INTERGRAPH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

-----------------------------------------------------------------------
December 31,                                       2002          2001
-----------------------------------------------------------------------
(In thousands, except share and per share amounts)

Assets
  Cash and cash equivalents                       $490,097     $ 99,773
  Short-term investments                            15,927       11,035
-----------------------------------------------------------------------
      Total cash and short-term investments        506,024      110,808
  Accounts receivable, net                         152,187      158,873
  Inventories, net                                  19,397       24,125
  Other current assets                              39,795       32,687
-----------------------------------------------------------------------
      Total current assets                         717,403      326,493
  Investments in affiliates                         20,700       20,654
  Capitalized software development costs, net       29,830       24,209
  Other assets, net                                 16,889       34,680
  Property, plant, and equipment, net               50,818       51,974
-----------------------------------------------------------------------
      Total Assets                                $835,640     $458,010
=======================================================================
Liabilities and Shareholders' Equity
  Trade accounts payable                          $ 17,850     $ 22,897
  Accrued compensation                              31,541       31,693
  Other accrued expenses                            35,730       43,765
  Billings in excess of sales                       43,908       37,968
  Income taxes payable                              67,477        9,913
  Short-term debt and current maturities of
   long-term debt                                      169        2,619
-----------------------------------------------------------------------
      Total current liabilities                    196,675      148,855
-----------------------------------------------------------------------
  Deferred income taxes                             16,260        2,573
  Other noncurrent liabilities and long-term debt      995        3,843
-----------------------------------------------------------------------
      Total noncurrent liabilities                  17,255        6,416
-----------------------------------------------------------------------
  Minority interest in consolidated subsidiaries       ---        7,526
-----------------------------------------------------------------------
  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                      206,888      210,748
   Retained earnings                               586,020      208,268
   Accumulated other comprehensive loss               (659)     (20,603)
-----------------------------------------------------------------------
                                                   797,985      404,149
   Less - cost of treasury shares (11,198,767 at
     December 31,2002, and 7,539,419 at December
     31, 2001)                                    (176,275)    (108,936)
-----------------------------------------------------------------------
      Total shareholders' equity                   621,710      295,213
-----------------------------------------------------------------------
     Total Liabilities and Shareholders' Equity   $835,640     $458,010
=======================================================================

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

INTERGRAPH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

----------------------------------------------------------------------
Year Ended December 31,                    2002      2001       2000
----------------------------------------------------------------------
 (In thousands, except per share amounts)

Revenues
  Systems                               $287,999   $301,483   $426,791
  Maintenance                            121,513    125,305    160,456
  Services                                91,665    105,273    103,207
----------------------------------------------------------------------
     Total revenues                      501,177    532,061    690,454
----------------------------------------------------------------------

Cost of revenues
  Systems                                146,525    153,790    266,147
  Maintenance                             55,162     66,367     87,793
  Services                                65,550     78,578     84,237
----------------------------------------------------------------------
     Total cost of revenues              267,237    298,735    438,177
----------------------------------------------------------------------
     Gross profit                        233,940    233,326    252,277

Product development expenses              50,669     53,892     56,319
Sales and marketing expenses              96,689     96,258    118,402
General and administrative expenses       76,197     75,473     92,699
Restructuring charges (credits)            2,106       (384)     8,498
----------------------------------------------------------------------
     Income (loss) from operations         8,279      8,087    (23,641)

Patent litigation gain, net              440,623        ---        ---
Gains on sales of assets                  17,214     11,243     49,546
Interest income                            6,886      7,427      4,809
Interest expense                            (219)    (1,793)    (4,031)
Other income (expense), net               (3,611)     3,954     (7,457)
----------------------------------------------------------------------
     Income before income taxes and
       minority interest                 469,172     28,918     19,226

Income tax expense                       (91,135)    (8,500)    (6,600)
----------------------------------------------------------------------
     Income before minority interest     378,037     20,418     12,626

Minority interest in earnings of
  consolidated subsidiaries                 (285)      (476)    (2,531)
----------------------------------------------------------------------

     Net income                         $377,752   $ 19,942   $ 10,095
======================================================================
Net income per share:
    Basic                               $   7.87   $   0.40   $   0.20
    Diluted                             $   7.47   $   0.39   $   0.20
======================================================================
Weighted average shares outstanding:
    Basic                                 47,991     49,578     49,368
    Diluted                               50,536     51,620     49,855
======================================================================

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,                     2002      2001      2000
----------------------------------------------------------------------
(In thousands)

Cash Provided By (Used For):
Operating Activities
  Net income                              $377,752  $ 19,942  $ 10,095
  Adjustments to reconcile net income to
  net cash provided by (used for)
  operating activities:
    Depreciation                            9,677     11,917    14,980
    Amortization                           15,535     14,307    18,906
    Provision for losses on accounts
     receivable                             3,851      1,348     5,507
    Non-cash portion of restructuring
     charges                                2,069        ---     5,696
    Noncurrent portion of deferred income
     taxes                                 13,695     (4,043)     (267)
    Write-down of long-term investment      6,956        ---       ---
    Write-down of convertible debenture       ---        ---     5,000
    Gains on sales of assets              (17,214)   (11,243)  (49,546)
    Net changes in current assets and
     liabilities                           47,239     (7,759)   30,875
----------------------------------------------------------------------
    Net cash provided by operating
    activities                            459,560     24,469    41,246
----------------------------------------------------------------------

Investing Activities
  Net proceeds from sales of assets        34,368     12,734    38,362
  Purchases of property, plant, and
   equipment                              (10,713)    (9,675)   (7,244)
  Purchases of short-term investments    (270,088)   (11,035)      ---
  Proceeds from short-term investments    266,654        ---       ---
  Capitalized software development costs  (11,294)    (4,827)  (10,829)
  Capitalized internal use software costs  (1,147)    (1,973)   (1,057)
  Business acquisitions, net of cash
   acquired                                (7,317)    (2,904)      ---
  Other                                      (451)       148    (3,349)
----------------------------------------------------------------------
    Net cash provided by (used for)
    investing activities                       12    (17,532)   15,883
----------------------------------------------------------------------

Financing Activities
  Gross borrowings                             81      1,653       ---
  Debt repayment                           (3,655)   (28,518)  (23,368)
  Treasury stock repurchase               (83,588)    (1,875)      ---
  Proceeds of employee stock purchases
   and exercises of stock options          12,389      3,818     1,630
----------------------------------------------------------------------
    Net cash used for financing activities(74,773)   (24,922)  (21,738)
----------------------------------------------------------------------
Effect of exchange rate changes on cash     5,525     (2,090)   (4,056)
----------------------------------------------------------------------
Net increase (decrease) in cash and cash
  equivalents                             390,324    (20,075)   31,335
Cash and cash equivalents at beginning
  of year                                  99,773    119,848    88,513
----------------------------------------------------------------------
Cash and cash equivalents at end of year $490,097   $ 99,773  $119,848
======================================================================

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

<TABLE>

INTERGRAPH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                                                             Accumulated
                                                       Additional               Other           	    Total
                                              Common    Paid-in   Retained   Comprehensive    Treasury   Shareholders'
                                              Stock     Capital   Earnings   Income (Loss)      Stock       Equity
------------------------------------------------------------------------------------------------------------------------
(In thousands except share amounts)

                                             <c>        <c>       <c>          <c>            <c>          <c>

  Balance at January 1, 2000                  $5,736    $216,943   $178,231   $ (5,506)      $(118,704)     $276,700

Comprehensive income (loss):
  Net income                                     ---         ---     10,095        ---             ---        10,095
  Other comprehensive loss:
     Foreign currency translation adjustments    ---         ---        ---     (2,738)            ---           ---
      Less: Net translation loss realized upon
            liquidation of subsidiary            ---         ---        ---        252             ---           ---
      Net foreign currency translation                                             ---
       adjustments                               ---         ---        ---     (2,486)            ---        (2,486)
     Net unrealized holding losses on
      investments                                ---         ---        ---     (7,939)            ---        (7,939)
                                                                                                               -----
       Comprehensive loss                        ---         ---        ---        ---             ---          (330)
                                              								       =====
Issuance of 305,447 shares under employee stock
 purchase plan                                   ---      (2,839)       ---        ---           4,452         1,613
Issuance of 3,250 shares upon exercise of stock
 options                                         ---         (25)       ---        ---              42            17
------------------------------------------------------------------------------------------------------------------------
  Balance at December 31, 2000                 5,736     214,079    188,326    (15,931)       (114,210)      278,000

Comprehensive income (loss):
  Net income                                     ---         ---     19,942        ---             ---        19,942
  Other comprehensive loss:
     Foreign currency translation adjustments    ---         ---        ---     (1,385)            ---        (1,385)
     Net unrealized holding losses on
      investments                                ---         ---        ---     (3,287)            ---        (3,287)
													       -----
       Comprehensive income                      ---         ---        ---        ---             ---        15,270
													      ======
Repurchase of 195,000 shares of treasury stock   ---         ---        ---        ---          (1,875)       (1,875)
Issuance of 147,478 shares under employee stock
 purchase plan                                   ---        (746)       ---        ---           2,143         1,397
Issuance of 344,555 shares upon exercise of
 stock options                                   ---      (2,585)       ---        ---           5,006         2,421
------------------------------------------------------------------------------------------------------------------------
  Balance at December 31, 2001                 5,736     210,748    208,268    (20,603)       (108,936)      295,213

