Five Year Financial Summary

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                            1996       1995       1994       1993       1992 
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(In thousands except per share amounts)

Revenues              $1,095,333 $1,097,978 $1,041,403 $1,050,277 $1,176,661
Restructuring
  charge (credit)            ---      6,040    ( 4,826)    89,806      4,418
Nonrecurring
  operating charges       10,545        ---        ---        ---        ---
Gains on sales of
  investments in
  affiliates              11,173      6,493      5,815        ---        ---
Net income (loss)        (69,112)   (45,348)   (70,220)  (116,042)     8,442
Net income (loss)
  per share              (  1.46)   (   .98)   (  1.56)  (   2.51)       .18
Working capital          230,804    261,140    282,893    348,756    430,974
Total assets             756,347    826,045    839,618    855,329    986,663
Total debt                65,644     69,541     61,114     26,606     21,887
Shareholders' equity     447,263    504,064    522,337    588,710    736,863


MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


INTRODUCTION

The following summarized financial data sets forth the results
of operations of the Company for the three year period ended
December 31, 1996.  The complete consolidated financial
statements of the Company, including footnote disclosures, are
presented on pages 23 to 44 of this annual report.

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                                         1996    1995    1994
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(In millions except per share amounts)

Revenues                               $1,095  $1,098  $1,041
Cost of revenues                          692     668     619
---------------------------------------------------------------
Gross profit                              403     430     422

Operating expenses                        461     478     500
Restructuring charge (credit)             ---       6   (   5)
Nonrecurring operating charges             11     ---     ---
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Loss from operations                    (  69)  (  54)  (  73)

Gains on sales of investments
 in affiliates                             11       7       6
All other income (expense) - net        (   8)      2   (   7)
---------------------------------------------------------------
Loss before income taxes                (  66)  (  45)  (  74)

Income tax benefit (expense)            (   3)    ---       4
---------------------------------------------------------------
Net loss                               $(  69) $(  45) $(  70)
===============================================================
Net loss per share                     $(1.46) $( .98) $(1.56)
===============================================================

RESULTS OF OPERATIONS

Summary.  The industry in which the Company competes continues
to be characterized by rapidly changing technologies, a move to
higher performance, lower priced product offerings, intense
price and performance competition, shorter product cycles, and
development and support of software standards that result in
less specific hardware and software dependencies by customers.

Strategic Decisions.  Beginning in late 1992, the Company made
strategic decisions regarding its operating systems and
hardware architecture that were designed to better position the
Company to effectively compete under the industry conditions
described above.  At the end of 1994, the Company completed a
two year development effort to port its technical software
applications to Microsoft Corporation's Windows NT operating
system, and to make Windows NT available on Intergraph
workstations.  The effect of this effort has been to expand the
availability of the Company's workstations and software
applications to Windows-based computing environments not
previously addressed by the Company, including the availability
of Intergraph software applications operating across a variety
of both the Intergraph hardware architecture and the hardware
architectures of other vendors that use the Windows NT
operating system.  In addition, the transition from a
proprietary hardware architecture to that of Intel Corporation
was substantially completed during this same period.  Sales of
Windows-based software represented 48% of the Company's
software revenues in 1994 and grew to 70% in 1995 and 78% in
1996.  Intel-based systems represented 74% of hardware unit
sales in 1994, 95% in 1995, and 99% in 1996.

Operating Results.  Industry conditions and changes in
operating system and hardware architecture strategies resulted
in a transition period for the Company characterized by
revenues that declined from 1992 through 1994, by restructuring
charges in 1993 and 1995, and by annual net losses from 1993
through 1995.  Although the Company substantially completed its
operating system and hardware architecture transition in 1995,
revenue to date associated with resulting new product offerings
has not met expectations, and gross margin on product sales has
continued to decline due primarily to price competition in the
industry.

The Company continues to believe its operating system and
hardware architecture strategies will prove to be the correct
choices.  However, to achieve profitability, the Company must
substantially increase sales volume while continuing to control
cost.  The Company believes that industry trends toward higher
performance and lower priced products, intense competition, and
rapidly changing technology will continue, and that improvement
in its operating results will depend on its ability to
accurately anticipate customer requirements and technological
trends and to rapidly and continuously develop and deliver new
hardware and software products that are competitively priced,
deliver enhanced performance, and meet customer requirements
for standardization and interoperability.  In addition, while
the Company believes the industry is accepting Windows NT, and
that it will become the dominant operating system in the
markets served by the Company, acceptance of this system by
customers has been slower than anticipated, and the timing of
such acceptance is unpredictable, since adoption of any new
operating system requires considerable effort and expense.
Competing operating systems are available in the market, and
several competitors of the Company offer or are adopting
Windows NT as the operating system for their products.  There
can be no assurance that the Windows NT operating system will
become dominant in the markets served by the Company or that
the Company's operating system and hardware strategies will
result in the restoration of profitability.

Restructuring and Nonrecurring Operating Charges.  The
strategic decisions described above led to actions that
resulted in an $89.8 million ($1.34 per share) charge to
earnings in 1993.  The 1993 restructuring plan and resulting
charge consisted of direct workforce reductions, elimination or
restructuring of certain business operations, and revaluation
of certain assets as the result of new product strategies.  The
plan was completed in 1994 substantially as planned, with the
exception of disposition of the Company's European
manufacturing and distribution facility (IEM), which continues
to be utilized as a distribution center for Europe.  Included
in the statement of operations for the year ended December 31,
1994, is a $4.8 million credit representing reversal of the
remaining unincurred portion of the restructuring charge
related to IEM.  Cash outlays during 1994 related to the 1993
restructuring were approximately $10 million, all of which were
funded by cash from operations or borrowings under credit
facilities.  Cash outlays in 1995 were insignificant.

During the second quarter of 1995, the Company undertook a
second restructuring plan designed to further adapt the
Company's cost structure to the changing industry and market
conditions described above.  The plan as originally conceived
consisted of direct reductions in workforce, other workforce
reductions through attrition, and disposition of four
unprofitable business units over the twelve month period ended
June 30, 1996.  The 1995 plan, had it been fully executed with
respect to the four business units, was expected to provide an
operating expense reduction of approximately $100 million
annually on a prospective basis.  Of this total anticipated
annual savings, approximately $66 million was to be derived
from disposition of the four unprofitable business units.

During the fourth quarter of 1996, the Company determined that
two of the four business units included in the original 1995
plan should be retained based on their improving future
prospects and strategic value to other business units.  The
Company has terminated this plan effective December 31, 1996.
However, it will continue to seek buyers for the two remaining
business units.  Revenues and losses of the two units held for
sale totaled $24 million and $16 million, respectively, for
1996, $43 million and $7 million for 1995, and $43 million and
$16 million for 1994.  Assets of the units totaled $14 million
and $26 million at December 31, 1996 and 1995, respectively.
The Company estimates that its operating expenses have been
reduced by approximately $35 million annually as a result of
employee headcount reductions under the 1995 plan.

The 1995 restructuring charge totaled $6 million, primarily for
employee severance pay and related costs.  Approximately 450
positions were eliminated through direct reductions in
workforce, with approximately 350 others eliminated through
attrition.  All employee groups were affected, but the majority
of eliminated positions derived from the research and
development, systems engineering and support, and sales and
marketing areas.  Cash outlays related to the restructuring
totaled $3.6 million in 1995, funded by cash from operations
and borrowings under credit facilities.  Cash required in 1996
to fund the 1995 plan was insignificant.  The $6 million charge
is included in "Restructuring charge (credit)" in the 1995
consolidated statement of operations.

In 1996, the Company incurred a nonrecurring operating charge
of $10.5 million, consisting of a $7.2 million revaluation of
the assets of the two noncore business units held for sale and
a $3.3 million write-off of deferred financing costs due to
early termination of the Company's revolving credit agreement
with a group of lenders.  See "Liquidity and Capital Resources,
Term Loan and Revolving Credit Agreements" below for further
discussion of the Company's refinancing.  The $10.5 million
charge is included in "Nonrecurring operating charges" in the
1996 consolidated statement of operations.

Litigation and Other Risks and Uncertainties.  The Company's
business is subject to risks and uncertainties, including those
described below.

The Company is the 50% owner of Bentley Systems, Inc. (BSI),
the developer and owner of MicroStation, a software product
utilized in many of the Company's software applications and for
which the Company serves as a nonexclusive distributor.  The
Company's business relationship with BSI is the subject of two
arbitration proceedings.  In December 1995, the Company
commenced an arbitration proceeding against BSI with the
American Arbitration Association, Philadelphia, Pennsylvania,
alleging that BSI inappropriately and without cause terminated
a contractual arrangement between BSI and the Company.  In
response, BSI in January 1996, filed a counterclaim against the
Company seeking significant damages as the result of the
Company's alleged failure to use best efforts to sell software
support services pursuant to terms of the contractual
arrangement terminated by BSI.  In March 1996, BSI commenced
arbitration against the Company alleging that the Company
failed to properly account for and pay to BSI certain royalties
on the sale of BSI software products by the Company, and
seeking unspecified damages.  This matter is currently pending
with the American Arbitration Association, Atlanta, Georgia.
The Company denies that it has breached any of its contractual
obligations to BSI and is defending vigorously in both
proceedings, but at present is unable to predict the outcome of
the proceedings.  Separately, the Company has engaged an
investment banking firm to value and sell its ownership
interest in BSI.  At present, the investment banking firm is
not actively pursuing a buyer due to disagreement between the
Company and BSI regarding due diligence information to be
supplied to potential buyers.  See "Revenues" section below for
further details relative to the Company's business relationship
with BSI, its sales of MicroStation, and the financial effects
on the Company of changes in the business relationship.

The Company filed a legal action in August 1995, in the U.S.
District Court of Alabama, Northeast Division, seeking to
dissolve and wind up its business arrangement with Zydex, Inc.
(Zydex), a company with which it jointly developed its plant
design software application ("PDS"), and seeking an order
allowing the Company to continue the business of that
arrangement without further responsibility or obligation to
Zydex.  In response, Zydex filed a counterclaim against the
Company in November 1995, alleging wrongful dissolution of the
business relationship and seeking both sole ownership of PDS
and significant compensatory and punitive damages.  The Company
denies and is defending these allegations vigorously, but at
present is unable to predict the outcome of the proceedings.
The Company's sales of PDS products during the year ended
December 31, 1996 were approximately $36 million.

The Company has certain business risks related to revenues
earned under long-term contractual arrangements, and to its
ability to obtain patents, trademarks, and copyrights on
products it develops, obtain the patented technology of other
companies if required as part of the Company's product
offerings, and obtain third party product licenses, all of
which are important to success in the industry in which the
Company does business.  See Notes to Consolidated Financial
Statements for further discussion of these risks and
uncertainties.

Substantially all of the Company's microprocessor needs are
currently supplied by Intel.  The Company does not have a fixed
quantity commitment for microprocessors in its agreements with
Intel, but believes it has a good relationship with Intel and
is unaware of any reason that Intel might encounter
difficulties in meeting the Company's microprocessor needs for
the long term.  Other microprocessors are available in the
market, but a change by the Company from Intel to another
microprocessor would significantly disrupt the Company's
development and manufacturing activities and result in delayed
or lost sales, which would have a significant adverse effect on
the Company's results of operations and financial position.


Orders.  Systems orders for 1996 were $723 million, a 1%
increase over the prior year after increases of 12% and 2% in
1995 and 1994, respectively.  Product transition adversely
affected 1994 orders as did slower than anticipated customer
acceptance of the Windows NT operating system.  The Company's
product transition carried over into 1995, but with growing
availability of new products and slowly increasing acceptance
of the Windows NT operating system, orders sequentially
improved with each quarter to end the year with a 12% increase
over 1994.  Orders for the Company's systems in 1996 were
characterized by heavier demand for the Company's hardware
product offerings but with offsetting softer demand for its
software products.  The Company introduced several new hardware
and software products during 1996.  New software and certain of
the new hardware products did not generate significant orders
or revenues during the year.  Initial releases of the Company's
new software products were delayed until late in the year and
contained certain performance problems.  The Company believes
these problems have been resolved in subsequent releases of the
products which began in the fourth quarter of 1996.  In
addition, the Company believes these products are now well
positioned within the marketplace and that increased orders and
revenues for these products should occur in 1997.

New Products.  In late 1995, the Company announced its Jupiter
technology, a Windows-based component software architecture
that is the foundation of many new computer-aided-
design/computer-aided-manufacturing/computer-aided-engineering
(CAD/CAM/CAE) and geographic information systems (GIS)
applications software products under development by the
Company.  The first two products built on Jupiter technology
began shipping in mid-1996.  Initial orders for these products
have not met Company expectations and have not contributed
substantially to 1996 revenues.

During 1996, the Company introduced a complete line of
workstations and servers for the high end marketplace based on
Intel's Pentium Pro microprocessor.  In addition, the Company
introduced a new add-in 3D graphics card which delivers
workstation class 3D graphics to the Pentium- or Pentium Pro-
based personal computer.  These products began shipping at
various times throughout 1996.  The Company believes these
products have been well accepted, are now well positioned in
the marketplace, and that sales of these products should
increase with full year availability for 1997.

Geographic Regions.  International orders totaled $396 million
for the year, an increase of 9% after increases of 12% and 2%
in 1995 and 1994, respectively.  Asia Pacific orders totaled
$112 million in 1996, an increase of 45%, after decreasing 7%
in 1995 and increasing 22% in 1994.  Growth in that region in
1996 was due in large part to orders for the Company's public
safety products and related consulting services.  European
orders totaled $221 million, a 5% decline from the prior year
after a 19% increase in 1995 and a 4% decline in 1994.
European orders for 1995 were strong as a result of winning
several large individual orders in the third and fourth
quarters of that year.  U.S. orders, including federal
government orders, totaled $327 million for the year, down 7%
after increases of 11% and 1% in the two preceding years.  The
decline in U.S. orders results primarily from a decrease in
orders in one of the Company's noncore business units held for
sale.  Excluding this business unit, U.S. orders for the year
were flat with the prior year.

