------------|--------------------------------------------------|---------------------|---------------------|---|---------------|---------------|--|
|                                                      |                                                                                                               |                                                  | ***June 30, 2005*** | *December 31, 2004* |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
| *(In thousands, except share and per share amounts)* |                                                                                                     |                                                  |                |                     |   |          |
|                                  |                                                                                      |                                                  |                     |                     |   |               |               |  |
| ***Assets***                                         |                                                                                                               |                                                  |                     |                     |   |               |               |
|                                                      | Cash and cash equivalents                                                                                     | **$**                                            | **212,816 **   |                     | $ | 224,978  |               |
|                                                      | Short-term investments                                                                                        |                                                  | **73,035 **    |                     |   | 67,457   |               |
|                                                      | Accounts receivable, net                                                                                      |                                                  | **146,257 **   |                     |   | 155,160  |               |
|                                                      | Inventories, net                                                                                              |                                                  | **26,299 **    |                     |   | 22,253   |               |
|                                                      | Receivables from IP-related litigation                                                                        |                                                  | **551 **       |                     |   | 50,409   |               |
|                                                      | Other current assets                                                                                          |                                                  | **33,356 **    |                     |   | 33,641   |               |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                      |                                                                                                               | ***Total current assets***                       |                     | **492,314 **   |   |               | 553,898  |  |
|                                                      | Investments                                                                                                   |                                                  | **9,499 **     |                     |   | 9,499    |               |
|                                                      | Capitalized software development costs, net                                                                   |                                                  | **24,314 **    |                     |   | 26,201   |               |
|                                                      | Other assets, net                                                                                             |                                                  | **7,108 **     |                     |   | 10,314   |               |
|                                                      | Property, plant, and equipment, net                                                                           |                                                  | **49,320 **    |                     |   | 50,628   |               |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                      |                                                                                                               | ***Total Assets***                               | **$**               | **582,555 **   |   | $             | 650,540  |  |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                 |                                                                                                               |                                                  |                     |                     |   |               |               |  |
| ***Liabilities and Shareholders' Equity***           |                                                                                                               |                                                  |                     |                     |   |               |
|                                                      | Trade accounts payable                                                                                        | **$**                                            | **14,688 **    |                     | $ | 20,915   |               |
|                                                      | Accrued compensation                                                                                          |                                                  | **35,868 **    |                     |   | 40,142   |               |
|                                                      | Other accrued expenses                                                                                        |                                                  | **36,250 **    |                     |   | 42,495   |               |
|                                                      | Billings in excess of sales                                                                                   |                                                  | **49,075 **    |                     |   | 58,263   |               |
|                                                      | Income taxes payable                                                                                          |                                                  | **47,964 **    |                     |   | 22,680   |               |
|                                                      | Short-term debt                                                                                               |                                                  | **429 **       |                     |   | 314      |               |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                      |                                                                                                               | ***Total current liabilities***                  |                     | **184,274 **   |   |               | 184,809  |  |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                      | Deferred income taxes                                                                                         |                                                  | **14,475 **    |                     |   | 15,320   |               |
|                                                      | Long-term debt                                                                                                |                                                  | **656 **       |                     |   | 874      |               |
|                                                      | Other noncurrent liabilities                                                                                  |                                                  | **251 **       |                     |   | 275      |               |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                      |                                                                                                               | ***Total noncurrent liabilities***               |                     | **15,382 **    |   |               | 16,469   |  |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                      | ***Shareholders' equity:***                                                                                   |                                                  |                     |                     |   |               |               |
|                                                      | Common stock, par value $0.10 per share - 100,000,000   shares authorized; 57,361,362 shares issued |                                                  | **5,736 **     |                     |   | 5,736    |               |
|                                                      | Additional paid-in capital                                                                                    |                                                  | **188,049 **   |                     |   | 195,709  |               |
|                                                      | Deferred compensation                                                                                         |                                                  | **(13,193)**        |                     |   | (6,054)       |               |
|                                                      | Retained earnings                                                                                             |                                                  | **856,749 **   |                     |   | 767,280  |               |
|                                                      | Accumulated other comprehensive income                                                                        |                                                  | **10,586 **    |                     |   | 18,341   |               |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                      |                                                                                                               |                                                  |                     | **1,047,927 ** |   |               | 981,012  |  |
|                                                      | Less - cost of treasury shares (28,663,807 at June 30, 2005,   and 24,248,359 at December 31, 2004) |                                                  | **(665,028)**       |                     |   | (531,750)     |               |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                      |                                                                                                               | ***Total shareholders' equity***                 |                     | **382,899 **   |   |               | 449,262  |  |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                      |                                                                                                               | ***Total Liabilities and Shareholders' Equity*** | **$**               | **582,555 **   |   | $             | 650,540  |  |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |
|                                                      |                                                                                                               |                                                  |                     |                     |   |               |               |  |

The accompanying notes are an integral part of these consolidated financial statements.