Comprehensive income:
  Net income                                     ---         ---    377,752        ---             ---       377,752
  Other comprehensive income:
     Foreign currency translation adjustments    ---         ---        ---      9,366             ---         9,366
     Net unrealized holding gains on investments ---         ---        ---     22,724             ---        22,724
     Reclassification adjustments for gains
      included in net income                     ---         ---        ---    (12,146)            ---       (12,146)
													      ------
       Comprehensive income                      ---         ---        ---        ---             ---       397,696
													     =======
Repurchase of 4,734,100 shares of treasury stock ---         ---        ---        ---         (83,588)      (83,588)
Tax benefits related to stock option plans       ---       4,283        ---        ---             ---         4,283
Issuance of 107,806 shares under employee stock
 purchase plan                                   ---        (115)       ---        ---           1,630         1,515
Issuance of 966,946 shares upon exercise of
 stock options                                   ---      (8,028)       ---        ---          14,619         6,591
------------------------------------------------------------------------------------------------------------------------
  Balance at December 31, 2002                $5,736    $206,888   $586,020   $   (659)      $(176,275)     $621,710
========================================================================================================================

The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>


INTERGRAPH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

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

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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 operations are divided for operational and management
purposes into four separate business segments, along with an
Intellectual Property division ("IP") and a corporate oversight
function ("Corporate"): Intergraph Process, Power & Offshore ("PPO"),
Intergraph Mapping and Geospatial Solutions ("IMGS"), Intergraph
Solutions Group ("ISG"), and Intergraph Public Safety, Inc. ("IPS").
See Note 15 for a description of these business segments.

The Company's products are sold worldwide, with the United States and
Europe representing approximately 83% of total revenues for 2002.

Cash Equivalents and Short-Term Investments:  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 limits the amount of credit
exposure from any single issuer of securities.  The carrying amounts
reported in the consolidated balance sheets for cash and cash
equivalents and short-term investments approximate their fair value.
For purposes of financial statement presentation, investments with
original maturities of three months or less are considered to be cash
equivalents, and investments with original maturities of greater than
three months but less than a year are considered to be short-term
investments.

The Company's investments in debt securities are stated at a carrying
value which approximates fair value and any unrealized holding gains
and losses are reported as a component of "Accumulated other
comprehensive loss" in the consolidated balance sheets.  At December
31, 2002, and 2001, the Company held various debt securities maturing
within three months or less with fair market values of approximately
$420.1 million and $37.3 million, respectively.  For the same two
periods, the Company's debt securities with maturities of greater than
three months but less than a year were approximately $15.9 million and
$11 million, respectively.  Gross realized gains and losses on debt
securities sold during the three-year period ended December 31, 2002,
were not significant, and there were no unrealized holding gains or
losses on debt securities at December 31, 2002, or 2001.

Inventories:  Inventories are stated at the lower of average cost or
market.  The Company regularly estimates the degree of technological
obsolescence in its inventories and provides inventory reserves on that
basis.  An inability of the Company to accurately forecast its
inventory needs related to its warranty and maintenance obligations
could adversely affect gross margin and results of operations.  See
Note 2 for a summary of inventory balances.

Other Current Assets:  Other current assets reflected in the Company's
consolidated balance sheets consist primarily of prepaid expenses, non-
trade receivables, the current portion of notes receivable from sales
of various non-core businesses and assets, refundable income taxes,
and the Company's net current deferred tax asset.  See Notes 11, 16,
and 17 for a discussion of significant transactions affecting these
components.

Investments in Affiliates:  Investments in companies in which the
Company believes it has the ability to influence operations or finances
are accounted for by the equity method.  Investments in companies in
which the Company does not exert such influence 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 equity ownership in Bentley Systems, Inc. ("BSI") is
approximately 34% at December 31, 2002.  The Company does not account
for its investment in BSI under the equity method due to a lack of
significant influence.  (See Note 16 for further discussion of the
Company's business relationship with BSI.)  The book value of the
Company's investment in BSI was approximately $9.2 million at December
31, 2002, and 2001.  The Company is unable to determine the fair value
of this investment.

As a result of the acquisition of 3Dlabs Inc., Ltd. ("3Dlabs") by
Creative Technology Ltd. ("Creative") during 2002 (in which the Company
sold all of its shares of 3Dlabs stock), the Company now owns
approximately 1.5 million shares of Creative common stock.  At December
31, 2002, the Company's shares of Creative stock represented a 2%
ownership, with a market value of $10.6 million.  For complete details
of the Company's July 2000 sale of its Intense3D graphics accelerator
division to 3Dlabs and all subsequent related events, see Note 17.

Capitalized Software Development Costs:  Product development costs are
charged to expense as incurred; however, the costs incurred for the
development of computer software that will be sold, leased, or
otherwise marketed are capitalized when technological feasibility of
the product has been established.  Such capitalized costs are amortized
on a straight-line basis over a period of two to three years.
Amortization of these capitalized costs, included in "Cost of revenues
- Systems" in the consolidated statements of income, amounted to $5.8
million in 2002, $4.2 million in 2001, and $9.2 million in 2000.

Although the Company regularly reviews its capitalized development
costs to ensure recognition of any decline in value, it is possible
that, for any given product, revenues will not materialize in amounts
anticipated due to industry conditions that include price and
performance competition.  Should this occur, the net realizable value
of capitalized development costs would decline, producing adverse
effects on systems cost of revenues and results of operations.  Due to
net realizable value concerns, the Company did not capitalize product
development expenses of $10.5 million, $8.6 million, and $3.9 million
in 2002, 2001, and 2000, respectively, for costs normally eligible for
capitalization.  Accumulated amortization (net of certain fully
amortized projects) in the consolidated balance sheets at December 31,
2002, and 2001, was $14.6 million and $8.8 million, respectively.

In October 2000, the Company entered into a research services agreement
to develop an advanced, next-generation shipbuilding software product
for the design of commercial and military vessels.  The agreement
allows for two years of cost funding by the customer to bring the
software to commercial release.  The terms include a 15% escrow of
consulting work until release of product to the customer, sliding scale
royalty payable to the customer on future sales of software by the
Company, and customer commitment to purchase and pay maintenance on a
minimum number of software seats.  The Company will retain the
intellectual property rights of the software.  The agreement was
amended in 2002 to waive the 15% escrow of consulting work until
release of product and the escrow accumulated to date was paid.  The
2002 amendment includes a commitment to spend $3 million in total on
services with the customer over two years from the date of software
handover, which is expected to occur in second quarter 2003.  Services
revenues and costs related to the agreement totaled approximately $2.9
million and $1.8 million, respectively, for 2002, and $2.8 million and
$1.9 million, respectively, for 2001.  Research and development
expenses incurred prior to the agreement totaling approximately $9.7
million were capitalized and are included as a component of
"Capitalized software development costs" in the consolidated balance
sheets at December 31, 2002, and 2001.

Other Assets:  Other assets reflected in the Company's consolidated
balance sheets consist primarily of purchased software and
intellectual property rights (see Notes 4 and 17).

Property, Plant, and Equipment:  Expenditures for property, plant, and
equipment are capitalized at cost.  Depreciation is computed using the
straight-line method over the estimated useful lives of the assets.
See Note 5 for a summary of property, plant, and equipment balances.

Other Noncurrent Liabilities and Long-Term Debt:  Other noncurrent
liabilities reflected in the Company's consolidated balance sheets
consist primarily of accruals for excess building space and a deferred
gain on the sale and leaseback of a European office building.  See
Note 7 for a discussion of the Company's debt.

Minority Interest:  Effective October 1, 2002, the Company purchased
the 40% ownership interest held by Zeiss for approximately $6 million
in cash and the transfer of certain reconnaissance camera assets.  Z/I
Imaging's assets, liabilities, and results of operations are included
in the Company's consolidated financial statements as a component of
the IMGS business segment.  Zeiss' former minority interest in the
earnings and equity of this subsidiary is reflected as "Minority
interest in earnings of consolidated subsidiaries" and "Minority
interest in consolidated subsidiaries," respectively, in the Company's
consolidated statements of income and balance sheets.  See Note 16 for
a discussion of transactions between Z/I Imaging and Zeiss.

Treasury Stock:  Treasury stock is accounted for by the cost method.
Treasury stock activity for the three-year period ended December 31,
2002, (consisting of stock option exercises, purchases of stock by
employees under the Company's stock purchase plan, and the purchase of
shares for the treasury) is presented in the consolidated statements of
shareholders' equity.

During 2002, the Company's Board of Directors (the "Board") increased
the funding for the existing stock repurchase plan from $30 million to
$175 million.  The plan may be suspended at any time and terminates on
December 31, 2004.  During 2002, the Company purchased approximately
4.7 million shares of its outstanding common stock.  During 2001, the
Company purchased approximately 195,000 shares.  Total expenditures
during 2002 and 2001 under this plan were approximately $83.6 million
and $1.9 million, respectively.