Revenues.  Total revenues for 1996 were $1.1 billion, flat with
the previous year after a 5% increase in 1995 and a 1% decline
in 1994.

Systems.  Sales of Intergraph systems in 1996 were $726
million, up 2% after a 7% increase in 1995 and a 1% decline in
1994.  Factors previously cited as adversely affecting systems
orders also affected systems revenues over the three year
period.  Competitive conditions manifested in declining per
unit sales prices continue to adversely affect the Company's
systems revenues; workstation and server unit volume increased
42% in 1996, 22% in 1995, and 41% in 1994, while workstation
and server revenue increased only 18% in 1996 and 4% in each of
the two preceding years.

Geographic Regions.  U.S. systems sales, including sales to the
federal government, increased by 2% in 1996 after a decline of
6% in 1995 and an increase of 7% in 1994.  Growth in U.S.
systems sales was depressed in 1996 by a revenue decline in one
of the Company's noncore business units held for sale.
Excluding this business unit, U.S. sales growth was 7% in 1996.
In 1995, U.S. systems sales were negatively impacted by the
continuation of product transition and weak demand in U.S.
indirect selling channels.  European sales were down 6% in 1996
as a result of weak demand for the Company's software products,
after growth of 19% in 1995 and a 12% decline in 1994.  Asia
Pacific systems sales were up 25% after increases of 22% in
1995 and 7% in 1994.

Software.  Sales of the Company's software applications
declined by 9% in 1996 after a 4% decline in 1995 and
relatively flat sales in 1994.  Declines in the last two years
are the result primarily of a decrease in sales of
MicroStation, the Company's second highest volume software
offering, which declined by approximately 39% in both years
(see "MicroStation" below for further discussion).  However,
1996 sales of the Company's plant design and electronics
software applications increased by a combined 38% to soften the
effect of the loss in MicroStation sales.  In terms of broad
market segments, the Company's mapping/geographic information
systems, architecture/engineering/construction, and mechanical 
design, engineering and manufacturing product applications
continue to dominate the Company's product mix at approximately
52%, 27%, and 13%,respectively, of total systems sales in 1996
(43%, 34%, and 14%, respectively, for 1995).  Sales of Windows-based
software represented approximately 80% of total software sales in 1996,
up from approximately 72% in 1995 and 50% in 1994.  UNIX-based
software comprised approximately 20% of total 1996 software
sales, down from approximately 28% in 1995 and 50% in 1994.

Federal Government Sales.  Total revenue from the United States
government was approximately $161 million in 1996, $159 million
in 1995, and $167 million in 1994, in all three years
representing approximately 15% of total revenue.  The Company
sells to the U.S. government under long-term contractual
arrangements, primarily indefinite delivery, indefinite
quantity and cost-plus award fee contracts, and through
commercial sales of products not covered by long-term
contracts.  Approximately 40% of total federal government
revenues are earned under long-term contracts.  The Company
believes its relationship with the federal government to be
good.  While it is fully anticipated that these contracts will
remain in effect through their expiration, the contracts are
subject to termination (with damages paid to the Company) at
the election of the government.  Any loss of a significant
government contract would have an adverse impact on the results
of operations of the Company.

MicroStation.  Through the end of 1994, the Company had an
exclusive license agreement with BSI, a 50%-owned affiliate of
the Company, under which the Company distributed MicroStation,
a software product developed and maintained by BSI and utilized
in many of the Company's software applications.  As a result of
settlement of a dispute between the companies relative to the
exclusivity of the Company's distribution license, effective
January 1, 1995, the Company has a nonexclusive license to sell
MicroStation via its direct sales force and to sell
MicroStation via its indirect sales channels if MicroStation is
sold with other Intergraph products.  Also as a result of the
settlement, the per copy royalty payable by the Company to BSI
was increased effective January 1, 1995 and again January 1,
1996 and, for 1995 only, BSI paid the Company a per copy
distribution fee based on BSI's MicroStation sales to resellers
(such fees were $7 million).  See "Litigation and Other Risks
and Uncertainties" preceding for a description of arbitration
proceedings currently pending between the Company and BSI.

The Company's sales of MicroStation declined by approximately
39% in 1996 and 1995.  The Company estimates this revenue
decline, the per copy royalty increase, and the discontinued
distribution fee adversely affected its results of operations
in 1996 by approximately $26 million, or $.52 per share (in
1995 by approximately $17 million, or $.37 per share).  It is
possible that the Company's MicroStation sales will be further
reduced, but the Company is at present unable to predict the
level of MicroStation sales that will occur in future years.

Maintenance and Services.  Maintenance and services revenue
consists of revenues from maintenance of Company systems and
from Company provided training, consulting and other services.
These forms of revenue totaled $370 million in 1996, down 5%
after essentially flat revenues in 1995 and 1994.  Maintenance
revenues totaled $283 million in 1996, down 12% after a 2%
decrease in 1995 and a 1% increase in 1994.  The trend in the
industry toward lower priced products and longer warranty
periods has resulted in reduced levels of maintenance revenue,
and the Company believes this trend will continue in the
future.  Services revenue represented 8% of total revenues in
1996 and increased by 31% from the previous year.  Growth in
services revenue has acted to partially offset the decline in
maintenance revenue.  The Company is endeavoring to increase
revenues from its services business.  Such revenues, however,
produce lower gross margins than maintenance revenues.

Gross Margin.  The Company's total gross margin was 36.8% in
1996, down 2.3 points after a decline of 1.4 points in 1995 and
no substantial change in 1994.

Margin on systems sales declined 2.3 points in 1996, 1.6 points
in 1995, and 5.1 points in 1994.  The decline in 1996 results
primarily from an increase in hardware content in the product
mix and from an increase in MicroStation product cost (see
"MicroStation" above for further discussion).  Competitive
pricing conditions in the industry reduced margin on systems
sales in all three years, accounting for the majority of the
decline in 1995 and 1994.

In general, the Company's systems margin may be lowered by
price competition, a stronger U.S. dollar in international
markets, the effects of technological changes on the value of
existing inventories, and a higher mix of federal government
sales, which generally produce lower margins than commercial
sales.  Systems margins may be improved by higher software
content in the product, a weaker dollar in international
markets, a higher mix of international systems sales to total
systems sales, and reductions in prices of component parts,
which generally tend to decline over time in the industry.  The
Company is unable to predict the effects that many of these
factors may have, but expects continuing pressure on its
systems margin due primarily to industry price competition.

Margin on maintenance and services revenue declined by 2.2
points in 1996 after a decline of 1.1 points in 1995 and an
improvement of 8.6 points in 1994.  The margin declines in 1996
and 1995 result primarily from a higher mix of services
revenues, which generally produce lower margins than
maintenance revenues.  Improvement in 1994 was the result of
changes in product strategy in 1993, in which oldest generation
spare parts were revalued, resulting in lower obsolescence
charges.  The Company believes the trend in the industry toward
lower priced products and longer warranty periods may continue
to reduce its maintenance revenues, which will pressure
maintenance and services margin in the absence of corresponding
cost reductions.

The industry in which the Company competes is characterized by
rapid technological change.  This technological change is an
important consideration in the Company's overall inventory
management program, in which the Company endeavors to carry
only parts and systems utilizable with the technology of its
current product offerings and as spares for the contracted
maintenance of systems in its installed customer base.  The
Company regularly estimates the degree of technological
obsolescence in its inventories and provides inventory reserves
on that basis.  Though the Company believes it has adequately
provided to date for any such declines in inventory value, any
unanticipated change in technology could significantly affect
the value of the Company's inventories and thereby adversely
affect margins and reported results of operations.

Operating Expenses (exclusive of nonrecurring operating charges
and restructuring charges).  Operating expenses declined by 3%
in 1996, 4% in 1995, and 1% in 1994.  The total number of
employees of the Company has declined by 14% in the three year
period ended December 31, 1996.

Product development expense declined 7% in 1996 after declines
of 19% and 14%  in the two preceding years.  Employee headcount
in the development areas has been significantly reduced over
the last three years through the cessation of microprocessor
design activities, declining proprietary software development
activity resulting from migration to the Windows NT operating
system, restructuring actions, and attrition.  In addition, new
product development costs qualifying for capitalization
substantially increased in 1995 as a result of development of
the Company's Jupiter technology.  Sales and marketing expense
decreased 5% in 1996 after increases of 2% and 10% in the two
preceding years.  The expense decline results from
restructuring actions taken in 1995 and from closer monitoring
of costs.  The Company achieved substantial sales and marketing
headcount and related expense reductions in 1995, but those
gains were more than offset by weakness of the U.S. dollar in
international locations and by expenses of pursuit of new
business in the Asia Pacific region in that year.  Increased
costs of presales support activities and advertising and
promotion costs of the Company's new product offerings resulted
in the increase in 1994 sales and marketing expense.  General
and administrative expense increased by 4% in 1996 after
declines of 3% and 4% in the two preceding years.  Installation
of new internal business systems, increased legal expenses, and
amortization of deferred financing costs related to the
Company's revolving line of credit (see "Liquidity and Capital
Resources, Term Loan and Revolving Credit Agreements" for
further discussion) increased general and administrative
expenses in 1996.  The decline in 1995 was the result of
headcount reductions, but was limited by the weakness of the
U.S. dollar in international locations and by the increasing
level of business activity in the Asia Pacific region.
Workforce reductions and other cost control measures, partially
offset by a $5.5 million write-off of an account receivable
from a Middle Eastern customer, accounted for the 1994 savings.

The Company capitalizes a portion of the cost of development of
new products and amortizes those costs against revenues later
generated by those products.  Though the Company regularly
reviews its capitalized development costs to ensure recognition
of any decline in value, it is possible that revenues will not
materialize in amounts anticipated due to industry conditions
that include intense price and performance competition, or that
product lives will be reduced due to shorter product cycles.
Should either of these events occur, the carrying amount of
capitalized development costs would be reduced, producing
adverse effects on product development expenses and results of
operations.

Nonoperating Income and Expense.  Interest expense was $5.1
million in 1996, $4.2 million in 1995, and $2.4 million in
1994.  Both the Company's average outstanding debt and average
rate of interest have increased over the period.

In 1996, the Company entered into an interest rate swap
agreement in the principal amount (approximately $19 million at
December 31, 1996) of its Australian floating rate term loan
agreement.  The agreement is for a period of approximately six
years, and its expiration date coincides with that of the term
loan.  The agreement was entered into to reduce the risk of
increase in interest rates.  Under the agreement, the Company
pays a fixed rate of interest and receives payment based on a
variable rate of interest, and is thus exposed to market risk
of potential future decreases in interest rates.  The weighted
average pay and receive rates of the agreement at December 31,
1996 were 9.58% and 7.06%, respectively.  The agreement had an
insignificant effect on the total cash flows of the Company in
1996.   The Company does no trading in this form of derivative
instrument.  See "Liquidity and Capital Resources" below for
further description of the Company's borrowing arrangements.

The Company sold stock investments in affiliated companies at
gains of $11.2 million or $.23 per share in 1996, $6.5 million
or $.14 per share in 1995, and $5.8 million or $.12 per share
in 1994.  These gains are included in "Gains on sales of
investments in affiliates" in the consolidated statements of
operations.

"Other income (expense) - net" in the consolidated statements
of operations consists primarily of interest income, foreign
exchange losses, other miscellaneous items of nonoperating
income and expense, and nonrecurring charges.  Included in
these amounts are foreign exchange losses of $4.6 million in
1996 and $2.6 million in 1994, and a $3.4 million write-down of
investments in affiliated companies in 1994.

Income Taxes.  The Company incurred a loss before income tax
expense of $66.1 million in 1996 and losses before income tax
benefit of $45.3 million in 1995 and $74.2 million in 1994.

Note 8 of Notes to Consolidated Financial Statements contains a
reconciliation of statutory to actual income tax benefit or
expense, and further details of the Company's tax position,
including net operating loss carryforwards.

Operating Results, Geographic Areas.  International markets,
particularly Europe, continue in importance to the industry and
to the Company.  The Company's operations are subject to and
may be adversely affected by a variety of risks inherent in
doing business internationally, such as government policies or
restrictions, currency exchange fluctuations, and other
factors.  For 1996, sales outside the U.S. represented 55% of
total revenues versus 54% in 1995 and 49% in 1994.  European
revenues were 33% of total revenues in 1996, 36% in 1995, and
33% in 1994.  Asia Pacific revenues represented 13% of total
Company revenues in 1996 and approximately 8% in the two
previous years.

The Company incurred losses from operations of $68.7 million in
1996 (including $10.5 million in nonrecurring charges), $54.1
million in 1995 (including a restructuring charge of $6
million), and $72.6 million in 1994 (including a credit from
revision of the 1993 restructuring charge of $4.8 million).
The factors that have limited the Company's revenue growth and
reduced profitability over the past three years, including
declining per unit sales prices due to competitive conditions,
have similarly affected each of the geographic areas in which
the Company does business.  The Company expects that intense
price competition will continue in the future.  The increased
loss from operations in 1996 results primarily from flat
revenues and a decline in gross margin, partially offset by a
decline in product development and sales and marketing
expenses.

The U.S. region incurred a loss from operations of $30.3
million in 1996 (including $10.5 million in nonrecurring
charges) after operating losses of $12.3 million in 1995
(including a restructuring charge of $4.8 million) and $27.6
million in 1994.  Systems revenue increased slightly during
1996, but systems margin declined by 2.5 points.  The margin
decline, along with a 13% increase in general and
administrative expense due to implementation of new internal
business systems and higher legal expenses, resulted in
increased operating losses for the year.  U.S. systems revenue
declined by 6% in 1995, and systems margin declined slightly,
reflecting continued product transition and weakness in
indirect selling channels.  These negative factors were more
than offset by a 17% decline in product development expense in
1995, the result of employee headcount reductions and increased
development costs qualifying for capitalization.