**INTERGRAPH CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(Unaudited)**
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |
|-------------------------------------------------------|------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------|----------------------|-------------------|
|                                                       | ***Quarter Ended June 30,*** |                                                                                                                                                                                                                                                                                                                                                                      | ***Six Months Ended June 30,*** |
|                                                       | ***2005***                   |                                                                                                                                                                                                                                                                                                                                                            | *2004*                          |                      | ***2005***        | *   * | *2004* |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |
| *(In thousands, except per share amounts)*            |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |
|                                                  |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
| ***Revenues***                                        |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |
|                                        | Systems                      | **$**                                                                                                                                                                                                                                                                                                                                                                | **75,370 **                |    $  | 71,752       | **                 $** | **144,380 ** | $ | 141,487  |
|                                                       | Maintenance                  | **38,087 **                                                                                                                                                                                                                                                                                                                                                     |                                 | 34,587          |                   | **74,587 ** |  | 67,588  |
|                                                       | Services                     | **31,898 **                                                                                                                                                                                                                                                                                                                                                     |                                 | 31,624          |                   | **62,876 ** |  | 61,173  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |
|                                                       |          | ***Total revenues***                                                                                                                                                                                                                                                                                                                                                 | **145,355 **               |                      | 137,963      |  | **281,843 ** |  | 270,248  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |
|                                                  |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
| ***Cost of revenues***                                |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |
|                                                       | Systems                      |                                                                                                                                                                                                                                                                                                                                                                      | **37,144 **                |                      | 35,888       |  | **70,215 ** |  | 70,226  |
|                                                       | Maintenance                  | **10,702 **                                                                                                                                                                                                                                                                                                                                                     |                                 | 10,578          |                   | **21,664 ** |  | 21,056  |
|                                                       | Services                     |                                                                                                                                                                                                                                                                                                                                                                      | **23,104 **                |                      | 21,943       |  | **45,907 ** |  | 42,970  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |
|                                                       |                              | ***Total cost of revenues***                                                                                                                                                                                                                                                                                                                                         | **70,950 **                |                      | 68,409       |  | **137,786 ** |  | 134,252  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                  |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                       |                              | ***Gross profit***                                                                                                                                                                                                                                                                                                                                                   | **74,405 **                |                      | 69,554       |  | **144,057 ** |  | 135,996  |
|                                                  |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
| ***Operating expenses***                              |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |
|                                                       | Product development          | **15,201 **                                                                                                                                                                                                                                                                                                                                                     |                                 | 14,483          |                   | **30,200 ** |  | 29,047  |
|                                                       | Sales and marketing          | **31,712 **                                                                                                                                                                                                                                                                                                                                                     |                                 | 28,174          |                   | **62,088 ** |  | 54,212  |
|                                                       | General and administrative   | **15,717 **                                                                                                                                                                                                                                                                                                                                                     |                                 | 17,746          |                   | **32,403 ** |  | 35,207  |
|                                                       | Restructuring charges        | **1,984 **                                                                                                                                                                                                                                                                                                                                                      |                                 | ---             |                   | **3,678 ** |  | 826  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                       |                              | ***Total operating expenses***                                                                                                                                                                                                                                                                                                                                       | **64,614 **                |                      | 60,403       |  | **128,369 ** |  | 119,292  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |
|                                                  |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                       |                              | ***Income from operations***                                                                                                                                                                                                                                                                                                                                         | **9,791 **                 |                      | 9,151        |  | **15,688 ** |  | 16,704  |
|                                                  |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
| Intellectual property income (expense), net           | **(584)**                    |                                                                                                                                                                                                                                                                                                                                                                      | 7,981                      |                      | **127,256 ** |  | 211,041  |
| Interest income                                       | **1,791 **              |                                                                                                                                                                                                                                                                                                                                                                      | 1,068                      |                      | **3,764 **   |  | 1,949  |
| Other income (expense), net                           | **(239)**                    |                                                                                                                                                                                                                                                                                                                                                                      | (504)                           |                      | **(439)**         |  | 568  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                  |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                       |                              | ***Income before income taxes***                                                                                                                                                                                                                                                                                                                                     | **10,759 **                |                      | 17,696       |  | **146,269 ** |  | 230,262  |
|                                                  |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
| Income tax expense                                    | **(3,220)**                  |                                                                                                                                                                                                                                                                                                                                                                      | (2,800)                         |                      | **(56,800)**      |  | (79,800) |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                  |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                       | ***Net income***             | **$**                                                                                                                                                                                                                                                                                                                                                                | **7,539 **                 | $                    | 14,896       | **$** | **89,469 ** | $ | 150,462  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                  |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
| Net income per share - basic                | **$**                        | **0.27  **                                                                                                                                                                                                                                                                                                                                                 | $                               | 0.41            | **$**             | **2.93 ** | $ | 4.13  |
|                                                       |                              |                           - diluted                                                                                                                                                                                           | **$**                           | **0.25  ** | $                 | 0.39  | **$** | **2.79 ** | $ | 3.96  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
| Weighted average shares outstanding - basic | **28,364 **             |                                                                                                                                                                                                                                                                                                                                                                      | 36,588                     |                      | **30,573 **  |  | 36,428  |
|                                                       |                              |                                                          - diluted |                                 | **30,003 **     |                   | 38,130  |  | **32,028 ** |  | 37,988  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |
|                                                       |                              |                                                                                                                                                                                                                                                                                                                                                                      |                                 |                      |                   |  |  |  |  |