Revenue Recognition:  The Company recognizes revenue in accordance with
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101"), and Statement of Position 97-2, "Software Revenue
Recognition" ("SOP 97-2").  SAB 101 and SOP 97-2 outline basic criteria
that must be met prior to the recognition of revenue, including
persuasive evidence of a sales arrangement, delivery of products and
performance of services, a fixed and determinable sales price, and
reasonable assurance of collection.  For revenue recognition purposes,
the Company considers persuasive evidence of a sales arrangement to be
receipt of a signed contract or purchase order.

SAB 101 became effective in fourth quarter 2000 for the Company.  Upon
implementation of SAB 101, the Company changed its method of revenue
recognition for certain of its product sales, specifically those for
which transfer of title occurs upon delivery to the customer.
Historically, the Company has recognized revenues for its systems sales
with no significant post-shipment obligations upon shipment to the
customer, with any post-shipment costs accrued at that time.  To comply
with the provisions of SAB 101, the Company now recognizes revenues on
such sales based upon estimated delivery times, generally less than
five days after shipment, for the equipment and/or software shipped.
This accounting change did not materially impact the Company's reported
revenues and results of operations for the full year 2000.

Revenues on systems sales with significant post-shipment obligations,
including the production, modification, or customization of software,
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 labor 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 contracts accounted for by the percentage-of-completion
method are 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 these contracts, which could delay revenue
recognition and decrease the gross margin to be earned. Any losses
identified in the review process are recognized in full in the period
in which determined.

Multiple element software sale arrangements are identified by the
Company's contracts personnel and accounted for based upon the relative
fair value of each element.  Revenue is not recognized on any element
of a sale arrangement if undelivered elements are essential to the
functionality of delivered elements.

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.

Amounts billed to customers for shipping and handling costs are
classified as revenues in the consolidated statements of income with
the associated costs included as a component of cost of revenues.

Billings may not coincide with the recognition of revenue.  Unbilled
accounts receivable occur when revenue recognition precedes billing to
the customer, and arise 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, and arise primarily from
maintenance revenue billed in advance of performance of the maintenance
activity and systems revenue recognized on the percentage-of-completion
method.

Foreign Currency Exchange and Translation:  Local currencies were the
functional currencies for the Company's European and Canadian
subsidiaries in 2002.  The U.S. dollar was the functional currency for
all other international subsidiaries in 2002.  Foreign currency gains
and losses resulting from remeasurement or settlement of receivables
and payables denominated in a currency other than the functional
currency are included in "Other income (expense), net" in the
consolidated statements of income.  Net exchange gains totaled $277,000
in 2002, compared to net exchange losses of $1.5 million in 2001 and
$3.9 million in 2000.  Translation gains and losses resulting from
translation of subsidiaries' financial statements from the functional
currency into U.S. dollars are included as a component of "Accumulated
other comprehensive loss" in the consolidated balance sheets.

Derivative Financial Instruments:  The Company's policy is to recognize
all derivative financial instruments as either assets or liabilities on
the balance sheet and measure the instruments at fair value.  The
accounting for changes in the fair value of a derivative instrument
depends on whether it has been designated and qualifies as part of a
hedging relationship, and on the type of hedging relationship involved.
The designations for such derivative instruments, based on the exposure
being hedged, are fair value hedge, cash flow hedge, or a hedge of a
net investment in a foreign operation.  Any net results of effective
hedging relationships are presented in the income statement line item
associated with the hedged item.

At  December  31, 2002, 2001, and 2000, the Company had no freestanding
or embedded derivatives.

Stock-Based Compensation Plans:  The Company maintains a stock purchase
plan and two fixed stock option plans for the benefit of its employees
and directors.  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.

Under  the  fixed stock option plans, stock options may be  granted  to
employees  and  directors at exercise prices that are  equal  to,  less
than,  or greater than the fair market value of the Company's stock  on
the  date  of grant.  Compensation expense, equal to the difference  in
exercise  price  and  fair  market value  on  the  date  of  grant,  is
recognized  over the vesting period for options granted  at  less  than
fair market value.

In accordance with the disclosure provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," the Company has elected to apply Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
related Interpretations in accounting for its stock-based plans.
Accordingly, the Company has recognized no compensation expense for
these plans during the three-year period ended December 31, 2002.  Had
the Company accounted for its stock-based compensation plans based on
the fair value of awards at grant date consistent with the methodology
of SFAS 123, the Company's reported net income and income per share for
each of the three years would have been impacted as indicated below.
The effects of applying SFAS 123 on a pro forma basis for the three-
year period ended December 31, 2002, are not likely to be
representative of the effects on reported pro forma net income for
future years as options vest over several years and as it is
anticipated that additional grants will be made in future years.

------------------------------------------------------------------------
Year Ended December 31,                    2002    2001    2000
------------------------------------------------------------------------
(In thousands except per share amounts)

Net income                 As reported   $377,752  $19,942  $10,095
Deduct:  Total stock-based employee
  compensation expense determined
  under fair value based method for
  all awards                               (3,147)  (3,318)  (2,695)
                                         --------- -------- --------
                           Pro forma     $374,605  $16,624  $ 7,400
                                         ========= =======  =======

Diluted income per share   As reported   $   7.47  $  0.39  $  0.20
                           Pro forma     $   7.41  $  0.32  $  0.15
=======================================================================

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
11).

Net Income Per Share:  Basic income per share is computed using the
weighted average number of common shares outstanding.  Diluted income
per share is computed using the weighted average number of common and
equivalent common shares outstanding.  Employee stock options are the
Company's only common stock equivalent and are included in the
calculation only if dilutive.  For the years ended December 31, 2002,
2001, and 2000, these dilutive shares were 2,545,000, 2,042,000, and
487,000, respectively (see Note 12).

Comprehensive Income (Loss):  Comprehensive income (loss) includes net
income as well as all other non-owner changes in equity.  With respect
to the Company, such non-owner equity items include foreign currency
translation adjustments and unrealized gains and losses on certain
investments in debt and equity securities.  The Company's comprehensive
income or loss for each year in the three-year period ended December
31, 2002, is displayed in the consolidated statements of shareholders'
equity and in Note 9.

Reclassifications:  Certain reclassifications have been made to 2001
and 2000 amounts to provide comparability with the current year
presentation.

NOTE 2 - INVENTORIES

Inventories at December 31, 2002, and 2001, are summarized as follows
(in thousands):
------------------------------------------------------------
December 31,                        2002        2001
------------------------------------------------------------

Raw materials                     $ 7,011     $ 7,076
Work-in-process                       877       1,952
Finished goods                      5,436       9,245
Spares                              6,073       5,852
------------------------------------------------------------
Totals                            $19,397     $24,125
============================================================

Inventories on hand at December 31, 2002, and 2001, relate primarily to
continuing specialized hardware assembly activity in the Company's IMGS
and ISG business segments, and to the Company's continuing warranty and
maintenance obligations on computer hardware previously sold.

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

NOTE 3 - 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.  During
the two years ended December 31, 2002, the Company experienced no
significant losses related to trade receivables from individual
customers or from groups of customers in any geographic area in any
business segment.

Revenues from the U.S. government were approximately $136.9 million,
$143 million, and $132.4 million in 2002, 2001, and 2000, respectively,
representing approximately 27% of total revenue in 2002, and 27% and
19% of total revenue in 2001 and 2000, respectively.  Accounts
receivable from the U.S. government totaled approximately $26.7 million
and $27.7 million at December 31, 2002, and 2001, respectively.  The
Company sells to the U.S. government under long-term contractual
arrangements, primarily indefinite delivery, indefinite quantity, and
cost-based contracts, and through sales of commercial products not
covered by long-term contracts.  Approximately 80% of the Company's
2002 federal government revenue was earned under long-term contracts.

Accounts receivable include unbilled amounts of $41.1 million and $50.7
million at December 31, 2002, and 2001, respectively.  These amounts
include amounts due under long-term contracts of approximately $23.8
million and $33.4 million at December 31, 2002, and 2001, respectively.
Accounts receivable also include retainages of approximately $2.8
million and $5.1 million at December 31, 2002, and 2001, respectively.

The Company maintained reserves for uncollectible accounts, included in
"Accounts receivable, net" in the consolidated balance sheets at
December 31, 2002, and 2001, of $15.4 million and $13 million,
respectively.

NOTE 4 - INTANGIBLE ASSETS

The Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets,"
in first quarter 2002.  The Company currently reviews all intangible
assets on a quarterly basis, and the adoption of this statement did not
impact the Company's financial statements.  The Company's intangible
assets include capitalized software development costs (included as a
separate line in the consolidated balance sheets and discussed in Note
1) and other intangible assets (included in "Other assets, net" in the
consolidated balance sheets).