The European region incurred losses from operations of $32.3
million in 1996, $27.7 million in 1995 (including a
restructuring charge of $1 million), and $33.1 million in 1994
(including a restructuring credit of $4.8 million from revision
of the 1993 restructuring charge).  Revenues and gross margin
declined 7% and 1.7 points, respectively, during 1996, offset
to a degree by an approximate 6% decline in both sales and
marketing and general and administrative expenses.  Software
sales were weak during the year, while maintenance revenues
were adversely impacted by lower priced products and longer
warranty periods.  Operating expenses continue to decline as a
result of restructuring actions and other cost control
measures.  Improvement in 1995 was the result of a 19% increase
in systems revenue (a portion of which relates to weakness of
the U.S. dollar in Europe for most of 1995), and reduced
operating expenses.  Operations from 1994 through mid-1995 were
adversely affected by product transition but also by poor
economic conditions, particularly in 1994, in the Company's
primary German and U.K. markets.

The Asia Pacific region incurred losses from operations of $5.9
million in 1996, $10.8 million in 1995, and $5.7 million in
1994.  This region is the Company's fastest growing with total
revenue increases in excess of approximately 30% in each of the
past two years.  The increased 1995 operating loss resulted
from operating expenses incurred primarily in pursuit of new
business.

Other international regions, in total representing
approximately 9% of total Company revenues in 1996, are
comprised of operations in the Middle East, Canada, and Non-
U.S. Americas.  These regions incurred operating losses of $5.4
million in 1996, $10.1 million in 1995, and $11.7 million in
1994 (including the write-off of a $5.5 million Middle Eastern
account receivable).  The 1995 operating loss increase resulted
from cost increases associated with maintenance and
professional services revenues.

See Note 11 of Notes to Consolidated Financial Statements for
further details of operations by geographic area.

Impact of Currency Fluctuations and Currency Risk Management.
Fluctuations in the value of the U.S. dollar in international
markets can have a significant impact on the Company's results
of operations.  For 1996, approximately 55% of the Company's
revenues were derived from customers outside the United States,
primarily through subsidiary operations.  Most subsidiaries
sell to customers and incur and pay operating expenses in local
currency.  These local currency revenues and expenses are
translated to dollars for U.S. reporting purposes.  A stronger
U.S. dollar will decrease the level of reported U.S. dollar
orders and revenues, decrease the dollar gross margin, and
decrease reported dollar operating expenses of the
international subsidiaries.  During 1996, the U.S. dollar
strengthened on average from its 1995 level, which decreased
reported dollar revenues, orders, and gross margin, but also
decreased reported dollar operating expenses in comparison to
the prior year period.  Such currency effects did not
materially affect the Company's results of operations in 1996
or 1994.  The Company estimates that weakness of the U.S.
dollar in 1995 in its international markets, primarily Europe,
improved 1995 results of operations by approximately $.22 per
share.

The Company conducts business in all major markets outside the
U.S., but the most significant of these operations with respect
to currency risk are located in Europe (specifically Germany,
U.K., The Netherlands, France and Italy) and Australia.
Primarily, but not exclusively in these locations, the Company
has certain currency related asset and liability exposures
against which certain measures, primarily hedging, are taken to
reduce currency risk.  With respect to these exposures, the
objective of the Company is to protect against financial
statement volatility arising from changes in exchange rates
with respect to amounts denominated for balance sheet purposes
in a currency other than the functional currency of the local
entity.  The Company therefore enters into forward exchange
contracts primarily related to these balance sheet items
(intercompany receivables, payables, and formalized
intercompany debt).  Periodic changes in the value of these
contracts offset exchange rate related changes in the financial
statement value of these balance sheet items.  Forward exchange
contracts are purchased with maturities reflecting the expected
settlement dates of these balance sheet items (generally three
months or less), and only in amounts sufficient to offset
possible significant currency rate related changes in the
recorded values of these balance sheet items, which represent a
calculable exposure for the Company from period to period.
Since this risk is calculable, and these contracts are
purchased only in offsetting amounts, neither the contracts
themselves nor the exposed foreign currency denominated balance
sheet items are likely to have a significant effect on the
Company's financial position or results of operations.  Based
on the terms of contracts outstanding and the amount of the
Company's balance sheet exposures at December 31, 1996, the
Company's results of operations would not be materially
affected by a 10% increase or decrease in exchange rates
underlying the contracts and the exposures being hedged.  The
Company's positions in these derivatives are continuously
monitored to ensure protection against the known balance sheet
exposures described above.  By policy, the Company is
prohibited from market speculation via such instruments and
therefore does not take currency positions exceeding its known
financial statement exposures, and does not otherwise trade in
currencies.

At December 31, 1996, the Company had net outstanding forward
exchange contracts of approximately $47 million ($46 million at
December 31, 1995), maturing at various dates through February
13, 1997.  The fair values of these contracts approximated
original contract amounts based on the insignificant amounts
the Company would pay or receive to transfer the contracts to
third parties at December 31, 1996.  Neither the gains and
losses resulting from changes in exchange rates underlying the
exposed balance sheet amounts nor the offsetting gains and
losses from the Company's hedging activity were material to
results of operations in 1996, 1995, or 1994.  Net negative
cash flow from forward contract activity, consisting of
realized gains and losses from settlement of exposed assets and
liabilities at exchange rates in effect at the settlement date
rather than at the time of recording, settlement of the forward
contracts purchased to mitigate these exposures, and payment of
bank fees on the forward contracts, was $1.7 million in 1996,
$825,000 in 1995, and $1.1 million in 1994.  Deferred gains and
losses as of December 31, 1996 and 1995 were not significant.

See Notes 1 and 4 of Notes to Consolidated Financial Statements
for further information related to management of currency risk.


LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1996, cash totaled $50.7 million, down $5.7
million from year end 1995.  Cash generated from operations in
1996 was $26 million versus $59.8 million in 1995 (including
$22.3 million in tax refunds) and $35.7 million in 1994
(including $34.5 million in tax refunds).  Tax refunds in 1995
and 1994 resulted primarily from carryback of U.S. taxable
losses to prior years.

Net cash used for investing activities totaled $31.7 million in
1996, $83.0 million in 1995, and $54.4 million in 1994.
Included in investing activities were capital expenditures of
$30.6 million in 1996, $54.7 million in 1995, and $68 million
in 1994 primarily for Intergraph products used in hardware and
software development and sales and marketing activities.  In
addition, investing activity in 1995 also included capital
expenditures for facilities and equipment utilized in a long-
term Australian public safety contract.  Other significant
investing activities included expenditures of $15.5 million in
1996, $25.4 million in 1995, and $16.6 million in 1994 for
capitalizable software development activity, and proceeds from
sales of investments in affiliated companies of $11.6 million
in 1996, $7.9 million in 1995 and $7.3 million in 1994.

Net cash used for financing activities totaled $600,000 in 1996
versus a net positive generation of cash from financing
activities of $17.8 million in 1995 and $26.1 million in 1994.
Significant sources of cash included $8.3 million from exercise
of employee stock options in 1995 and a net borrowing of $32.5
million to fund capital expenditures and restructuring charges
in 1994.  Cash used to purchase Company stock for the treasury
totaled $10.4 million in 1994.

The Company's collection period for accounts receivable was
approximately 83 days as of December 31, 1996, unchanged from
the prior year.  Approximately 70% of the Company's 1996
revenues were derived from the U.S. government and
international customers, both of which traditionally carry
longer collection periods.  The Company is experiencing slow
collection periods throughout the Middle East region,
particularly in Saudi Arabia.  Total accounts receivable from
Middle Eastern customers was approximately $21 million at
December 31, 1996 ($13.6 million at December 31, 1995).  Total
U.S. government accounts receivable was $48 million at December
31, 1996 and 1995.  The Company endeavors to enforce its
payment terms with these and other customers, and grants
extended payment terms only in very limited circumstances.

Over the last nine years, the Board of Directors of the Company
has authorized the purchase of up to 20 million shares of the
Company's stock in the open market.  As of December 31, 1996,
the Company had purchased approximately 18.8 million shares for
the treasury.  There were no treasury stock purchases in 1996
or 1995.  Under the provisions of its term loan and revolving
credit agreement, the Company is prohibited from further
purchases of its stock in the open market without the consent
of the lending organization.

The Company expects that capital expenditures will require $40
million to $50 million in 1997, primarily for Intergraph
products used in product development and sales and marketing
activities.  The Company's revolving credit agreement contains
certain restrictions on the level of the Company's capital
expenditures.

Term Loan and Revolving Credit Agreements.  In October 1995,
the Company entered into a three year revolving credit
agreement with a group of lenders.  Borrowings available under
the agreement were determined by the amounts of eligible assets
of the Company, with maximum borrowings of $50 million.  At
December 31, 1996, the Company had outstanding borrowings of
$20 million, and an additional $22 million of the available
credit line was allocated to support letters of credit issued
by the Company.  Borrowings were secured by a pledge of
substantially all of the Company's assets in the U.S. and
Canada and, under certain circumstances, the accounts
receivable of some European subsidiaries of the Company.  The
rate of interest on all borrowings under the agreement was, at
the Company's option, the Citibank base rate of interest plus
1.75% or the Eurodollar rate plus 2.75%.  The average effective
rate of interest was 10.6% for the period of time in 1996
during which the Company had outstanding borrowings under the
agreement.  The agreement required the Company to pay a
commitment fee at an annual rate of .5% of the average unused
daily portion of the revolving credit commitment.  In addition,
the agreement contained certain financial and restrictive
covenants of the Company.  In January 1997, the Company
terminated its agreement with this group of lenders and
replaced it with a term loan and revolving credit agreement
with another lender.  As a result, the Company wrote off $3.3
million of deferred financing costs associated with the
previous agreement.  The charge is included in "Nonrecurring
operating charges" in the 1996 consolidated statement of
operations.

Under the Company's January 1997 three year fixed term loan and
revolving credit agreement, available borrowings are determined
by the amounts of eligible assets of the Company, as defined in
the agreement, including accounts receivable, inventory, and
property, plant, and equipment, with maximum borrowings of $100
million.  The term loan portion of the agreement is in the
principal amount of $20 million, with principal due at
expiration of the agreement.  Borrowings are secured by a
pledge of substantially all of the Company's assets in the U.S.
The rate of interest on all borrowings under the agreement is
the greater of 7% or the Norwest Bank Minnesota National
Association base rate of interest (8.25% at inception of the
agreement) plus .625%.  The agreement requires the Company to
pay a facility fee at an annual rate of .15% of the maximum
amount available under the credit line, an unused credit line
fee at an annual rate of .25% of the average unused portion of
the revolving credit line, and a monthly agency fee.  At
February 21, 1997, the Company had outstanding borrowings of
$20 million, all of which was classified as long-term debt, and
an additional $33 million of the available credit line was
allocated to support letters of credit issued by the Company.
As of this same date, the maximum available credit under the
line was $83 million.

The term loan and revolving credit agreement contains certain
financial covenants of the Company, including minimum net
worth, minimum current ratio,  and maximum levels of capital
expenditures.  In addition, the agreement includes restrictive
covenants that limit or prevent various business transactions
(including repurchases of the Company's stock, dividend
payments, mergers, acquisitions of or investments in other
businesses, and disposal of assets including individual
businesses, subsidiaries, and divisions) and limit or prevent
certain other business changes.

At December 31, 1996, the Company had $65.6 million in debt on
which interest is charged under various floating rate
arrangements, primarily its revolving credit agreement,
mortgages, and Australian term loan (see Note 7 of Notes to
Consolidated Financial Statements).  The Company is exposed to
market risk of future increases in interest rates on these
loans, with the exception of the Australian term loan, on which
the Company has entered into an interest rate swap agreement.

The Company believes that existing cash balances, together with
cash generated by operations and cash available under its term
loan and revolving credit agreement, will be adequate to meet
cash requirements for 1997.


FOURTH QUARTER 1996

Revenues for the fourth quarter were $294 million, down 2% from
fourth quarter 1995.  The Company incurred a net loss of $33.6
million ($.71 per share) for the quarter, including a $10.5
million ($.21 per share) nonrecurring operating charge, versus
a fourth quarter 1995 net income of $7.1 million ($.15 per
share).  In addition to the adverse effects of the revenue
decline and nonrecurring charge, the decline in fourth quarter
1996 earnings is due to a 6 point decline in gross margin
versus fourth quarter 1995, the result of continuation of the
factors cited in "Gross Margin" above as affecting full year
1996 margins.