The accompanying notes are an integral part of these consolidated financial statements.

**INTERGRAPH CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)**
|                                                          |                                                                                         |                                                 |                  |                   |                  |               |              |
|----------------------------------------------------------|-----------------------------------------------------------------------------------------|-------------------------------------------------|------------------|-------------------|------------------|---------------|--------------|
| ***Six Months Ended June 30,***                          |                                                                                         | ***2005***                                      |                  | *2004*            |
|                                                          |                                                                                         |                                                 |                  |                   |                  |               |              |
| *(In thousands)*                                         |                                                                                         |                                                 |                  |                   |                  |
|                                      |                                                                                    |                                                 |                  |                   |                  |               |              |
| ***Cash Provided By (Used For): Operating Activities:*** |                                                                                         |                                                 |                  |                   |
|                                                          | Net income                                                                              |                                                 | **$**            | **89,469 **  | $                | 150,462  |
|                                                          | Adjustments to reconcile net income to net cash  provided by operating activities: |                                                 |                  |                   |                  |
|                                                          |                                                                                         | Depreciation                                    |                  |                   | **4,223 **  |               | 4,250   |
|                                                          |                                                                                         | Amortization                                    |                  |                   | **8,321 **  |               | 10,094  |
|                                                          |                                                                                         | Non-cash portion of restructuring charges       |                  | **836 **     |                  | 2        |
|                                                          |                                                                                         | Provisions for losses on accounts receivable    |                  | **767 **     |                  | 871      |
|                                                          |                                                                                         | Income taxes payable                            |                  |                   | **25,198 ** |               | 34,063  |
|                                                          |                                                                                         | Noncurrent portion of deferred taxes            |                  | **(832)**         |                  | (1,099)       |
|                                                          |                                                                                         | Receivables from IP-related litigation          |                  | **49,858 **  |                  | (105,165)     |
|                                                          |                                                                                         | Net changes in other assets and liabilities     |                  | **(20,513)**      |                  | 2,203    |
|                                                          |                                                                                         |                                                 |                  |                   |                  |               |              |
|                                                          |                                                                                         | ***Net cash provided by operating activities*** |                  | **157,327 ** |                  | 95,681   |
|                                                          |                                                                                         |                                                 |                  |                   |                  |               |              |
|                                                     |                                                                                         |                                                 |                  |                   |                  |               |              |
| ***Investing Activities:***                              |                                                                                         |                                                 |                  |                   |                  |
|                                                          | Net proceeds from sales of assets                                                       |                                                 | **436 **    |                   | 8,498       |
|                                                          | Purchases of property, plant, and equipment                                             |                                                 | **(3,851)**      |                   | (3,955)          |
|                                                          | Purchases of short-term investments                                                     |                                                 | **(87,750)**     |                   | (176,625)        |
|                                                          | Proceeds from maturities of short-term investments                                      |                                                 | **82,172 ** |                   | 108,920     |
|                                                          | Capitalized software development costs                                                  |                                                 | **(4,744)**      |                   | (5,331)          |
|                                                          | Business acquisitions, net of cash acquired                                             |                                                 | **(1,192)**      |                   | (1,326)          |
|                                                          | Other                                                                                   |                                                 |                  | **951 **     |                  | (1,723)       |
|                                                          |                                                                                         |                                                 |                  |                   |                  |               |              |
|                                                          |                                                                                         | ***Net cash used for investing activities***    |                  | **(13,978)**      |                  | (71,542)      |
|                                                          |                                                                                         |                                                 |                  |                   |                  |               |              |
|                                                     |                                                                                         |                                                 |                  |                   |                  |               |              |
| ***Financing Activities:***                              |                                                                                         |                                                 |                  |                   |                  |
|                                                          | Debt repayment                                                                          |                                                 |                  | **(103)**         |                  | ---      |
|                                                          | Treasury stock repurchases                                                              |                                                 | **(155,462)**    |                   | (8,313)          |
|                                                          | Proceeds of employee stock purchases and exercises of stock options                     |                                                 | **5,283 **  |                   | 5,417       |
|                                                          |                                                                                         |                                                 |                  |                   |                  |               |              |
|                                                          |                                                                                         | ***Net cash used for financing activities***    |                  | **(150,282)**     |                  | (2,896)       |
|                                                          |                                                                                         |                                                 |                  |                   |                  |               |              |
| Effect of exchange rate changes on cash                  |                                                                                         | **(5,229)**                                     |                  | (114)             |
|                                                          |                                                                                         |                                                 |                  |                   |                  |               |              |
| Net increase (decrease) in cash and cash equivalents     |                                                                                         | **(12,162)**                                    |                  | 21,129       |
| Cash and cash equivalents at beginning of period         |                                                                                         | **224,978 **                               |                  | 216,122      |
|                                                          |                                                                                         |                                                 |                  |                   |                  |               |              |
| ***Cash and cash equivalents at end of period***         | **$**                                                                                   | **212,816 **                               | $                | 237,251      |
|                                                          |                                                                                         |                                                 |                  |                   |                  |               |              |
|                                                          |                                                                                         |                                                 |                  |                   |                  |               |              |
|                                                          |                                                                                         |                                                 |                  |                   |                  |               |              |