At December 31, 2002, and 2001, the Company's intangible assets and
related accumulated amortization consisted of the following (in
thousands):
--------------------------------------------------------------------------------
                                  2002                          2001
                       --------------------------   ----------------------------
                               Accumulated                   Accumulated
                       Gross   Amortization   Net    Gross   Amortization   Net
--------------------------------------------------------------------------------
Capitalized software
 development          $44,417  $(14,587)   $29,830  $32,982   $ (8,773)  $24,209
Other  intangible
 assets                44,988   (32,522)    12,466   43,787    (23,174)   20,613
--------------------------------------------------------------------------------
Totals                $89,405  $(47,109)   $42,296  $76,769   $(31,947)  $44,822
================================================================================

The Company recorded amortization expense of $15.5 million and $14.3
million for the years ended December 31, 2002, and 2001, respectively.
Based on the current intangible assets subject to amortization, the
estimated amortization expense for each of the succeeding five years is
as follows:  $16 million in 2003, $10 million in 2004, $7 million in
2005, $4 million in 2006, and $4 million in 2007.

NOTE 5 - PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment at December 31, 2002, and 2001, are
summarized as follows (in thousands):
---------------------------------------------------------------------
December 31,                                      2002         2001
---------------------------------------------------------------------

Land and improvements (15-30 years)            $  8,291      $  7,565
Buildings and improvements (30 years)            76,621        76,010
Equipment, furniture, and fixtures (3-8 years)   80,258        98,870
---------------------------------------------------------------------
                                                165,170       182,445
Allowances for depreciation                    (114,352)     (130,471)
---------------------------------------------------------------------
Totals                                         $ 50,818      $ 51,974
=====================================================================

NOTE 6 - FINANCIAL INSTRUMENTS

Information related to the Company's financial instruments, other than
cash equivalents and stock investments in less-than-50%-owned
companies, is summarized below.

Short-term Debt:  At December 31, 2002, the Company had $169,000 in
short-term debt. This debt was repaid in January 2003.

Convertible Debenture:  As part of the proceeds of the April 1999 sale
of its InterCAP subsidiary to Micrografx, Inc. ("Micrografx"), the
Company received a $5.8 million convertible subordinated debenture due
on March 31, 2002.  In fourth quarter 2000, the Company recorded a $5
million write-down of the value of this debenture due to financial and
operational difficulties being experienced by Micrografx.  The Company
wrote off the remaining $797,000 of the debenture in first quarter 2001
to reflect the continuing financial and operational difficulties being
experienced by Micrografx.  The 2001 and 2000 write-offs are included
in "Other income (expense), net" in the 2001 and 2000 consolidated
statements of income, respectively.

On October 31, 2001, Corel Corporation, a Canadian software company,
purchased Micrografx.  In order to facilitate this purchase, the
Company agreed to accept $3.8 million, plus accrued interest of
$485,000, for complete settlement of its convertible subordinated
debenture.

Stock Warrant:  As part of the proceeds of the October 1999 sale of its
VeriBest business segment, the Company received a warrant to purchase
500,000 shares of the common stock of Mentor Graphics at a price of $15
per share. At December 31, 2000, the Company's $300,000 estimated value
of the warrant was included in "Investments in affiliates" in the
consolidated balance sheet.  This value was determined using the Black-
Scholes option pricing model as of the date of sale of VeriBest. The
Company sold the warrant to Mentor Graphics for $2 million in October
2001.  A gain of $1.7 million was recognized on the sale and recorded
as a component of "Other income (expense), net" in the 2001
consolidated statement of income.

Forward Exchange Contracts:  At December 31, 2002, and 2001, the
Company had no forward exchange contracts outstanding.  The Company
is not currently hedging any of its foreign currency risks.

NOTE 7 - DEBT AND LEASES

Short- and long-term debt is summarized as follows:

---------------------------------------------------------------------------
December 31,                                          2002     2001
---------------------------------------------------------------------------
(In thousands)

Revolving credit agreement and term loan             $  ---   $   424
Australian term loan                                    ---       255
Long-term mortgages                                     ---       826
Other secured debt                                      ---        65
Short-term credit facilities                            169     2,163
---------------------------------------------------------------------------
Total debt                                              169     3,733
Less amounts payable within one year                   (169)   (2,619)
---------------------------------------------------------------------------
Total long-term debt                                  $ ---   $ 1,114
===========================================================================

In 2002, the Company reduced its total debt by $3.6 million.  In August
2002, the Company terminated its fixed-term loan and revolving credit
agreement.  (See the Company's Annual Report on Form 10-K for the year
ended December 31, 2001, for complete details of this credit
agreement.)  At December 31, 2001, the $3.7 million carrying amount of
the Company's floating rate debt approximated fair market values since
interest rates on the debt adjusted periodically to reflect changes in
market rates of interest.

In September 2002, in order to reduce the cost of issuing letters of
credit, the Company established a credit line with Wells Fargo Bank to
cover its outstanding letters of credit.  This credit line is secured
by $15 million of interest-bearing securities.  Under this arrangement,
the Company earns interest on the securities and withdrawal of
securities is allowed, but the Company is required to maintain a level
of securities sufficient to cover total outstanding letters of credit
(which were $9.7 million at January 31, 2003).

The Company leases various property, plant, and equipment under
operating leases as lessee.  Rental expense for operating leases was
approximately $16.8 million in 2002, $18.3 million in 2001, and $21.6
million in 2000.  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)

2003                                    $12,118
2004                                      8,077
2005                                      4,982
2006                                      3,176
2007                                      2,631
Thereafter                               21,033
-----------------------------------------------------------
Total future minimum lease payments     $52,017
===========================================================

NOTE 8 - SUPPLEMENTARY CASH FLOW INFORMATION

Changes in current assets and liabilities, net of the effects of
business acquisitions and divestitures, in reconciling net income to
net cash provided by operations are as follows:

-----------------------------------------------------------------------------
Year Ended December 31,                           2002      2001      2000
-----------------------------------------------------------------------------
(In thousands)

(Increase) decrease in:
  Accounts receivable                           $ 10,536   $15,409  $ 61,627
  Inventories                                      3,601       352     9,837
  Other current assets                           (10,597)   12,330    (1,972)
Increase (decrease) in:
  Trade accounts payable                          (5,301)  (11,690)  (14,470)
  Accrued compensation and other
   accrued expenses                              (12,876)  (18,940)  (10,770)
  Income taxes payable                            57,775     2,425     3,015
  Billings in excess of sales                      4,101    (7,645)  (16,392)
------------------------------------------------------------------------------
Net changes in current assets and liabilities   $ 47,239  $ (7,759) $ 30,875
==============================================================================

Cash payments for income taxes were approximately $20.8 million, $8.3
million, and $8.8 million in 2002, 2001, and 2000, respectively.  Cash
payments for interest in those years totaled approximately $338,000, $2
million, and $4.1 million, respectively.

Significant non-cash investing and financing transactions in 2002
include a $27.3 million favorable mark-to-market adjustment on the
Company's investment in 3Dlabs, offset by a reclassification adjustment
of $16.6 million upon the sale of its investment in 3Dlabs stock.  (See
Note 9 for additional details on comprehensive income.)  In addition,
in second quarter 2002, the Company sold its shares in 3Dlabs to
Creative, receiving Creative stock valued at $26.8 million as partial
consideration.

Significant non-cash investing and financing transactions in 2001
included the receipt of common stock with a value of approximately $10
million as additional consideration (and in satisfaction of the
receivable included in the December 31, 2000, consolidated balance
sheet) for the sale of the Company's Intense3D graphics accelerator
division, offset by a $2.7 million unfavorable mark-to-market
adjustment.  The mark-to-market adjustment is included in "Accumulated
other comprehensive loss" in the December 31, 2001, consolidated
balance sheet.  Also included in 2001 is a $10.1 million increase to a
note receivable as additional consideration for the fourth quarter 2000
sale of its civil, plotting, and raster product lines.

Significant non-cash investing and financing transactions in 2000
included the termination of a long-term lease on one of the Company's
facilities.  The Company accounted for this lease as a financing lease
and, upon termination, long-term debt of $8.3 million and property,
plant, and equipment of $6.5 million were removed from the Company's
books.  Also during 2000, the Company's Intense 3D graphics accelerator
division was sold for initial consideration of $11.2 million paid in
common stock of the acquirer and a receivable of $8.6 million (included
in "Other current assets" in the December 31, 2000, consolidated
balance sheet) for additional consideration earned through the end of
2000.  During the second half of 2000, a $7.9 million unfavorable mark-
to-market adjustment was recorded on the stock received in this
transaction and is included in "Accumulated other comprehensive loss"
in the December 31, 2000, consolidated balance sheet.  Other
significant non-cash investing and financing transactions in 2000
included the sales of product lines and a subsidiary in part for long-
term notes receivable totaling approximately $13.7 million.

See Note 17 for further details regarding the Company's acquisitions
and divestitures during the three-year period ended December 31, 2002.

NOTE 9 - COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) is as follows (in thousands):
-----------------------------------------------------------------------------
Year Ended December 31,                         2002       2001      2000
-----------------------------------------------------------------------------

Net income                                     $377,752   $19,942   $10,095
Unrealized holding gains (losses) arising
 during the period                               22,724    (3,287)   (7,939)
Reclassification adjustment for gains
 included in net income                         (12,146)      ---       ---
Translation adjustment for financial statements
 denominated in a foreign currency                9,366    (1,385)   (2,486)
-----------------------------------------------------------------------------
Comprehensive income (loss)                    $397,696   $15,270   $  (330)
=============================================================================

The 2002 unrealized holding gains (losses) are shown net of $2.4
million in taxes.  There was no income tax effect related to the items
included in other comprehensive income (loss) for 2001 or 2000.  See
Note 11 for details of the Company's tax position, including its net
operating loss carryforwards and policy for reinvestment of subsidiary
earnings.