INTERGRAPH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

--------------------------------------------------------------------------
December 31,                                            1996          1995
--------------------------------------------------------------------------
(In thousands except share and per share amounts)

Assets
  Cash and cash equivalents                        $  50,674     $  56,407
  Accounts receivable, net                           326,117       324,051
  Inventories                                         89,411       111,813
  Other current assets                                37,718        49,581
--------------------------------------------------------------------------
     Total current assets                            503,920       541,852
  Investments in affiliates                           19,102        11,636
  Other assets                                        59,106        59,900
  Property, plant, and equipment, net                174,219       212,657
--------------------------------------------------------------------------
     Total Assets                                   $756,347      $826,045 
==========================================================================

Liabilities and Shareholders' Equity
  Trade accounts payable                           $  51,205     $  54,352
  Accrued compensation                                50,364        51,301
  Other accrued expenses                              72,798        79,199
  Billings in excess of sales                         62,869        63,707
  Short-term debt and current
     maturities of long-term  debt                    35,880        32,153
--------------------------------------------------------------------------
     Total current liabilities                       273,116       280,712
  Deferred income taxes                                6,204         3,881
  Long-term debt                                      29,764        37,388
--------------------------------------------------------------------------
     Total liabilities                               309,084       321,981
--------------------------------------------------------------------------
  Shareholders' equity:
     Common stock, par value $.10 per share --
      100,000,000 shares authorized;
      57,361,362 shares issued                         5,736         5,736
     Additional paid-in capital                      229,675       233,940
     Retained earnings                               339,679       408,791
     Unrealized holding gain on securities
       of affiliate                                    6,858           ---
     Cumulative translation adjustment                 6,049         8,650
--------------------------------------------------------------------------
                                                     587,997       657,117
     Less --  cost of 9,656,295 treasury shares
      at December 31, 1996, and 10,501,309
      treasury shares at December 31, 1995          (140,734)     (153,053)
--------------------------------------------------------------------------
     Total shareholders' equity                      447,263       504,064
--------------------------------------------------------------------------
     Total Liabilities and Shareholders' Equity     $756,347      $826,045
==========================================================================

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


INTERGRAPH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

------------------------------------------------------------------------------
Year Ended December 31,                        1996         1995         1994
------------------------------------------------------------------------------
(In thousands except per share amounts)

Revenues
  Systems                                $  725,828   $  710,168   $  665,583
  Maintenance and services                  369,505      387,810      375,820
------------------------------------------------------------------------------
     Total revenues                       1,095,333    1,097,978    1,041,403
------------------------------------------------------------------------------
Cost of revenues
  Systems                                   465,645      439,502      401,515
  Maintenance and services                  226,263      228,785      217,756
------------------------------------------------------------------------------
     Total cost of revenues                 691,908      668,287      619,271
------------------------------------------------------------------------------
     Gross profit                           403,425      429,691      422,132

Product development                         103,397      111,587      137,247
Sales and marketing                         256,482      268,702      262,322
General and administrative                  101,725       97,507      100,031
Restructuring charge (credit)                   ---        6,040      ( 4,826)
Nonrecurring operating charges               10,545          ---          ---
------------------------------------------------------------------------------
     Loss from operations                   (68,724)     (54,145)     (72,642)

Interest expense                            ( 5,137)     ( 4,198)     ( 2,359)
Equity in earnings (losses) of affiliates       825        4,322      ( 3,055)
Gains on sales of investments in affiliates  11,173        6,493        5,815
Other income (expense) -- net               ( 4,249)       2,180      ( 1,950)
------------------------------------------------------------------------------
     Loss before income taxes               (66,112)     (45,348)     (74,191)

Income tax benefit (expense)                ( 3,000)         ---        3,971
------------------------------------------------------------------------------
     Net loss                             $ (69,112)   $ (45,348)   $ (70,220)
==============================================================================

     Net  loss  per  share                $ (  1.46)   $ (   .98)   $ (  1.56)
==============================================================================

Weighted average shares outstanding          47,195       46,077       44,860
==============================================================================

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


INTERGRAPH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

------------------------------------------------------------------------------
Year Ended December 31,                            1996       1995       1994
------------------------------------------------------------------------------
(In thousands)

Cash Provided By (Used For):
Operating Activities:
  Net loss                                     $(69,112)  $(45,348)  $(70,220)
  Adjustments to reconcile net loss to net
  cash provided by operating activities:
    Depreciation and amortization                75,820     80,157     73,640
    Noncash portion of nonrecurring
      operating charges and restructuring
      charge (credit)                            10,545      2,449    ( 4,826)
    Deferred income tax expense                   2,496      3,175     15,625
    Collection of income tax refunds              2,113     22,264     34,472
    Gains on sales of investments 
      in affiliates                             (11,173)   ( 6,493)   ( 5,815)
    Equity in (earnings) losses
      of affiliates                             (   825)   ( 4,322)     3,055
    Write-off of investments in affiliates          ---        ---      3,361
    Net changes in current assets
      and liabilities                            16,149      7,951    (13,610)
------------------------------------------------------------------------------
    Net cash provided by operating activities    26,013     59,833     35,682
------------------------------------------------------------------------------

Investing Activities:
  Purchases of securities                           ---        ---    (86,620)
  Sales and maturities of securities                ---      1,000    111,126
  Proceeds from sales of investments
    in affiliates                                11,561      7,908      7,315
  Purchase of property, plant, and equipment    (30,563)   (54,689)   (67,967)
  Capitalized software development costs        (15,492)   (25,370)   (16,584)
  Other                                           2,816    (11,799)   ( 1,683)
------------------------------------------------------------------------------
    Net cash used for investing activities      (31,678)   (82,950)   (54,413)
------------------------------------------------------------------------------

Financing Activities:
  Gross borrowings                               18,366     65,652     44,609
  Debt repayment                                (22,764)   (59,844)   (12,138)
  Proceeds of employee stock purchases
    and exercise of stock options                 3,834     12,027      4,019
  Acquisition of treasury stock                     ---        ---    (10,379)
------------------------------------------------------------------------------
    Net cash provided by (used for)
      financing activities                      (   564)    17,835     26,111
------------------------------------------------------------------------------
Effect of exchange rate changes on cash             496        296    ( 1,963)
------------------------------------------------------------------------------
Net increase (decrease) in cash and
  cash equivalents                              ( 5,733)   ( 4,986)     5,417
Cash and cash equivalents at beginning of year   56,407     61,393     55,976
------------------------------------------------------------------------------
Cash and cash equivalents at end of year       $ 50,674   $ 56,407   $ 61,393
==============================================================================

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

<TABLE>
INTERGRAPH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                             Unrealized
                                                               Holding
                                        Additional             Gain on  Cumulative              Total
                                  Common Paid-in  Retained  Securities Translation  Treasury Shareholders'
                                   Stock Capital  Earnings of Affiliate Adjustment   Stock       Equity
-------------------------------------------------------------------------------------------------------------
(In thousands except share amounts)
<S>                              <C>    <C>       <C>           <C>        <C>      <C>          <C>           
  Balance at January 1, 1994     $5,736 $246,642  $524,359         ---    $(7,606) $(180,421)    $588,710    
Acquisition of 1,080,000
 treasury shares                    ---      ---       ---         ---        ---   ( 10,379)     (10,379)    
Issuance of 510,625 shares under 
 employee stock purchase plan       ---   (3,489)      ---         ---        ---      7,508        4,019    
Translation adjustments             ---      ---       ---         ---     10,064        ---       10,064     
Issuance of 120 shares for other 
 purposes                           ---      142       ---         ---        ---          1          143    
Net loss for the year               ---      ---   (70,220)        ---        ---        ---      (70,220)    
-------------------------------------------------------------------------------------------------------------
  Balance at December 31, 1994    5,736  243,295   454,139         ---      2,458   (183,291)     522,337      

Issuance of 358,687 shares under 
 employee stock purchase plan       ---   (1,512)      ---         ---        ---      5,228        3,716     
Issuance of 836,469 shares upon 
 exercise of stock options          ---   (3,881)      ---         ---        ---     12,192        8,311     
Issuance of 797,931 shares upon 
 purchase of a business             ---   (4,130)      ---         ---        ---     11,630        7,500   
Translation adjustments             ---      ---       ---         ---      6,192        ---        6,192      
Issuance of 81,686 shares for 
 other purposes                     ---      168       ---         ---        ---      1,188        1,356    
Net loss for the year               ---      ---   (45,348)        ---        ---        ---      (45,348)     
-------------------------------------------------------------------------------------------------------------   
  Balance at December 31, 1995    5,736  233,940   408,791         ---      8,650   (153,053)     504,064    

Issuance of 352,759 shares under 
 employee stock purchase plan       ---   (1,594)      ---         ---        ---      5,143        3,549    
Issuance of 53,898 shares upon 
 exercise of stock options          ---   (  501)      ---         ---        ---        786          285     
Issuance of 438,357 shares in 
 connection with a professional
 services agreement                 ---   (2,390)      ---         ---        ---      6,390        4,000     
Unrealized holding gain on 
 securities of affiliate            ---      ---       ---      $6,858        ---        ---        6,858    
Translation adjustments             ---      ---       ---         ---     (2,601)       ---      ( 2,601)   
Other                               ---      220       ---         ---        ---        ---          220    
Net loss for the year               ---      ---   (69,112)        ---        ---        ---      (69,112)    
-------------------------------------------------------------------------------------------------------------
  Balance at December 31, 1996   $5,736 $229,675  $339,679      $6,858    $ 6,049  $(140,734)    $447,263    
=============================================================================================================
</TABLE>

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


INTERGRAPH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996


NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES.
Basis of Presentation:  The consolidated financial statements
include the accounts of Intergraph Corporation and its majority-
owned subsidiaries.  All significant intercompany accounts and
transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with
generally accepted accounting principles requires that management
make estimates and assumptions that affect the amounts reported in
the financial statements and determine whether contingent assets
and liabilities, if any, are disclosed in the financial statements.
The ultimate resolution of issues requiring these estimates and
assumptions could differ significantly from the resolution
currently anticipated by management and on which the financial
statements are based.

The Company's business is principally in one industry segment - the
development, manufacturing, marketing, and service of interactive
computer graphics systems.  Graphics workstations, servers, and
peripheral hardware manufactured by the Company and others are
combined with operating systems developed by others and application-
specific software programs developed by the Company and third-party
applications software developers.  The Company's hardware products
and integrated software applications are used for computer-aided
design, manufacturing, and engineering, mapping and geographic
information services, public safety, and technical information
management in technical fields such as utilities, facilities
management, architecture, engineering, construction, mechanical and
electronics design, and mapping and geographic information systems.
The Company's products are sold worldwide, with United States and
European revenues representing approximately 78% of total revenues
for 1996.  See Note 11.

Cash Equivalents:  The Company's excess funds are generally
invested in short-term, highly liquid, interest-bearing securities,
which may include short-term municipal bonds, time deposits, money
market preferred stocks, commercial paper, and U.S. government
securities.  The Company's investment policy limits the amount of
credit exposure to any single issuer of securities.  All cash
equivalents are stated at fair market value based on quoted market
prices.  Investments with original maturities of three months or
less are considered to be cash equivalents for purposes of
financial statement presentation.

The Company's investments in debt securities are valued at fair
market value with any unrealized gains and losses reported as a
component of shareholders' equity, net of tax.  At December 31,
1996 and 1995, the Company held various debt securities, all within
three months of maturity at these dates, with fair market values of
$16,000,000 and $27,200,000, respectively.  Gross realized gains
and losses on debt securities sold during the years ended December
31, 1996 and 1995, were not significant, and there were no
unrealized holding gains or losses on debt securities at December
31, 1996 or 1995.

Inventories:  Inventories are stated at the lower of average cost
or market and are summarized as follows:

-------------------------------------------------------------
December 31,                            1996        1995
-------------------------------------------------------------
(In thousands)

Raw materials                        $26,601    $ 36,336
Work-in-process                       24,008      25,037
Finished goods                        12,945      17,140
Service spares                        25,857      33,300
-------------------------------------------------------------
Totals                               $89,411    $111,813
=============================================================

The industry in which the Company competes is characterized by
rapid technological change.  This technological change is an
important consideration in the Company's overall inventory
management program, in which the Company endeavors to carry only
parts and systems utilizable with the technology of its current
product offerings and as spares for the contracted maintenance of
systems in its installed customer base.  The Company regularly
estimates the degree of technological obsolescence in its
inventories and provides inventory reserves on that basis.  Though
the Company believes it has adequately provided for any such
declines in inventory value to date, any unanticipated change in
technology could significantly affect the value of the Company's
inventories and thereby adversely affect gross margins and reported
results of operations.

Investments in Affiliates:  Investments in companies in which the
Company has the ability to influence operations or finances,
generally 20%- to 50%-owned companies, are accounted for by the
equity method.  Investments in companies in which the Company does
not exert such influence, generally in less than 20%-owned
companies, are accounted for at fair value if such values are
readily determinable, and at cost if such values are not readily
determinable.  The Company's investments accounted for by the cost
method are insignificant.

During 1996, a company in which the Company holds a minority
interest underwent an initial public offering of its stock.  At
December 31, 1996, the remaining unrealized portion of this
investment at fair market value totaled $6,858,000 and is included
in "Investments in affiliates" and "Unrealized holding gain on
securities of affiliate" in the consolidated balance sheet at
December 31, 1996.

Property, Plant, and Equipment:  Property, plant, and equipment,
summarized below, is stated at cost.  Depreciation is provided
using the straight line method over the estimated useful lives
described below.

-------------------------------------------------------------
December 31,                               1996        1995
-------------------------------------------------------------
(In thousands)

Land and improvements (15-30 years)    $ 14,943    $ 15,256
Buildings and improvements (30 years)   146,251     152,759
Equipment, furniture, and
 fixtures (3-8 years)                   320,561     349,263
-------------------------------------------------------------
                                        481,755     517,278
Allowances for depreciation            (307,536)   (304,621)
-------------------------------------------------------------
Totals                                 $174,219    $212,657
=============================================================

Effective January 1, 1996, the Company adopted Statement of
Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of.  For long-lived assets and certain intangible assets
to be held and used by an entity, the Statement requires a review
for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.  An
impairment loss, based on comparison of carrying value to the fair
value of the asset, must be recognized if the sum of the expected
future cash flows from the asset is less than the carrying amount
of the asset.  For long-lived assets and certain intangible assets
to be disposed of, the Statement requires financial statement
reporting at the lower of carrying amount or fair value of the
asset less cost to sell.  Application of this Statement did not
materially affect the Company's results of operations or financial
position in 1996.

Treasury Stock:  Treasury stock is accounted for by the cost
method.  The Board of Directors of the Company has authorized the
purchase of up to 20,000,000 shares of the Company's common stock
in the open market.  From the initial authorization in 1987 through
the end of 1996, the Company had purchased approximately 18,800,000
shares for the treasury.  Further purchases of treasury stock are
restricted by terms of the Company's term loan and revolving credit
agreement.  See Note 7.  Treasury stock activity is presented in
the consolidated statements of shareholders' equity.