The accompanying notes are an integral part of these consolidated financial statements.

**INTERGRAPH CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

****

**NOTE 1 - BASIS OF PRESENTATION**

The unaudited consolidated financial statements include the accounts of Intergraph Corporation (the "Company" or "Intergraph") and its majority-owned subsidiaries.  All significant intercompany accounts and transactionshave been eliminated in consolidation.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring items) necessary for a fair presentation of results for the interim periodspresented.  These unaudited interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2004 ("2004 AnnualReport").

The operating results for the quarter ended June 30, 2005, are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

The Company's operations are divided for operational and management purposes into two separate business units, Process, Power & Marine ("PP&M") andSecurity, Government & Infrastructure("SG&I"), along with a Corporate oversight function ("Corporate").  See Note 13 of Notes to Consolidated Financial Statements contained in this Form 10-Q ("Notes to Consolidated Financial Statements") for a description of these businessunits.

Certain reclassifications have been made to the prior-year amounts to provide comparability with the current-year presentation.

**NOTE 2 - STOCK-BASED COMPENSATION**

******

The Company maintains a stock purchase plan and a fixed equity incentive plan for the benefit of its employees and directors.  Under the stock purchase plan, employees may purchase the Company's stock at 85% of theclosing market price as of the last pay date of each calendar month.  No compensation expense is recognized for the difference in price paid by employees and the fair market value of the Company's stock at the date of purchase.

Under the fixed equity incentive plan, stock options, restricted stock awards, and restricted stock units ("RSUs") may be granted and issued to employees and directors.  Stock options may be granted at exercise pricesthat are equal to or greater than the fair market value of the Company's stock on the date of grant, depending on the terms of the plan.  Compensation expense for stock options, equal to the difference in exercise price and fair market value on the date ofgrant, would be recognized over the vesting period for options if granted at less than fair market value.  Restricted stock awards are issued at the fair market value of the stock on the date of grant.  Compensation expense for restricted stock awards andRSUs, equal to the fair market value of the stock on the date of grant, is recognized over the applicable vesting period.

For the quarters ended June 30, 2005, and 2004, the Company issued 18,813 and 23,678 shares of restricted stock, respectively.  For the quarter ended June 30, 2004, the Company also issued 990 RSUs.  The total of allrestricted stock and RSUs issued as of June 30, 2005, was 712,591 shares and 990 RSUs.  The value at issuance of the restricted stock and RSUs is being amortized over periods from one to four years.  The amortization expense for the quarters ended June 30,2005, and 2004, was $1.3 million and $463,000, respectively.  The amortization expense for the year-to-date period ended June 30, 2005, and 2004, was $2.1 million and $679,000, respectively.