NOTE 10 - RESTRUCTURING CHARGES

In 2002, the Company recorded $2.1 million in restructuring charges as
a result of combining the Utilities & Communications business with the
IMGS division.  In 2001, the Company reversed severance liabilities of
$384,000 for its 2000 restructuring plan.  The Company recorded
restructuring charges of $13.2 million in 2000 (including inventory
write-downs reflected in "Cost of revenues - Systems" and "Cost of
revenues - Maintenance" of $4.5 million and $210,000, respectively).
For a complete description of these charges, see "Restructuring
Charges" included in Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A").

NOTE 11 - INCOME TAXES

The components of income before income taxes and minority interest are
as follows:
----------------------------------------------------------------------
Year Ended December 31,                   2002       2001      2000
----------------------------------------------------------------------
(In thousands)

U.S.                                    $463,487   $18,010   $14,138
International                              5,685    10,908     5,088
----------------------------------------------------------------------
Income before income taxes
   and minority interest                $469,172   $28,918   $19,226
======================================================================

Income tax benefit (expense) consists of the following:
----------------------------------------------------------------------
Year Ended December 31,                   2002       2001      2000
----------------------------------------------------------------------
 (In thousands)

Current benefit (expense):
  Federal                               $(64,797)  $(2,008)  $(3,330)
  State                                  (15,809)     (387)     (597)
  International                           (1,828)   (6,028)   (3,430)
----------------------------------------------------------------------
   Total current                         (82,434)   (8,423)   (7,357)
----------------------------------------------------------------------
Deferred benefit (expense):
  Federal                                 (6,665)     (103)      389
  State                                   (1,064)       (9)       38
  International                             (972)       35       330
----------------------------------------------------------------------
   Total deferred                         (8,701)      (77)      757
----------------------------------------------------------------------
Total income tax expense                $(91,135)  $(8,500)  $(6,600)
======================================================================


Deferred income taxes included in the Company's consolidated balance
sheets 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,                                  2002           2001
----------------------------------------------------------------------
(In thousands)

Current Deferred Tax Assets (Liabilities):
 Inventory reserves                               $ 8,882       $5,310
 Vacation pay and other employee benefit accruals   3,923        5,619
 Other financial statement reserves, primarily
   allowances for doubtful accounts and warranty    5,519        9,801
 Profit on uncompleted sales contracts               (827)      (1,220)
 Other current tax assets and liabilities, net      3,452          261
-----------------------------------------------------------------------
                                                   20,949       19,771
 Less asset valuation allowance                   (12,934)     (16,742)
-----------------------------------------------------------------------
 Total net current asset(1)                         8,015        3,029
-----------------------------------------------------------------------
Noncurrent Deferred Tax Assets (Liabilities):
 Net operating loss and tax credit carryforwards:
   U.S. federal and state                             ---       86,096
   International operations                        21,229       19,955
 Depreciation                                      (5,350)      (5,595)
 Capitalized software development costs           (11,833)      (8,173)
 Other noncurrent tax assets and liabilities, net  (3,142)        (191)
------------------------------------------------------------------------
                                                      904       92,092
 Less asset valuation allowance                   (17,164)     (94,665)
------------------------------------------------------------------------
 Total net noncurrent liability                   (16,260)      (2,573)
------------------------------------------------------------------------
Net deferred tax asset (liability)               $ (8,245)    $    456
========================================================================
  (1)  Included in "Other current assets" in the consolidated balance sheets.

The valuation allowance for deferred tax assets decreased by $81.3
million primarily due to the utilization of U.S. net operating loss and
tax credit carryforwards.  The valuation allowance for 2002 consists
primarily of reserves against the deferred tax assets of international
operations.  If realized, these reserved 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,
2002, the Company had international net operating loss carryforwards of
approximately $66 million that expire as follows:

-----------------------------------------------------------------------
                                  International
                                Net Operating Loss
December 31, 2002                 Carryforwards
-----------------------------------------------------------------------
(In thousands)

Expiration:
3 years or less                     $  9,600
4 to 5 years                           7,500
6 to 10 years                            900
Unlimited carryforward                48,000
-----------------------------------------------------------------------
Total                               $ 66,000
=======================================================================

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

-------------------------------------------------------------------------------
Year Ended December 31,                            2002       2001      2000
-------------------------------------------------------------------------------
(In thousands)

Income tax expense at federal statutory rate  $ (164,210)    $(10,121)  $(6,729)
Tax effect of U.S. tax loss carried forward       71,670        2,619     8,056
Tax effect of U.S. tax credits carried forward    10,882          ---       ---
State income taxes, net of federal tax benefit   (10,276)        (257)     (363)
Tax effects of international operations, net        (809)      (1,844)   (5,667)
Prior year taxes                                     ---          ---      (311)
Other, net                                         1,608        1,103    (1,586)
--------------------------------------------------------------------------------
Income tax expense                            $  (91,135)    $ (8,500)  $(6,600)
================================================================================

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, 2002, the Company had not provided federal income taxes on earnings
of individual international subsidiaries of approximately $38 million.
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 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 taxes of
approximately $2.9 million would be payable if all previously
unremitted earnings as of December 31, 2002, were remitted to the U.S.
company.

NOTE 12 - STOCK-BASED COMPENSATION PLANS

The Intergraph Corporation 2002 Stock Option Plan was approved by
shareholders in May 2002.  Under this plan, the Company reserved a
total of 2,000,000 shares of common stock to grant as options to key
employees.  Options may be granted at exercise prices which are equal
to, less than, or greater than the fair market value of the Company's
stock on the date of grant.  Options are granted for a term of ten
years from the date of grant.  Options first become exercisable one
year from the date of grant and vest at a rate of 25% per year, with
full vesting on the fourth anniversary date of the grant.  Options to
purchase 90,000 shares of the Company's common stock were granted in
2002.  At December 31, 2002, 1,910,000 shares were available for future
grants.

The Intergraph Corporation 1997 Stock Option Plan was approved by
shareholders in May 1997.  Under this plan, the Company reserved a
total of 5,000,000 shares of common stock to grant as options to key
employees.  Options may be granted at exercise prices which are equal
to, less than, or greater than the fair market value of the Company's
stock on the date of grant.  Options are granted for a term of ten
years from the date of grant.  Options first become exercisable two
years from the date of grant and vest at a rate of 25% per year from
that point, with full vesting on the fifth anniversary date of the
grant.  Options to purchase 20,000, 245,000, and 2,770,000 shares of
the Company's common stock were granted in 2002, 2001, and 2000,
respectively, under this plan.  During 2002, 592,124 shares expired,
and at December 31, 2002, there were no shares available for future
grants.

The Intergraph Corporation Nonemployee Director Stock Option Plan was
approved by shareholders in May 1998.  The Company has reserved a total
of 250,000 shares of common stock to grant as options under this plan.
The exercise price of each option granted is the fair market value of
the Company's stock on the date of grant.  Options are granted for a
term of ten years from the date of grant.  Options first become
exercisable one year from the date of grant and vest at a rate of 33%
per year from that point, with full vesting on the third anniversary
date of the grant.  Upon approval of this plan, members of the Board
who were not otherwise employed by the Company were granted options to
purchase 3,000 shares of the Company's common stock.  Any new non-
employee director is similarly granted an option to purchase 3,000
shares of common stock upon his or her first election to the Board.  At
each annual meeting of shareholders, each non-employee director re-
elected to the Board is granted an option to purchase an additional
1,500 shares of the Company's common stock.  Options to purchase
10,500, 9,000, and 9,000 shares of the Company's common stock were
granted in 2002, 2001, and 2000, respectively, under this plan.  At
December 31, 2002, 205,000 shares were available for future grants.

Under the 2000 Intergraph Corporation Employee Stock Purchase Plan,
3,000,000 shares of common stock were made available for purchase
through a series of five consecutive annual offerings each June
beginning June 1, 2000.  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 of the Company 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 107,806, 147,478, and 305,447 shares of stock in 2002, 2001,
and 2000, respectively, under the 2000 and predecessor plans.  At
December 31, 2002, 2,578,363 shares were available for future
purchases.

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 year after vest date in
2002 (1.09 years in 2001 and 1.38 years in 2000) and 81% expected
volatility for the market price of the Company's stock in 2002 (73% in
2001 and 60% in 2000).  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 rates of return were determined
separately for each of the serial vesting periods of the options and
ranged from .92% to 4.47% in 2002, 3.32% to 4.57% in 2001, and 6.03% to
6.37% in 2000.

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 under all stock option plans during 2002, 2001, and 2000 were
$9.62, $6.92, and $3.14, respectively.  During 2002, options were
granted under these plans at exercise prices equal to the market value
of the Company's stock on the date of grant.