Revenue Recognition:  Revenues from systems sales with no
significant post-shipment obligations are recognized as equipment
and software are shipped, with any post-shipment costs accrued at
that time.  Revenues on systems sales with significant post-
shipment obligations are recognized by the percentage-of-completion
method with progress to completion measured on the basis of
completion of milestones, labor costs incurred currently versus the
total estimated cost of performing the contract over its term, or
other factors appropriate to the individual contract of sale.  The
total amount of revenues to be earned under these contracts is
generally fixed by contractual terms.  The Company regularly
reviews its progress on these contracts and revises the estimated
costs of fulfilling its obligations.  Due to uncertainties inherent
in the estimation process, it is possible that completion costs
will be further revised on some of the Company's long-term
contracts, which could delay revenue recognition and decrease the
gross margin to be earned on these contracts.  Any losses
identified in the review process are recognized in full in the
period in which determined.  Revenues from certain contracts with
the U.S. government, primarily cost-plus award fee contracts, are
recognized monthly as costs are incurred and fees are earned under
the contracts.

Maintenance and services revenues are recognized ratably over the
lives of the maintenance contracts or as services are performed.

Billings may not coincide with the recognition of revenue.
Unbilled accounts receivable occur when revenue recognition
precedes billing to the customer, arising primarily from commercial
sales with predetermined billing schedules, U.S. government sales
with billing at the end of a performance period, and U.S.
government cost-plus award fee contracts.  Billings in excess of
sales occur when billing to the customer precedes revenue
recognition, arising primarily from maintenance revenue billed in
advance of performance of the maintenance activity and systems
revenue recognized on the percentage-of-completion method.

Product Development Costs:  The Company capitalizes certain costs
of computer software development incurred after the technological
feasibility of the product has been established.  Such capitalized
costs are amortized over a two-year period on a straight-line
basis.  Amortization expense included in "Cost of revenues -
Systems" in the consolidated statements of operations amounted to
$16,100,000 in 1996, $14,700,000 in 1995, and $11,300,000 in 1994.
The unamortized balance of capitalized software development costs,
included in "Other assets" in the consolidated balance sheets,
totaled $26,400,000 and $27,000,000 at December 31, 1996 and 1995,
respectively.

Although the Company regularly reviews its capitalized development
costs to ensure recognition of any decline in value, it is possible
that revenues expected to be generated by these development
activities will not materialize in amounts anticipated due to
industry conditions that include intense price and performance
competition, or that product lives will be reduced due to shorter
product cycles.  Should either of these events occur, the carrying
amount of capitalized development costs would be reduced, producing
adverse effects on product development expenses and results of
operations.

Foreign Currency Exchange and Translation:  Local currencies are
the functional currencies for the Company's European subsidiaries.
The U.S. dollar is the functional currency for all other
international subsidiaries.  Foreign currency gains and losses
resulting from remeasurement or settlement of receivables and
payables denominated in a currency other than the functional
currency, together with gains and losses and fees paid in
connection with the Company's forward exchange contracts, are
included in "Other income (expense) - net" in the consolidated
statements of operations.  Net exchange losses totaled $4,600,000
in 1996, $300,000 in 1995, and $2,600,000 in 1994.  Translation
gains and losses resulting from translation of subsidiaries'
financial statements from the functional currency into dollars for
U.S. reporting purposes and foreign currency gains and losses
resulting from remeasurement of intercompany advances of a long-
term investment nature are included in the "Cumulative translation
adjustment" component of shareholders' equity.

Derivative Financial Instruments:  Derivatives utilized by the
Company consist of forward exchange contracts and interest rate
swap agreements.

Realized and unrealized gains and losses on forward exchange
contracts are recognized as offsets to gains and losses resulting
from the underlying hedged transactions in the period in which
exchange rates change.  Bank fees charged on the contracts are
amortized over the period of the contract.

The Company accounts for its interest rate swap agreements as
hedges of its debt obligations.  The difference in amounts paid and
received under the contracts is accrued and recognized as an
adjustment to interest expense on the debt.  Deferred gains related
to terminated interest rate swap agreements, which are not
significant to the Company's results of operations, are amortized
to interest expense over the remaining terms of the agreements.

Amounts payable to or receivable from counterparties related to
derivative financial instruments are included in "Other accrued
expenses" or "Other current assets" in the consolidated balance
sheets.  These amounts were not significant at December 31, 1996 or
1995.  Cash flows from derivative financial instruments are
classified in the consolidated statements of cash flows consistent
with the cash flows from the assets and liabilities being hedged.

See Note 4 for further details of the Company's derivative
financial instruments.

Stock-Based Compensation Plans:  The Company has two stock-based
compensation plans, a fixed stock option plan and a stock purchase
plan.

Under the fixed stock option plan, stock options may be granted to
employees at fair market value or at a price less than fair market
value at the date of grant.  No compensation expense is recognized
for options granted at fair market value.  Expense associated with
grants at less than fair market value, equal to the difference in
fair market value at the date of grant and exercise price, is
recognized over the vesting period of the options.

Under the stock purchase plan, employees purchase stock of the
Company at 85% of the closing market price of the Company's stock
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.

Effective December 31, 1996, the Company adopted the disclosure
requirements of Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation.  This Statement,
effective for transactions entered into during calendar year 1996
for the Company, establishes accounting and reporting standards for
stock-based employee compensation plans including, with respect to
the Company, stock options and employee stock purchase plans.  The
Statement also establishes fair value as the measurement basis for
transactions in which goods or services are acquired from
nonemployees in exchange for equity instruments.

The Statement defines a fair value-based method of accounting for
employee stock options under which compensation cost is measured at
the date options are granted and recognized by charges to expense
over the employees' service periods, and it encourages entities to
adopt that method of accounting.  It also allows entities to
continue to measure compensation cost using the method prescribed
under Accounting Principles Board (APB) Opinion No. 25, under which
compensation expense is recognized only for the excess, if any, of
the market price of the stock at grant date over the amount the
employee must pay to acquire stock.  The Company has elected to
continue to account for its employee stock options and its employee
stock purchases under the provisions of APB No. 25.  This decision
results in recognition of no compensation expense for employee
stock options that are granted at market price at the date of grant
or for employee stock purchases.  However, in accordance with the
disclosure provisions of the Statement, the Company has provided
proforma basis information to reflect results of operations and
earnings per share had compensation expense been recognized for
these items.  See Note 9.

Income Taxes:  The provision for income taxes includes federal,
international, and state income taxes currently payable or
refundable and income taxes deferred because of temporary
differences between the financial statement and tax bases of assets
and liabilities.  See Note 8.

Net Loss Per Share:  Net loss per share is computed using the
weighted average number of common and equivalent common shares
outstanding.  Stock options are the only common stock equivalent.
See Note 9.

Reclassifications:  Certain reclassifications have been made to the
previously reported consolidated balance sheet at December 31, 1995
and to the consolidated statements of operations and cash flows for
the years ended December 31, 1995 and 1994 to provide comparability
with the current year presentation.


NOTE 2 -- LITIGATION AND OTHER RISKS AND UNCERTAINTIES.
In addition to those described in Notes 1, 4, 6, 7, and 11, the
Company has risks related to its business and economic environment,
including those described below.

The Company is the 50% owner of Bentley Systems, Inc. (BSI), the
developer and owner of MicroStation, a software product utilized in
many of the Company's software applications and for which the
Company serves as a nonexclusive distributor.  The Company's
business relationship with BSI is the subject of two arbitration
proceedings.  In December 1995, the Company commenced an
arbitration proceeding against BSI with the American Arbitration
Association, Philadelphia, Pennsylvania, alleging that BSI
inappropriately and without cause terminated a contractual
arrangement between BSI and the Company.  In response, BSI in
January 1996, filed a counterclaim against the Company seeking
significant damages as the result of the Company's alleged failure
to use best efforts to sell software support services pursuant to
terms of the contractual arrangement terminated by BSI.  In March
1996, BSI commenced arbitration against the Company alleging that
the Company failed to properly account for and pay to BSI certain
royalties on the sale of BSI software products by the Company, and
seeking unspecified damages.  This matter is currently pending with
the American Arbitration Association, Atlanta, Georgia.  The
Company denies that it has breached any of its contractual
obligations to BSI and is defending vigorously in both proceedings,
but at present is unable to predict the outcome of the proceedings.
Separately, the Company has engaged an investment banking firm to
value and sell its ownership interest in BSI.  At present, the
investment banking firm is not actively pursuing a buyer due to
disagreement between the Company and BSI regarding due diligence
information to be supplied to potential buyers.

The Company filed a legal action in August 1995, in the U.S.
District Court of Alabama, Northeast Division, seeking to dissolve
and wind up its business arrangement with Zydex, Inc. (Zydex), a
company with which it jointly developed its plant design software
application ("PDS"), and seeking an order allowing the Company to
continue the business of that arrangement without further
responsibility or obligation to Zydex.  In response, Zydex filed a
counterclaim against the Company in November 1995, alleging wrongful
dissolution of the business relationship and seeking both sole
ownership of PDS and significant compensatory and punitive damages.
The Company denies and is defending these allegations vigorously,
but at present is unable to predict the outcome of the proceedings.
The Company's sales of PDS products during the year ended December
31, 1996 were approximately $36,000,000.

Substantially all of the Company's microprocessor needs are
currently supplied by Intel Corporation.  The Company does not have
a fixed quantity commitment for microprocessors in its agreements
with Intel, but believes it has a good relationship with Intel and
is unaware of any reason that Intel might encounter difficulties in
meeting the Company's microprocessor needs for the long term.
Other microprocessors are available in the market, but a change by
the Company from Intel to another microprocessor would
significantly disrupt the Company's development and manufacturing
activities and result in delayed or lost sales, which would have a
significant adverse effect on the Company's results of operations
and financial position.

The Company develops its own graphics, data management, and
applications software as part of its continuing product development
activities.  The Company has standard license agreements with
Microsoft Corporation for use and distribution of the Windows NT
operating system and with UNIX Systems Laboratories for use and
distribution of the UNIX operating system.  The license agreements
are perpetual and allow the Company to sublicense the operating
systems software upon payment of required sublicensing fees.  The
Company also has an extensive program for the licensing of third-
party application and general utility software for use on systems
and workstations.

The Company owns and maintains a number of registered patents and
registered and unregistered copyrights, trademarks, and service
marks.  The patents and copyrights held by the Company are the
principal means by which the Company preserves and protects the
intellectual property rights embodied in the Company's hardware and
software products.  Similarly, trademark rights held by the Company
are used to preserve and protect the goodwill represented by the
Company's registered and unregistered trademarks.

As industry standards proliferate, there is a possibility that the
patents of others may become a significant factor in the Company's
business.  Personal computer technology is widely available, and
many companies are attempting to develop patent positions
concerning technological improvements related to personal computers
and workstations.  At present, it does not appear that the Company
will be prevented from using the technology necessary to compete
successfully, since patented technology is typically available in
the industry under royalty-bearing licenses or patent cross-
licenses, or the technology can be purchased on the open market.
Any increase in royalty payments or purchase costs would increase
the Company's costs of manufacture, however, and it is possible
that some key improvement necessary to compete successfully in
markets served by the Company may not be available.

An inability to retain significant third party license rights, in
particular the Microsoft license, to protect the Company's
copyrights, trademarks, and patents, or to obtain any required
patent rights of others through licensing or purchase could
significantly reduce the Company's revenues and adversely affect
its results of operations.


NOTE 3 -- RESTRUCTURING AND NONRECURRING OPERATING CHARGES.
1995 Charge:  During the second quarter of 1995, the Company
undertook a second restructuring plan designed to further adapt the
Company's cost structure to changed industry and market conditions.
The program, as originally planned, consisted of direct reductions
in workforce, other workforce reductions through attrition, and
disposition of four unprofitable business units over the twelve
month period ended June 30, 1996.  The program, had it been fully
executed with respect to the four business units, was expected to
provide an operating expense reduction of approximately
$100,000,000 annually on a prospective basis.  Of this total
anticipated annual savings, approximately $66,000,000 was to be
derived from disposition of the business units.  During the fourth
quarter of 1996, the Company determined that two of the four
business units included in the original plan should be retained
based on their improving future prospects and strategic value to
other business units.  The Company has terminated this plan
effective December 31, 1996.  However, it will continue to seek
buyers for the remaining two business units.  Revenues and losses
of the two business units held for sale totaled $24,000,000 and
$16,000,000, respectively, for 1996, $43,000,000 and $7,000,000,
respectively, for 1995, and $43,000,000 and $16,000,000,
respectively, for 1994.  Assets of the business units totaled
$14,000,000 and $26,000,000 at December 31, 1996 and 1995,
respectively.  The 1996 loss and asset amounts reflect a $7,245,000
revaluation of the assets of these two units (see 1996 Nonrecurring
Operating Charge below).  The Company estimates that its operating
expenses have been reduced by approximately $35,000,000 annually as
a result of employee headcount reductions under the 1995 plan.

The 1995 restructuring charge totaled $6,040,000, primarily for
employee severance pay and related costs.  Approximately 450
positions were eliminated through direct reductions in workforce,
with approximately 350 others eliminated through attrition.  All
employee groups were affected, but the majority of eliminated
positions derived from the research and development, systems
engineering and support, and sales and marketing areas.  Cash
expenditures related to the restructuring totaled $3,600,000 in
1995, funded by cash from operations and borrowings under credit
facilities, with an insignificant amount paid in 1996.  The
$6,040,000 charge is included in "Restructuring charge (credit)" in
the 1995 consolidated statement of operations.

1993 Charge:  During late 1992 and 1993, the Company made several
changes in its product, sales, and manufacturing strategies
designed to make the Company more competitive in its industry and
economic environment.  These strategic decisions resulted in the
Company's 1993 restructuring plan.  The plan was completed in 1994
substantially as planned, with the exception of disposition of the
Company's European manufacturing and distribution facility (IEM),
which continues to be utilized as a distribution center for Europe.
Included in the statement of operations for the year ended December
31, 1994 is a $4,826,000 credit representing reversal of the
remaining unincurred portion of the restructuring charge related to
IEM.  Cash outlays during 1994 related to the 1993 restructuring
were approximately $10,000,000, all of which were funded by cash
from operations or borrowings under credit facilities.  Cash
outlays in 1995 were insignificant.