In accordance with the disclosure provisions of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation", the Company has elected to apply Accounting Principles Board ("APB")Opinion No. 25, "Accounting for Stock Issued to Employees", and related Interpretations in accounting for its stock-based plans.  Accordingly, the Company has recognized no compensation expense for these plans during the quarters ended June 30, 2005, and2004.  Had the Company accounted for its stock-based compensation plans based on the fair value of awards at grant date consistent with the methodology of SFAS No. 123, the Company's reported net income and income per share for these periods would have beenimpacted as indicated below.  The effects of applying SFAS No. 123 on a pro forma basis for the quarters and year-to-date ended June 30, 2005, and 2004, are not likely to be representative of the effects on reported pro forma net income for future years asoptions vest over several years and it is possible that additional equity grants will be made in future years.
|                                                                                                                                                                          |             |                                                                  |                                                               |                                         |                                                        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|------------------------------------------------------------------|---------------------------------------------------------------|-----------------------------------------|--------------------------------------------------------|
|                                                                                                                                                                          |             | ***    Quarter Ended June 30,***             | ***     Six Months Ended June 30,*** |
|                                                                                                                                                                          |             | ***         2005*** | *         2004*  | ***    2005***      | *        2004* |
|                                                                                                                                                                          |             |                                                                  |                                                               |                                         |                                                        |
| *(In thousands, except per share amounts)*                                                                                                                               |             |                                                                  |                                                               |                                         |
|                                                                                                                                                                     |             |                                                                  |                                                               |                                         |                                                        |
| Net income                                                                                                                                                               | As reported | **$7,539 **                                                 | $14,896                                                  | **$89,469 **                       | $150,462                                          |
| Deduct:  Total stock-based employee   compensation expense determined   under fair-value-based method for all   awards (net of income tax) |             | **(298)**                                                        | (359)                                                         | **(650)**                               | (718)                                                  |
|                                                                                                                                                                          |             |                                                                  |                                                               |                                         |                                                        |
|                                                                                                                                                                          | Pro forma   | **$7,241 **                                                 | $14,537                                                       | **$88,819 **                       | $149,744                                          |
|                                                                                                                                                                     |             |                                                                  |                                                               |                                         |                                                        |
| Basic income per share                                                                                                                                                   | As reported | **$  0.27 **                                      | $  0.41                                        | **$    2.93 ** | $      4.13         |
|                                                                                                                                                                          | Pro forma   | **$  0.26 **                                      | $  0.40                                        | **$    2.91 ** | $      4.11         |
|                                                                                                                                                                     |             |                                                                  |                                                               |                                         |                                                        |
| Diluted income per share                                                                                                                                                 | As reported | **$  0.25 **                                      | $  0.39                                        | **$    2.79 ** | $      3.96         |
|                                                                                                                                                                          | Pro forma   | **$  0.24 **                                      | $  0.38                                        | **$    2.77 ** | $      3.94         |
|                                                                                                                                                                          |             |                                                                  |                                                               |                                         |                                                        |
|                                                                                                                                                                          |             |                                                                  |                                                               |                                         |                                                        |
|                                                                                                                                                                          |             |                                                                  |                                                               |                                         |                                                        |

In December 2004, the Financial Accounting Standards Board ("FASB") revised SFAS No. 123 ("SFAS No. 123(R)"), which established the fair-value-based method of accounting as preferable for share-based compensation awardedto employees and encouraged, but did not require entities to adopt it until July 1, 2005.  On April 14, 2005, the Securities and Exchange Commission ("SEC") announced that it would provide for a phased-in implementation process that allowednon-small business registrants with a fiscal year ended December 31, 2005, an extension until January 1, 2006, to adopt Statement 123(R).  SFAS No. 123(R) eliminates the alternative to use APB Opinion No. 25, which allowed entities to account for share-basedcompensation arrangements with employees according to the intrinsic value method.  SFAS No. 123(R) requires the measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of theaward.  The cost will be recognized over the period during which an employee is required to provide service in exchange for the award.  No compensation cost is recognized for equity instruments for which employees do not render service.  The Companyplans to adopt SFAS No. 123(R) on January 1, 2006, requiring compensation cost to be recorded as expense for the portion of outstanding unvested awards, based on the grant date fair value of those awards.  Based on unvested stock options currently outstandingand the expense that will be associated with the Employee Stock Purchase Plan, the effect of adopting SFAS No. 123(R) will reduce the Company's after tax earnings by approximately $618,000 in 2006.

****

**NOTE 3 - INVENTORIES**

Inventories at June 30, 2005, and December 31, 2004, are summarized as follows:
|                  |                     |                     |              |   |        |                          |
|------------------|---------------------|---------------------|--------------|---|--------|--------------------------|
|                  | ***June 30, 2005*** | *December 31, 2004* |
|                  |                     |                     |              |   |        |                          |
| *(In thousands)* |                     |                     |    |   |        |      |
|             |                     |                     |              |   |        |                          |
| Raw materials    | **$**               | **10,278**          |              | $ | 8,203  |                          |
| Work-in-process  |                     | **8,408**           |              |   | 6,027  |                          |
| Finished goods   |                     | **4,896**           |              |   | 3,941  |                          |
| Service spares   |                     | **2,717**           |              |   | 4,082  |                          |
|                  |                     |                     |              |   |        |                          |
| Totals           | **$**               | **26,299**          |              | $ | 22,253 |                          |
|                  |                     |                     |              |   |        |                          |
|                  |                     |                     |              |   |        |                          |
|                  |                     |                     |              |   |        |                          |

Inventories on hand at June 30, 2005, and December 31, 2004, relate primarily to continuing specialized hardware assembly activity in the Company's SG&I business unit, contracts accounted for under thepercentage-of-completion method, and the Company's maintenance operations.