Activity in the Company's fixed stock option plans for each year in the
three-year period ended December 31, 2002, is summarized as follows:

--------------------------------------------------------------------------------
                                 2002             2001             2000
                            -------------    --------------    -------------
                              Weighted          Weighted         Weighted
                               Average           Average          Average
                              Exercise          Exercise         Exercise
                            Shares  Price    Shares   Price    Shares  Price
--------------------------------------------------------------------------------
Outstanding at beginning
 of year                    4,635,393 $ 6.44  5,453,510 $ 6.29  3,550,296  $7.46
Granted:
  Price equal to
 market value                 120,500  16.99    254,000  11.81  2,744,000   5.57
  Price less than
 market value                     ---    ---        ---    ---     25,000   5.56
  Price greater than
 market value                     ---    ---        ---    ---     10,000   5.56
Exercised                    (966,946)  6.82   (344,555)  6.85     (3,250)  5.38
Forfeited                     (61,562)  5.68   (727,562)  6.85   (872,536)  8.77
--------------------------------------------------------------------------------
Outstanding at end of year  3,727,385 $ 6.72  4,635,393 $ 6.44  5,453,510  $6.29
================================================================================
Exercisable at end of year  1,192,260 $ 6.88  1,112,337 $ 7.88  1,223,023  $8.62
================================================================================

Further information relating to stock options outstanding at December 31, 2002,
is as follows:

--------------------------------------------------------------------------------
                           Options Outstanding             Options Exercisable
                     -------------------------------     -----------------------
                           Weighted Average Weighted                    Weighted
                               Remaining    Average                     Average
Range of                      Contractual   Exercise                    Exercise
Exercise Prices      Number       Life       Price        Number         Price
--------------------------------------------------------------------------------

$ 5.063 to $ 5.813  2,967,712  6.97 years    $ 5.50        799,587        $ 5.43
$ 5.875 to $ 9.000    170,811  4.38 years      7.90        160,311          8.03
$ 9.250 to $12.700    443,362  5.53 years     11.29        232,362         11.06
$14.000 to $19.080    145,500  9.43 years     16.48            ---           ---
--------------------------------------------------------------------------------
                    3,727,385  6.78 years    $ 6.72      1,192,260        $ 6.88
================================================================================

NOTE 13 - EMPLOYEE BENEFIT PLANS

The Intergraph Corporation Stock Bonus Plan ("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
Stock Bonus Plan to qualify it as an employee stock ownership plan
(ESOP).  The Company made contributions to the Stock Bonus Plan in
amounts determined at the discretion of the Board, and the
contributions were funded with Company stock.  Amounts were allocated
to the accounts of participants based on compensation.

In December 2000, the Board resolved to terminate the Stock Bonus Plan
effective for the plan year ending December 31, 2000, and to amend the
Intergraph Corporation SavingsPlus Plan ("SavingsPlus Plan") to permit
the Company to make discretionary profit sharing contributions to it.
During 2002, the Company received a favorable determination letter from
the Internal Revenue Service and a "no action" letter from the
Securities and Exchange Commission.  Upon receipt of both favorable
responses, each Stock Bonus Plan participant was entitled to receive a
lump sum distribution of their account balance (subject to income tax
liability and withholdings) or to rollover the account balance into an
Individual Retirement Account or other qualified plan. The distribution
of Stock Bonus Plan assets commenced on May 16, 2002, for a period of
four months, and expired on September 16, 2002.  The lost participants'
shares and remaining cash were transferred to a trust fund held by a
Trustee effective December 31, 2002.  As of December 31, 2002, there
were 415 lost participants with account balances in the Stock Bonus
Plan, including ownership of approximately 33,000 shares of Intergraph
common stock.

In 1990, the Company established the SavingsPlus Plan, an employee
savings plan qualified under Section 401(k) of the Internal Revenue
Code, covering substantially all U.S. employees.  As of January 1,
2003, employees may elect to contribute up to 25% of their compensation
to the SavingsPlus Plan, up from the previous limit of 15%.  The
Company matches 50% of employee contributions up to 6% of each
employee's compensation.  Cash contributions by the Company to the
SavingsPlus Plan were $3 million, $2.6 million, and $3.4 million, in
2002, 2001, and 2000, respectively.

The Company maintains various retirement benefit plans for the
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.  The Company's
contributions to these plans totaled approximately $3.2 million, $3
million, and $2.4 million in 2002, 2001, and 2000, respectively.

NOTE 14 - SHAREHOLDER RIGHTS PLAN

On March 4, 2002, the Board approved an amendment to the Shareholder
Rights Plan that was previously adopted on August 25, 1993.  As part of
this plan, the Board 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 $65, 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 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 under certain
circumstances.  The Rights expire on March 5, 2012.

NOTE 15 - SEGMENT INFORMATION

Over the past three years the Company has reorganized into four
business segments, along with an intellectual property division and a
corporate oversight function.  The four core business segments consist
of PPO, IMGS, ISG, and IPS.  The Company's reportable segments are
strategic business units that are organized by the types of products
sold and the specific markets served.  The presentation below provides
business segment information based on the Company's current business
structure.

PPO supplies integrated lifecycle software solutions for the design,
construction, and operation of process and power plants, offshore rigs,
and ships.  This division offers a breadth and depth of applications
that span shipbuilding, plant design and visualization, materials
procurement and management, plant operation, and engineering
information management.

IMGS segment results now include the results of Z/I Imaging and
Utilities and Communications.  IMGS is a leading geospatial solutions
provider for the following markets:  local, state, federal, and
national government (including military); transportation; utilities;
communications; remote sensing and photogrammetry; mapping; and civil
aviation.  In October 2002, Intergraph purchased the remaining 40%
minority interest in its Z/I Imaging segment.  At the completion of the
transaction, Z/I Imaging became an Intergraph wholly owned subsidiary
and was combined with IMGS.  In addition, in a corporate restructuring,
the former IPS Utilities and Communication division was combined into
IMGS.

ISG provides specially developed software and hardware, commercial off-
the-shelf products, and professional services to federal, state, and
local governments worldwide, as well as to commercial customers.

IPS develops computer graphics-based systems designed for public safety
agencies, commercial fleet operations, campus, military base, and
airport security.  IPS systems are complete, integrated solutions for
command and control, deployment, tracking, information gathering,
analysis, and records management.

Intergraph has created IP, an intellectual property division, to
maximize the value of the Company's portfolio of patents, copyrights,
and trademarks.  This division has the responsibility of managing all
aspects of the Company's intellectual property with the goal of
identifying, protecting, and profiting from its intellectual capital.

The Corporate segment includes revenues and costs for Teranetix (a
provider of computing support and hardware integration services),
international hardware maintenance, and general corporate functions.
Operating expenses for Corporate consist of general corporate expenses,
primarily general and administrative expenses remaining after charges
to the business segments based on usage of administrative services.
Corporate also includes the remainder of the Middle East operations,
portions of which were sold in 2001 (with the sale of the remaining
portion closing in April 2002, effective October 2001).

The Company evaluates the business segments' performance based on
revenue and income (loss) from operations.  The accounting policies of
the reportable segments are consistent across segments and are the same
as those described for the Company as a whole in Note 1.  Sales between
the business segments are accounted for under a transfer pricing
policy.  Transfer prices approximate prices that would be charged for
the same or similar property to similarly situated unrelated buyers.
The following table sets forth revenues and operating income (loss)
before restructuring charges for the Company's 2002, 2001, and 2000
reportable segments, together with supplementary information related to
depreciation and amortization expense attributable to the business
segments.  Certain reclassifications of the results of Z/I Imaging,
Utilities and Communications, and IP have been made to the 2001 and
2000 segment information to provide comparability with 2002.

--------------------------------------------------------------------------
Year Ended December 31,                2002       2001      2000
--------------------------------------------------------------------------
(In thousands)
Revenues:
PPO:
   Unaffiliated customers            $120,321  $110,915 $ 114,663
   Intersegment revenues                3,763     5,563     9,007
--------------------------------------------------------------------------
                                      124,084   116,478   123,670
--------------------------------------------------------------------------
IMGS:
   Unaffiliated customers             187,140   211,268   249,411
   Intersegment revenues                7,932    11,436    22,620
--------------------------------------------------------------------------
                                      195,072   222,704   272,031
--------------------------------------------------------------------------
ISG:
   Unaffiliated customers             122,375   127,492   143,587
   Intersegment revenues                4,614     6,646    15,912
--------------------------------------------------------------------------
                                      126,989   134,138   159,499
--------------------------------------------------------------------------
IPS:
   Unaffiliated customers              61,147    60,928    51,508
   Intersegment revenues                2,447        18       423
--------------------------------------------------------------------------
                                       63,594    60,946    51,931
--------------------------------------------------------------------------
IP:
   Unaffiliated customers                 100       ---       ---
   Intersegment revenues                  ---       ---       ---
--------------------------------------------------------------------------
                                          100       ---       ---
--------------------------------------------------------------------------
Corporate:
   Unaffiliated customers              10,094    21,458    131,285
   Intersegment revenues                3,046    12,343     53,665
--------------------------------------------------------------------------
                                       13,140    33,801    184,950
--------------------------------------------------------------------------
                                      522,979   568,067    792,081
--------------------------------------------------------------------------
Eliminations                          (21,802)  (36,006)  (101,627)
--------------------------------------------------------------------------
Total revenues                       $501,177  $532,061  $ 690,454
==========================================================================