See Management's Discussion and Analysis of Financial Condition and
Results of Operations for discussion of industry conditions and
strategic decisions leading to the 1993 and 1995 restructuring
plans.

1996 Nonrecurring Operating Charge:  During 1996, the Company
incurred a nonrecurring  operating charge of $10,545,000,
consisting of a $7,245,000 revaluation of the assets of the
Company's two noncore business units held for sale and a $3,300,000
write-off of deferred financing costs due to early termination of
the Company's revolving credit agreement with a group of lenders
(see Note 7).  The $10,545,000 charge is included in "Nonrecurring
operating charges" in the 1996 consolidated statement of
operations.


NOTE 4 -- FINANCIAL INSTRUMENTS.
Information related to the Company's financial instruments other
than cash equivalents and stock investments in less than 20%-owned
companies is summarized below.

Short- and Long-Term Debt:  The balance sheet carrying amounts of
the Company's floating rate debt (approximately $55,000,000 at
December 31, 1996), consisting of loans under a revolving credit
agreement, mortgages, and a term loan (see Note 7), approximate
fair market values since interest rates on the debt adjust
periodically to reflect changes in market rates of interest.  With
the exception of the term loan (see Note 7), the Company is exposed
to market risk of future increases in interest rates on these
loans.  The carrying amounts of fixed rate debt approximate fair
market values based on current interest rates for debt of the same
remaining maturities and character.

Forward exchange contracts:  The Company has certain currency
related asset and liability exposures related to its international
operations against which certain measures, primarily hedging, are
taken to reduce currency risk.  The Company conducts business in
all major markets outside the U.S., but the most significant of
these operations with respect to currency risk are located in
Europe (specifically Germany, U.K., The Netherlands, France, and
Italy) and Australia.  With respect to these exposures, the
objective of the Company is to protect against financial statement
volatility arising from changes in exchange rates with respect to
amounts denominated for balance sheet purposes in a currency other
than the functional currency of the local entity.  The Company
enters into forward exchange contracts primarily related to these
balance sheet items (intercompany receivables, payables, and
formalized intercompany debt).  Periodic changes in the value of
these contracts offset exchange rate related changes in the
financial statement value of these balance sheet items.  Forward
exchange contracts are purchased with maturities reflecting the
expected settlement dates of these balance sheet items, which are
generally less than three months.  The Company is prohibited by
policy from taking currency positions exceeding its known balance
sheet currency exposures and from otherwise trading in currencies.

The Company had outstanding net forward exchange contracts of
$47,468,000 and $46,344,000 at December 31, 1996 and 1995,
respectively.  Such amounts approximated the Company's currency
related asset and liability exposures at those dates.  The table
below summarizes in U.S. dollars the face amounts of these
contracts by major currency.  For purposes of presentation, foreign
currency amounts are translated to dollars at the rates in effect
at each balance sheet date.  "Sell" amounts represent the U.S.
dollar equivalent of commitments to sell currencies, and "buy"
amounts represent the U.S. dollar equivalent of commitments to
purchase currencies.

-------------------------------------------------------------------------
December 31,               1996                         1995
                  -------------------------- ---------------------------
                                Net Forward                Net Forward
                                  Contract                   Contract
                   Sell     Buy   Position    Sell    Buy    Position
-------------------------------------------------------------------------
(In thousands)

German mark      $18,127  $ 4,736  $13,391  $19,919  $2,016  $17,903
British pound      9,317    3,419    5,898    3,900   2,340    1,560
Swiss franc        7,638      235    7,403    3,487   1,928    1,559
Italian lira       6,754      395    6,359    8,055     302    7,753
French franc       6,018      656    5,362    6,831     ---    6,831
Belgian franc      2,186       75    2,111    3,550     345    3,205
Spanish peseta     2,081    1,059    1,022    4,778     ---    4,778
Other currencies   7,581    1,659    5,922    3,455     700    2,755
-------------------------------------------------------------------------
Totals           $59,702  $12,234  $47,468  $53,975  $7,631  $46,344
=========================================================================

Based on the terms of outstanding forward exchange contracts and
the amount of the Company's balance sheet exposures at December 31,
1996 and 1995, the Company's results of operations would not be
materially affected by a 10% increase or decrease in exchange rates
underlying the contracts and the exposures hedged.  Cash
requirements of forward exchange contracts are limited to receipt
of an amount equal to the exchange gain or payment of an amount
equal to the exchange loss at the contract settlement date, and
payment of bank fees related to the contracts.  Net negative cash
flow from forward contract activity, consisting of realized gains
and losses from settlement of exposed assets and liabilities at
exchange rates in effect at the settlement date rather than at the
time of recording, settlement of the forward contracts purchased to
mitigate the exposures, and payment of bank fees on the forward
contracts, was $1,700,000 in 1996, $825,000 in 1995, and $1,100,000
in 1994.

Interest rate swap agreements:  The Company enters into interest
rate swap agreements to reduce the risk of increases in interest
rates on certain of its outstanding floating rate debt.  The
Company pays a fixed rate of interest and receives payment based on
a variable rate of interest, and is thus exposed to market risk of
potential future decreases in interest rates.  In 1996, the Company
entered into an interest rate swap agreement in the principal
amount of its Australian term loan agreement (approximately
$19,000,000 at December 31, 1996).  The agreement is for a period
of approximately six years, and its expiration date coincides with
that of the term loan.  Weighted average pay and receive rates
under this agreement were 9.58% and 7.06%, respectively, at
December 31, 1996.  Through March 1995, the Company had interest
rate swap agreements in the principal amounts of its two European
mortgages (approximately $20,000,000).  Weighted average pay and
receive rates at termination in 1995 were 7.36% and 5.22%,
respectively.  Cash requirements of the agreements, which are not
significant, are limited to the differential between the fixed rate
paid and the variable rate received.  The Company does no trading
in this form of derivative instrument.

The fair market values of the Company's forward exchange contracts
and interest rate swap agreements were determined by obtaining
quotes from banks, and are expressed in terms of amounts the
Company would receive or pay should the Company's obligations under
the instruments be transferred to a third party at the reporting
date.  The fair values of the Company's forward exchange contracts
and interest rate swap agreements approximated the original
contract amounts on that basis.


NOTE 5 -- SUPPLEMENTARY CASH FLOW INFORMATION.
Changes in current assets and liabilities, net of the effects of
business acquisitions and divestitures, restructuring charges, and
nonrecurring operating charges, in reconciling net loss to net cash
provided by operations are as follows:

-----------------------------------------------------------------------
                               Cash Provided By (Used For) Operations
Year Ended December 31,               1996       1995        1994
-----------------------------------------------------------------------
(In thousands)

(Increase) decrease in:
 Accounts receivable              $( 8,547)   $27,440    $(20,738)
 Inventories                        21,299     11,915       8,331
 Other current assets               10,522    (20,462)    (26,501)
Increase (decrease) in:
 Trade accounts payable            ( 1,513)     2,720       8,013
 Accrued compensation and other
   accrued expenses                ( 5,344)     3,008       2,461
 Billings in excess of sales       (   268)   (16,670)     14,824
-----------------------------------------------------------------------
Net changes in current assets
 and liabilities                   $16,149     $7,951    $(13,610)
=======================================================================

Cash payments for income taxes totaled $4,900,000, $4,800,000, and
$4,600,000 in 1996, 1995, and 1994, respectively.  Cash payments
for interest in those years totaled $5,000,000, $4,100,000, and
$2,400,000, respectively.

Investing and financing transactions in 1996 that did not require
cash included the issuance of 438,357 shares of the Company's
common stock with a fair market value of $4,000,000 in connection
with a professional services agreement related to the Company's
efforts to build its public safety business in the Asia Pacific
region and a $6,858,000 favorable mark-to-market adjustment of an
investment in an affiliated company.  See Note 1.  Investing and
financing transactions in 1995 that did not require cash consisted
of acquisition of a business for total consideration of $7,500,000,
consisting of issuance of 797,931 shares of the Company's common
stock and the granting of stock options on 148,718 of the Company's
shares to employees of the acquired company.  There were no
significant non-cash investing and financing transactions in 1994.


NOTE 6 -- ACCOUNTS RECEIVABLE.
Concentrations of credit risk with respect to accounts receivable
are limited due to the diversity of the Company's customer base.
The Company performs periodic credit evaluations of its customers'
financial condition and generally does not require collateral.
Historically, the Company has not experienced significant losses
related to trade receivables from individual customers or from
groups of customers in any geographic area, with the exception of
the 1994 write-off of a $5,500,000 receivable from a Middle Eastern
customer.  The Company's total accounts receivable from Middle
Eastern customers at December 31, 1996 and 1995 was $20,700,000 and
$13,600,000, respectively.

Revenues from the U.S. government were $160,800,000 in 1996,
$159,300,000 in 1995, and $167,000,000 in 1994, representing
approximately 15% of total revenue in all three years.  Accounts
receivable from the U.S. government was approximately $48,000,000
at December 31, 1996 and 1995.  The Company sells to the U.S.
government under long-term contractual arrangements, primarily
indefinite delivery, indefinite quantity and cost-plus award fee
contracts, and through commercial sales of products not covered by
long-term contracts.  Approximately 40% of total federal government
revenues are earned under long-term contracts.  The Company
believes its relationship with the federal government to be good.
While it is fully anticipated that these contracts will remain in
effect through their expiration, the contracts are subject to
termination (with damages paid to the Company) at the election of
the government.  Any loss of a significant government contract
would have an adverse impact on the results of operations of the
Company.

Included in accounts receivable are unbilled amounts of $82,300,000
and $75,800,000 at December 31, 1996 and 1995, respectively.

The Company maintained reserves for uncollectible accounts,
included in "Accounts receivable" in the consolidated balance
sheets at December 31, 1996 and 1995, of $16,700,000 and
$20,400,000, respectively.


NOTE 7 -- DEBT AND LEASES.
Short- and long-term debt is summarized as follows:

---------------------------------------------------------------
December 31,                                 1996      1995
---------------------------------------------------------------
(In thousands)

Revolving credit agreement                $20,000   $15,000
Term loan                                  19,029    21,607
Long-term mortgages                        12,889    12,626
Other secured debt                          7,911    13,946
Short-term credit facilities                3,310     1,432
Other                                       2,505     4,930
---------------------------------------------------------------
Total debt                                 65,644    69,541
Less amounts payable within one year       35,880    32,153
---------------------------------------------------------------
Total long-term debt                      $29,764   $37,388
===============================================================

In October 1995, the Company entered into a three year revolving
credit agreement with a group of lenders.  Borrowings available
under the agreement were determined by the amounts of eligible
assets of the Company, as defined in the agreement, including cash,
accounts receivable, inventory, and property, plant, and equipment,
with maximum borrowings of $50,000,000.  Borrowings were secured by
a pledge of substantially all of the Company's assets in the U.S.
and Canada and, under certain circumstances, the accounts
receivable of some European subsidiaries of the Company.  At
December 31, 1996 and 1995, the Company had outstanding borrowings
of $20,000,000 and $15,000,000, respectively, and approximately
$22,000,000 and $20,000,000, respectively, of the available credit
line was allocated to support letters of credit issued by the
Company.  The rate of interest on all borrowings under the
agreement was, at the Company's option, the Citibank base rate of
interest plus 1.75% or the Eurodollar rate plus 2.75%.  The
weighted average interest rate on combined debt outstanding under
short-term credit arrangements and revolving credit agreements for
1996 and 1995 was 9.7% and 10.4%, respectively.  The agreement
required the Company to pay a commitment fee at an annual rate of
 .5% of the average unused daily portion of the revolving credit
commitment.  In addition, the agreement contained certain financial
and restrictive covenants of the Company.

In January 1997, the Company terminated its agreement with this
group of lenders and replaced it with a term loan and revolving
credit agreement with another lender.  As a result, the Company
wrote off $3,300,000 million of deferred financing costs associated
with the previous agreement.  The charge is included in
"Nonrecurring operating charges" in the 1996 consolidated statement
of operations.

Under the Company's January 1997, three year fixed term loan and
revolving credit agreement, available borrowings are determined by
the amounts of eligible assets of the Company, as defined in the
agreement, including accounts receivable, inventory, and property,
plant, and equipment, with maximum borrowings of $100,000,000.  The
term loan portion of the agreement is in the principal amount of
$20,000,000, payable at expiration of the agreement.  Borrowings
are secured by a pledge of substantially all of the Company's
assets in the U.S.  The rate of interest on all borrowings under
the agreement is the greater of 7% or the Norwest Bank Minnesota
National Association base rate of interest (8.25% at inception of
the agreement) plus .625%.  The agreement requires the Company to
pay a facility fee at an annual rate of .15% of the maximum amount
available under the credit line, an unused credit line fee at an
annual rate of .25% of the average unused portion of the maximum
revolving credit line, and a monthly agency fee.  At February 21,
1997, the Company had outstanding borrowings of $20,000,000, all of
which was classified as long-term debt, and an additional
$33,000,000 of the available credit line was allocated to support
letters of credit issued by the Company. The effective interest
rate on this amount was 8.9%.  As of this same date, maximum
available credit under the line was approximately $83,000,000.

The term loan and revolving credit agreement contains certain
financial covenants of the Company, including minimum net worth,
minimum current ratio, and maximum levels of capital expenditures.
In addition, the agreement includes restrictive covenants that
limit or prevent various business transactions (including
repurchases of the Company's stock, dividend payments, mergers,
acquisitions of or investments in other businesses, and disposal of
assets including individual businesses, subsidiaries, and
divisions) and limit or prevent certain other business changes.