Amounts reflected as work-in-process relate to sales contracts accounted for under the percentage-of-completion method.

**NOTE 4 - CAPITALIZED SOFTWARE DEVELOPMENT COSTS**

Product development costs are charged to expense as incurred; however, the costs incurred for the development of computer software that will be sold, leased, or otherwise marketed are capitalized when technological feasibilityof the product has been established.  Such capitalized costs are amortized on a straight-line basis (which is greater than expected sales) over a period of two to seven years.  Amortization of these capitalized costs, included in "Cost of revenues -Systems" in the consolidated statements of income, amounted to $3.3 million for both the second quarter of 2005 and 2004, and $6.6 million for both the first six months of 2005 and 2004.  Amortization has remained essentially the same period to period as aresult of the proportional activity in the development and expiration of capitalized software.  See Note 5 of Notes to Consolidated Financial Statements for further information regarding capitalized software development costs and accumulatedamortization.

**NOTE 5 - INTANGIBLE ASSETS**

The Company's intangible assets include capitalized software development costs (included as a separate line in the consolidated balance sheets) and other intangible assets, including patents and licenses (included in "Otherassets, net" in the consolidated balance sheets).

At June 30, 2005, and December 31, 2004, the Company's intangible assets and related accumulated amortization consisted of the following:
|                                                    |       |                     |                                                                                           |                  |                                                                   |            |                |                            |              |                                                                           |          |                                                                           |        |
|----------------------------------------------------|-------|---------------------|-------------------------------------------------------------------------------------------|------------------|-------------------------------------------------------------------|------------|----------------|----------------------------|--------------|---------------------------------------------------------------------------|----------|---------------------------------------------------------------------------|--------|
|                                                    |       | ***June 30, 2005*** |                                                                       |                  | *December 31, 2004*                                               |
|                                                    |       |                     |                                                                                           |                  |                                                                   |            |                |                            |              |                                                                           |          |                                                                           |        |
|                                                    |       | ***  Gross***  | ***Accumulated Amortization***                                                            | ***  Net*** |                                                                   |            | *  Gross* | *Accumulated Amortization* | *  Net* |
|                                                    |       |                     |                                                                                           |                  |                                                                   |            |                |                            |              |                                                                           |          |                                                                           |        |
| *(In thousands)*                                   |       |                     |                                                                                           |                  |                                                                   |            |                |                            |              |                                                                           |          |                                                                           |        |
|                                               |       |                     |                                                                                           |                  |                                                                   |            |                |                            |              |                                                                           |          |                                                                           |        |
| Capitalized software    development | **$** | **69,427**          | **              $** | **(45,113)**     | **          $** | **24,314** |                | $                          | 64,683       |             $ | (38,482) |             $ | 26,201 |
| Other intangible assets                            |       | **38,946**          |                                                                                           | **(34,734)**     |                                                                   | **4,212**  |                |                            | 50,808       |                                                                           | (46,613) |                                                                           | 4,195  |
|                                                    |       |                     |                                                                                           |                  |                                                                   |            |                |                            |              |                                                                           |          |                                                                           |        |
| Totals                                             | **$** | **108,373**         | **$**                                                                                     | **(79,847)**     | **$**                                                             | **28,526** |                | $                          | 115,491      | $                                                                         | (85,095) | $                                                                         | 30,396 |
|                                                    |       |                     |                                                                                           |                  |                                                                   |            |                |                            |              |                                                                           |          |                                                                           |        |
|                                                    |       |                     |                                                                                           |                  |                                                                   |            |                |                            |              |                                                                           |          |                                                                           |        |
|                                                    |       |                     |                                                                                           |                  |                                                                   |            |                |                            |              |                                                                           |          |                                                                           |        |

The Company recorded amortization expense of $4.1 million and $5.1 million for second quarter 2005 and 2004, respectively, and $8.3 million and $10.1 million for first half of 2005 and 2004, respectively.  Based on thecurrent intangible assets subject to amortization, the estimated amortization expenses for the remainder of 2005, each of the succeeding five years, and thereafter is as follows: $8.0 million in 2005, $9.0 million in 2006, $4.0 million in 2007, $3.0 million in 2008,$3.0 million in 2009, $2.0 million in 2010, and none thereafter.  The estimated amortization expenses do not include any amounts for capitalized software development costs incurred or any intangible assets added after June 30, 2005.

**NOTE 6 - PROPERTY, PLANT, AND EQUIPMENT, NET**

Property, plant, and equipment, net includes accumulated depreciation of approximately $92.4 million and $99.5 million at June 30, 2005, and December 31, 2004, respectively.