--------------------------------------------------------------------------
Year Ended December 31,                2002       2001       2000
--------------------------------------------------------------------------
(In thousands)
Operating income (loss) before
 restructuring charges:
PPO                                 $ 18,979   $  6,799   $  9,899
IMGS                                  (1,039)     6,085     13,243
ISG                                    5,946     10,004     13,824
IPS                                   14,741      8,232      1,851
IP                                    (6,551)    (4,006)    (4,321)
Corporate                            (21,970)   (19,411)   (49,639)
Eliminations                             279        ---        ---
--------------------------------------------------------------------------
Total                               $ 10,385   $  7,703   $(15,143)
==========================================================================
Depreciation and amortization
 expense:
PPO                                 $ 10,247   $  8,179   $  9,607
IMGS                                   5,711      3,343      6,200
ISG                                    1,018      1,323      2,690
IPS                                    3,230      5,092      5,468
IP                                       ---        ---        ---
Corporate                              5,006      8,287      9,921
--------------------------------------------------------------------------
Total depreciation and amortization
 expense                            $ 25,212   $ 26,224   $ 33,886
==========================================================================

Significant profit and loss items that were not allocated to the
segments and not included in the segment analyses above include net
patent litigation gain of $440.6 million in 2002; gains on sales of
assets of $17.2 million, $11.2 million, and $49.5 million in 2002,
2001, and 2000, respectively; interest income of $6.9 million, $7.4
million, and $4.8 million in 2002, 2001, and 2000, respectively; and
restructuring charges (credits) of $2.1 million, ($384,000), and $8.5
million in 2002, 2001, and 2000, respectively.

The Company does not evaluate performance or allocate resources based
on assets.

Revenues from the U.S. government were $136.9 million in 2002, $143
million in 2001, and $132.4 million in 2000, representing approximately
27%, 27%, and 19% of total revenue in 2002, 2001, and 2000,
respectively.  The majority of these revenues are attributed to the ISG
business segment.  The U.S. government was the only customer accounting
for more than 15% of consolidated revenue in each year of the three-
year period ended December 31, 2002.

International markets, particularly Europe and Asia, are important to
each of the Company's business segments, except for ISG.  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, worldwide political conditions, currency
exchange fluctuations, and other factors.  Following is a summary of
third-party revenues and long-lived assets by principal geographic
area.  For purposes of this presentation, revenues are attributed to
geographic areas based on customer location.  Long-lived assets include
property, plant, and equipment, capitalized software development costs,
investments in affiliates, and other non-current assets.  Assets have
been allocated to geographic areas based on their physical location.

----------------------------------------------------------------------------
                             Revenues                Long-lived Assets
                      ----------------------      -----------------------
                      2002     2001     2000      2002      2001     2000
----------------------------------------------------------------------------
(In thousands)

United States      $285,981 $281,734 $333,980  $ 97,112  $115,920  $113,271
Europe              128,640  146,406  188,212    18,161    10,291    13,462
Asia Pacific         49,843   49,243   85,662     1,511     3,067     7,826
Other International  36,713   54,678   82,600     1,453     2,239     2,874
----------------------------------------------------------------------------
Total              $501,177 $532,061 $690,454  $118,237  $131,517  $137,433
============================================================================

NOTE 16 - RELATED PARTY TRANSACTIONS

BSI:  The Company owns a 34% equity position in BSI, the developer and
owner of MicroStation, a software product for which the Company is a
nonexclusive distributor.  Under the Company's distributor agreement
with BSI, the Company purchases MicroStation products for resale to
third parties.  The Company's purchases from BSI were approximately
$1.9 million in 2002, $1.3 million in 2001, and $3.8 million in 2000.
At December 31, 2002, 2001, and 2000, the Company had amounts payable
to BSI of approximately $660,000, $560,000, and $2.3 million,
respectively.  The Company's sales to BSI were approximately $531,000
in 2002 and $1.1 million in 2001.  There were no sales to BSI in 2000.
Outstanding trade receivables from BSI were $1.1 million at December
31, 2002, and $407,000 at December 31, 2001.  The balance of a note
receivable at December 31, 2002, was $9.7 million. This non-trade
receivable is included in "Other current assets" in the Company's
December 31, 2002, consolidated balance sheet.

Zeiss:  On October 17, 2002, but effective October 1, 2002, the Company
purchased the remaining 40% ownership interest of Z/I Imaging from
Zeiss, a manufacturer of aerial cameras and photogrammetric scanning
systems.  Prior to the purchase of the remaining interest, Z/I Imaging
and Zeiss were party to various license, supply, and reseller
agreements.  Under these agreements, the two companies sold products
and services to each other, and Zeiss subsidiaries in Europe provided
services to Z/I Imaging subsidiaries in that region through various
administrative, marketing, and development services agreements.  Z/I
Imaging's purchases from Zeiss totaled $5.4 million for 2002 until the
acquisition date, $7.2 million in 2001, and $12.2 million in 2000.
Related payables to Zeiss were $758,000, $3.3 million, and $2.5 million
at December 31, 2002, 2001, and 2000, respectively.  Z/I Imaging's
other transactions with Zeiss during these periods were insignificant
to the Company's consolidated results and financial position.

3Dlabs:  Under its former agreement with 3Dlabs, the Company served as
intermediary between 3Dlabs and SCI, a wholly owned subsidiary of SCI
Systems, Inc. (the Company's contract manufacturer), for manufacturing
performed by SCI for 3Dlabs.  The Company earned no margin on the
inventory purchased from SCI and sold to 3Dlabs, and recorded no
associated revenues or cost of revenues in its results of operations.
Gross billings to 3Dlabs during 2001 and the second half of 2000
totaled $17.8 million and $14.1 million, respectively.  At December 31,
2001, and 2000, the Company's receivables from 3Dlabs for inventory
purchased on its behalf totaled $1.5 million and $6.3 million,
respectively.  This non-trade receivable is included in "Other current
assets" in the Company's December 31, 2001, and 2000, consolidated
balance sheets.  In 2001, this obligation to serve as intermediary
expired.  Since the date of the expired agreement, the Company has been
providing services to 3Dlabs, including repair, test, and inventory hub
services at a profit.  For 2002, the Company's sales to 3Dlabs totaled
$229,000, purchases from 3Dlabs totaled $407,000, and an outstanding
trade receivable totaled $57,000.

Ireland:  During first quarter 1999, the Company sold 80% of the
Intergraph Ireland subsidiary to the subsidiary's management
("Ireland").  This sale did not have a material effect on the Company's
results of operations.  Sales to Ireland totaled $421,000, $1 million,
and $16,000 for the three years ended December 31, 2002, 2001, and
2000, respectively, with receivables for the comparable years ended
December 31, 2002, 2001, and 2000 of $51,000, $48,000, and $7,000,
respectively.  The Company had no significant purchases from Ireland
for the same three-year period.

TeraMedia:  In December 1999, the GeoMedia Services division of the
United Kingdom subsidiary was sold to TeraMedia for 500,000 British
pounds plus a 10% equity interest in TeraMedia.  The Company's sales to
TeraMedia were approximately $432,000 in 2002, $504,000 in 2001, and
$545,000 in 2000.  At December 31, 2002, 2001, and 2000, the Company
had amounts receivable from TeraMedia of approximately $63,000,
$100,000, and $133,000, respectively.  The Company had no purchases
from or payables to TeraMedia for the three years ended December 31,
2002, 2001, and 2000.

NOTE 17 - ACQUISITIONS AND DIVESTITURES

3Dlabs and Creative:  On July 21, 2000 (but effective July 1, 2000),
the Company sold the Intense3D graphics accelerator division of ICS to
3Dlabs, a supplier of integrated hardware and software graphics
accelerator solutions for workstations and design professionals.  As
initial consideration for the acquired assets, 3Dlabs issued to the
Company approximately 3,600,000 of its common shares, subject to a
registration rights agreement and a three-year irrevocable proxy
granted to 3Dlabs, with an aggregate market value of approximately
$13.2 million on the date of closing.  Approximately fifteen percent of
these shares were placed in escrow to cover any potential claims
against the Company by 3Dlabs.

An earn-out provision in the agreement provided for possible additional
consideration, payable March 31, 2001, in stock and/or cash at the
option of 3Dlabs, based on various performance measures for the
Intense3D operations through the end of 2000, including the financial
contribution of the division, the retention of key employees, the
delivery schedules of new products, and the performance of products
developed by the division.  In December 2000, the Company recorded a
receivable of $8.6 million for additional consideration due from
3Dlabs.  The Company considered this amount to be the minimum earn-out
due from 3Dlabs and, as such, recorded a gain of approximately $15.7
million in its 2000 results of operations based on the initial proceeds
from the sale and this estimated minimum earn-out.  This gain is
included in "Gains on sales of assets" in the 2000 consolidated
statements of income and cash flows.