In August 1995, the Company entered into a term loan agreement with
an Australian bank totaling 35,000,000 Australian dollars
(approximately $26,000,000).  The loan is payable in varying
installments through August 2002 and bears interest at the bank's
variable short-term lending rate, which ranged from 6.8% to 9.6% in
1996 (7.5% to 8.2% in 1995).  Letters of credit totaling
$19,100,000 are pledged as security under the loan agreement.
During 1996, the Company entered into a six year interest rate swap
agreement in the amount of the term loan to reduce the risk of
increases in interest rates, effectively converting the interest
rate on this loan to a fixed rate of 9.58%.

The Company has two long-term mortgages on certain of its European
facilities.  Prior to refinancing in December 1995 and January
1996, the mortgages were payable in varying installments through
the year 2017 and bore interest at the floating Amsterdam Interbank
Offering Rate (AIBOR), which ranged from 3.9% to 4.6% in 1996 and
from 3.9% to 5.7% in 1995.  The refinanced mortgages are payable in
varying installments through the year 2010 and bear interest at the
floating AIBOR rate plus 1%.  During 1993, the Company entered into
two year interest rate swap agreements in the amounts of the
mortgages to reduce the risk of increases in interest rates,
effectively converting the interest rates on these mortgages to a
fixed rate of 7.4%.  The agreements expired in first quarter 1995.

Other secured debt consists of debt to various financial
institutions payable in varying installments through 1999 and
secured by certain internally used computer equipment.  The
weighted average interest rate on this debt was approximately 11.5%
for 1996 and 1995.

See Note 4 for discussion of fair values of the Company's debt and
interest rate swap agreements.

The Company leases various property, plant, and equipment under
operating leases as lessee.  Rental expense for operating leases
was $34,200,000 in 1996, $38,200,000 in 1995, and $38,600,000 in
1994.  Subleases and contingent rentals are not significant.
Future minimum lease payments, by year and in the aggregate, under
noncancelable operating leases with initial or remaining terms of
one year or more are as follows:

----------------------------------------------------------
                                         Operating
                                     Lease Commitments
----------------------------------------------------------
(In thousands)

1997                                       $26,300
1998                                        18,500
1999                                        11,900
2000                                         7,400
2001                                         2,500
Thereafter                                  23,600
----------------------------------------------------------
Total future minimum lease payments        $90,200
==========================================================


NOTE 8 -- INCOME TAXES.
The components of loss before income taxes are as follows:

-----------------------------------------------------------------------
Year Ended December 31,                    1996       1995       1994
-----------------------------------------------------------------------
(In thousands)

U.S.                                   $(42,381)  $(17,779)  $(26,330)
International                           (23,731)   (27,569)   (47,861)
-----------------------------------------------------------------------
Total loss before income taxes         $(66,112)  $(45,348)  $(74,191)
=======================================================================

Income tax benefit (expense) consists of the following:

-----------------------------------------------------------------------
Year Ended December 31,                    1996       1995       1994
-----------------------------------------------------------------------
(In thousands)

Current benefit (expense):
  Federal                              $  3,351    $ 5,251    $19,799
  International                         ( 3,855)    (2,076)   (   203)
-----------------------------------------------------------------------
   Total current                        (   504)     3,175     19,596
-----------------------------------------------------------------------
Deferred benefit (expense):
  Federal                               ( 2,447)    (2,685)   (14,775)
  International                         (    49)    (  490)   (   850)
-----------------------------------------------------------------------
   Total deferred                       ( 2,496)    (3,175)   (15,625)
-----------------------------------------------------------------------
Total income tax benefit (expense)     $( 3,000)   $   ---    $ 3,971
=======================================================================

Deferred income taxes included in the Company's balance sheet
reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the carrying amounts for income tax return purposes.
Significant components of the Company's deferred tax assets and
liabilities are as follows:

-----------------------------------------------------------------------
December 31,                                          1996       1995
-----------------------------------------------------------------------
(In thousands)

Current Deferred Tax Assets (Liabilities):
 Inventory reserves                                $23,356    $13,901
 Vacation pay and other employee benefit accruals    3,624      6,413
 Other financial statement reserves, primarily
   allowance for doubtful accounts                   4,000      9,078
 Profit on uncompleted sales contracts
   deferred for tax return purposes                ( 4,297)   ( 8,686)
 Other current tax assets and liabilities, net         912      4,331
-----------------------------------------------------------------------
                                                    27,595     25,037
 Less asset valuation allowance                    (23,617)   (21,209)
-----------------------------------------------------------------------
 Total net current asset  (1)                        3,978      3,828
-----------------------------------------------------------------------

Noncurrent Deferred Tax Assets (Liabilities):
 Net operating loss and tax credit carryforwards:
   U.S. federal and state                           47,019     29,577
   International operations                         38,132     28,964
 Depreciation                                      ( 9,256)   ( 8,632)
 Capitalized software development costs            ( 9,198)   ( 9,322)
 Other noncurrent tax assets and liabilities, net  ( 6,664)   ( 1,165)
-----------------------------------------------------------------------
                                                    60,033     39,422
 Less asset valuation allowance                    (66,237)   (43,303)
-----------------------------------------------------------------------
 Total net noncurrent liability                    ( 6,204)   ( 3,881)
-----------------------------------------------------------------------
Net deferred tax liability                        $( 2,226)  $(    53)
=======================================================================

(1)Included in "Other current assets" in the consolidated balance sheets.

The valuation allowance for deferred tax assets, which consists
primarily of reserves against the tax benefit of net operating loss
carryforwards, increased by $25,342,000 in 1996 due to the
incurrence of additional losses that may be carried forward, the
future tax benefits of which cannot be assured.  If realized, these
tax benefits will be applied to reduce income tax expense in the
year of realization.

Net operating loss carryforwards are available to offset future
earnings within the time periods specified by law.  At December 31,
1996, the Company had a U.S. federal net operating loss
carryforward of approximately $92,000,000 expiring from the year
2009 through 2011.  International net operating loss carryforwards
total approximately $102,000,000 and expire as follows:

------------------------------------------------------------
                                       International
                                    Net Operating Loss
December 31, 1996                      Carryforwards
------------------------------------------------------------
(In thousands)

Expiration:
3 years or less                           $ 11,000
4 to 5 years                                19,000
6 to 10 years                                8,000
Unlimited carryforward                      64,000
------------------------------------------------------------
Total                                     $102,000
============================================================

Additionally, the Company has $3,500,000 of U.S. alternative
minimum tax credit carryforwards which have no expiration date.
U.S. research and development tax credit carryforwards of
$5,800,000 are available to offset regular tax liability through
2011.

A reconciliation from income tax benefit at the U.S. federal
statutory tax rate of 35% to the Company's income tax benefit
(expense) is as follows:

-----------------------------------------------------------------------------
Year Ended December 31,                            1996      1995      1994
-----------------------------------------------------------------------------
(In thousands)

Income tax benefit at federal statutory rate   $ 23,139   $15,872   $25,967
Benefit from Foreign Sales Corp. (FSC)            1,963       905     1,689
Tax effects of international operations, net    ( 8,657)  ( 8,629)   (9,836)
Tax effect of U.S. tax loss carried forward     (23,752)  (10,967)   (3,804)
Tax effect of U.S. tax credits carried forward      ---       ---    (7,900)
Reduction of taxes provided in prior years        4,712       ---       ---
Other - net                                     (   405)    2,819    (2,145)
-----------------------------------------------------------------------------
Income tax benefit (expense)                   $( 3,000)  $   ---   $ 3,971
=============================================================================

The Company does not provide for federal income taxes or tax
benefits on the undistributed earnings or losses of its
international subsidiaries, because earnings are reinvested and, in
the opinion of management, will continue to be reinvested
indefinitely.  At December 31, 1996, the Company had not provided
federal income taxes on earnings of individual international
subsidiaries of approximately $49,000,000.  Should these earnings
be distributed in the form of dividends or otherwise, the Company
would be subject to both U.S. income taxes and withholding taxes in
the various international jurisdictions.  Determination of the
related amount of unrecognized deferred U.S. income tax liability
is not practicable because of the complexities associated with its
hypothetical calculation.  Withholding of approximately $2,700,000
would be payable if all previously unremitted earnings as of
December 31, 1996, were remitted to the U.S. company.


NOTE 9 -- STOCK-BASED COMPENSATION PLANS.
The Company has reserved a total of 3,000,000 shares of common
stock to grant as options to key employees under the Intergraph
Corporation 1992 Stock Option Plan.  Options may be granted at fair
market value or at a price less than fair market value on the date
of grant.  Options are not exercisable prior to twenty four months
from the date of grant or later than ten years after the date of
grant.  At December 31, 1996, 1,151,641 shares were available for
future grants.

Under the 1995 Employee Stock Purchase Plan, 3,200,000 shares of
common stock were made available for purchase through a series of
five consecutive annual offerings each June beginning June 1, 1995.
In order to purchase stock, each participant may have up to 10% of
his or her pay, not to exceed $25,000 in any offering period,
withheld through payroll deductions.  All full time employees,
except members of the Administrative Committee of the Plan, are
eligible to participate.  The purchase price of each share is 85%
of the closing market price of the Company's common stock on the
last pay date of each calendar month.  Employees purchased 352,759,
358,687, and 510,625 shares of stock in 1996, 1995, and 1994,
respectively, under the 1995 and predecessor Plans.  At December
31, 1996, 2,655,727 shares were available for future purchases.

As allowed under the provisions of Statement of Financial
Accounting Standards 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.  Had the Company accounted
for its stock-based compensation plans based on fair value of
awards at grant date consistent with the methodology of SFAS 123,
the Company's net loss and loss per share would have been increased
as indicated below.  The effects of applying SFAS 123 on a pro
forma basis are not likely to be representative of the effects on
reported pro forma net income (loss) for future years as the
estimated compensation costs reflect only options granted
subsequent to December 31, 1994.

----------------------------------------------------------------------------
Year Ended December 31,                                    1996       1995
----------------------------------------------------------------------------
(In thousands except per share amounts)

Net loss                                  As reported  $(69,112)  $(45,348)
                                          Pro forma    $(71,447)  $(46,757)

Primary and fully diluted loss per share  As reported  $(  1.46)  $(   .98)
                                          Pro forma    $(  1.51)  $(  1.01)
============================================================================

Under the methodology of SFAS 123, the fair value of the Company's
fixed stock options was estimated at the date of grant using the
Black-Scholes option pricing model.  The multiple option approach
was used, with assumptions for expected option life of 1.39 years
after vest date and 40% expected volatility for the market price of
the Company's stock.  Dividend yield is excluded from the
calculation since it is the present policy of the Company to retain
all earnings to finance operations.  Risk free interest rates were
determined separately for each grant and are as follows:

--------------------------------------------------------------
                                     Risk Free Interest Rate
Expected Life                        -----------------------
(in years)                              1996           1995
--------------------------------------------------------------

  3.39                                 6.55%          5.95%
  4.39                                 6.67%          6.02%
  5.39                                 6.74%          6.09%
  6.39                                 6.79%          6.17%
==============================================================

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable.  In addition, option
valuation models require the input of highly subjective
assumptions, including expected stock price volatility.  Because
the Company's employee stock options have characteristics
significantly different from those of traded options, and because
the subjectivity of assumptions can materially affect estimates of
fair value, the Company believes the Black-Scholes model does not
necessarily provide a reliable single measure of the fair value of
its employee stock options.

Shares issued under the Company's stock purchase plan were valued
at the difference between the market value of the stock and the
discounted purchase price of the shares on the date of purchase.
The date of grant and the date of purchase coincide for this plan.

The weighted average grant date fair values of options granted to
employees during 1996 and 1995 were $3.92 and $4.84, respectively,
under the 1992 stock option plan and $1.78 and $1.88, respectively,
under the 1995 stock purchase plan.

Activity in the Company's fixed stock option plan for the years
ended December 31, 1996, 1995, and 1994 is summarized as follows:

-------------------------------------------------------------------------------
                              1996               1995               1994
                       ------------------ ------------------ ------------------
                                 Weighted           Weighted           Weighted
                                  Average            Average            Average
                                 Exercise           Exercise           Exercise
                         Shares    Price    Shares    Price    Shares    Price
-------------------------------------------------------------------------------
Outstanding at
 beginning of year     1,778,304  $10.42  1,260,637  $10.48  1,408,925  $11.01
Granted at fair value    290,018    9.47  1,244,000   11.12     70,000    9.50
Granted at less than
 fair value                  ---     ---    148,718    1.25        ---     ---
Exercised               ( 53,898)   5.28   (836,469)   9.94        ---     ---
Expired                 ( 14,982)   9.23        ---     ---   (146,157)  15.00
Forfeited               (168,025)  11.02   ( 38,582)   9.97    (72,131)  10.87
-------------------------------------------------------------------------------
Outstanding at
 end of year           1,831,417  $10.38  1,778,304  $10.42  1,260,637  $10.48
-------------------------------------------------------------------------------

Exercisable at
 end of year             247,874  $ 9.12    160,171  $ 7.68    598,814  $10.91
===============================================================================

<TABLE>
Further information relating to stock options outstanding at
December  31, 1996 is as follows:

<CAPTION>
-----------------------------------------------------------------------------------------------
                                     Options Outstanding                 Options Exercisable   
                         -------------------------------------------  ------------------------- 
                                    Weighted Average    Weighted                   Weighted    
                                        Remaining        Average                    Average
Range of Exercise Prices    Number  Contractual Life  Exercise Price     Number  Exercise Price
-----------------------------------------------------------------------------------------------
<S>                     <C>          <C>                  <C>          <C>           <C>        
$   .90 to $ 3.75           30,335    7.58 years          $ 1.33         22,294      $ 1.40        
$ 7.875 to $ 9.50          586,223    7.77                  8.97        173,241        8.56       
$11.125 to $16.00        1,214,859    8.29                 11.28         52,339       14.23      
-----------------------------------------------------------------------------------------------
                         1,831,417    8.11                $10.38        247,874      $ 9.12     
===============================================================================================
</TABLE>

Options shown above with a weighted average exercise price of $1.25
per share and a range of exercise prices of $.90 to $3.75 were
granted in 1995 as the result of a business acquisition in which
the Company assumed the total shares and price obligations under
the acquired company's stock option plans.  All other option grants
during the three year period ended December 31, 1996 were at the
fair market value of the Company's stock at date of grant.