**NOTE 7 - SUPPLEMENTARY CASH FLOW INFORMATION**

Changes in other assets and liabilities less cash, net of the effects of business acquisitions and divestitures, in reconciling net income to net cash provided by operations are as follows:
|                                                  |                                                 |              |                    |   |             |             |
|--------------------------------------------------|-------------------------------------------------|--------------|--------------------|---|-------------|-------------|
| ***Six Months Ended June 30,***                  |                                                 | ***2005***   | ***  *** |   | *2004*      |
|                                                  |                                                 |              |                    |   |             |             |
| *(In thousands)*                                 |                                                 |              |                    |   |             |
|          |                                                 |              |                    |   |             |             |
| (Increase) decrease in:                          |                                                 |              |                    |   |             |
|                                                  | Accounts receivable, net                        | **$**        | **1,414 **    |   | $           | 6,470  |
|                                                  | Inventories, net                                |              | **(4,285)**        |   |             | (3,286)     |
|                                                  | Deferred tax assets                             |              | **1,042 **    |   |             | (186)       |
|                                                  | Other assets and liabilities                    |              | **59 **       |   |             | 1,017  |
| Increase (decrease) in:                          |                                                 |              |                    |   |             |
|                                                  | Trade accounts payable                          |              | **(4,572)**        |   |             | (6,488)     |
|                                                  | Accrued compensation and other accrued expenses |              | **(7,838)**        |   |             | (261)       |
|                                                  | Refundable income taxes                         |              | **134 **      |   |             | 866    |
|                                                  | Billings in excess of sales                     |              | **(6,467)**        |   |             | 4,071  |
|                                                  |                                                 |              |                    |   |             |             |
| Net changes in other assets and liabilities      | **$**                                           | **(20,513)** |                    | $ | 2,203  |
|                                                  |                                                 |              |                    |   |             |             |
|                                                  |                                                 |              |                    |   |             |             |
|                                                  |                                                 |              |                    |   |             |             |

There were no significant non-cash investing and financing transactions in the six-month periods ended June 30, 2005, and 2004.

**NOTE 8 - EARNINGS PER SHARE**

Basic income per share is computed using the weighted average number of common shares outstanding.  Diluted income per share is computed using the weighted average number of common and equivalent common sharesoutstanding.  Employee stock options and the incremental shares from the presumed settlement of the Accelerated Stock Buyback ("ASB") contracts are the Company's common stock equivalents and are included in the calculation only if dilutive.  For thequarters ended June 30, 2005, and 2004, these dilutive common stock equivalents were 1,640,000 and 1,542,000, respectively.  For the six months ended June 30, 2005, and 2004, these dilutive shares were 1,455,000 and 1,560,000, respectively.  For the quarterand year-to-date period ended June 30, 2005, there were, respectively, 487,000 and 245,000 shares from the presumed settlement of the March 2005 ASB that were included in the dilutive common stock equivalents referenced above.  This ASB has a settlement date ofMarch 21, 2006.

**NOTE 9 - COMPREHENSIVE INCOME**

Comprehensive income differs from net income due to non-equity items that include unrealized gains and losses on certain investments in debt and equity securities and foreign currency translation adjustments.

Comprehensive income is as follows:
|                                                                                   |                              |                                                                          |                                 |                        |                    |
|-----------------------------------------------------------------------------------|------------------------------|--------------------------------------------------------------------------|---------------------------------|------------------------|--------------------|
|                                                                                   | ***Quarter Ended June 30,*** |              | ***Six Months Ended June 30,*** |
|                                                                                   | ***  2005***       | *  2004*                                                       |                                 | ***  2005*** | *  2004* |
|                                                                                   |                              |                                                                          |                                 |                        |                    |
| *(In thousands)*                                                                  |                              |                                                                          |                                 |                        |                    |
|                                                                              |                              |                                                                          |                                 |                        |                    |
| Net income                                                                        | **$7,539 **             | $14,896                                                             |                                 | **$89,469 **      | $150,462      |
| Unrealized holding gains (losses) arising during the period                       | **(33)**                     | 210                                                                 |                                 | **(40)**               | 237           |
| Translation adjustment for financial statements denominated in a foreign currency | **(4,047)**                  | (163)                                                                    |                                 | **(7,715)**            | (2,489)            |
|                                                                                   |                              |                                                                          |                                 |                        |                    |
| Comprehensive income                                                              | **$3,459 **             | $14,943                                                             |                                 | **$81,714 **      | $148,210      |
|                                                                                   |                              |                                                                          |                                 |                        |                    |
|                                                                                   |                              |                                                                          |                                 |                        |                    |
|                                                                                   |                              |                                                                          |                                 |                        |                    |

There was no income tax effect related to the items included in other comprehensive income for second quarter and year-to-date periods ended June 30, 2005, and 2004, respectively.