On March 31, 2001, the Company recorded an additional $581,000 gain as
a result of the final calculation and settlement of the earn-out
provisions. This gain is included in "Gains on sales of assets" in the
2001 consolidated statements of income and cash flows.  The total earn-
out of $10 million ($8.6 million of which was accrued in fourth quarter
2000) was paid to the Company in the form of 7,591,000 shares of 3Dlabs
stock (valued at $10 million) increasing Intergraph's ownership to
approximately 37%.  These shares had a three-year irrevocable proxy
that prevented the Company from having any voting rights; therefore,
this investment was not accounted for using the equity method.  As a
result of the final earn-out settlement, all contingencies and related
transitional services associated with the sale of Intense3D were
satisfied.

In March 2002, the shares in escrow were released and valued at
approximately $2 million.  On March 11, 2002, 3Dlabs signed a
definitive agreement with Creative to be acquired for $3.60 per share,
with two-thirds to be converted into Creative stock and one-third in
cash.  In the second quarter of 2002, the Company's 3Dlabs stock was
sold to Creative for 2,291,765 shares of Creative stock (valued at
$26.8 million) and $13.4 million in cash.  In third quarter 2002,
788,655 of these shares were sold for $7.9 million, and a loss of $1.3
million was recorded.  At December 31, 2002, the remaining 1,503,000
shares represented a 2% ownership in Creative with a market value of
$10.6 million.

Until December 2002, the Company maintained its investment in Creative
at market value, with any unrealized holding gains or losses recorded
as a component of "Accumulated other comprehensive loss" in the
consolidated balance sheets.  In December 2002, this impairment in
value was determined to be "other than temporary" and a write-down in
the carrying value of the stock of approximately $7 million was
recognized in the 2002 consolidated statements of income and cash
flows.

Z/I Imaging:  On October 17, 2002, but effective October 1, 2002, the
Company purchased the remaining 40% ownership interest of Z/I Imaging
(formerly a 60%-owned and consolidated subsidiary of the Company) from
Zeiss.  The Company transferred certain reconnaissance camera assets
and paid $6 million, net in cash.  The film-based commercial mapping
cameras and the newly introduced Digital Mapping Camera remain a part
of Z/I Imaging.

MARIAN:  In January 2001, the Company acquired the MARIAN materials
management business unit from debis Systemhaus Industry GmbH of Germany
for a purchase price consisting of 1.5 million Euros paid at closing
and additional payments due March 1, 2002, and 2003, to be calculated
as 15% of the annual revenues earned by the Company from the sale of
MARIAN products in 2001 and 2002.  The Company's payment at closing
approximated $1.8 million and is included in "Business acquisitions" in
the Company's 2001 consolidated statement of cash flows.  The Company
accounted for the acquisition as a purchase of the intangible assets
(amortized over a useful life of two years) and software rights (of
which the intangible assets are amortized over a useful life of four
years and the maintenance contract is amortized over a useful life of
three years).  The unamortized balance, approximately $1.9 million at
December 31, 2002, and $1.7 million at December 31, 2001, is included
in "Other assets, net" in the Company's consolidated balance sheets.
The accounts and results of operations of MARIAN have been combined
with those of PPO since January 1, 2001.

Mid World:  In first quarter 2001, the Company announced its intention
to sell its Mid World operations and convert them into distributorships.
In April 2001, the Company closed the sales of its operations in Turkey
and Kuwait.  Effective July 2001, the Company closed the sale of its Saudi
Arabian operation and recorded a $680,000 gain.  The Company also completed
the sale of Intergraph Middle East,Ltd. ("IMEL"), based in Dubai, United
Arab Emirates, in second quarter 2002.  This sale was effective October
2001, and an impairment reserve of $150,000 was recorded in third quarter
2001 in anticipation of the loss on the IMEL sale (which was completed in
April 2002, effective October 2001).  The gain on Saudi Arabia, net of the
IMEL impairment reserve, is included in "Gains on sales of assets" in the
2001 consolidated statements of income and cash flows.  Upon completion of
the IMEL sale, the Company no longer has any subsidiaries in the region
and does business through distributors. The Company has retained
responsibility for some of the Mid World contracts in effect at the
date of the sale.

None of the Mid World operations were material to the Company, and the
Company believes the sale of these operations will not have a material
impact on the Company's consolidated operating results or cash flows.
Mid World's consolidated revenues and after-tax loss for 2002 totaled
approximately $120,000 and $766,000, respectively.  Consolidated revenues and
after-tax losses for 2001 were $11.8 million and $3.3 million, respectively,
and for 2000 were $21.9 million and $1.5 million, respectively.  Net assets
for the region at December 31, 2002, 2001, and 2000, totaled approximately
$3.2 million, $5.6 million, and $8.9 million, respectively.

Singapore:  On November 30, 2000, the Company sold its Singapore
subsidiary for approximately $2.7 million, primarily in the form of a
long-term note receivable.  The consideration became due in varying
installments beginning June 30, 2001, and ending December 31, 2004.  At
December 31, 2002, and 2001, the balances on the notes in the
consolidated balance sheets include approximately $671,000 and
$600,000, respectively, in "Other current assets" and $842,000 and $1.5
million, respectively, in "Other assets, net."  The Company will
continue to sell products into Singapore and related territories
through a distributor arrangement with the purchaser.  The $1.3 million
loss on this transaction is included in "Gains on sales of assets" in
the 2000 consolidated statements of income and cash flows.

BSI:  On December 27, 2000, the Company sold its MicroStation-based
civil engineering, plotting, and raster conversion software product
lines to BSI for initial proceeds of approximately $24.6 million,
consisting of $13.6 million in cash and an $11 million note due in
quarterly installments through December 2003.  In the first quarter of
2001, the Company reported an additional gain from the BSI transaction
of approximately $4.2 million as the initial consideration for the
sale, and the Company's note receivable from BSI was increased based
upon a revised calculation of transferred maintenance revenues for the
products sold to BSI, as provided for in the original sale agreement.
The agreement also provided for additional purchase price consideration
based on renewals through December 1, 2001, of maintenance contracts
related to the product lines.  The Company recorded this additional
purchase price consideration of $5.9 million in December 2001.  This
additional gain, revision, purchase price consideration, and the
proceeds received at closing of the transaction resulted in gains of
approximately $10.1 million and $23 million, respectively, in the 2001
and 2000 consolidated statements of income and cash flows.  This
resulted in an increase in the note of $10.1 million in the year 2001.
The balance of the note receivable at December 31, 2002, was $9.7
million. This non-trade receivable is included in "Other current
assets" in the Company's December 31, 2002, consolidated balance sheet.
See Note 16 for a discussion of the Company's related party
transactions with BSI.

In December 2002, the Company filed a declaratory judgment action
against BSI, and BSI subsequently filed complaints against Intergraph
in regard to this transaction.  See MD&A for a discussion of this litigation.

NOTE 18 - LITIGATION AND OTHER RISKS AND UNCERTAINTIES

In addition to the items described in these Notes to Consolidated
Financial Statements, the Company has certain other risks related to
its business and economic environment and continues its ongoing patent
infringement litigation, as further described in "Litigation and Other
Risks and Uncertainties" included in MD&A.

NOTE 19 - SUMMARY OF QUARTERLY INFORMATION - UNAUDITED

--------------------------------------------------------------------------------
Quarter Ended                          Mar. 31   Jun. 30   Sep. 30   Dec. 31
--------------------------------------------------------------------------------
(In thousands except per share amounts)

Year ended December 31, 2002:
Revenues                               $123,096  $122,570  $133,516  $121,995
Gross profit                             55,820    58,843    60,067    59,210
Restructuring charges (credits)             ---       ---       ---     2,106
Income from operations                    1,919     2,672     3,232       456
Patent litigation gain (expense)            ---   293,566    (1,186)  148,243
Gains (losses) on sales of assets         1,530    17,015    (1,331)      ---
Net income                                4,378   280,587     2,673    90,114
Net income per share:
  Basic                                $   0.09  $   5.67  $   0.06  $   1.95
  Diluted                              $   0.08  $   5.37  $   0.05  $   1.85
Weighted average shares outstanding:
  Basic                                  49,954    49,506    46,311    46,245
  Diluted                                52,503    52,204    48,754    48,653

Year ended December 31, 2001:
Revenues                               $144,122  $127,791  $127,056  $133,092
Gross profit                             58,409    57,962    56,150    60,805
Restructuring charges (credits)            (384)      ---       ---       ---
Income from operations                    2,897     1,381     2,164     1,645
Gains on sales of assets                  4,831       ---       530     5,882
Net income                                4,967     1,830     1,242    11,903
Net income per share:
  Basic                                $   0.10  $   0.04  $   0.02  $   0.24
  Diluted                              $   0.10  $   0.04  $   0.02  $   0.23
Weighted average shares outstanding:
  Basic                                  49,569    49,638    49,655    49,761
  Diluted                                50,960    52,018    51,854    51,845
================================================================================

For complete descriptions of the net gains on asset sales and restructuring
charges included in the Company's results of operations, see Notes 10, 16 and
17 and "Gains on Sales of Assets" and "Restructuring Charges" included in
MD&A.