NOTE 10 -- EMPLOYEE BENEFIT PLANS.
The Intergraph Corporation Stock Bonus Plan was established in 1975
to provide retirement benefits to substantially all U.S. employees.
Effective January 1, 1987, the Company  amended the Plan to qualify
it as an employee stock ownership plan (ESOP).  The Company makes
contributions to the Plan in amounts determined at the discretion
of the Board of Directors, and the contributions are funded with
Company stock.  Amounts are allocated to the accounts of
participants based on compensation.  Benefits are payable to
participants subject to the vesting provisions of the Plan.  The
Company has not made a contribution to the Plan since 1991.

In 1990, the Company established the Intergraph Corporation
SavingsPlus Plan, an employee savings plan qualified under Section
401(k) of the Internal Revenue Code, covering substantially all
U.S. employees.  Employees can elect to contribute up to 15% of
their compensation  to the Plan.  The Company matches 50% of
employee contributions up to 6% of each employee's compensation.
Company contributions to the Plan were $5,687,000, $5,886,000, and
$6,169,000 in 1996, 1995, and 1994, respectively.

The Company maintains various retirement benefit plans for
employees of its international subsidiaries, primarily defined
contribution plans that cover substantially all employees.
Contributions to the plans are made in cash and are allocated to
the accounts of participants based on compensation.  Benefits are
payable based on vesting provisions contained in each plan.
Contributions to the plans were $3,678,000, $3,856,000, and
$3,331,000 in 1996, 1995, and 1994, respectively.


NOTE 11-- OPERATIONS BY GEOGRAPHIC AREA.
International markets, particularly Europe, continue in importance
to the industry and to the Company.  The Company's operations are
subject to and may be adversely affected by a variety of risks
inherent in doing business internationally, such as government
policies or restrictions, currency exchange fluctuations, and other
factors.

The following summary of operations by geographic area includes
both sales to unaffiliated customers and intercompany sales between
geographic areas.  Sales between geographic areas are accounted for
under a transfer pricing policy.  Loss from operations by
geographic areas reflects these sales.

-----------------------------------------------------------------------
Year Ended December 31,                  1996        1995        1994
-----------------------------------------------------------------------
(In thousands)

Revenues
United States:
 Unaffiliated customers - U.S.     $  488,759  $  500,295  $  526,082
 Unaffiliated customers - export       42,061      49,035      38,908
 Consolidated subsidiaries            232,871     217,171     199,663
-----------------------------------------------------------------------
                                      763,691     766,501     764,653
-----------------------------------------------------------------------

Europe:
 Unaffiliated customers               363,255     390,715     344,579
-----------------------------------------------------------------------

Asia Pacific:
 Unaffiliated customers               127,607      91,284      70,645
 U.S. parent                            2,257       2,252       2,250
-----------------------------------------------------------------------
                                      129,864      93,536      72,895
-----------------------------------------------------------------------

Other International:
 Unaffiliated customers                73,651      66,649      61,189
 U.S. parent                            1,320         770         370
-----------------------------------------------------------------------
                                       74,971      67,419      61,559
-----------------------------------------------------------------------
Eliminations -- net                 ( 236,448)  ( 220,193)  ( 202,283)
-----------------------------------------------------------------------
Total revenues                     $1,095,333  $1,097,978  $1,041,403
=======================================================================

Loss From Operations
United States                      $(  30,346) $(  12,261) $(  27,640)
Europe                              (  32,299)  (  27,663)  (  33,147)
Asia Pacific                        (   5,917)  (  10,799)  (   5,716)
Other International                 (   5,424)  (  10,106)  (  11,687)
Eliminations -- net                     5,262       6,684       5,548
-----------------------------------------------------------------------
Total loss from operations         $(  68,724) $(  54,145) $(  72,642)
=======================================================================

Identifiable Assets
United States                      $  522,966  $  558,446  $  586,041
Europe                                204,913     248,459     239,649
Asia Pacific                           85,197      85,205      59,525
Other International                    40,147      46,234      49,934
Eliminations -- net                 (  96,876)  ( 112,299)  (  95,531)
-----------------------------------------------------------------------
Total identifiable assets          $  756,347  $  826,045  $  839,618
=======================================================================

Loss from operations in 1994 includes a restructuring credit
(reversal of the unincurred portion of the 1993 restructuring
charge) of $4,826,000 in Europe.  Loss from operations in 1995
includes restructuring charges of $4,778,000 in the U.S., $978,000
in Europe, and $284,000 in Other International.  Loss from
operations in 1996 includes a charge of $10,545,000 in the U.S. for
a $7,245,000 revaluation of the assets of two noncore business
units planned for disposal through sales to third parties and a
$3,300,000 write-off of deferred financing fees due to the
Company's early termination of its revolving credit agreement with
a group of lenders.


NOTE 12 -- RELATED PARTY TRANSACTIONS.
Bentley Systems, Inc.:  Through December 31, 1994, the Company had
an exclusive license agreement with Bentley Systems, Inc. (BSI), a
50%-owned affiliate of the Company, under which the Company
distributed MicroStation, a software product developed and
maintained by BSI and utilized in many of the Company's software
applications.  Under this agreement, the Company paid royalties to
BSI based on its sales of MicroStation.  Royalties expense totaled
$21,820,000 in 1994.

Effective January 1, 1995, the Company has a nonexclusive license
to sell MicroStation via its direct sales force, and to sell
MicroStation via its indirect sales channels if MicroStation is
sold with other Intergraph products.  In addition, effective
January 1, 1995 and 1996, the per copy fee payable by the Company
to BSI was increased and, for 1995 only, BSI paid the Company a per
copy distribution fee based on BSI's MicroStation sales to
resellers.  See Note 2 and Management's Discussion and Analysis of
Financial Condition and Results of Operations for further
discussion of the Company's business relationship with BSI.

The Company's purchases from BSI totaled $14,244,000 in 1996 and
$39,329,000 in 1995, and the per copy distribution fees earned by
the Company from BSI totaled $7,414,000 in 1995.  Amounts due from
BSI or for which the Company holds the right to delivery of BSI
products totaled $10,700,000 and $13,000,000 at December 31, 1996
and 1995, respectively.

Loan Program for Executive Officers:  In order to encourage
retention of Company stock by executive officers, the Company
adopted a loan program effective January 1993, under which
executive officers may borrow from the Company, on an unsecured
basis, an amount not exceeding (1) the current market value of the
common stock of the Company owned by any such executive officer,
and/or (2) the net value (current market price less exercise price)
of currently exercisable stock options owned by any such executive
officer.  Interest is charged on a monthly basis at the prevailing
prime rate.  Principal and interest must be repaid by the earliest
to occur of termination of employment, the attainment of a
designated market price for the Company's stock or the sale of a
certain number of shares by loan recipients, or April 30, 1997.  At
December 31, 1996 and 1995, James W. Meadlock, Chief Executive
Officer and Chairman of the Board of the Company, was indebted to
the Company in the amounts of $5,530,000 and $5,165,000,
respectively, under the program.


NOTE 13 -- SHAREHOLDER RIGHTS PLAN.
On August 25, 1993, the Company's Board of Directors adopted a
Shareholder Rights Plan.  As part of this plan, the Board of
Directors declared a distribution of one common stock purchase
right (a "Right") for each share of the Company's common stock
outstanding on September 7, 1993.  Each Right entitles the holder
to purchase from the Company one common share at a price of $50,
subject to adjustment.  The Rights are not exercisable until the
occurrence of certain events related to a person or a group of
affiliated or associated persons acquiring, obtaining the right to
acquire, or commencing a tender offer or exchange offer, the
consummation of which would result in beneficial ownership by such
a person or group of 15% or more of the outstanding common shares
of the Company.  Rights will also become exercisable in the event
of certain mergers or an asset sale involving more than 50% of the
Company's assets or earnings power.  Upon becoming exercisable,
each Right will allow the holder, except the person or group whose
action has triggered the exercisability of the Rights, to either
buy securities of Intergraph or securities of the acquiring
company, depending on the form of the transaction, having a value
of twice the exercise price of the Rights.  The Rights trade with
the Company's common stock.  The Rights are subject to redemption
at the option of the Board of Directors at a price of $.01 per
Right until the occurrence of certain events, and are exchangeable
for the Company's common stock at the discretion of the Board of
Directors under certain circumstances.  The Rights expire on
September 7, 2003.


NOTE 14 -- SUMMARY OF QUARTERLY INFORMATION -- UNAUDITED.

-----------------------------------------------------------------------------
Quarter Ended                        March 31   June 30  Sept. 30  Dec. 31
-----------------------------------------------------------------------------
(In thousands except per share amounts)

Year ended December 31, 1996:
Revenues                             $256,706  $268,166  $276,313  $294,148
Gross profit                           95,401   101,370   103,001   103,653
Net loss                              ( 6,391)  (15,179)  (13,930)  (33,612)
Net loss per share                    (   .14)  (   .32)  (   .29)  (   .71)
Weighted average shares outstanding    46,902    46,922    47,243    47,636

Year ended December 31, 1995:
Revenues                             $257,329  $260,167  $279,231  $301,251
Gross profit                           98,148   101,387   105,972   124,184
Net income (loss)                     (22,472)  (21,958)  ( 8,049)    7,131
Net income (loss) per share           (   .49)  (   .48)  (   .17)      .15
Weighted average shares outstanding    45,601    45,929    46,146    46,616

==============================================================================

First quarter 1996 losses were reduced by a $.20 per share gain on
the sale of the Company's stock investment in an affiliated
company.  Fourth quarter 1996 losses were increased by a $.21 per
share charge for nonrecurring operating expenses, primarily
revaluation of the assets of two noncore business units and write-
off of deferred financing fees.

Second quarter 1995 losses were increased by a restructuring charge
of $.16 per share and reduced by an $.11 per share gain on the sale
of a subsidiary.  Fourth quarter 1995 earnings were increased by a
$.03 per share reversal of a portion of the restructuring charge
recognized in second quarter 1995.


REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
Intergraph Corporation


We have audited the accompanying consolidated balance
sheets of Intergraph Corporation and subsidiaries as of
December 31, 1996 and 1995, and the related consolidated
statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended
December 31, 1996.  These financial statements are the
responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally
accepted auditing standards.  Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Intergraph Corporation and
subsidiaries at December 31, 1996 and 1995, and the
consolidated results of their operations and their cash
flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted
accounting principles.



Birmingham, Alabama
January 30, 1997


DIVIDEND POLICY

The Company has never declared or paid a cash dividend on its
common stock.  It is the present policy of the Company's Board of
Directors to retain all earnings to finance the Company's
operations.  In addition, payment of dividends is restricted by the
Company's term loan and revolving credit agreement.

PRICE RANGE OF COMMON STOCK

Since April 1981, Intergraph common stock has traded on The NASDAQ
Stock Market under the symbol INGR.  As of January 31, 1997, there
were 47,758,544 shares of common stock outstanding, held by 6,092
shareholders of record.  The following table sets forth, for the
periods indicated, the high and low sale prices of the Company's
common stock as reported on The NASDAQ Stock Market.

----------------------------------------------------------
                          1996                   1995
Period               High      Low         High        Low
----------------------------------------------------------

First Quarter     $20 1/8   $14 5/8     $14 3/8    $ 8 1/8
Second Quarter     16 1/4    11 1/8      14         10
Third Quarter      13 1/8     8 5/8      13         10 7/8
Fourth Quarter     12 5/8     8 5/8      18 1/2     11 5/8
==========================================================

TRANSFER AGENT AND REGISTRAR

Harris Trust and Savings Bank
Shareholder Services Division
311 W. Monroe Street
P. O. Box A-3504
Chicago, IL  60690-3504

CORPORATE COUNSEL

Lanier Ford Shaver & Payne P.C.
200 West Court Square, Suite 5000
Huntsville, AL  35801

INDEPENDENT AUDITORS

Ernst & Young LLP
AmSouth/Harbert Plaza, Suite 1900
Birmingham, AL  35203

FORM 10-K

A copy of the Company's Form 10-K filed with the Securities and
Exchange Commission is available without charge upon written 
request to Shareholder Relations, Intergraph Corporation, 
Huntsville, AL  35894-0001.

ANNUAL MEETING

The annual meeting of Intergraph Corporation will be held May 15,
1997, at the Corporate offices in Huntsville, Alabama.


                            BOARD MEMBERS AND OFFICERS
                                

BOARD OF DIRECTORS           EXECUTIVE VICE PRESIDENTS    VICE PRESIDENTS

James W. Meadlock            Wade C. Patterson            Thomas G. Baybrook
Chief Executive Officer and  President, Intergraph
Chairman of the Board        Computer Systems             Klaas Borgers

Roland E. Brown              William E. Salter            Roger O. Coupland
Director                     President, Intergraph
                             Federal Systems              Jeffrey H. Edson
Larry J. Laster
Executive Vice President     Tommy D. Steele              Graeme J. Farrell
and Director                 President, Intergraph
                             Software Solutions           Milford B. French
Keith H. Schonrock Jr.
Director                     Lawrence F. Ayers Jr.        Jeffrey P. Heath

James F. Taylor Jr.          Edward F. Boyle              Fred D. Heddens
Executive Vice President,
President, International     Penman R. Gilliam            Rune Kahlbom
Public Safety, and Director
                             Neil E. Keith                William H. McClure
Robert E. Thurber
Executive Vice President     Richard H. Lussier           Winston P. Newton
and Director
                             Nancy B. Meadlock            John R. Owens

                             Stephen J. Phillips          Robert Patience

                             Edward A. Wilkinson          Stephen B. Rowles

                             Allan B. Wilson              David K. Stinson Jr.

                             Manfred Wittler              John W. Wilhoite


                                                          SECRETARY

                                                          John R. Wynn