**NOTE 10 - RESTRUCTURING CHARGES**

****

In April 2005, the Company announced that as part of its business transformation efforts it was realigning its organizational structure and streamlining its global operations.  These restructuring activities are expectedto be completed by the end of second quarter 2006.  The Company currently estimates that total restructuring charges for the organizational realignment will be between $6.5 million and $8.0 million, with total estimated costs for SG&I to be between $5.3million and $6.0 million, for PP&M to be between $600,000 and $1.0 million, and for Corporate to be between $600,000 and $1.0 million.  Total severance benefits are estimated between $6.0 million and $7.0 million and other associated costs are estimatedbetween $500,000 and $1.0 million.  In second quarter 2005, the Company recorded $2.0 million in restructuring costs related to the organizational realignment.  Total restructuring costs reported for SG&I, PP&M, and Corporate were $1.1 million,$600,000, and $249,000, respectively.  These expenses are reflected in "Restructuring charges" in the consolidated statements of income.  Severance benefits totaled $1.8 million, and other associated costs, consisting of consulting fees, totaled$175,000.  The following table sets forth a reconciliation of the restructuring charges for severance and other associated costs to the ending severance liability for this restructuring plan which is reflected in "Accrued compensation" in the Company'sconsolidated balance sheet.  The liability balance at June 30, 2005, represents the remaining liabilities on employment contracts payable at various dates throughout 2005.
|                                           |                               |                          |                              |                          |                                       |           |              |        |   |
|-------------------------------------------|-------------------------------|--------------------------|------------------------------|--------------------------|---------------------------------------|-----------|--------------|--------|---|
|                                           | ***    Severance*** |      | ***Other Associated Costs*** |      | ***  Total Restructuring***      |
|                                           |                               |                          |                              |                          |                                       |           |              |        |   |
| *(In thousands)*                          |                               |                          |                              |                          |                                       |           |              |        |   |  |  |
| * *                                  |                               |                          |                         |                |                                       |           |    |   |   |  |    |
| Restructuring charges                     | $                             | 1,809               |                              |                          |       $ | 175  |    |        | $ | 1,984  |  |
| Costs paid or otherwise settled - Q2 2005 |                               | (1,060)                  |                              |                          |                                       | (175)     |              |        |   | (1,235) |  |
|                                           |                               |                          |                              |                          |                                       |           |              |        |   |
| Accrual balance, June 30, 2005            | $                             | 749                 |                              |                          | $                                     | ---  |              |        | $ | 749  |  |
|                                           |                               |                          |                              |                          |                                       |           |              |        |   |
|                                           |                               |                          |                              |                          |                                       |           |              |        |   |  |
|                                           |                               |                          |                              |                          |                                       |           |              |        |   |

In first quarter 2005, the Company recorded $1.7 million in restructuring costs in SG&I and Corporate, for $1.0 million and $690,000, respectively, in an effort to align costs with revenues.  These expenses arereflected in "Restructuring charges" in the consolidated statements of income.  All restructuring activities were completed by March 31, 2005.  Severance benefits totaled $1.6 million, and other associated costs, including legal and relocation, totaled$65,000.  The following table sets forth a reconciliation of the ending liabilities for severance and other associated costs related to this restructuring plan, which are reflected in "Accrued compensation" and "Other accrued expenses" in the Company'sconsolidated balance sheets.  The liability balances at June 30, 2005, represent the remaining liabilities on employment contracts, accrued legal fees, and relocation payable at various dates throughout 2005.
|                                           |                               |                                |                              |                          |                                  |          |                                |        |
|-------------------------------------------|-------------------------------|--------------------------------|------------------------------|--------------------------|----------------------------------|----------|--------------------------------|--------|
|                                           | ***    Severance*** | ***    *** | ***Other Associated Costs*** |      | ***  Total Restructuring*** |
|                                           |                               |                                |                              |                          |                                  |          |                                |        |
| *(In thousands)*                          |                               |                                |                              |                          |                                  |          |                                |        |  |  |  |
| *  *                            |                               |                                |                         |                |                                  |          |                      |   |  |  |    |
| Restructuring charges                     | $                             | 1,629                     |                              |                          |      $  | 65  |       |        | $ | 1,694  |  |
| Costs paid or otherwise settled - Q1 2005 |                               | (1,506)                        |                              |                          |                                  | (13)     |                                |        |  | (1,519) |  |
| Foreign currency exchange - Q1 2005       |                               | (6)                            |                              |                          |                                  | (1)      |                                |        |  | (7) |  |
|                                           |                               |                                |                              |                          |                                  |          |                                |        |  |  |  |
| Accrual balance, March 31, 2005           |                               | 117                       |                              |                          |                                  | 51  |                                |        |  | 168  |  |
| Costs paid or otherwise settled - Q2 2005 |                               | (70)                           |                              |                          |                                  | (3)      |                                |        |  | (73) |  |
| Foreign currency exchange - Q2 2005       |                               | (4)                            |                              |                          |                                  | (4)      |                                |        |  | (8) |  |
|                                           |                               |                                |                              |                          |                                  |          |                                |        |